University of the Philippines

COLLEGE OF LAW

LABOR LAW I
TFernandez Notes*
1ST Semester, AY 2008-2009

I. Introduction to Labor Law

1. LABOR: Concept
a. In its general sense – physical toil (skilled or unskilled)
b. In its technical sense – work force (working or potential workers)
2. LABOR LAW:
a. Definition
b. 1. Justification: Social Justice – aim and reason or justification of labor law, promotion
of public welfare.
3. Classification
a. Labor Standards
– minimum requirements prescribed by existing laws, rules and regulations relating to wages,
hours of work, cost of living, monetary and welfare benefits and occupational, safety
and health hazards
– material or subject to be processed
b. Labor Relations
- Regulates the institutional relationship between workers organized into a union and employers
- Defines status, rights and duties that govern interactions of employers and employees
c. Welfare Legislation
- Designed to take care of contingencies that may affect the workers
- Particular kind of protection or benefits for furtherance of social welfare and justice.
4. Basis
a. Economic Basis
- inherent inequality between labor and capital
- Azucena: 7 Principles underlying code
i. Labor relations to be responsive and responsible for national development
ii. Labor laws to substitute rationality for controntation
iii. Labor justice as expeditious without sacrificing due process
iv. Manpower development as a major dimension of labor policy
v. Global labor market
vi. Labor laws for adequate resources and capable machinery to sustain implementation
vii. Policy making through tripartism of government, laborer and employer
b. Legal Basis
i. 1987 constitution, *1935 Const Art XIV, Section 6, *1973 Const Art II Sec 6, 9
 PNB v. Cabansag
Florence Cabansag was hired by the PNB Branch in Singapore and was terminated (even if her good work was
commended) allegedly due to cost cutting then because of the need for a Chinese speaking employee. She was not
properly notified by her boss and she was not given a chance to be heard. There was no due process. PNB should
have 1) apprised her of her particular act or omission 2) inform her of their decision to dismiss her. 282, 283, 284
valid grounds of dismissal. She did not commit any offenses or omissions under 282, the business was not closing
(283) and she did not have any diseases (284). She was simple forced to resign and was illegally dismissed.
“contract of employment is imbued with public interest and cannot insinuate themselves from impact of labor laws”
i.a. Right to Security of Tenure
 Casimiro v. Stern Real Estate, Inc

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Stern owns Rembrandt Hotel and due to losses, they offered a Special Separation Program which the petitioners did
not avail of. Rembrandt, the court held, gave valid notifications and proved their reason for retrenching (283) due to
major business losses. Quitclaims were also voluntarily signed by Casimiro and others after receiving their pay and
are thus valid and binding on them. There is no illegal dismissal. Retrenchment “termination of employment initiated
by employer without fault or prejudice to the employees resorted to by management in times of business recession”
“It is not the function of law to compel a business to operate at a continuing loss simply because it has to maintain
its workers in employment. Such an act would be tantamount to taking of property without due process of law”
ii. Civil Code
 Innodata Philippines, Inc. v. Quejada-Lopez
Quejada and Natividad were employed as formatters for Innodata under a supposed fixed-term employment. They
were separated from the company and therefore they files a case for illegal dismissal. The court ruled that the fixed-
term employment agreement fixed not only a one year term but also a 3 month probationary period where the
employer can pre terminate the employment therefore making it illegal.
“blocking the acquisition of tenure by employees deserve to be struck down for being contrary to law, morals, good
customs, public order and public policy.”
iii. Labor Code and Omnibus Rules Implementing to Labor Code
iv. International Conventions, Recommendations
- International Labor Organization> tripartism: government representatives, employees, worker’s
organization. Philippines is an ILO member
- Universal Declaration of Human Rights (23, 24, 25, Covenant on Economic, Social and Cultural Rights)
 International School Alliance of Educators v. Quisumbing
Local Hires of the ISchool claim discrimination in pay as compared to foreign hires (those who are hired from abroad
to do expatriate teaching here) who earn 25% more than them and are entitled to benefits such as housing. The
court ruled that salaries could not be used to entice foreign hires. (but lodging is okay) “public policy abhors
inequality and discrimination. Foreign hires do not perform 25% more efficiently and thus should be paid equal pay
for work of equal value.”
5. The Labor Code of the Philippines
a. Brief History: began in 1968 under Blas Ople to address needs of economic development
and justice.
b. Name of Decree (Art 1) Labor Code of the Philippines PD 442
c. Date of Effectivity – (2) 6 mos. After promulgation which was on (May 1, 1974)
therefore, Nov 1, 1974
d. Declaration of Basic Policy – (3) Full employment, Equal work opportunity, Security of
Tenure, etc.
e. Construction in Favor of Labor – (4) in favor of safety and decent living of the laborer
however, it must be noted that the management also has rights (management
prerogatives)
 Reyes v. CA
Dr. Pedrito demanded PhilMalay for separation payment similar to its employees as well as for underpayment of
salary, a new car, life insurance policy, office rentals and legal service costs he incurred. The LA claimed that the
retrenchment of PhilM is valid. NLRC reduced the awards. His appeal was dismissed by CA for failure to attach
position paper, decision by Labor Arbiter and Memorandul of Appeal.
“Leniency should be applied. If the rules of procedure are applied very rigidly, justice would be defeated. Labor laws
mandate speedy disposition of cases without sacrificing fundamental requisites of due process”
 Salinas Jr. v.NLRC
Constant renewals by AG&P of Salinas etc. contracts as cement workers etc. as project based employees but did not
comply with department order which requires them to submit to DOLE the notice and reason of termination upon the
end of the project. “It would be prejudicial and would run counter to the constitutional mandate on social justice and
protection to labor”
f. Technical Rules not binding (221) – Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law as well as due process.
 Huntington Steel Products, Inc. v. NLRC

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Complaint for illegal dismissal by Orbase and 11 other employees against Huntington Steel Products was dismissed
due to the lack of a certificate of non-forum shopping required by Circular No. 28-91 with the petitioners commenting
that the complaint was a mere scrap of paper.
Labor cases must be supported by evidence. Disregarding technical rules of procedure will not sacrifice the
fundamental requisites of due process ALSO the complaint form supplied by the LA were just filled up by them and
therefore, respondents should not be faulted.
CA ruled that “technical rules shall not be applied strictly if the result would be detrimental to the working man”
REMEDIED BY A POSITION PAPER.
 Industrial Timber Corp v. Ababon (2 petitions are consolidated as one)
Industrial Plywood Group Corporation did not continue to lease the plant to ITC (herein petitioner) which led to ITC
to close its operations. ITC posted a final notice of closure of business and asked its workers to collect the benefits
due them. Ababon is one of the 387 workers laid off due to the plant’s shutdown and thus he and 96 of his co-
workers filed a case of illegal dismissal. LA required (1/2 mo) separation pay, reinstatement etc. ITC filed with the
NLRC who reinstated the LA’s decision. Ababon filed with the SC and was referred to the CA which ruled that
retrenchment was valid because of proof on non-renewal of license HOWEVER, ITC did not properly notify its
employees (1 month before) 50k as damages was awarded.
ITC: they were 3 days late in filing the MoR and thus, CA cannot validly overturn NLRC’s decision. “Apply liberality in
applying technical rules. Substantial Justice is best served by allowing the petition for relief despite the procedural
defect of PETITIONERS of filing the motion for reconsideration 3 days late” INJUSTICE TO EMPLOYER.
Art 218 (c), LC: it is within power of commission to… correct, amend, or waive any error, defect or irregularity
whether in substance or in form…”
g. Rules and Regulations or Limitation (5)
- Department of Labor and Employment shall promulgate necessary regulations which shall have the force of
law and is entitled to great respect + ANY OTHER (TO ADMINISTER, ENFORCE AND IMPLEMENT)
- EXCEPT if its in the excess of authority
 Kapisanan ng mga manggagawang Pinagyakap v. NLRC
The negotiated daily wage increase of P. 1.33 could be credited to and deducted from the P60/monthly living
allowance which in effect, nullified the P 1. 33 increase. The LA ruled according to Sec 1(k) of the Labor department’s
rules implementing PD 1123 (made to protect wages against inflation) which exempts those that have granted the
60-peso monthly allowance from paying for anything extra. ALL DOUBTS SHALL BE RESOLVED IN FAVOR OF LABOR.
In the Philippine Apparel case, this paragraph was already declared void for contravening the statutory authority
granted to the secretary of Labor., “Due to facts as well as the ruling with regard to dismissal for lack to serve a
Memorandum of Agreement as being inconsistent with the requirement of social justice to terminate employee of his
employment on a mere technicality, the petition is granted”
h. Applicability (6) All rights and benefits granted to workers under this Code shall, except as may
otherwise be provided herein, apply alike to all workers, whether agricultural or nonagricultural.
276: Government employees. The terms and conditions of employment of all government
employees…shall be governed by the Civil Service Law, rules and regulations…However, there shall be no reduction
of …benefits and other terms and conditions of employment being enjoyed by them at
the time of the adoption of this Code.
Consti Art IX- B Sec (2) 1: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of
the Government, including government-owned or controlled corporations with original charters.
 PNOC Energy Development Corp v. NLRC
Danilo Mercado was dismissed for alleged acts of dishonesty (negotiating cost then pocketing the money)
1. The decision was made when the 1987 constitution was in effect and not the 1973 constitution therefore it is
already the Labor Code and not the Civil Service Decree that it in effect. The test is the manner of its creation, those
under the civil service law, CS. Those created under the General Corporation Law, are under the Labor Code. ALSO
case arose in 1973 but it was promulgated on July 1987, therefore under the 1987 constitution.
2. Also, there was no evidence of the alleged violations, in fact the testimony as well as the explanations provided by
Mercado’s affidavit is satisfactory for the Labor Arbiter.
i. Enforcement and sanctions
217 a Labor Arbiter’s Jurisdiction
128 Visitorial and enforcement power.
129 Recovery of wages, simple money claims and other benefits.
288 Penalties.
289 Who are liable when committed by other than natural person.
290 Offenses.
291 Money claims

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292 Institution of Money claims
Art III Constitution
Sec 11 Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any
person by reason of poverty.
16 All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.
6. Work Relationship
a. Definition
97
a: person- individual, partner etc
B: employer – person acting directly or indirectly in interest of employer
167
c: employee – employed by employer
F: employer – employing employee
G: employee – compulsorily covered by GSIS
H: person - any individual, partnership, firm, association, trust, corporation or legal representative thereof.
212
e: employer – acting in the interest of employer
F: employee: in employ of employer even those whose work has ceased given unfair labor practices.
b. Employer Employee relationship
1. Factors/ Tests
Four Fold Test of ER-EE relationship
i. Selection and engagement of EE
ii. Payment of Wages by ER
iii. Power of Dismissal is with ER
iv. Control Test: is the end achieved controlled by ER?;
manner or means it is achieved controlled by ER?
 Television and Prod. Exponents Inc. v. RC Servana
Roberto Servana served as a security guard for TAPE and was terminated due to TAPE’s decision to hire a
professional security agency. TAPE says that Servana is an independent contractor, a talent and part of the support
group. His termination, TAPE said, was due to redundancy. The court ruled that there is, in fact a ER-EE relationship
because the “four-fold test and the ID given as well as the bundy cards of Servana serve as proof of the employer
employee relationship of TAPE and Servana” (Servana was hired, paid by and controlled by respondents)  (even if
program employee, already regularized, more than 1 yr, 281). Nominal damages of 10k. POLICY INSTRUCTION 40.
SHOULD BE FILED WITH BROADCAST MEDIA COUNCIL.
 Chavez v. NLRC
Pedro Chavez is a truck driver for Supreme Packaging Inc. since 1984. In 1992, he wanted to be regularized to get
the benefits of the regular employees. In 1995, this not being granted, he filed complaint for regularization but he
was terminated (due to gross negligence in proper maintenance of truck, wanting to sever ties with the company
etc) before the case was heard. ER-EE relationship is present due to the four fold test. (Same work, paid by SPI,
dismissed by SPI, his truck is owned by SPI and his truck routes are controlled by SPI.) That he was paid on a per
trip basis is not significant. Reinstated to his work with full backwages, 279. However, separation pay instead of
reinstatement is more equitable in this case. NOT INDEPENDENT CONTRACTOR BECAUSE NOT ENOUGH CAPITAL
 Vicente Sy v. CA
Jamie Sahot was with SB Trucking (owned by Sy) since 1965. In 1994, Sahot strated to have thigh pains and filed for
leave. He was later dismissed for failure to go to work. He found out later that his SSS premiums were not paid by
employers. Court found that an ER-EE relationship is present between SBT and Sahot and he was not, infact, an
industrial partner (he did not receive any share of the division of profits and he was not shown to be part of any
managerial duty; he was in fact content to follow the instructions of petitioners during those years). Dismissal was
not valid and it was without notice (he was simply threatened then dismissed). Even if he was offered a job which is
less strenuous is of no matter; also, being terminated of a disease under 284 requires a medical certificate by the
employer which was not shown in the case. He is entitled to separation pay.
2. Piercing the Corporate veil See through protective shroud to distinguish a corporaion
from a seemingly separate one.

 Pamplona Plantation Co., Inc. v. Tinghil

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PPCI took over the operations of Hacienda Pamplona but did not absorb all of them. CA ruled that Pamplona illegally
dismissed its employees. Pamplona claimed that no relationship was formed between them and that the non-joinder
of ‘PAMPLONA PLANTATION LEISURE CORP’ in the complaint warrants a dismissal and that there is no ER-EE
between them. The court ruled that there is a relationship (ER-EE) since they were hired, being paid under the
corporate control of Jose Luis Bondoc, the managing director of the company (2 separate entities as far as workers
are concerned; devious), also, “there should be no need to implead PPLC since petitioner company and Leisure
Corporation are one and the same entity” (Corporation has same incorporators and are under one management)

c. Independent Contractor and Labor-Only Contractor

Independent contractor: implementing rules section 8
- own account and responsibility and capital
- free from control of performance but toward same result

Labor only contractor

- no substantial capital or tools
- workers recruited perform activities related (necessary and desirable) to the principal business of ER

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal business of
such employer.
In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any
person, partnership, association or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.
Art. 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to
furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due
the employees should the contractor or subcontractor, as the case may be, fail to pay the same.
Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or
indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of
this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as
direct employers.
D.O. No. 10, Rule VIII-A Bk III, 1997 (Rules implementing above)
D.O. No. 3, S. May 2001 (Revoked above D.O.) Labor only Contracting prohibited, non-impairment of
existing contracts
D.O. No. 14, September 18, 2001, Section 8: Re employment of security guards and similar personnel.
Security service contractor as the employer of the security guards. Not company assigned to them etc…
 Phil. Bank of Communications v. NLRC
PBC and CESI (Corporate Executive Search Inc) entered into an agreement for the hiring of 11 mesengers. Orpiada
and the others were relieved of their jobs because of the eventual termination of PBC and CESI’s agreement.
The court ruled that although Orpiada was assigned to and not chosen by bank the fact remains that PBC agreed.
Also, control as to what they are to do etc. is with bank. The payment and the power to dismiss was with CESI.
Having completed more than 1 yr (16 mos) of service Orpiada is considered to be a regular employee (Art 281, LC).
CESI is not a parcel delivery company it is a recruitment corporation who, in this case, made a letter agreement with
PBC for only the temporary services of the msgrs. Temporary service leads to the presumption to labor-only
contracting. CESI is then rendered as a mere agent. PBC to pay Orpiada because he is liable as though it directly
employed him but can sue CESI of reimbursement
 Alexander Vinoya v. NLRC
Alexander Vinoya worked in Regent Food as a sales rep. booking sales in groceries, getting payment etc. He was
required to post a monthly bond of 200 to ensure compliance with his duties. He was then moved to PMCI then
reassigned to RFC and was soon terminated because of the expiration of the contract of service between RFC and

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PMCI. Court said that PMCI is engaged in labor-only contracting not having substantial capital and investment and
did not carry on an independent business OR own manner of undertaking of its contract. The Court cited Neri v.
NLRC saying that in the case, BCC was found to be an independent contractor because (4 fold test) control of
employees is with BCC, employer is concerned only with end result BCC had the power to reassign the employees,
deployment of which is not subject to the approval of the employer. BCC is paid with lump sum
- In Vinoya’s case  PMCI did not have substantial capital or investment in form of tools. Authorized capital
stock of 1M but only 75k paid in capital nor did they carry on an independent business nor did it undertake
the performance of its contract according to its own manner or method.
- PMCI was not engaged to perform a specific and special job or service
thus, satisfying the application of the 4 fold test. Issuance if ID is also proof of Vinoya’s employment with RFC prior
to his reassignment to PMCI and ALSO there was no sufficient notice. Reinstatement and Backwages.
 PAL v. E. Ligan, et al.
Synergy undertook loading and unloading of baggage for PAL. PAL soon cut ties with Synergy and thus, E. Ligan etc.
were dismissed. Applying the 4 fold test, it is shown that respondent performed desirable and necessary duties
related to the main business of PAL and that the equipment used was owned by PAL. Also, Synergy mentioned but
did not show that it had substantial capital and as to how much that capital is. Also according to D.O. 18-02, labor-
only contracting is present when one of these elements are present:
1. The contractor does not have substantial capital
2. Contractor does not exercise the right to control the performance of the work of the
employee.
Synergy was not shown to have substantial capital and it was PAL who had control over the schedule and the tasks
of the employees (dependent on the frequency of plane arrivals) Also, respondent’s and PAL’s employees were doing
the same kind of work therefore, there is labor only contracting. Synergy, being categorized as a mere agent and
respondents having acquired security of tenure are therefore entitled to reinstatement or separation pay, wage
differential and backwages from PAL.
 Mandaue Galleon Trade Inc. v. V. Andales
Vicente Andales is one of the 260 workers laid off due to the termination of their contracts by MGTI. MGTI claims
that due to the dwindling demand for rattan products, they retrenched some of their employees and the 260 envied
the substantial separation pay of the regular employees. The court held that the 260 “independent contractors” did
not have substantial capital and tools and that their work is directly related to MGTI’s business. This proves a labor
only contraction and thus, equivalent to declaring that there is an ER-EE relationship between the principal and the
employees of the supposed contractor. They are entitled to separation pay of ½ month for every year of service.

EXECPTIONS to the rule

- When the findings are grounded entirely on speculation
- When the inference made is manifestly mistaken
- Where there is grave abuse of discretion
- Judgment is made from misapprehension of facts
- Findings of fact are conflicting
- (in making its findings) CA went beyond issue
- Findings are contrary to the trial court
- Conclusions without citation
- Facts set forth not disputed by respondent
- Findings premised on absence of evidence
- CA overlooked relevant facts disputed by parties.
*The first 2 par. Of article 106 set the general rule that a principal is permitted by law to engage the services of a
contractor for the performance of a particular job, but the principal, nevertheless, becomes SOLIDARILY liable with
the contractor.
d. Registration of Contractors
D.O. 18-03 (11-12: registration requirements, submission of annual report (SSS, GSIS, HDMF, PhilHealth)
Effect of non compliance
D.O. 18-02, Sec 11, 3rd par: failure to register gives rise to presumption of labor-only
contracting

 Sandoval Shipyards v. Pepito et al.,

The Natl Fed of Labor NFL filed a petition for certification election with DOLE alleging that its members are already
regular employees of SSI and were dismissed due tot heir participation in the strike. Finding an EE-EE to exist, the
Med Arbiter granted the petition. Undersecretary Laguesma reversed saying that there is a valid subcontracting

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agreement between the parties. Illegal dismissal cases were filed and the LA and NLRC upheld Laguesma saying that
there was illegal dismissal but that they are not employees of SSI. CA reversed the decision and said that SSI is their
direct employer. On the basis that:
A) The “so-called” subcontractors do not even have a license to engage in subcontracting (presumption of LO)
B) Salaries are paid by SSI
C) They were hired by SSI and placed under their respective subcontractors
D) Tools used are owned by SSI. EVIDENCE OF LABOR ONLY CONTRACTION.
e. Liability of Indirect Employer
Sec 7 D.O. No 18-02 (109) indirect employers are solidarily liable with principal.
 Eparwa Security and Janitorial Services Inc. v. Liceo de Cagayan University
Eparwa and LDCU entered into a contract for services of 11 security guards. Security guards filed a claim for
underpayment of wages (leave, overtime, holiday, 13 th month etc.) against both entities.
LDCU made a claim for reimbursement from Eparwa and was not approved by NLRC.
Both companies appealed. NLRC held that although both were solidarily liable (Art 109): Eparwa as employer and
LDCU as agent, It is Eparwa that may claim reimbursement from LDCU in lieu of allowing an adjustment of the
contract (since their contract expired, the payment needed by Eparwa cannot be amended anymore).LDCU cannot
ask for reimbursement. If contractor does not pay overtime/ busts union, to hold principal liable will be absurd and
unfair. Based on Eagle Security Agency Case

II. Labor Standards Law

1. Employment Policies, Recruitment and Placement of Workers, and Agencies
Reference – Arts 12-39, Local Employment, Overseas Employment, POEA Rules
a. Employment Policies: 12 a-f, Constitution, Art II, Sec. 9, RA 8042 Sec
2,4,5**
Art. 12. Statement of objectives. It is the policy of the State:
a. To promote and maintain a state of full employment through improved manpower training,
allocation and utilization;
b. To protect every citizen desiring to work locally or overseas by securing for him the best
possible terms and conditions of employment;
c. To facilitate a free choice of available employment by persons seeking work in conformity
with the national interest;
d. To facilitate and regulate the movement of workers in conformity with the national interest;
e. To regulate the employment of aliens, including the establishment of a registration and/or
work permit system;
f. To strengthen the network of public employment offices and rationalize the participation of
the private sector in the recruitment and placement of workers, locally and overseas, to
serve national development objectives;
g. To insure careful selection of Filipino workers for overseas employment in order to protect
the good name of the Philippines abroad.

RA 8042, Migrant Workers and Overseas Filipino Act of 1995 declares that the state does not promote overseas
employment as a means to sustain economic growth, instead THE STATE SHALL CONTINUOUSLY CREATE LOCAL
EMPLOYMENT OPPORTUNITIES AND PROMOTE THE EQUITABLE DISTRIBUTION OF WEALTH AND THE BENEFITS
OF DEVELOPMENT. It requires a certain guarantee of protection for the overseas worker.

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence
of the nation and free the people from poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.

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The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and
growth.

SEC. 2. DECLARATION OF POLICIES--

(a) In the pursuit of an independent foreign policy and while considering national sovereignty, territorial integrity,
national interest and the right to self-determination paramount in its relations with other states, the State shall, at all
times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant
workers, in particular.

(b) The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all. Towards this end, the State shall provide adequate
and timely social, economic and legal services to Filipino migrant workers.

(c) While recognizing the significant contribution of Filipino migrant workers to the national economy through their
foreign exchange remittances, the State does not promote overseas employment as a means to sustain
economic growth and achieve national development. The existence of the overseas employment program
rests solely on the assurance that the dignity and fundamental human rights and freedoms of the Filipino citizens
shall not, at any time, be compromised or violated. The State, therefore, shall continuously create local employment
opportunities and promote the equitable distribution of wealth and the benefits of development.

(d) The State affirms the fundamental equality before the law of women and men and the significant role of
women in nation-building. Recognizing the contribution of overseas migrant women workers and their particular
vulnerabilities, the State shall apply gender sensitive criteria in the formulation and implementation of policies and
programs affecting migrant workers and the composition of bodies tasked for the welfare of migrant workers.

(e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any
persons by reason of poverty. In this regard, it is imperative that an effective mechanism be instituted to ensure that
the rights and interest of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular,
documented or undocumented, are adequately protected and safeguarded.

(f) The right of Filipino migrant workers and all overseas Filipinos to participate in the democratic decision-
making processes of the State and to be represented in institutions relevant to overseas employment is
recognized and guaranteed.

(g) The State recognizes that the ultimate protection to all migrant workers is the possession of skills. Pursuant to
this and as soon as practicable, the government shall deploy and/or allow the deployment only to skilled Filipino
workers.

(h) Non-governmental organizations, duly recognized as legitimate, are partners of the State in the protection of
Filipino migrant workers and in the promotion of their welfare, the State shall cooperate with them in a spirit of trust
and mutual respect.

(I) Government fees and other administrative costs of recruitment, introduction, placement and assistance to migrant
workers shall be rendered free without prejudice to the provision of Section 36 hereof.

Nonetheless, the deployment of Filipino overseas workers, whether land-based or sea-based by local service
contractors and manning agencies employing them shall be encouraged. Appropriate incentives may be extended to
them.

SEC. 3. DEFINITIONS. - For purposes of this Act:

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(a) "Migrant worker" refers to a person who is to be engaged, is engaged or has been engaged in a renumerated
activity in a state of which he or she is not a legal resident to be used interchangeably with overseas Filipino
worker.

(b) "Gender-sensitivity" shall mean cognizance of the inequalities and inequities prevalent in society
between women and men and a commitment to address issues with concern for the respective interests of the
sexes.

(c) "Overseas Filipinos" refers to dependents of migrant workers and other Filipino nationals abroad who are in
distress as mentioned in Sections 24 and 26 of this Act.

I. DEPLOYMENT

SEC. 4. Deployment of Migrant Workers - The State shall deploy overseas Filipino workers only in countries where the
rights of Filipino migrant workers are protected. The government recognizes any of the following as guarantee
on the part of the receiving country for the protection and the rights of overseas Filipino workers:

(a) It has existing labor and social laws protecting the rights of migrant workers;

(b) It is a signatory to multilateral conventions, declaration or resolutions relating to the protection of migrant
workers;

(c) It has concluded a bilateral agreement or arrangement with the government protecting the rights of overseas
Filipino workers; and

(d) It is taking positive, concrete measures to protect the rights of migrant workers.

SEC. 5. TERMINATION OR BAN ON DEPLOYMENT - Notwithstanding the provisions of Section 4 hereof, the
government, in pursuit of the national interest or when public welfare so requires, may, at any time, terminate or
impose a ban on the deployment of migrant workers.

b. Employment Agencies
b.1. Private Sector- Agencies and Entities
1.) Parties
i. Worker
13 a: Worker means any member of the labor force, whether employed or unemployed.
RA 8042, Sec 3 (a) <the countries they are deployed to has existing labor and social laws protecting the rights of the
migrant workers.
ii. Private employment agency
Art. 13. Definitions.
c. "Private fee-charging employment agency" means any person or entity engaged in recruitment and
placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both.
d. "License" means a document issued by the Department of Labor authorizing a person or entity to operate a
private employment agency.
Art. 12. Statement of objectives. It is the policy of the State:
f. To strengthen the network of public employment offices and rationalize the participation of the private sector in
the recruitment and placement of workers, locally and overseas, to serve national development objectives;
Art. 14. Employment promotion. The Secretary of Labor shall have the power and authority:
a. To organize and establish new employment offices in addition to the existing employment offices under the
Department of Labor as the need arises;
iii. Private recruitment entity
Art. 13. Definitions.
e. "Private recruitment entity" means any person or association engaged in the recruitment and placement of
workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers.

9
f. "Authority" means a document issued by the Department of Labor authorizing a person or association to engage in
recruitment and placement activities as a private recruitment entity.
2.) Recruitment and Placement
i. Local Employment
Art. 13. Definitions.
b. "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to two or more
persons shall be deemed engaged in recruitment and placement.
***WON for profit, IF ANY PERSON OFFERS OF PROMISES A FEE EMPLOYMENT TO 2 OR MORE PERSONS SHALL BE
DEEMED ENGAGED IN RECRUITMENT AND PLACEMENT.
ii. Overseas employment – Sec 6, RA 8042
Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or
more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of
juridical persons, the officers having control, management or direction of their business shall be liable.

3.) Allowed and Protected Entitites

i. Allowed private agencies and entities
Art. 12. Statement of objectives. It is the policy of the State:
f. To strengthen the network of public employment offices and rationalize the participation of the private sector in
the recruitment and placement of workers, locally and overseas, to serve national development objectives;
Art. 16. Private recruitment. Except as provided in Chapter II of this Title, no person or entity other than the
public employment offices, shall engage in the recruitment and placement of workers.
Art. 25. Private sector participation in the recruitment and placement of workers.
Pursuant to national development objectives and in order to harness and maximize the use of private sector
resources and initiative in the development and implementation of a Comprehensive employment program, the
private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under
such guidelines, rules and regulations as may be issued by the Secretary of Labor.

ii. Prohibited business agencies and entities.

Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether
for profit or not.

Exceptions: 18, 2nd sentence (See below)

ii.1. Direct Hiring - Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas
employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by
members of the diplomatic corps, international organizations and such other employers as may be
allowed by the Secretary of Labor is exempted from this provision.

ii.2. Travel Agencies – Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales
agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers
for overseas employment whether for profit or not.

POEA rules II, Sec 2

Section 2. Disqualification. The following are not qualified to engage in the business of recruitment
and placement of Filipino workers overseas:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation engaged in the business of a travel agency;
c. Corporations, when any of its officers is also an officer of a corp. engaged in the business of a travel agency;

10
d. Persons, partnerships or corporations which have derogatory records, such as but not limited to the following:
1) Those certified to have derogatory record
2) Those with prima facie finding of guilt for illegal recruitment or other related cases exists;
3) Those convicted for illegal recruitment or other related cases and/or crimes involving moral
turpitude
4) Those agencies whose licenses have been previously revoked or cancelled (violation of RA 8042,
PD 442)
f. Persons or partners, officers and Directors of corporations whose licenses have been previously cancelled or
revoked for violation of recruitment laws.

 Hornales v. NLRC
Mario Hornales filed a complaint for nonpayment of wages and recovery of damages against JEAC (run by Cayanan).
JEAC sent Hornales to Singapore to work and upon meeting Mr. Victor Lim, he was assigned as a fisherman. There,
Hornales was subjected to maltreatment, lack of food and water, and 22 hours/day work for no pay. He managed to
return to the Philippines and demanded for the rightful payment of his wages. JEAC simply asked him of his passport
and gave him 500 pesos. The issue is Won JEAC is responsible for petitioner’s recruitment and deployment to
Singapore. NLRC’s conclusions (overturning POEA’s findings) that JEAC was a mere travel agency and Hornales is a
tourist is unfounded since even respondents claim they are a licensed recruitment agency. Also the PNB checks and
the letter agreements issued by JEAC to Hornales and Lim respectively show a quantum of evidence that proves
JEAC’s connivance with the foreign employer (Step Up). JEAC and its surety are jointly and severally liable to
Hornales.
(under Rule 5 Book 1 Sec 2 e or the IRR: requires a private employment agency to assume all responsibilities for the
implementation of the contract of employment of an overseas worker; under book 2 Rule 2 Section 3 of the POEA
rules and regulations, private employment agency shall assume joint and solidary liability with the implementation of
a contract)
POEA decision reinstated (but minus 16,000 paid by JEAC for Hornales’ travel)

4.) Government Techniques of Regulation – Private Recruitment

i. Licensing: Citizenship – 27: for permit to participate in recruitment and placement of workers (local and
overseas)
i. Filipino Citizens
ii. Corp or partnerships at least 75% of the authorized and voting capital stock of which is owned and controlled by
Filipino Citizens.
POEA Rules Part II, Rule I, Sec 1 (a)
Section 1. Requirements Qualifications. Only those who possess the following qualifications may be permitted to
engage in the business of recruitment and placement of Filipino workers:

a. Filipino citizens, partnerships or corporations at least seventy five percent (75%) of the authorized capital stock of
which is owned and controlled by Filipino citizens;
a. Capitalization – 28: substantial capitalization as determined by the secretary of labor. Required for
all applicants for authority to hire or renewal of license to recruit.

POEA Rules Part II, Rule I, Sec 1 (b)

b. A minimum capitalization of Two Million Pesos (P2,000,000.00) in case of a single proprietorship or partnership
and a minimum paid-up capital of Two Million Pesos (P2,000,000.00) in case of a corporation; Provided that those
with existing licenses shall, within four years from effectivity hereof, increase their capitalization or paid up capital, as
the case may be, to Two Million Pesos (P2,000,000.00) at the rate of Two Hundred Fifty Thousand Pesos
(P250,000.00) every year.
b. Duration
POEA Rules Part II, Rule II, Sec 5, 6
Section 5. Provisional License. Applicants for new license shall be issued a provisional license which shall be valid for
a limited period of one (1) year within which the applicant should be able to comply with its undertaking to deploy
100 workers to its new principal. The license of a complying agency shall be upgraded to a full license entitling them
to another three years of operation. Non-complying agencies will be notified of the expiration of their license.

Section 6. Validity of the License. Except in case of a provisional license, every license shall be valid for four (4) years
from the date of issuance unless sooner cancelled, revoked or suspended for violation of applicable Philippine law,

11
these rules and other pertinent issuances. Such license shall be valid only at the place/s stated therein and when
used by the licensed person, partnership or corporation.

c. Non-transferability – 29: n-t of license or authority.

Who may use? Only the person in whose favor it was issued.
Where it may be used? Only at place stated in the license or authority.
Prohibition? Transfer/conveyance to other person or entity. Approval of DOLE required in: 1. transfer of business
address 2. appointment or designation of any agent/representative 3. establishment of additional offices.

POEA Rules Part II, Rule II, Sec 7

Non-Transferability of License. No license shall be transferred, conveyed or assigned to any person, partnership or
corporation. It shall not be used directly or indirectly by any person, partnership or corporation other than the one in
whose favor it was issued.

d. Registration fees – 30
Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all
applicants for license or authority.
POEA Rules Part II, Rule II, Sec 4: Payment of Fees and Posting of Bonds.
e. Bonds – 31
Art. 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as determined by the
Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms
and conditions of employment as may be appropriate.
ii. Workers’ Fees (Placement Fees) – 32
Art. 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for
employment assistance shall not be charged any fee until he has obtained employment through its efforts or has
actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the
amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.

POEA Rules Part II, Rule V, Sec 3

Section 3. Fees/Costs Chargeable to the Workers. Except where the prevailing system in the country where the
worker is to be deployed, either by law, policy or practice, do not allow the charging or collection of placement and
recruitment fee, a landbased agency may charge and collect from its hired workers a placement fee in an amount
equivalent to one month salary, exclusive of documentation costs. Documentation costs to be paid by the worker
shall include, but not limited to, expenses for the following:
a. Passport
b. NBI/Police/Barangay Clearance
c. Authentication
d. Birth Certificate
e. Medicare
f. Trade Test, if necessary
g. Inoculation, when required by host country
h. Medical Examination fees
In the event that the recruitment agency agrees to perform documentation services, the worker
shall pay only the actual cost of the document which shall be covered by official receipts.

The above-mentioned placement and documentation costs are the only authorized payments that may be collected
from a hired worker. No other charges in whatever form, manner or purpose, shall be imposed on and be paid by the
worker without prior approval of the POEA. Such fees shall be collected from a hired worker only after he has
obtained employment through the facilities of the recruitment agency.

iii. Reports/ Employment Information – 33, 14 d, 34 h, RA 8042 Sec 6h

Art. 14. Employment promotion. The Secretary of Labor shall have the power and authority:
***d. To require any person, establishment, organization or institution to submit such employment information as
may be prescribed by the Secretary of Labor.

Art. 33. Reports on employment status. Whenever the public interest requires, the Secretary of Labor may
direct all persons or entities within the coverage of this Title to submit a report on the status of employment,

12
including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other
employment data.

Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of
authority:
h. To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings,
separation from jobs, departures and such other matters or information as may be required by the Secretary of
Labor.

iv. Illegal Recruitment – RA 8042 Sec 6-12; 34, 38 a b

Art. 38. Illegal recruitment.
a. Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of
this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints under
this Article.
b. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed
committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first
paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
REPEALED
c. The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the
arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his
activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers.
The Secretary
shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other
implements used in illegal recruitment activities and the closure of companies, establishments and entities found to
be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to
do so.

a. When Undertaken by non-licensees, non-holders

b. Prohibited Practices
 Rodolfo v. People of the Philippines
Rosa Rodolfo approached the complainants and invited them to apply for overseas employment in Dubai claiming
that she knew Florante Hinahon, the owner of the agency. She collected the processing fees. Their flights were being
constantly rescheduled and as a result of this they asked for their money back. Aside from the 1k given to Ferre (one
of the complainants) no reimbursement was given. A case of illegal recruitment was filed against Rodolfo who
claimed that she was the one approached by complainants and that she gave the money directly to Hinahon. The
court said that since
1. She had no valid license to recruit
2. Rodolfo undertook activity wherein she passed along or forwarded an applicant for
employment and the court said that it is sufficient that the accused promises or offers
for a fee employment.
The court further said that she could have advised them to pay directly to the agency. CA affirmed.
 Pp v. Jamilosa
Jamilosa, under the guise of an FBI agent of the US on a mission “recruited” a number of people whom he met on
the bus, in malls etc. by saying that his sister is the head nurse in a nursing home in California and that he has
connections in the US embassy being an FBI agent. The complainants gave him the money (and on a few instances
jewelry and 2 bottles of black label) for processing of their application. He even insisted to meet a few of the
complainants family and showed to them the Xerox of the passport as well as the ticket. The appellant never issued
receipts. They were never able to fly out of the country and upon asking the money from the petitioner, he avoided
them. Bamba, one of the complainants filed an illegal recruitment case against him.
Jamilosa claims that Bamba is an aggrieved lover who is imputing the case against him because of their separation.
Also, he showed certifications signed by complainants stating that Jamilosa is not an illegal Recruiter.
COURT: Petition has no merit. It is sufficient that the accused promises or offers for a fee employment to warrant
conviction for illegal recruitment. The certifications were signed after the notice that he was being sued was issued
because he did not present them in his counter affidavit. (graduate of UE dapat mas matalino). Appeal is dismissed.

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  Pp v. Comila
Aida and Comila was looking for workers for a factory in Intaly. Comila introduced the complainants to Erlinda
Ramos, one of the agents of Mrs. Indira Lastra. After their flights not pushing through, they ask for a refund which
was not given but rather, they were left with an assurance and they were brought to Lastra who was in Manila City
Jail. A case of illegal recruitment was filed against them. Aida said she never professed she has the authority to
recruit and was merely trying to help the complainants process their papers. As for her husband, he claimed that the
prosecution failed in proving his participation.The court said that they cannot feign ignorance of the matters that
were happening as it was Aida herself who informed the complainants of the existence of the job orders. There must
be at least a promise or offer of employment from the person posing as a recruiter whether locally or abroad. Also,
they can be charged with estafa and illegal recruitment given that estafa is malum in se and IL is malum prohibitum.
Appeal of Comilas is dismissed.
 Salazar v. Achacoso 183 SCRA 145
Due to the refusal of Salazar to return the PECC card of complainant Rosalie Tesoro, Tesoro filed an illegal
recruitment case against her. The POEA ordered a closure and seizure order and soon went to her dance studio and
confiscated certain costumes. Hortencia Salazar sent a letter to POEA demanding the return of her seized items and
also filed a suit for prohibition. The sole issue of the case is WON issuing of a warrant of arrest against her by the
POEA/ Secretary of Labor as well as the seizing of her dance studio, pursuant to Art 38, LC, is valid. The court held
that 38 c is a product of several decrees which were the dying vestiges of an authoritarian rule. The court further
said that the secretary of labor, not being a judge cannot issue search and arrest warrants. Under the constitution,
these can only be exercised by the courts. The president issuing an arrest of aliens for deportation is the only
exception. 38 c of labor code is UNCONSTITUTITONAL.
(declared Art 38 © unconstitutional because of Art III, Section 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be
determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched and the persons or things to be seized. )
v. Enforcement Powers
a. Regulatory power – 35, 36
Art. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have the power to
suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and
regulations issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the
provisions of this and other applicable laws, General Orders and Letters of Instructions.
MISCELLANEOUS PROVISIONS
Art. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the recruitment
and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and
promulgate rules and regulations to carry out the objectives and implement the provisions of this Title.
Art. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any time, inspect
the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports
regularly on prescribed forms, and act on violation of any provisions of this Title.
b. Rule-making power -36
c. Visitorial Power – 37
 DOLE Phil Inc. v. Esteva
Dole Phil hired members of CAMPCO (Cannery Multi Purpose Coop) depending on their sole needs. Upon evaluation,
DOLE Regional Task force found CAMPCO and Dole Phil engaged in Labor Only contracting, having no substantial
capital as well as the fact that the workers recruited are performing activities directly related to the principal business
of Dole. Dole Philippines appealed raising that the DOLE Regional Director committed error in Law in directing
cooperatives to cease and desist from Labor Only Contracting saying that this had been their practice ever since.
Despite the order being final and executory, Dole Phil continued its operations. On appeal LA and NLRC found
CAMPCO is not engaged in Labor Only Contracting. CA reversed LA and NLRC holding that the order by DOLE should
be given weight in the exercise of its visitorial and enforcement power (Art 128 a and b). Ruling: Art 128 Secretary of
Labor can issue compliance orders to give effect to Labor standards. The regional director of DOLE made procedural
steps such as sending a task force to investigate before issuing his order to cease and desist based on his findings
that CAMPCO is guilty of Labor Only Contracting. Dole Phil is found guilty. CA affirmed.
vi. Joint and Several Liability of Employment agent and principal
POEA Part II, Rule II

14
Section 1. Requirements for Licensing. Every applicant for license to operate a private employment agency shall
submit a written application together with the following requirements: A verified undertaking stating that the
applicant:
1. Shall select only medically and technically qualified recruits;
2. Shall assume full and complete responsibility for all claims and liabilities which may arise in connection with the
use of the license;
3. Shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection
with the implementation of the contract, including but not limited to payment of wages, death and disability
compensation and repatriations;
4. Shall guarantee compliance with the existing labor and social legislations of the Philippines and of the country of
employment of the recruited workers;
5. Shall assume full and complete responsibility for all acts of its officials, employees and representatives done in
connection with recruitment and placement;
6. Shall negotiate for the best terms and conditions of employment;
7. Shall disclose the full terms and conditions of employment to the applicant workers;
8. Shall deploy at least 100 workers to its new markets within one (1) year from the issuance of its license;
9. Shall provide orientation on recruitment procedures, terms and conditions and other relevant information to its
workers and provide facilities therefor; and
10. Shall repatriate the deployed workers and his personal belongings when the need arises. For the purpose of
compliance with item (1), the agency may require the worker to undergo trade testing and medical examination only
after the worker has been pre-qualified for employment.

RA 8042 Sec 10 2nd par. (See below)

 OSM Shipping Phil Inc. v. NLRC
Fermin Gurrero filed a case against OSM Shipping since despite the services he rendered to OSM, no compensation
was paid to him. OSM alleged that the ship owner changed its plans on the use of the vessel (Princess Hoa) and
instead chartered it to PCSLC. Since OSM and PCSLC’s contract was terminated, PCSLC became employer of the
crew.
Issues: Sec 3 Rule 46 of RoC requires a certified true copy of LA’s decision but court said that it is not necessary to
send pleadings as long as Guerrero is represented by counsel. Also, from the inception of the case at the LA’s office,
Guerrero, a seaman was often not there. Service of pleadings is futile.
The fact that petitioner and its principal have already terminated their agency agreement does not retrieve the
formenr of its liability. Responsibilities of such parties towards the contracted employees under the agreement do not
end but rather extends until the expiration of the employment contract.
5.) Jurisdiction
I. RTC over criminal action arising from illegal recruitment
RA 8042, SEC. 9. VENUE. - A criminal action arising from illegal recruitment as defined herein shall be filed with
the Regional Trial Court of the province or city where the offense was committed or where the offended party
actually resides at the same time of the commission of the offense: Provided, That the court where the criminal
action is first filed shall acquire jurisdiction to the exclusion of other courts. Provided, however, That the
aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time
of the effectivity of this Act.

II. LA over money claims

RA 8042, SEC. 10. MONEY CLAIMS. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section
shall be joint and several. This provisions shall be incorporated in the contract for overseas employment and shall be
a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may
be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and
damages.

15
  Flourish Maritime Shipping v. Donato Almazor
Almazor worked in a Taiwan vessel as a fisherman for Flourish or FSM for only 26 days and he was subjected to
working with almost no sleep and was not provided with food. His contract with Flourish is for 2 years. In RA 8042
Sec 10, it says that there are 2 money claims available for illegal dismissal.
1. Salaries for the unexpired portion of the employment contract
2. 3 months salary for every year of the unexpired term. Whichever is less.
He was given option 2 by the LA because even if his contract is for 2 years, he was only made to work for 26 days.
III. POEA over administrative cases
a. Pre-employment Cases
Omnibus rules implementing RA 8042 Sec 28 a

Section 28. Jurisdiction of the POEA. - The POEA shall exercise original and exclusive jurisdiction to hear and
decide: a. all cases, which are administrative in character, involving or arising out of violations of rules and
regulations relating to licensing and registration of recruitment and employment agencies or entities; and b.
disciplinary action cases and other special cases, which are administrative in character, involving employers,
principals, contracting partners and Filipino migrant workers.

b. Disciplinary Cases
Omnibus rules implementing RA 8042 Sec 28 b
2. Alien Employment Regulation
Art. 12. Statement of objectives. It is the policy of the State:
e. To regulate the employment of aliens, including the establishment of a registration and/or work permit system;

EMPLOYMENT OF NON-RESIDENT ALIENS

Art. 40. Employment permit of non-resident aliens. Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of
the non-availability of a person in the Philippines who is competent, able and willing at the time of application to
perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments,
said employment permit may be issued upon recommendation of the government agency charged with the
supervision of said registered enterprise.

Art. 41. Prohibition against transfer of employment.

a. After the issuance of an employment permit, the alien shall not transfer to another job or change his employer
without prior approval of the Secretary of Labor.
b. Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing
rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code.
In addition, the alien worker shall be subject to deportation after service of his sentence.

Art. 42. Submission of list. Any employer employing non-resident foreign nationals on the effective date of this
Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating
their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The
Secretary of Labor shall then determine if they are entitled to an employment permit.
Omnibus Rules, Book I, Rule XIV
D.O. No. 12 Omnibus Guidelines for Issuance of Employment Permits to Foreign Nationals (see
reviwer) Book III Rule I.1 Exemption – Rule I.2

D.O. Nos 19-02, 26-02

Const., Art XII: Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and
locally produced goods, and adopt measures that help make them competitive
a. Coverage – 40
Art. 40. Employment permit of non-resident aliens. Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of Labor.

16
The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of
the non-availability of a person in the Philippines who is competent, able and willing at the time of application to
perform the services for which the alien is desired.
For an enterprise registered in preferred areas of investments, said employment permit may be issued upon
recommendation of the government agency charged with the supervision of said registered enterprise.

 Almodiel v. NLRC
Farle Almodiel claims that he was illegally dismissed by Raytheon Philippines after the company terminated his
services on the basis of redundancy. LA granted his petition for reinstatement but the NLRC only allowed him his
separation pay. He claims that there is bad faith, malice and irregularity on the part of Raytheon. The court found
that prior to his termination, he was notified by the company and was given separation pay which he did not accept.
Furthermore, his allegations that Ang Tan Chai, an alien with no working permit absorbed his position is untenable
given the fact that it is immaterial whether his job was absorbed rendering him jobless because it is the
management’s prerogative. Also, Ang Tan Chai was found to be a resident alien and therefore according to Article
40, LC he does not need a working permit. Petition Dismissed.
b. Conditions for Grant of Permit
Omnibus rules, Book I Part III, Rule II, 1 2 3 (See page 613 of Azucena if Ma’am asks)
1.) Accreditation of foreign principals, employers and projects with no POLO (Philippine Overseas Labor Office)
shall undergo accreditation under POEA
2.) Documentary Requirements for Accreditation to be submitted to the POEA for evaluation. (SPoA,
Employment Contract, Manpower request <position and salary of workers>, Business License, Visa
assurance)
3.) Validity of Accreditation will be valid up to 4 years unless revoked by POEA (grounds: expiration of business
license, written mutual agreement, false documentation, final judgment)

 Pacific Consultants Int’l Asia Inc. v. Schonfeld

Klaus Schonfeld, a Canadian was hired by PCIJ thru PPI as its VP of water and sanitation. He was dismissed and was
not given the money claims he was promised such as the cost of shipment of goods and unpaid salary. LA and NLRC
dismissed his complaint for illegal recruitment on the basis of the employment contract he signed stating that all
disputes between employer and employee should be filed in London, ruling that PCIJ is its employer and PPI is only a
mere subsidiary. Respondent company PCIJ say that it should have been filed in London or Japan where PCIJ is
based and not in the Philippines since its courts did not have jurisdiction.
CA declared that the claim of the respondents of multiple venues of filing actually shows that the venue is not limited
to just one place. Also, CA found that Schonfeld is an employee of PPI and not PCIJ. Schonfeld’s Alien Employment
Permit obtained in the Philippines was obtained by PPI stating that Schofeld is its employee. Also, using the 4 fold
test, it can be proven that Schonfeld is indeed an employee of PPI. SC denied petition and upheld CA decision.
c. Validity of AEP (Alien Employment Regulation) DO- 12 Omnibus R. Rule II 7
d. Revocation/Cancellation, Grounds Rule III.1

3. Development of Human Resources

Art 57-81
Technical Education and Skills Development of Filipino Middle-level Manpower
a. Manpower Development
1.) Definition – Article 44 (a)
Art. 44. Definitions. As used in this Title:
a. "Manpower" shall mean that portion of the nation’s population which has actual or potential capability to
contribute directly to the production of goods and services.
RA 7796 Sec 4 b c e
2.) General Policy – RA 7796, Sec 2
3.) Specific Goals and Objectives – RA 7796, Sec 3
b. Training and Employment of Special Workers – Apprentices and Learners
1.) Policy Objectives – 57
Art. 57. Statement of objectives. This Title aims:
1. To help meet the demand of the economy for trained manpower;
2. To establish a national apprenticeship program through the participation of employers, workers and
government and non-government agencies; and
3. To establish apprenticeship standards for the protection of apprentices.

17
 2.) Definition : RA 7796 Sec 4 j k l m n
Apprentice:
Art. 58. Definition of Terms. As used in this Title:
a. "Apprenticeship" means practical training on the job supplemented by related theoretical instruction.
b. An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual
employer or any of the entities recognized under this Chapter.

– RA 7796 Sec 4 k
Learner:
Art. 73. Learners defined. Learners are persons hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which may be learned through practical training on the job
in a relatively short period of time which shall not exceed three (3) months.

– RA 7796 Sec 4 n
3.) Allowed Employment and When – 60, 74
Art. 60. Employment of apprentices. Only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the Secretary of Labor and Employment. (As
amended by Section 1, Executive Order No. 111, December 24, 1986)
Art. 74. When learners may be hired. Learners may be employed when no experienced workers are
available, the employment of learners is necessary to prevent curtailment of employment opportunities, and the
employment does not create unfair competition in terms of labor costs or impair or lower working standards.
RA 7796 Sec 4 m
4.) Conditions of Employment – 61, 281, 75, 76, 72
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the
legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered
into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The
Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order
No. 111, December 24, 1986)
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
a. The names and addresses of the learners;
b. The duration of the learnership period, which shall not exceed three (3) months;
c. The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the
applicable minimum wage; and
d. A commitment to employ the learners if they so desire, as regular employees upon completion of the
learnership. All learners who have been allowed or suffered to work during the first two (2) months shall be deemed
regular employees if training is terminated by the employer before the end of the stipulated period through no fault
of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his duly
authorized representative.
Art. 76. Learners in piecework. Learners employed in piece or incentive-rate jobs during the training period shall
be paid in full for the work done.
Art. 72. Apprentices without compensation. The Secretary of Labor and Employment may authorize the hiring
of apprentices without compensation whose training on the job is required by the school or training program
curriculum or as requisite for graduation or board examination.

Wage Order No. NCR-14

5.) Enforcement – 65, 66, 67
Art. 65. Investigation of violation of apprenticeship agreement. Upon complaint of any interested person or
upon its own initiative, the appropriate agency of the Department of Labor and Employment or its authorized

18
representative shall investigate any violation of an apprenticeship agreement pursuant to such rules and regulations
as may be prescribed by the Secretary of Labor and Employment.
Art. 66. Appeal to the Secretary of Labor and Employment. The decision of the authorized agency of the
Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of Labor and
Employment within five (5) days from receipt of the decision. The decision of the Secretary of Labor and Employment
shall be final and executory.
Art. 67. Exhaustion of administrative remedies. No person shall institute any action for the enforcement of any
apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all available
administrative remedies.

c. Disabled Persons (Handicapped Workers) – 78-81

Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical or
mental deficiency or injury.

Art. 79. When employable. Handicapped workers may be employed when their employment is necessary to
prevent curtailment of employment opportunities and when it does not create unfair competition in labor
costs or impair or lower working standards.

Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:
1. The names and addresses of the handicapped workers to be employed;
2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%) percent of the
applicable legal minimum wage;
3. The duration of employment period; and
4. The work to be performed by handicapped workers. The employment agreement shall be subject to inspection
by the Secretary of Labor or his duly authorized representative.

Art. 81. Eligibility for apprenticeship. Subject to the appropriate provisions of this Code, handicapped workers
may be hired as apprentices or learners if their handicap is not such as to effectively impede the
performance of job operations in the particular occupations for which they are hired.

Magna Carta for Disabled Persons (RA 7277)

1.) Definition – RA 7277 Sec 4 a b c d
2.) Policy Declaration - RA 7277 Sec 2
3.) Coverage - RA 7277 Sec 3
4.) Rights and Privileges – 81
RA 7277 Sec 4 I 5, 6, 7
 Bernardo v. NLRC
43 deaf mute employees were dismissed by Far East Bank after their contracts with the bank as money counters
were terminated. The employees filed for illegal dismissal. The Bank claimed that they 1. hired them only as an
answer to the Government’s “pakiusap” 2. that it was already their tellers’ job to count the money 3. the workers
were told from the start that they will not be regularized. LA and NLRC dismissed the complaint for lack of merit
The court granted the petition because they noted that RA 7277 was controlling and not Art 80 as used by the LA
and NLRC the workers being considered as QULAIFIED for their jobs. The court held that the an employee is
considered regular because of the nature of the work & the length of the service, not because of the mode or
reasoning for hiring them.
The Petitioners’ contracts (except for 17 of them) were regularly renewed and since they have already completed the
6 moth probationary period, they are entitled to separation pay (cannot reinstate because there is no more job title
of money counters.)
5.) Discrimination – Sec 32, 33 (see pg 8 of RA)
6.) Enforcement – Sec 44-46 (see pg 13 of RA)
4. Conditions of employment
A. Hours of Work
Art 82-90
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined by the

19
Secretary of Labor in appropriate regulations. As used herein, "managerial employees" refer to those whose primary
duty consists of the management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a
day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional
compensation of at least thirty percent
(30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include
resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.

Omnibus Rules, Book III, rule I, IA, II (go to page 663 of Azucena if ma’am asks)

RULE I-A
Hours of Work of Hospital and Clinic Personnel

SECTION 1. General statement on coverage. — This Rule shall apply to:

(a) All hospitals and clinics, including those with a bed capacity of less than one hundred (100) which are situated in
cities or municipalities with a population of one million or more; and

(b) All hospitals and clinics with a bed capacity of at least one hundred (100), irrespective of the size of the
population of the city or municipality where they may be situated.

SECTION 2. Hospitals or clinics within the meaning of this Rule. — The terms "hospitals" and "clinics" as used in this
Rule shall mean a place devoted primarily to the maintenance and operation of facilities for the diagnosis, treatment
and care of individuals suffering from illness, disease, injury, or deformity, or in need of obstetrical or other medical
and nursing care. Either term shall also be construed as any institution, building, or place where there are installed
beds, or cribs, or bassinets for twenty-four (24) hours use or longer by patients in the treatment of disease, injuries,
deformities, or abnormal physical and mental states, maternity cases or sanitorial care; or infirmaries, nurseries,
dispensaries, and such other similar names by which they may be designated.

SECTION 3. Determination of bed capacity and population. — (a) For purposes of determining the applicability of this
Rule, the actual bed capacity of the hospital or clinic at the time of such determination shall be considered,
regardless of the actual or bed occupancy. The bed capacity of hospital or clinic as determined by the Bureau of
Medical Services pursuant to Republic Act No. 4226, otherwise known as the Hospital Licensure Act, shall prima facie
be considered as the actual bed capacity of such hospital or clinic.

(b) The size of the population of the city or municipality shall be determined from the latest official census issued by
the Bureau of the Census and Statistics.

SECTION 4. Personnel covered by this Rule. — This Rule applies to all persons employed by any private or public
hospital or clinic mentioned in Section 1 hereof, and shall include, but not limited to, resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians paramedical technicians, psychologists,
midwives, and attendants.

SECTION 5. Regular working hours. — The regular working hours of any person covered by this Rule shall not be
more than eight (8) hours in any one day nor more than forty (40) hours in any one week.

20
For purposes of this Rule a "day" shall mean a work day of twenty-four (24) consecutive hours beginning at the same
time each calendar year. A "week" shall mean the work of 168 consecutive hours, or seven consecutive 24-hour work
days, beginning at the same hour and on the same calendar day each calendar week.

SECTION 6. Regular working days. — The regular working days of covered employees shall not be more than five
days in a work week. The work week may begin at any hour and on any day, including Saturday or Sunday,
designated by the employer.

Employers are not precluded from changing the time at which the work day or work week begins, provided that the
change is not intended to evade the requirements of this Rule.

SECTION 7. Overtime work. — Where the exigencies of the service so require as determined by the employer, any
employee covered by this Rule may be scheduled to work for more than five (5) days or forty (40) hours a week,
provided that the employee is paid for the overtime work an additional compensation equivalent to his regular wage
plus at least thirty percent (30%) thereof, subject to the provisions of this Book on the payment of additional
compensation for work performed on special and regular holidays and on rest days.

SECTION 8. Hours worked. — In determining the compensable hours of work of hospital and clinic personnel covered
by this Rule, the pertinent provisions of Rule 1 of this Book shall apply.

SECTION 9. Additional compensation. — Hospital and clinic personnel covered by this Rule, with the exception of
those employed by the Government, shall be entitled to an additional compensation for work performed on regular
and special holidays and rest days as provided in this Book. Such employees shall also be entitled to overtime pay for
services rendered in excess of forty hours a week, or in excess of eight hours a day, whichever will yield the higher
additional compensation to the employee in the work week.

SECTION 10. Relation to Rule I. — All provisions of Rule I of this Book which are not inconsistent with this Rule shall
be deemed applicable to hospital and clinic personnel.

1.) Coverage: This rule shall apply to all employees except government, retail, domestic helpers,
managerial employees, field personnel.
2.) Night Shift differential (same as Art 86)

1. Regulation. Rationale-
 Manila Terminal Co. Inc. v. CIR
Manila Terminal Company Inc (MTC) took the arrastre service in some of the piers in Manila for which it hired 30
watchmen on 12 hour shifts. These watchmen are part of the Manila Terminal Relief and Mutual Aid; after organizing
themselves, they asked the Court of Industrial relations for MTC to pay them their overtime shifts. CIR granted their
request. MTC filed a petition for certiorari saying that CIR has no jurisdiction over the case and that in the agreement
for the 12 hour shifts, the overtime pay is already included in the salary and that due to the passage of time, MTRMA
are barred due to laches and estoppel.
According to the court, CIR has jurisdiction over the case. The findings of the court point out that after strict 8 hour
shifts were imposed by MTC in lieu of the 12 hour shifts, the salary was not reduced which proves that overtime pay
was not yet included in the salary. Also, it cannot be said that the watchmen have waived their rights to
compensation due to laches and estoppel for this would be contrary to the 8 hour law which should always be
construed as for the employee (another point: so the contract, being against the law should not be the reason why
the employer should not pay. It is because of its nullity that he should.)

2. Coverage 82, 276

Art. 276. Government employees. The terms and conditions of employment of all government employees,
including employees of government-owned and controlled corporations, shall be governed by the Civil Service
Law, rules and regulations. Their salaries shall be standardized by the National Assembly as provided for in the
New Constitution. However, there shall be no reduction of existing wages, benefits and other terms and
conditions of employment being enjoyed by them at the time of the adoption of this Code.

Book III, Rule I, Sec 1-2 (See page 658 of Azucena)

21
 1. General Statement on Coverage: apply to all employees except to those exempted.
2. Government Employees, Managerial Employees, Officers or members of Managerial Staff, Domestic
Servants, Workers paid by results, Nonagricultural field personnel.

SECTION 2. Exemption. — The provisions of this Rule shall not apply to the following persons if they qualify for
exemption under the conditions set forth herein:

(a) Government employees whether employed by the National Government or any of its political subdivision,
including those employed in government-owned and/or controlled corporations;

(b) Managerial employees, if they meet all of the following conditions:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a
department or sub-division thereof.

(2) They customarily and regularly direct the work of two or more employees therein.

(3) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to
hiring and firing and as to the promotion or any other change of status of other employees, are given particular
weight.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of their employer;

(2) Customarily and regularly exercise discretion and independent judgment; and

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii)
execute, under general supervision, special assignments and tasks; and

(4) Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly
and closely related to the performance of the work described in paragraphs (1), (2) and (3) above.

(d) Domestic servants and persons in the personal service of another if they perform such services in the employer's
home which are usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the
personal comfort, convenience, or safety of the employer as well as the members of his employer's household.

(e) Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or task basis, and
other non-time work if their output rates are in accordance with the standards prescribed under Section 8, Rule VII,
Book Three of these regulations, or where such rates have been fixed by the Secretary of Labor and Employment in
accordance with the aforesaid Section.

(f) Non-agricultural field personnel if they regularly perform their duties away from the principal or branch office or
place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty.

Exemptions
a. Government Employees – 82, 276
Constitution Art IX-B, Section 2. (1) The civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled corporations with original charters.
b. Managerial Employees – 82

22
212 m. "Managerial employee" is one who is vested with the powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use
of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.

Omnibus Rules, Book III, Rule I, Sec 2 (b)(c) (Managerial employees, officers/ members of managerial
staff)
 International Pharmaceuticals Inc. v. NLRC
Virginia Quintia was hired by Int’l Pharmaceuticals (IPI) as its Medical Director for the Research Department which is
still in its experimental stage and because of this, the contract of employment was subject to renewal. Her contract
was renewed and she was given the added task of being the company Physician. In one meeting, she pointed out
the inequality of the interest rates given to low salaried employees which led them to demand full disclosure of the
financials. She was later on dismissed due to the expiration of her contract and Paz Wong replaced her as head. LA
and NLRC found her to be illegally dismissed and held that she was a regular employee not a project employee.
The court was of the same opinion, pointing out that Quinta was continued as the Medical director and was even
given the job of company physician. Although she was not required to report her number of hours at work as a
managerial employee, she performed acts which are necessary and desirable to IPI’s business therefore satisfied the
test of WON a person is a regular employee of the company. Also, the court said that if she was a project employee
and that her contract expired due to the project being terminated, there would be no need to replace her.
IPI is allowed wider discretion in terminating the management personnel and loss of confidence can be alleged;
however, mere allegation is not sufficient, it must be substantiated by evidence because managerial employees are
entitled to security of tenure as well. Separation pay and backwages.
c. Field Personnel – 82
Omnibus Rules, Book III, Rule I, Sec 2 (f) (Non agricultural field personnel)

 Mercidar Fishing Corp v. NLRC

Fermin Agao filed a case against Mercidar for illegal dismissal because when he reported back for work after his sick
leave, the Company refused to give him work nor issue him a certificate of employment after. LA ordered his
reinstatement and NLRC affirmed dismissing Mercidar’s claim that Agao is a “field personnel” and thus not entitled to
service incentive leave pay. Art 82 defined field personnel as the non-agricultural employees who perform their duties
away from principal place of business and are therefore not covered by the Working Conditions and Rest Periods
title. In this case, Agao cannot be considered as a field personnel even though his work is performed away from the
principal place of business or office of Mercidar given the fact that the crew has no choice but to remain on the
vessel and stay under the supervision of the vessel master. Petition dismissed.
 Far East Agricultural Supply, Inc. v. Lebatique
Jimmy Lebatique was hired by Far East as a truck driver to deliver animal feeds. Lebatique complained of
nonpayment of overtime work and was dismissed by the Uy brothers (one as the general manager of far east). LA
found that Lebatique was illegally dismissed. NLRC dismissed Lebatique’s complaint for lack of merit finding him to be
a field personnel. CA reversed the NLRC decision ruling that he was illegally dismissed and that he was not a field
personnel. The court ruled that Far East failed to prove the burden that the termination was for a valid cause and in
fact, the court found, that it was his complaint for non payment of overtime work which prompted his dismissal.
The court also found that he is not a field personnel given that being one does not only concern the location of the
job but also the fact that the employee’s time and performance is not controlled and unsupervised by the employer.
The fact that company drivers are given a specific schedule to deliver goods as well as the instance that drivers are
directed to stay in the company premises during truck ban shows that Lebatique is a regular employee and thus
entitled to the benefit of overtime pay. Petition denied.
d. Dependent Family Members – 82
e. Domestic Helpers – 82, 141, 145
Art. 141. Coverage. This Chapter shall apply to all persons rendering services in households for compensation.
"Domestic or household service" shall mean service in the employer’s home which is usually necessary or desirable
for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the
members of the employer’s household, including services of family drivers.
Art. 145. Assignment to non-household work. No househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-
agricultural workers as prescribed herein.

23
Omnibus Rules, Book III, Rule I, Sec 2 (d) (Domestic servants)
f. Persons in the Personal Service of Another – 82
g. Piece Workers – 82
Omnibus Rules, Book III, Rule I, Sec 2 (e) (Workers who are paid by results)
 Labor Congress vs. NLRC
99 rank and file employees of Empire food products were dismissed due to abandonment of post which led to the
spoiling of the cheese curls. They filed a case of illegal dismissal and underpayment of wages which the LA and the
NLRC dismissed due to the testimonies of the company guard as well as the management and that the employees,
being piece workers or “pakiao workers”, are not entitled to underpayment of wages. Upon appeal by the employees
under the Office of the Solicitor General, it was shown to the court that the LA disregarded the testimonies of the 99
complainants because he was of the perception that he would not be subjected to the rebuke of the NLRC if it were
not for the employees. The court held that even if petitioners are pakiao workers does not imply that they are not
regular employees. Given the fact that they perform necessary operations in the day to day operations of Empire
food, makes them regular employees. Pieceworkers, however, are not entitled to overtime pay if the output rates are
in accordance with Sec 8 Rule VII Book III or fixed rates of the Secretary of Labor (Sec 2(e) Rule I Book III). The
court found however, that Empire Foods did not adhere to the standard in Section 8 nor with the rates of the Sec. of
Labor therefore, they are not exempted from giving overtime pay. Petition granted.
3. Normal Hours of Work – 83
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a
day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day,
for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional
compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital
or clinic personnel.

4. Compensable Hours of Work – In General

Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on duty
or to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to work. Rest
periods of short duration during working hours shall be counted as hours worked.
a. On Duty – 84(a),
Book III, Rule I, Sec 3 (a) (page 659 of Azucena): Hours worked: All time during which an employee is required to
be on duty or to be at the employer’s remises or to be at the prescribed work place and; Sec (4) a: Principles in
determining hours worked: All hours are hours worked which the employee is required to give the employer
regardless of WON such hours are spent in productive labor or involve physical or mental exertion.
b. At Work – 84(a), Book III, Rule I, Sec 3 (b): All time during which an employee is suffered or permitted to
work.
5. Specific Rules
a. Rest Period
i.) Short Duration or coffee break –
- 84 2nd Par
- Book III Rule I Sec 7 2nd Par: Rest periods or coffee breaks running from 5 to 20 minutes shall be
considered as compensable working time.

ii.) More than 20 minutes

- Book III Rule I Sec 4 (b): An employee need not leave the premises of the workplace in order that his rest
period shall not be counted, it being enough that he stops working, may rest completely and may leave his
work place, to go elsewhere, whether within or outside the premises of his workplace.
b. Meal Period
i.) Regular Meal Period (1 hour)
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of
every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.

24
 - Book III, Rule I Section 7 1st paragraph (page 660, Azucena) : Every employer shall give his employees,
regardless of sex, not less than 1 hour time of for regular meals except for (nonmanual labor; not less than
16 hours a day; actual or impending emergencies; work is necessary to prevent loss of perishable goods)
 Philippine Airlines v. NLRC (1999)
Dr. Herminio Fabros a flight surgeon, left the clinic to have his dinner at his residence which was only 5 minutes
away. Manuel Acosta suffered a heart attack and was brought to the clinic at 7:50pm. Fabros reached the clinic at
7:51 when the Nurse Eusebio has already left with Acosta. Acosta died the next day.
Fabros was suspended by PAL because he abandoned his post while on duty because he was obliged to stay in the
company premises for not less than 8 hours. Fabros contested this suspension claiming that he was entitled to a
thirty minute break. LA and NLRC nullified the suspension. The court affirmed their ruling and said that the eight
hour work period does not include the meal break and no where in the law (Art 83, 85) is it stated that employees
must take their meal within the company premises. Suspension is void.
ii.) Shorter Meal Period (Less than 1 hour but not less than 20 minutes)
- Section 7 1st par
c. Waiting Time
- Book III Rule I, Sec 5(a): Waiting time spent by an employee shall be considered as working time if waiting
is an integral part of his work or the employee is required or engaged by the employer to wait.
 Arica v. NLRC
Workers of Standard Philippine Fruits Corporation (Stanfilco) filed a complaint against the company claiming that the
30 minute assembly time is considered as waiting time or work time. LA and NLRC held that an agreement of the
parties includes the long standing practice of non-compensable assembly time. The Minister of Labor, relied on by
the LA and the court held that the 30 minute assembly time was institutionalized by mutual consent of the parties
under Article IV of their collective bargaining agreement and is a deeply-rooted routinary practice of the employees.
Given that their houses are on the farms, they can attend to household chores during the assembly time and are
therefore not subject to the control of the management during this time. The assembly time is primarily for the
employees to indicate their availability or non availability for work during that day. Petition Dismissed.

d. On Call
- Book III, Rule I, Sec 5 (b): An employee who is required to remain on call in the employer’s premises or so
close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered
as working while on call. An employee who is not required to leave word at his home or with company
officials where he may be reached is NOT working while on call.

e. Inactive due to work interruptions

- Book III, Rule I, Sec 4(d): The time during which an employee is inactive by reason of interruptions in his
work beyond his control shall be considered time either if the imminence of the resumption of work requires
the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employees own interest

 University of Pangasinan Faculty Union v. University of Pangasinan.

The University of Pangasinan Union filed a complaint against the university for payment of the Emergency Cost of
Living Allowances or ECOLA for the semestral break as well as for salary increases from 60 percent of the tuition
increase mandated under PD 451 sec 3. The University claims that the principle of “no work no pay” applies to this
case and that the increase in tuition fees is for the increasing operating expenditures, development, student
assistance and ROI of the school. The court held that “no work no pay” does not apply to this case because although
it is a forced leave, they are still tasked with checking papers, grading reports and other tasks during the break. Also,
Section 4d of the Omnibus Rules Implementing the Labor Code provides that “time during which employee is inactive
because of interruptions in his work beyond his control shall be considered as hours worked”. As for the tuition
increase, PD 451 is clear and unambiguous, 60% of the increase should be dedicated to salary increase of the
teachers. Petition granted.
f. Work after normal hours
- Book III Rule I Sec 4 (c): If the work performed was necessary, or it benefited the employer, or the
employee could not abandon his work at the end of his normal working hours because he had no
replacement, all time spent for such work shall be considered as hours worked, if the work was with the
knowledge of his employer or immediate supervisor.
g. Lectures, meetings, trainings
- Book III Rule I Sec. 6: Attendance at lectures, meetings, training programs, and other similar activities shall
not be counted as working time if all of the following conditions are met:

25
 i.) Attendance is outside of the employee’s regular working hours
ii.) Attendance is voluntary
iii.) The employee does not perform any productive work during such attendance.
h. Travel time
 Rada v. NLRC
Hilario Rada was hired as a truck driver for the construction supervision phase of the Manila North Expressway
Extension. Having dismissed after working for 8 years with Philnor Consultants and Planters Inc., Rada filed a case
for illegal dismissal and for overtime pay for picking up and dropping off Philcor’s other employees. LA ordered his
reinstatement and NLRC reversed this decision dismissing Rada’s petition. The court found that Philnor hired the
petitioner as a contractual or project employee as supported by documents which show that Rada was hired and re-
hired during the continually extending duration of the project because of his satisfactory work. His services were
rendered only for a particular project.
The court however, granted the overtime compensation to Rada claiming that the pickup and drop off was primarily
for the benefit of Philnor to delay inefficiencies. Proof of this is that when Rada was absent, another driver replaced
him for the day. If it is not part of Rada’s job, there would be no need to find a replacement. NLRC affirmed except
with respect to overtime pay.
6. Overtime Work/Pay
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid
for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent
(25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent
(30%) thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime
work on any other day. Permission given to the employee to go on leave on some other day of the week shall not
exempt the employer from paying the additional compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work in
any of the following cases:
a. When the country is at war or when any other national or local emergency has been declared by the National
Assembly or the Chief Executive;
b. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an
actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
c. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss
or damage to the employer or some other cause of similar nature;
d. When the work is necessary to prevent loss or damage to perishable goods; and
e. Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the employer. Any employee required to render overtime
work under this Article shall be paid the additional compensation required in this Chapter.
Art. 90. Computation of additional compensation. For purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only,
without deduction on account of facilities provided by the employer.
Book III, Rule I, Secs. 8-11 (see page 660, Azucena) (8: overtime pay: 25%, 9: Premium and Overtime pay
for holiday and rest day work: not less than 30% of his regular wage; 10: Compulsory Overtime work; 11:
Computation: regular wage without deduction of facilities provided by employer.)

a. Overtime in ordinary working day – 87, Book III, Rule I, Secs. 8

b. Emergency or compulsory overtime work -89
c. Undertime work/leave - 88
d. Additional Compensation – 87

7. Night Work –

Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and
six o’clock in the morning.

a. Coverage/ Exclusion – Sec 1 Book III, RULE II Night Shift Differential

26
SECTION 1. Coverage. — This Rule shall apply to all employees except: (a) Those of the government and any of its
political subdivisions, including government-owned and/or controlled corporations; (b) Those of retail and service
establishments regularly employing not more than five (5) workers; (c) Domestic helpers and persons in the
personal service of another; (d) Managerial employees as defined in Book Three of this Code; (e) Field personnel
and other employees whose time and performance is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing
work irrespective of the time consumed in the performance thereof.

SECTION 2. Night shift differential. — An employee shall be paid night shift differential of no less than ten per cent
(10%) of his regular wage for each hour of work performed between ten o'clock in the evening and six o'clock in the
morning.

SECTION 3. Additional compensation. — Where an employee is permitted or suffered to work on the period covered
after his work schedule, he shall be entitled to his regular wage plus at least twenty-five per cent (25%) and an
additional amount of no less than ten per cent (10%) of such overtime rate for each hour or work performed
between 10 p.m. to 6 a.m.

SECTION 4. Additional compensation on scheduled rest day/special holiday. — An employee who is required or
permitted to work on the period covered during rest days and/or special holidays not falling on regular holidays, shall
be paid a compensation equivalent to his regular wage plus at least thirty (30%) per cent and an additional amount
of not less than ten (10%) per cent of such premium pay rate for each hour of work performed.

SECTION 5. Additional compensation on regular holidays. — For work on the period covered during regular holidays,
an employee shall be entitled to his regular wage during these days plus an additional compensation of no less than
ten (10%) per cent of such premium rate for each hour of work performed.

SECTION 6. Relation to agreements. — Nothing in this Rule shall justify an employer in withdrawing or reducing any
benefits, supplements or payments as provided in existing individual or collective agreements or employer practice or
policy.

SECTION 1. General statement on coverage. — The provisions of this Rule shall apply to all employees in all
establishments and undertakings, whether operated for profit or not, except to those specifically exempted under
Section 2 hereof.

b. Additional Compensation
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent
(10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the
morning.

- Rule II, Sec 2 3 4 5

 Shell Oil Co. of the Philippines, Ltd. v. National Labor Union
Acting on a request by the National Labor Union, The industrial relations court rendered a decision allowing a 50% in
salary for the night shift workers of Shell Oil Company. Shell Oil had to hire workers for night shifts because the
plane from abroad often land an take off at night and chores such as supplying gasoline, lubricants and other duties
are needed to be performed. Shell invokes Commonwealth Act 444 which does not provide that night work is
considered overtime work but rather provides that it is when work goes over 8 hours a day that compensation is
required and that also, CIR has no jurisdiction.
The petitioner employees on the other hand contend that it is Commonwealth Act No. 103 that is in force. 103
stipulates that differences arising from wages, compensation, hours of work or conditions of employment are taken
cognizance by the Court of Industrial relations.
The court concludes that CA 444 pertains only to wages or compensation during the day of Sunday and holidays and
goes on a lengthy discussion about the effects of night work. They say that there are injurious effects of permanently
remote nightwork manifested in the later years of the employee’s life. The worker’s social life is also disarranged,
including the recreational activities of his leisure hours and family relations. From on economic point of view,
nightwork has an adverse effect on efficiency and output. There is also a moral argument in the case of women
working out late.
“Night was made for rest and sleep and not for work”

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 B. Weekly Rest Periods
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest
period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining
agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the
employer shall respect the preference of employees as to their weekly rest day when such preference is based on
religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his employees to work on
any day:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety;
b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which
the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable
injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and
Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no regular rest days
can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage
for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of
the regular wage of the employee. Where such holiday work falls on the employee’s scheduled rest day, he shall be
entitled to an additional compensation of at least fifty per cent (50%) of his regular wage.
d. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this Article, the employer shall pay such higher rate.

Book III RULE III: Weekly Rest Periods

SECTION 1. General statement on coverage. — This Rule shall apply to all employers whether operating for profit or
not, including public utilities operated by private persons.

SECTION 2. Business on Sundays/Holidays. — All establishments and enterprises may operate or open for business
on Sundays and holidays provided that the employees are given the weekly rest day and the benefits as provided in
this Rule.

SECTION 3. Weekly rest day. — Every employer shall give his employees a rest period of not less than twenty-four
(24) consecutive hours after every six consecutive normal work days.

SECTION 4. Preference of employee. — The preference of the employee as to his weekly day of rest shall be
respected by the employer if the same is based on religious grounds. The employee shall make known his preference
to the employer in writing at least seven (7) days before the desired effectivity of the initial rest day so preferred.
Where, however, the choice of the employee as to his rest day based on religious grounds will inevitably result in
serious prejudice or obstruction to the operations of the undertaking and the employer cannot normally be expected
to resort to other remedial measures, the employer may so schedule the weekly rest day of his choice for at least
two (2) days in a month.

28
SECTION 5. Schedule of rest day. — (a) Where the weekly rest is given to all employees simultaneously, the
employer shall make known such rest period by means of a written notice posted conspicuously in the work place at
least one week before it becomes effective.

(b) Where the rest period is not granted to all employees simultaneously and collectively, the employer shall make
known to the employees their respective schedules of weekly rest through written notices posted conspicuously in
the work place at least one week before they become effective.

SECTION 6. When work on rest day authorized. — An employer may require any of his employees to work on his
scheduled rest day for the duration of the following emergencies and exceptional conditions:

(a) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity, to prevent loss of life or property, or in cases of force majeure or imminent
danger to public safety;

(b) In case of urgent work to be performed on machineries, equipment or installations to avoid serious loss which the
employer would otherwise suffer;

(c) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be
expected to resort to other measures;

(d) To prevent serious loss of perishable goods;

(e) Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week
or more, as in the case of the crew members of a vessel to complete a voyage and in other similar cases; and

(f) When the work is necessary to avail of favorable weather or environmental conditions where performance or
quality of work is dependent thereon.

No employee shall be required against his will to work on his scheduled rest day except under circumstances
provided in this Section: Provided, However, that where an employee volunteers to work on his rest day under other
circumstances, he shall express such desire in writing, subject to the provisions of Section 7 hereof regarding
additional compensation.

SECTION 7. Compensation on rest day/Sunday/holiday. — (a) Except those employees referred to under Section 2,
Rule I, Book Three, an employee who is made or permitted to work on his scheduled rest day shall be paid with an
additional compensation of at least 30% of his regular wage. An employee shall be entitled to such additional
compensation for work performed on a Sunday only when it is his established rest day.

(b) Where the nature of the work of the employee is such that he has no regular work days and no regular rest days
can be scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work
performed on Sundays and holidays.

(c) Work performed on any special holiday shall be paid with an additional compensation of at least 30% of the
regular wage of the employees. Where such holiday work falls on the employee's scheduled rest day, he shall be
entitled to additional compensation of at least 50% of his regular wage.

(d) The payment of additional compensation for work performed on regular holiday shall be governed by Rule IV,
Book Three, of these regulations.

(e) Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this Section, the employer shall pay such higher rate.

29
SECTION 8. Paid-off days. — Nothing in this Rule shall justify an employer in reducing the compensation of his
employees for the unworked Sundays, holidays, or other rest days which are considered paid-off days or holidays by
agreement or practice subsisting upon the effectivity of the Code.

SECTION 9. Relation to agreements. — Nothing herein shall prevent the employer and his employees or their
representatives in entering into any agreement with terms more favorable to the employees than those provided
herein, or be used to diminish any benefit granted to the employees under existing laws, agreements, and voluntary
employer practices.
 Caltex Regular Employees, etc. vs. Caltex (Phils.) Inc. and NLRC
Caltex Regular Employees Association called Caltex’s attention to the non payment of night shift differential and
overtime pay for work performed during a Saturday as stipulated in their collective bargaining agreement. After
promises by the company, the workers were paid excluding the first 2 ½ hours of Saturday. The Union filed a
complaint of unfair labor practice against Caltex because in effect they were paying regular rates during Saturdays
which was supposed to be a day of rest or “day off”. Caltex claimed that Saturday was never designated as a day of
rest in their CBA.
LA ruled for the Union and this decision was set aside by NLRC for lack of evidence. The court is not asked to
interpret Article III and Annex B of the CBA which provides that “Caltex agreed to pay ‘day of rest’ rates for work
performed on ‘an employees day of rest’ ” The Union mistakenly interpreted Annex B, which was intended only as a
guide, to appropriate Saturday as a day of rest. The decision of the labor arbiter therefore was based on mere
allegation by the Union.
The court held that Saturday is not a day off. Extra compensation applies only when the worker is made to work for
an excess of 40 hours per calendar week. (Union was unable to show grave abuse of discretion in the part of NLRC.)
Petition Dismissed.
1. Coverage
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial employees, field personnel, members of the
family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. As
used herein, "managerial employees" refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof, and to other officers or
members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty.
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest
period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining
agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the
employer shall respect the preference of employees as to their weekly rest day when such preference is based on
religious grounds.

Book III RULE III Weekly Rest Periods SECTION 1. General statement on coverage. — This Rule shall apply to all
employers whether operating for profit or not, including public utilities operated by private persons.

2. Determination, Compulsory work, Compensation

WEEKLY REST PERIODS
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest
period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining
agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the
employer shall respect the preference of employees as to their weekly rest day when such preference is based on
religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his employees to work on
any day:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety;

30
b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which
the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable
injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and
Employment.

 Manila Electric Company v. Public Utilities Employees Association

Manila Electric, the petitioner, assails the decision of the CIR that they should grant 1 day vacation with pay to every
workingman who had worked for 7 consecutive days including Sundays and that because Sundays and holidays are
for rest, the CIR interposed a 50% increase in pay for work during these times.
Manila Electric contends that the decision is against the provision of Sec 4 Commonwealth Act 444 which provides
that the prohibition shall not apply to public utilities performing some public service such a supplying gas, electricity,
power, water or providing means of transportation or communication
The court held that the decision of the CIR is erroneous and contrary to CA 444 because appellant is a public utility
which supplies electricity and is therefore obviously exempted from the prohibition. They may compel workers to
work on Sunday without extra compensation because public utilities are exempted from the prohibition given that
they are required to perform a continuous service including Sundays.
The purpose of the Rule (CA 444) is to restrict the power of the CIR given in Act 103, to fix the minimum additional
compensation and to exempt public utilities affected with public interest from payment of compensation. The rling of
the CIR is therefore contrary to law.

3. Premium Pay
Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no regular rest days
can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage
for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of
the regular wage of the employee. Where such holiday work falls on the employee’s scheduled rest day, he shall be
entitled to an additional compensation of at least fifty per cent (50%) of his regular wage.

4. CBA on higher premium pay

d. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this Article, the employer shall pay such higher rate.

C. Holidays
[ REPUBLIC ACT NO. 9492 ] amending EO 203

AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26,
CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE ADMINISTRATIVE
CODE OF 1987.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 26, Chapter 7, Book I of Executive Order No. 292, as amended, otherwise known as the
Administrative Code of 1987, is hereby amended to read as follows:

“Sec. 26, Regular Holidays and Nationwide Special Days. – (1) Unless otherwise modified by law, and or
proclamation, the following regular holidays and special days shall be observed in the country:

a) Regular Holidays

31
 New year’s Day - January 1
Maundy Thursday - Movable date
Good Friday - Movable date
Eidul Fitr - Movable date
Araw ng Kagitingan - Monday nearest April 9
(Bataaan and Corregidor Day)
Labor Day - Monday nearest May 1
Independence Day - Monday nearest June 12
National Heroes Day - Last Monday of August
Bonifacio Day - Monday nearest November 30
Christmas Day - December 25
Rizal Day - Monday nearest December 30

b) Nationwide Special Holidays:

Ninoy Aquino Day - Monday nearest August 21

All Saints Day - November 1
Last Day of the Year - December 31

c) In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of the week. If
the holiday falls on a Sunday, the holiday will be observed on the Monday that follows:

Provided, That for movable holidays, the President shall issue a proclamation, at least six months
prior to the holiday concerned, the specific date that shall be declared as a nonworking day:

Provided, however, The Eidul Adha shall be celebrated as a regional holiday in the Autonomous
Region in Muslim Mindanao.”

SEC. 2. All laws, orders, presidential issuances, rules and regulations or part thereof inconsistent with this
Act are hereby repealed or modified accordingly.

SEC. 3. This Act shall take effect after fifteen (15) days following its publication in at least two newspapers
of general circulation.

PD 1083 (Code of Muslim Personal Laws)

1. Coverage/ Exclusions
Art. 94. Right to holiday pay.
a. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

Book III RULE IV Holidays with Pay

SECTION 1. Coverage. — This rule shall apply to all employees except:

(a) Those of the government and any of the political subdivision, including government-owned and controlled
corporation;

(b) Those of retail and service establishments regularly employing less than ten (10) workers;

(c) Domestic helpers and persons in the personal service of another;

(d) Managerial employees as defined in Book Three of the Code;

(e) Field personnel and other employees whose time and performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof.

32
Definition
a. Retail Establishment: Rules Implementing RA 6727 par f
RULES IMPLEMENTING REPUBLIC ACT NO. 6727. Pursuant to the authority granted to the Secretary of Labor
and Employment under Section 13 of Republic Act No. 6727, otherwise known as the Wage Rationalization Act, the
following rules are hereby issued for guidance and compliance by all concerned:

Pursuant to the authority granted to the Secretary of Labor and Employment under Section 13 of Republic Act No.
6727, otherwise known as the Wage Rationalization Act, the following rules are hereby issued for guidance and
compliance by all concerned:

Definition of Terms. As used in this Rules -

f."Retail Establishment" is one principally engaged in the sale of goods to end-users for personal or household
use;

b. Service Establishment: par g

g."Service Establishment" is one principally engaged in the sale of service to individuals for their own or household
use and is generally recognized as such;
 Mantrade/FMMC Division Employees and Workers Union v. Arbitator Bacungan and
Mantrade Corp

Mantrade Union questions the validity of Art 94 of the LC providing holiday pay. The respondent Corporation says
that the petitioner is barred from pursuing the present action regarding the holiday pay because it was already held
that any stipulation of the arbitrator’s award shall be final and executory under Art 2044, CC. Respondent Arbitrator
stated that although monthly salaried employees are not among those excluded in Art 94 of the LC, Sec 2 Rule IV
Book III of the omnibus rules provides otherwise (SECTION 2. Status of employees paid by the month. — Employees
who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less
than the statutory or established minimum wage shall be paid for all days in the month whether worked or not. For
this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days
divided by twelve.)

The court held that In Insular Bank of Asia v. Inciong, the Section was considered void because it AMENDED the
provision of holiday pay by including monthly paid employees thus enlarging the scope. It is clear in Art 94, LC that
monthly paid employees are not excluded from the benefits of holiday pay.

Chartered Bank Employees Association v. Ople also reiterated this ruling. Therefore, the court concluded that it is the
legal duty of the Corporation to grant the holiday pay. The decision of the Arbitrator is set aside.

2. Holiday Pay
Art. 94. Right to holiday pay. b. The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate; and

a. Faculty in Private School Book III Rule IV SECTION 8. Holiday pay of certain employees. — (a) Private
school teachers, including faculty members of colleges and universities, may not be paid for the regular
holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas
vacation;

(b) Where a covered employee, is paid by results or output, such as payment on piece work, his holiday pay shall not
be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday;
Provided, However, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.

(c) Seasonal workers may not be paid the required holiday pay during off-season when they are not at work.

(d) Workers who have no regular working days shall be entitled to the benefits provided in this Rule.

33
  Jose Rizal College v. NLRC
The National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty of Jose Rizal College, filed a
complaint with the Ministry of Labor for non-payment of holiday pay. The issue in the case is WON school faculty
whoa re aid per lecture per hour are entitled to holiday pay. Petitioner maintains that it is not covered by Book V of
the LC and that its hourly paid employees are paid on a contact basis.
The Solicitor General Argued that holiday pay applies to all employees except those in retail/ service establishments
because the purpose of holiday pay is to prevent diminution of the monthly income of the workers on account of
work interruptions; although the worker is forced to take a rest, he should earn what he should earn. Under Art
94,LC and Rule IV Book III Section A, although JRC is a non-profit institution, it is under the obligation to give pay
even on unworked regular holidays to the hourly paid faculty members because of the purpose of the holiday pay as
stated earlier.
The court held that for the hourly paid teachers, it is already understood that when they entered their contracts, they
should not expect payment for the “no class days” or the regular holidays. For Special Public holidays, the regular
class day is cancelled and the hourly paid teacher does not earn what he should earn that day. Therefore, for special
holidays, the petitioner should pay their hourly paid teachers.

SECTION 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty members of colleges
and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid
for the regular holidays during Christmas vacation; (b) Where a covered employee, is paid by results or output, such
as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7)
actual working days preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less
than the applicable statutory minimum wage rate. (c) Seasonal workers may not be paid the required holiday pay
during off-season when they are not at work. (d) Workers who have no regular working days shall be entitled to the
benefits provided in this Rule.
b. Divisor as Factor
 Trans-Asia Phil Employees Association (TAPEA)v. NLRC
TAPEA entered into a Collective Bargaining Agreement with their employer with the stipulation that on a legal
holiday, the employee is entitled to 200% of the regular daily wage and a 60% premium pay. Due to non-compliance
of their employer, TAPEA filed a complaint for the non inclusion of the holiday pays in their monthly pay. They
showed the Employee’s manual, the appointment papers of their employer as well as the CBA itself as proof that
their employer does not include their holiday pay in their monthly salary. TransAsia contended that these do not
prove their non-payment of holiday pay stating that they have used the 286 divisor in computing for the employee’s
overtime pay which is based on RA 6640 where 262 is used instead of 286. (52 weeks/yr x 44 hours per week ÷ 8
work hours per day = 286); (262 + 26 working Saturdays of employees = 286, their divisor). The LA dismissed the
complaint and was affirmed by the NLRC. Thus this petition. The court held that the use of 286 clearly shows the
inclusion of the employee’s benefits and deductions in Trans-Asia’s computation. The court upheld the decision of the
NLRC with the slight modification of changing the divisor to 287 to include the regular and special holidays as set in
EO 203.
c. Sunday: Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no regular rest days
can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage
for work performed on Sundays and holidays.

Book III Rule III SECTION 2. Business on Sundays/Holidays. — All establishments and enterprises may operate or
open for business on Sundays and holidays provided that the employees are given the weekly rest day and the
benefits as provided in this Rule.

SECTION 9. Regular holiday falling on rest days or Sundays. — (a) A regular holiday falling on the employee's rest
day shall be compensated accordingly. (b) Where a regular holiday falls on a Sunday, the following day shall be
considered a special holiday for purposes of the Labor Code, unless said day is also a regular holiday.

 Wellington Investment Inc. v. Trajano

34
A routine inspection by the Labor enforcement officer held that Wellington flour wills did not pay regular holidays
falling on Sunday for monthly paid employees. The petitioner raised the issue of WON a monthly paid employee
receiving a fixed monthly compensation is entitled to additional pay aside from his usual holiday pay whenever a
regular holiday pay falls on a Sunday. The petitioner contends that it uses the 314 factor and that it undeniably
covers and already includes payment for all the working days of the month including the 10 unworked regular
holidays. On a motion for reconsideration, the Undersecretary affirmed the order of the regional director finding the
divisor of Wellington does not reflect the actual working days in a year.
The court held that Wellington was paying the holiday pay according to Art 94 of LC. That at the time of inspection,
wellington was already paying its employees a salary not less than the statutory or established minimum wage. The
314 facor simply deducts the 51 Sundays from the 365 days per year to determine the monthly salary which in effect
leaves no day unaccounted for during the 365 day year. To uphold the ruling of the undersecretary that the 317
factor should be used in the year of 1988 (because of the regular holidays falling on a Sunday that year) would make
it a year of 368 days. The public respondents have acted beyond their authority in using the power to order and
administer given to the Regional director under Sec 2 Rule X Book III. Undersecretary and Regional Director’s orders
are nullified.

d. Muslim Holiday
PD 1083 169-172

Article 169. Official Muslim holidays. The following are hereby recognized as legal Muslim holidays:

(a) 'Amun Jadid (New Year), which falls on the first day of the first lunar month of Muharram;

(b) Maulid-un-Nabi (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar
month of Rabi-ul-Awwal;

(c) Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the
twenty-seventh day of the seventh lunar month of Rajab;

(d) 'Id-ul-Fitr (Hari Raya Pausa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and

(e) 'Id-ul-Adha (Hari Raja Haji), which falls on the tenth day of the twelfth lunar month of Dhu 1-Hijja.

Article 170. Provinces and cities where officially observed.

(1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte and Zamboanga del
Sur, and in the Cities of Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim
provinces and cities as may hereafter be created.

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in
other provinces and cities.

Article 171. Dates of observance. The dates of Muslim holidays shall be determined by the Office of the President of
the Philippines in accordance with the Muslim Lunar Calendar (Hijra).

Article 172. Observance of Muslim employees.

(1) All Muslim government officials and employees in places other than those enumerated under Article 170
shall also be excused from reporting to office in order that they may be able to observe Muslim holidays.

(2) The President of the Philippines may, by proclamation, require private offices, agencies or
establishments to excuse their Muslim employees from reporting for work during a Muslim holiday without
reduction in their usual compensation.

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  SMC v. CA
The Department of Labor and Employment conducted a routine inspection in San Miguel, Iligan finding that there
was underpayment by SMC of regular Muslim Holiday pay to its employees. Director of DOLE issue a compliance
order from which SMC filed an appeal. SMC’s appeal was dismissed. CA ruled that SMC should pay muslim holiday
(150% of basic salary) thus this petition for certiorari.
The court upheld the decision of the CA citing PD 1083 (Sec 169-170) and 94, LC. Petitioner asserts that the
provisions of PD 1083 (Art 3(3) of the PD) should be applicable only to muslims. The court held however, that there
should be no distinction between muslims and non-m as regard the payment of benefits. (Only if ma’am asks: Given
Art 128 of the LC as amended by RA 7730, Regional director Macaraya’s issuing of the compliance order is within his
power) The petition is dismissed.
3. Absences
Book III Rule IV SECTION 6. Absences. — (a) All covered employees shall be entitled to the benefit provided herein
when they are on leave of absence with pay. Employees who are on leave of absence without pay on the day
immediately preceding a regular holiday may not be paid the required holiday pay if he has not worked on such
regular holiday.

(b) Employees shall grant the same percentage of the holiday pay as the benefit granted by competent authority in
the form of employee's compensation or social security payment, whichever is higher, if they are not reporting for
work while on such benefits.

(c) Where the day immediately preceding the holiday is a non-working day in the establishment or the scheduled rest
day of the employee, he shall not be deemed to be on leave of absence on that day, in which case he shall be
entitled to the holiday pay if he worked on the day immediately preceding the non-working day or rest day.

SECTION 10. Successive regular holidays. — Where there are two (2) successive regular holidays, like Holy Thursday
and Good Friday, an employee may not be paid for both holidays if he absents himself from work on the day
immediately preceding the first holiday, unless he works on the first holiday, in which case he is entitled to his
holiday pay on the second holiday.

4. Non-Working day/Schedule. Rest Day. Section 6 c

Book III Rule IV SECTION 6. Absences. — (c) Where the day immediately preceding the holiday is a non-working day
in the establishment or the scheduled rest day of the employee, he shall not be deemed to be on leave of absence
on that day, in which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the
non-working day or rest day.

D. Service Incentive Leave Book III RULE V Service Incentive Leave

SECTION 1. Coverage. — This rule shall apply to all employees except:

(a) Those of the government and any of its political subdivisions, including government-owned and
controlled corporations;

(b) Domestic helpers and persons in the personal service of another;

(c) Managerial employees as defined in Book Three of this Code;

(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof;

(e) Those who are already enjoying the benefit herein provided;

(f) Those enjoying vacation leave with pay of at least five days; and

36
 (g) Those employed in establishments regularly employing less than ten employees.

SECTION 2. Right to service incentive leave. — Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.

SECTION 3. Definition of certain terms. — The term "at least one-year service" shall mean service for not less than
12 months, whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contract is less than 12 months, in which case said period shall be
considered as one year.

SECTION 4. Accrual of benefit. — Entitlement to the benefit provided in this Rule shall start December 16, 1975, the
date the amendatory provision of the Code took effect.

SECTION 5. Treatment of benefit. — The service incentive leave shall be commutable to its money equivalent if not
used or exhausted at the end of the year.

SECTION 6. Relation to agreements. — Nothing in the Rule shall justify an employer from withdrawing or reducing
any benefits, supplements or payments as provided in existing individual or collective agreements or employer's
practices or policies.

1. Coverage
Art. 95. Right to service incentive leave.
a. Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave
of five days with pay.
b. This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying
vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten
employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after
considering the viability or financial condition of such establishment.
c. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or
administrative action.

 Makati Haberdashery Inc. v. NLRC

Respondents have been working for Makati Haberdashery as tailors, seamstress, basters and plantsadoras. They are
paid on a piece rate basis and are given a daily allowance of 3 pesos to report for work before 9:30 am everyday.
They are required to work from Monday to Saturday and even Sundays on peak periods. The workers filed a
complaint for underpayment, nonpayment of overtime work, non payment of service incentive pay.
During the pendency of the case, respondent Pelobello left a jusi barong tagalog with Zapata who admitted he as
copying the design. A memorandum was issued to each of them which they did not reply to, instead, they did not
report for work and thus they were dismissed by petitioners. LA found respondents to have violated cost of living
allowance, service incentive leave pay and 13th month. This was affirmed by NLRC. Thus this petition.
The court found that the petitioners were the employers of the respondents using the four fold test and the
memorandum as the court’s basis. They also found that the Respondents are entitled to the minimum wage, COLA
and 13th month pay but they are NOT entitled to service incentive leave pay because as piece-rate workers, they are
being paid at a fixed amount irrespective of the time consumed. They fall under the exceptions in Book III Rule V
1(d).
Also, their blatant disregard of their employer’s memorandum is an open defiance to their lawful orders. It should not
be assumed that every labor dispute would be decided in favor of labor. Haberdashery had lawful ground in
terminating them.
Decision of NLRC modified. Complaint for illegal dismissal dismissed.
 Labor Congress v. NLRC supra
99 rank and file employees of Empire food products were dismissed due to abandonment of post which led to the
spoiling of the cheese curls. They filed a case of illegal dismissal and underpayment of wages which the LA and the
NLRC dismissed due to the testimonies of the company guard as well as the management and that the employees,
being piece workers or “pakiao workers”, are not entitled to underpayment of wages. Upon appeal by the employees
under the Office of the Solicitor General, it was shown to the court that the LA disregarded the testimonies of the 99
complainants because he was of the perception that he would not be subjected to the rebuke of the NLRC if it were

37
not for the employees. The court held that even if petitioners are pakiao workers does not imply that they are not
regular employees. Given the fact that they perform necessary operations in the day to day operations of Empire
food, makes them regular employees. Pieceworkers, however, are not entitled to overtime pay if the output rates are
in accordance with Sec 8 Rule VII Book III or fixed rates of the Secretary of Labor (Sec 2(e) Rule I Book III). The
court found however, that Empire Foods did not adhere to the standard in Section 8 nor with the rates of the Sec. of
Labor therefore, they are not exempted from giving overtime pay. Petition granted.
Section 1 (e), Rule II, Sec. 1(e) Rule IV and Sec. 1(d), Rule V of Book II
“The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay,
holiday pay, service incentive leave and 13th month pay, inter alia, “field personnel and other employees whose time
and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof.” Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned
earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did
petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further,
in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being
entitled to holiday pay.”

2. Requirements
E. Paternity Leave
RA 8187, Sec 1-6 AND implementing guidelines
1. Coverage
2. Requirements
3. Employment- related rights and benefits
F. Parental Leave
RA 8972 (Solo Parent’s Welfare Act of 2000)
1. Coverage
2. Requirements
3. Employment- related rights and benefits
G. Victim’s Leave
RA 9262 Sec 43 March 08, 2004 AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR
CHILDREN, PROVIDING FOR PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING PENALTIES
THEREFORE, AND FOR OTHER PURPOSES

SECTION 43. Entitled to Leave. – Victims under this Act shall be entitled to take a paid leave of absence up to ten
(10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations, extendible
when the necessity arises as specified in the protection order.

Any employer who shall prejudice the right of the person under this section shall be penalized in accordance with the
provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an employer who shall prejudice any
person for assisting a co-employee who is a victim under this Act shall likewise be liable for discrimination.

Implementing Rules Section 42. Ten-day paid leave in addition to other leave benefits. - At any time during the
application of any protection order, investigation, prosecution and/or trial of the criminal case, a victim of VAWC who
is employed shall be entitled to a paid leave of up to ten (10) days in addition to other paid leaves under the Labor
Code and Civil Service Rules and Regulations and other existing laws and company policies, extendible when the
necessity arises as specified in the protection order. The Punong Barangay/kagawad or prosecutor or the Clerk of
Court, as the case may be, shall issue a certification at no cost to the woman that such an action is pending, and this
is all that is required for the employer to comply with the 10-day paid leave. For government employees, in addition
to the aforementioned certification, the employee concerned must file an application for leave citing as basis R.A.
9262. The administrative enforcement of this leave entitlement shall be considered within the jurisdiction of the
Regional Director of the DOLE under Article 129 of the Labor Code of the Philippines, as amended, for employees in
the private sector, and the Civil Service Commission, for government employees.

The availment of the ten day-leave shall be at the option of the woman employee, which shall cover the days that
she has to attend to medical and legal concerns. Leaves not availed of are noncumulative and not convertible to
cash.

38
The employer/agency head who denies the application for leave, and who shall prejudice the victim-survivor or any
person for assisting a co-employee who is a victim-survivor under the Act shall be held liable for discrimination and
violation of R.A 9262.

The provision of the Labor Code and the Civil Service Rules and Regulations shall govern the penalty to be imposed
on the said employer/agency head.

H. Service Charges –
Art. 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be
distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for
management. The share of the employees shall be equally distributed among them. In case the service charge is
abolished, the share of the covered employees shall be considered integrated in their wages.

Book III Rule VI Service Charges

SECTION 1. Coverage. — This rule shall apply only to establishments collecting service charges such as hotels,
restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses, and
similar enterprises, including those entities operating primarily as private subsidiaries of the Government.

SECTION 2. Employees covered. — This rule shall apply to all employees of covered employers, regardless of their
positions, designations or employment status, and irrespective of the method by which their wages are paid except
to managerial employees.

As used herein, a "managerial employee" shall mean one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees or to effectively recommend such managerial actions. All employees not falling within this definition shall
be considered rank-and-file employees.

SECTION 3. Distribution of service charges. — All service charges collected by covered employers shall be distributed
at the rate of 85% for the employees and 15% for the management. The 85% shall be distributed equally among the
covered employees. The 15% shall be for the disposition by management to answer for losses and breakages and
distribution to managerial employees at the discretion of the management in the latter case.

SECTION 4. Frequency of distribution. — The shares referred to herein shall be distributed and paid to the employees
not less than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.

SECTION 5. Integration of service charges. — In case the service charges is abolished the share of covered
employees shall be considered integrated in their wages. The basis of the amount to be integrated shall be the
average monthly share of each employee for the past twelve (12) months immediately preceding the abolition of
withdrawal of such charges.

SECTION 6. Relation to agreements. — Nothing in this Rule shall prevent the employer and his employees from
entering into any agreement with terms more favorable to the employees than those provided herein, or be used to
diminish any benefit granted to the employees under existing laws, agreement and voluntary employer practice.

SECTION 7. This rule shall be without prejudice to existing, future collective bargaining agreements.

Nothing in this rule shall be construed to justify the reduction or diminution of any benefit being enjoyed by any
employee at the time of effectivity of this rule.

1. Covered Employees - 96
2. Sharing - 96
5. Minimum Wages and Wage Fixing Machinery
97-119, Omnibus Rules Book III Rules VII-VIII
A. Minimum Wages – 99

39
Art. 99. Regional minimum wages. The minimum wage rates for agricultural and nonagricultural employees and
workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and
Productivity Boards. (As amended by Section 3, Republic Act No. 6727, June 9, 1989).

1987 Constitution, ARTICLE XIII – LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers
to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to
strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may
be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace. The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.

1. General Principles
a. No work, no pay OR A fair day’s wage for a fair day’s labor
 Atok Big Wedge Mining Co. Inc. v. Atok Big Wedge Mutual Benefit Association
A demand was sent to Atok Big Wedge Mining Corp by the Officers of the company’s union which the CIR fixed the
wage at P3.20 declaring that additional compensation representing efficiency bonus should not be included as part of
the wage.
The court ruled ruling that P2.58 as provided by RA 602 is only the minimum amount needed by the laborer and his
family AND that a person’s needs increase as his means increase. That the law guarantees the laborer a fair and just
wage therefore the minimum must be fair and just. The extra amount of P0.22 a day is not excessive for the purpose
of improving the worker’s mode of living.
As for the efficiency bonus, it should not be part of the minimum wage the same as living quarters because the
bonus is given when actual work accomplished is efficient and is paid as a prize, therefore not part of the wage.
Petition dismissed.
 Aklan Electric Corp., Inc. v. NLRC
The main office in Lezo. Aklan, was, BY RESOLUTION, temporarily moved to Kalibo Aklan because it was dangerous
to hold office at Lezo during the time. Despite the resolution, a majority of the workers continued to report at Lezo
and were not paid their wages. When it was safe the work at Lezo again, the workers and the office were removed
from Kalibo. Herein complainants however, reported for work at Lezo and were not paid their salaries from Apr to
May 1993. Complainant and 163 other workers submitted a complaint for non-payment of wages. LA dismissed
complaint. NLRC reversed the decision of the LA and ordered AEC to pay wages. The petitioner assailed the decision
in this petition for certiorari saying that NLRC committed grave abuse of discretion when it reversed the findings of
the LA that the workers refused to work under the lawful orders of AEO’s management and therefore, they are not
covered by the “no work, no pay” claim for unpaid wages.
The court found that the letter of the exchange of letters between Leyson (one of the complainants) and Mationg
(the general manager), as well as the computation used as basis for the request of the unpaid wages are self serving
and that the temporary resolution of AEO should be given credence. “If there is no work performed by the employee
there can be no wage pay unless the laborer was able willing and ready to work but was ILLEGALLY locked out,
suspended or dismissed.” In this case, the company legally transferred it business to Kalibo without prejudice to its
workers. NLRC decision reversed.

b. Equal pay for work of equal value – 135, 248

Art. 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against any woman
employee with respect to terms and conditions of employment solely on account of her sex.
The following are acts of discrimination:
a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a
female employees as against a male employee, for work of equal value; and
b. Favoring a male employee over a female employee with respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes. Criminal liability for the willful commission of any unlawful act as
provided in this Article or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be
penalized as

40
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this
provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for money claims,
which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall proceed
independently of each other. (As amended by Republic Act No. 6725, May 12, 1989)
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice:
a. To interfere with, restrain or coerce employees in the exercise of their right to selforganization;
b. To require as a condition of employment that a person or an employee shall not join a labor organization or shall
withdraw from one to which he belongs;
c. To contract out services or functions being performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to selforganization;
d. To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization,
including the giving of financial or other support to it or its organizers or supporters;
e. To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop
the parties from requiring membership in a recognized collective bargaining agent as a condition for employment,
except those employees who are already members of another union at the time of the signing of the collective
bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent, if such non-union members accept the benefits under the
collective bargaining agreement: Provided, that the individual authorization required under Article 242, paragraph
(o) of this Code shall not apply to the non-members of the recognized
collective bargaining agent;
f. To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about
to give testimony under this Code;
g. To violate the duty to bargain collectively as prescribed by this Code;
h. To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute; or
i. To violate a collective bargaining agreement.The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable. (As amended by Batas Pambansa Bilang 130, August 21,
1981)

 Int’l School Alliance of Education v. Sec. Quisumbing (supra)

Local Hires of the ISchool claim discrimination in pay as compared to foreign hires (those who are hired from abroad
to do expatriate teaching here) who earn 25% more than them and are entitled to benefits such as housing. The
court ruled that salaries could not be used to entice foreign hires. (but lodging is okay) “public policy abhors
inequality and discrimination. Foreign hires do not perform 25% more efficiently and thus should be paid equal pay
for work of equal value.”
c. Form: agreement for compensation of services Art 97 (f)
d. Art. 97. Definitions. As used in this Title:
f. "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities
customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to
the employer, or to any person affiliated with the employer.
 Arms Taxi v. NLRC
Ludivico C. Culla was hired by the Tanongon spouses to work as a mechanic, shop manager, garage
caretaker etc in their taxi business and he was paid P5K a month. His quarters were forced open without his consent
and he was ejected from his living quarters there and was dismissed by the spouses. Culla filed a complaint saying
that his ejectment and dismissal were illegal and he prayed for reinstatement with backwages as well as his 15%
commission of the gross income of the tax business. Tanongon spouses denied that Culla was their employee. LA
found for Culla but denied 13th month pay, over time pay and 15% commission. Both parties appealed to the NLRC
which affirmed the LA. The court holds that salary is a fixed compensation for regular work whereas commission is a
percentage or allowance made to a factor or agent transacting business for another. If it were true that he had
commission he must show memorandum to prove it and he should not have waited for 6 years to claim it. Also, Culla
was found to be an employee and is entitled to reinstatement and full backwages. Petition dismissed.

41
2. Coverage
Art. 97. Definitions. As used in this Title:
b. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an
employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-
owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations.
c. "Employee" includes any individual employed by an employer.
e. "Employ" includes to suffer or permit to work.
98. Application of Title. This Title shall not apply to farm tenancy or leasehold, domestic
service and persons working in their respective homes in needle work or in any cottage industry
duly registered in accordance with law.

Book III Rule VII SECTION 3.

 Phil. Fisheries Development Authority v. NLRC

PFD entered into a contract with Odin Security Agency for the security services of its Iloilo Fishing Port which was
renewable unless terminated by either party. Wage order number 6 was enforced, increasing the wages for security,
janitorial and similar service contracts prompting the respondents asked for an adjustment of the contract, which was
ignored by the petitioners. Thus, Odin filed a complaint for unpaid amounts of re-adjustment rate under Wage Order
No. 6. LA dismissed case claiming that the petitioner is a government owned corporation and should be under the
Civil Service Commission and not the NLRC. NLRC reversed. This court agrees because the guards are not employees
of the petitioner but are contractual employees of Odin working for PFD therefore under the scope of the NLRC. The
employees must be guaranteed wages due them for the performance of any work and it is the Odin as the
employer’s duty to know the labor laws and adequacy of compensation. Odin and PFD are held jointly and severally
liable (1/2, ½ because Odin entered into a contract without taking Wage O.N. 6 into consideration. Costs against
petitioner.
3. Minimum Wage
Art. 99. Regional minimum wages. The minimum wage rates for agricultural and nonagricultural employees and
workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and
Productivity Boards. (As amended by Section 3, Republic Act No. 6727, June 9, 1989).
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into
only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The
Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order
No. 111, December 24, 1986)
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
c. The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the
applicable minimum wage; and The learnership agreement shall be subject to inspection by the Secretary of Labor
and Employment or his duly authorized representative.
Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall include:
1. The names and addresses of the handicapped workers to be employed;
2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%)
percent of the applicable legal minimum wage;

Wage Order NO. 14

RA 7323 of 1992 AN ACT TO HELP POOR BUT DESERVING STUDENTS PURSUE THEIR EDUCATION BY
ENCOURAGING THEIR EMPLOYMENT DURING SUMMER AND/OR CHRISTMAS VACATIONS, THROUGH INCENTIVES
GRANTED TO EMPLOYERS, ALLOWING THEM TO PAY ONLY SIXTY PER CENTUM OF THEIR SALARIES OR WAGES
AND THE FORTY PER CENTUM THROUGH EDUCATION VOUCHERS TO BE PAID BY THE GOVERNMENT,
PROHIBITING AND PENALIZING THE FILING OF FRAUDULENT OR FICTITIOUS CLAIMS AND FOR OTHER PURPOSES
Section 2. Sixty per centum (60%) of said salary or wage shall be paid by the employer in cash and forty per centum
be applicable in the payment for his tuition fees and books in any educational institution for secondary, tertiary,
vocational or technological education. The amount of the education voucher shall be paid by the government to the
educational institution

42
concerned within thirty (30) days from its presentation to the officer or agency designated by the Secretary of
Finance.
The voucher shall not be transferable except when the payee thereof dies or for a justifiable cause stops in his duties
in which case it can be transferred to his brothers or sisters. If there be none, the amount thereof shall be paid his
heirs or to the payee himself, as the case may be.
Book III Rule VII
a. Determination of Compliance with minimum wage
 Iran v. NLRC
Antonio Iran is engaged in Softdrinks merchandising and distribution in Cebu and they employ truck drivers who
double as salesmen who receive commissions per case sold. While conducting an audit, Iran noted that there were
cash shortages and disallowed employees to go on their respective routes. They stopped reporting for work and Iran
construed this as abandonment of post and he filed estafa charges against them. Complaints were filed against Iran
for illegal dismissal and underpayment of wages. LA ruled for Iran but ruled that the 13 th month pay was not paid.
Both parties appealed to NLRC. Iran presented vouchers signed by the employees showing payment of 13 th month
pay while respondents claim that they were illegally dismissed. NLRC affirmed the validity of dismissal but said that
the same did not comply with proper procedure and that commissions are not included in the minimum wage already
given and thus still demandable.
According to Art 97, f, commissions are part of wages. The commission earned by private respondents selling soft
drinks must be considered part of the wages paid them there is no law mandating that the commissions should be
given AFTER the wage as contended by the NLRC. Also, vouchers presented only cover 1 year and thus are
admissible only for that year. The decision is reversed and set aside, remanded to the LA for determination of proper
wages.
b. Facilities and Supplements or Allowances
Book III Rule VII Sec 4-7
 Millares v. NLRC and PICOP
Petitioners are the 116 workers of Paper Industries Corp (PICOP) who were terminated in the retrenchment of the
respondents due to major financial setbacks. Petitioners now ask that the allowances they received on a monthly
basis should be included in the computation of their separation pay. LA granted the petition and NLRC reversed said
decision by decreeing that allowances are not part of the salary base in computing the separation pay. In this
petition for certiorari, petitioners contend that the allowances are part of the definition of “facilities” in 97,f of the LC
defining wage.
The court here clarifies that the retrenchment pay under 283 is not synonymous to “wage” in Art 97f. The receipt of
an allowance does not ipso facto characterize it as regular and forming part of the salary. Also, the disputed
allowance was not regularly received by petitioners and thus there is really no reason for petitioners to claim what is
not part of their salary. Petition Dismissed.
c. Cash Wage/ Commission
97 (f)
Art. 97. Definitions. As used in this Title:
f. "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities
customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to
the employer, or to any person affiliated with the employer
Book III Rule VII-A Section 1

 Songco v. NLRC
F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the gound of
retrenchment. The petitioners opposed this claiming that the company is not suffering from any losses but later on,
contended that they are no longer contesting their dismissal but rather wanted to receive separation pay including
the commissions, allowances etc which they receive every month. LA excluded the commissions and NLRC dismissed
the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that “computation of
backwages and separation pay should include transportation and emergency living allowances.” As for commissions,
the court held that commission is not part of the basic salary but is the reward of an agent or salesman and that the
nature of his job as a salesman demonstrates that such type of remuneration is part of their salary. Petition is
Granted.

43
  Boie Takeda v. De La Serna
A routine inspection was conducted in the premises of Boie Takeda Chemicals and it was found that BT had not been
including the commissions earned by its medical representatives in the computation of their 13 th month pay. Labor
Dept issued a notice of inspection results which was disputed by BT expressing that commissions are not part of the
basic or regular pay of their med reps. Regional Director issued the order of payment/ BT filed a motion for
reconsideration which the Labor Secretary ruled on, affirming the regional director. Hence this petition.
The court rules for BT. Memorandum 28 issued by Corazon Aquino did not repeal PD 851 but rather merely modified
Sec 1 of PD 851 removing the P1k salary ceiling. Therefore, the interpretation of basic salary in PD 851 should be
followed in memorandum 28 which is “rate of pay for a standard work period exclusive of such additional payments
as bonuses and overtime”. Petitions Granted.
 Phil. Duplicators v. NLRC
LA directed petitioner to pay 13th month pay to private respondent employees plus the sales commissions. NLRC
affirmed this order and the petition for certiorari was dismissed. Thus this petition for reconsideration submitting that
the decision in Boie Takeda has reversed the decision of Philippine Duplicators and should thus be applicable in their
case.
The court said that Boie Takeda is not a precedent under stare decisis and that the petirion of PD has been decided
with finality. Also, PD did not raise the issue of the validity of the 13 th month pay law as issued by Franklin Drilon and
that the doctrines in the two cases actually co-exist.
Sales commissions received for every duplicating machine sold are part of the basc compensatin of the salesmen of
Philippine Duplicators in doing their job and that these are not over time payments or profit sharing payments not
any other benefit. These salesmen’s commissions form part of the definition of basic salary. A bonus is a gratuity or
act of liberality on the part of the giver which the recipient has no right to demand. Productivity bonuses, although
similar to Sales commission (both being incentives) are tied to productivity or profit generation whereas sales
commissions are directly proportional to the extent or energy of the employees endeavors such as in the case of BT
and PD. Petition is denied.
d. Gratuity and Salary/ Wages. Differences

 Plastic Town Center Corp (PTCC) v. NLRC+Nagkakaisang Lakas ng Manggagawa (NLM)

NLM Katipunan filed a complaint for violation of wage order No. 5 and unfair labor practices by giving only 26 days of
pay instead of 30 as gratuity pay. LA ruled for PTCC sating that the 1 peso increase was ahead of the implementation
of the CBA and thus the LA cannot fault PTCC for a refusal for a 2nd increase. Union appealed to NLRC which reversed
LA’s decision. Motion for reconsideration was denied and thus this petition. Wage order No. 4 provided for the
integration of the mandatory emergency cost of living allowances into the basic pay. Wage order No. 5 provided for a
3 peso increase to the basic salary of the employees.
Petitioner argues that Wage order No. 5 provided an across the board increase in salary and they incurred a 1 peso
deficiency after implementing Wage order No.4 and thus advanced (to May 1, 1984) the increase, 2 months before
Wage order No. 4’s implementation to help their employees; AND that the gratuity pay should be computed at 26
days because workers do not work on Sundays and Holidays.
Sec 3 of the CBA provides that increases shall be granted against future allowances or wage orders and thus, the
increase on May 1 was not a July increase but a May increase and that complying with the wage orders does not
relieve them of their obligations in the CBA. As for the gratuity pay, it is not intended to pay the worker for actual
service rendered but it is supposed to “reward employees or laborers who have rendered satisfactory and efficient
service o the company”. Grant of this pay is not mandatory and thus s not part of salary but a reward for the
employee. Court dismissed the petition because it was devoid of merit.
e. Effect on Benefits
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation
of this Code.

 Davao Fruits Coporation v. NLRC+ Associated Labor Unions (ALU)

ALU filed a complaint against Davao Fruits for payment of the 1982 13 th month pay differentials of DFC’s employees
equivalent to sick, vacation, maternity leaves, rest day and holidays, which had been the practice of the company
since 1975. Petitioner claimed that it has erroneously added these and the mistake was only discovered in 1981. LA
and NLRC ruled for ALU. Thus this petition for review. Basic salary under IRR of PD 851 includes all “remunerations
or earnings paid by the employer to the employee but excludes cost of living allowances, profit sharing payments and
all allowances and monetary benefits which have not been considered as part of the basic salary” such as fringe
benefits or allowances. From 1975 to 1981, petitioner had freely and continuously included these in their
computation and this practice had ripened into a benefit which cannot b reduced or eliminated by the employer (Sec

44
10 IRR PD 851, Art 100, LC). Solution indebiti cannot be invoked because it is a concept in civil law and also because
it did not demand the return of the wages mistakenly paid but rather rectify the mistake. Petition dismissed NLRC
affirmed.

B. WAGE FIXING MACHINERY

RA 6727, Sec 3
Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as amended, is
hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby incorporated into Presidential Decree
No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non- agricultural
employees and workers in each and every region of the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art 120-127
Book III Rule IX Wage Studies and Determination
Wage order No. NCR-14
1. Rationale for Wage Rationalization (6727, Sec 2)
Sec. 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment
generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth.

2. Agencies in Wage Fixing Machinery

a. National Wages and Productivity Commission
Art. 120. Creation of National Wages and Productivity Commission. There is hereby created a National
Wages and Productivity Commission, hereinafter referred to as the Commission, which shall be attached to the
Department of Labor and Employment (DOLE) for policy and program coordination. (As amended by Republic Act No.
6727, June 9, 1989).
Art. 121. Powers and functions of the Commission. The Commission shall have the following powers and
functions:
a. To act as the national consultative and advisory body to the President of the Philippines and Congress on matters
relating to wages, incomes and productivity;
b. To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry
and national levels;
c. To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures
at the regional, provincial, or industry levels;
d. To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these
are in accordance with prescribed guidelines and national development plans;
e. To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to
collect and compile data and periodically disseminate information on wages and productivity and other related
information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns;
f. To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether
these are consistent with national development plans;
g. To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;
h. To call, from time to time, a national tripartite conference of representatives of government, workers and
employers for the consideration of measures to promote wage rationalization and productivity; and
i. To exercise such powers and functions as may be necessary to implement this Act. The Commission shall be
composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the National
Economic and Development Authority (NEDA) as exofficio vice-chairman, and two (2) members each from workers’
and employers’ sectors who shall be appointed by the President of the Philippines upon recommendation of the

45
Secretary of Labor and Employment to be made on the basis of the list of nominees submitted by the workers’ and
employers’ sectors, respectively, and who shall serve for a term of five (5) years. The Executive Director of the
Commission shall also be a member of the Commission.
The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy
Directors, who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of
Labor and Employment.
The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department
Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as
that of a Bureau Director. The members of the Commission representing labor and management shall have the same
rank, emoluments, allowances and other benefits as those prescribed by law for labor and management
representatives in the Employees’
Compensation Commission. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 126. Prohibition against injunction. No preliminary or permanent injunction or temporary restraining order
may be issued by any court, tribunal or other entity against any proceedings before the Commission or the Regional
Boards. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates
lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June
9, 1989)

b. Regional Tripartite Wages and Productivity Board (3, 122, 126)

Regions:

Region I (ILOCOS REGION)

Region II (CAGAYAN VALLEY)
Region III (CENTRAL LUZON)
Region IV (CALABARZON & MIMAROPA)
Region V (BICOL REGION)
Region VI (WESTERN VISAYAS)
Region VII (CENTRAL VISAYAS)
Region VIII (EASTERN VISAYAS)
Region IX (ZAMBOANGA PENINSULA)
Region X (NORTHERN MINDANAO)
Region XI (DAVAO REGION)
Region XII (SOCCSKSARGEN)
Region XIII (CARAGA)
AUTONOMOUS REGION IN MUSLIM MINDANAO (ARMM)
CORDILLERA ADMINISTRATIVE REGION (CAR)
NATIONAL CAPITAL REGION (NCR)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby
created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional Boards, in
all regions, including autonomous regions as may be established by law. The Commission shall determine

46
the offices/headquarters of the respective Regional Boards. The Regional Boards shall have the following
powers and functions in their respective territorial
jurisdictions:
a. To develop plans, programs and projects relative to wages, incomes and productivity improvement for
their respective regions;
b. To determine and fix minimum wage rates applicable in their regions, provinces or industries therein
and to issue the corresponding wage orders, subject to guidelines issued by the Commission;
c. To undertake studies, researches, and surveys necessary for the attainment of their functions,
objectives and programs, and to collect and compile data on wages, incomes, productivity and other
related information and periodically disseminate the same;
d. To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of
this Code;
e. To receive, process and act on applications for exemption from prescribed wage rates as may be
provided by law or any Wage Order; and
f. To exercise such other powers and functions as may be necessary to carry out their mandate under
this Code.
Implementation of the plans, programs, and projects of the Regional Boards referred to in the second
paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department of
Labor and Employment within their territorial jurisdiction; Provided, however, That the Regional Boards
shall have technical supervision over the regional office of the Department of Labor and Employment with
respect to the implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional Director of the Department of Labor and
Employment as chairman, the Regional Directors of the National Economic and Development Authority
and the Department of Trade and Industry as vice-chairmen and two (2) members each from workers’
and employers’ sectors who shall be appointed by the President of the Philippines, upon the
recommendation of the Secretary of Labor and Employment, to be made on the basis of
the list of nominees submitted by the workers’ and employers’ sectors, respectively, and who shall serve
for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended
by Republic Act No. 6727, June 9, 1989)

 Nasipit Lumber Co. v. National Wages and Productivity Commission (NWPC) and the Unions
Nasipit Lumber Co. Anakan Lumber Co. and Phil. Watershed Corp jointly filed an application for exemption to Wage
Order No. RX-01 and 01-A (issued by Region Tripartite Wages and Productivity Board) which increased the minimum
wage by 11 to 13 pesos. Nasipit applied for exemption from Wage Orders issued by Region 10 Board due to:
1. depressed economic activities due to worldwide recession
2. peace and order and other related problems causing disruption and suspension of normal logging operations
3. imposition of environmental fee for timber production in addition to regular forest charges
4. logging moratorium in Bukidnon
Unions claimed that company was not distressed since capitalization has not been impaired by 25%
The RTWPB approved the exemption but granting them only temporary reprieve as stated in Guideline No. 3.
Respondents appealed with NWPC and it affirmed ALCO’s application but reversed the two others. It is said that the
commission does not approve rules implementing wage orders issued by the RTWPB. Thus this petition.
WON guidelines by an RTWPB without approval of NWPC is valid. NO.
1. RA 6727 amended LC and grants NWPC power to prescribe rules and guidelines for determination of
minimum wage and productivity measures
2. RTWPB has power to issue wage orders but subject to rules on Minimum Wage Fixing
3. NWPC never assented to Guideline No. 3
4. Insertion of Guideline of ‘distressed industry’ as criterion for exemption is void: irregularly takes away
mandated increase in minimum wage awarded to workers
ALCO application approved: sustained capital impairment of 28.72%. Petition dismissed.
3. Standards or Criteria for Minimum Wage Fixing (3, 124)
Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as amended, is
hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby incorporated into Presidential Decree
No. 442, as amended, to read as follows:

47
 "Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non- agricultural
employees and workers in each and every region of the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the
minimum standards of living necessary for the health, efficiency and general wellbeing of the employees
within the framework of the national economic and social development program. In the determination of
such regional minimum wages, the Regional Board shall, among
other relevant factors, consider the following:
a. The demand for living wages;
b. Wage adjustment vis-à-vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the imperatives of economic and
social development.
The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing
minimum wages in every region. These wages shall include wages varying with industries, provinces or
localities if in the judgment of the Regional Board, conditions make such local differentiation proper and
necessary to effectuate the purpose of this Title.
Any person, company, corporation, partnership or any other entity engaged in business shall file and
register annually with the appropriate Regional Board, Commission and the National Statistics Office, an
itemized listing of their labor component, specifying the names of their workers and employees below the
managerial level, including learners, apprentices and disabled/handicapped workers who were hired
under the terms prescribed in the employment contracts, and their corresponding salaries and wages.
Where the application of any prescribed wage increase by virtue of a law or wage order issued by any
Regional Board results in distortions of the wage structure within an establishment, the employer and the
union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be
resolved through the grievance procedure under their collective bargaining agreement and, if it remains
unresolved, through voluntary arbitration. Unless otherwise agreed by
the parties in writing, such dispute shall be decided by the voluntary arbitrators within ten (10) calendar
days from the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through
the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days
of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission
(NLRC). It shall be mandatory for the NLRC to conduct continuous hearings
and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for
compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any increase in prescribed wage rates pursuant to the provisions of law or wage order.

48
As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation. All workers paid by result, including those who are paid on piecework, takay, pakyaw or
task basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a
proportion thereof for working less than eight (8) hours.
All recognized learnership and apprenticeship agreements shall be considered automatically modified
insofar as their wage clauses are concerned to reflect the prescribed wage rates. (As amended by
Republic Act No. 6727, June 9, 1989)

4. Wage Order (3, 123-124)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as amended, is
hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby incorporated into Presidential Decree
No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non- agricultural
employees and workers in each and every region of the country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board shall investigate and
study all pertinent facts; and based on the standards and criteria herein prescribed, shall proceed to determine
whether a Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its
complete publication in at least one (1) newspaper of general circulation in the region.
In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees’ and employers’ groups, provincial, city and municipal officials
and other interested parties.
Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission
within ten (10) calendar days from the publication of such order. It shall be mandatory for the Commission to decide
such appeal within sixty (60) calendar days from the filing thereof. The filing of the appeal does not stay the order
unless the person appealing such order shall file with the Commission, an undertaking with a surety or sureties
satisfactory to the Commission for the payment to the employees affected by the order of the corresponding
increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989)

a. Methods of Fixing (According to Employer’s Confederation case)

i.) Floor Wage method
- fixing of determinate amount that would be added to the prevailing statutory minimum wage
ii.) Salary-ceiling or Salary Cap method
- wage adjustment is applied to employees receiving a certain denominated salary ceiling (RA 6640
and 6727). Shift to this kind of salary method is brought about by labor disputes arising from
wage distortions (brought about by the floor wage method)
 Employers Confederation of the Phil v. National Wages and Productivity Commission
ECOP is questioning the validity of Wage Order No. 01-A of the RTWPB pursuant to RA 6727 which amended No. 01
by not only increasing the minimum wage by 17 pesos but also entitling the employees receiving P125 and above to
the said order. ECOP appealed to the NWPC and this was dismissed for lack of merit.
ECOP claims that RA6727 may only prescribe minimum wages and not determine salary ceiling. It insists that wage
fixing is a legislative function and that the boards may adjust only floor wages. The Solicitor General argued that RA
6727 is intended to correct wage distortions through the salary ceiling method.
In this petition the court held that the constitution protects that rights of the workers and ECOP is mistaken in
interpreting RA 6727 in empowering management to decide the wages. In this case, it seems that Congress has
delegated the power to fix rates to the commission and that the Commission has correctly upheld the Board’s

49
decision in this case. The statute would have no need of a board if the only question to be solved is “how much”. The
state is concerned woth distributing wages more evenly. The petition is denied.

b. Validity
 Metropolitan Bank and Trust company Inc. v. National Wages and Productivity
Commission and Regional Tripartite Wages and Productivity Board
RTWPB Tuguegarao issued Wage Order No. R02-03 which raised the wage P15.00 across the board. In a letter
inquiry to the NWPC, The Banker’s Council for Personnel Management (BCPM) in behalf of its member banks
requested for an exemption from the wage order since the member banks are already paying for more than the
minimum wage rate in the NCR which is the principal place of their business. NWPC replied that they are not under
the exemptible categories. In a letter inquiry, BCPM asked for interpretation on the applicability of the wage order.
NWPC referred the inquiry to the RTWPB who said that the wage order covers all private establishments in Region II
regardless of the adoption of the establishments of wage orders in Metro Manila.
Pet filed a petition for certiorari and prohibition with the CA asking to nullify the wage order claiming that RTWPB
acted without authority in issuing said order and that implementing it will cause the petitioner and similarly situated
employers to incur huge financial losses and eventually labor unrest. OSG affirmed the petitioner’s claim.
Ca denied the petition saying that the wage order had long become fait accompli and that no appeal from the said
wage order was done during the time allotted (10 days from publication of order as shown in Sec 13 of the wage
order).
RA 6727 gives RTWPB the authority to fix minimum wage rates as applicable in their respective regions.
In the present case however, the RTWPB did not set a wage level (floor wage method) or set a range to which a
wage adjustment or increase shall be added (salary-ceiling method). In simply increasing P15 across the board, it
exceeded its authority. When the application of administrative issuances modifies existing laws by exceeding the
intended scope, issuance become VOID not only for being ultra vires but for being unreasonable. Petition partially
granted. Wage order is void as to employees who receive more than the prevailing minimum wage.

c. Wage Distortion (3, 124)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

 Prubankers Association v. Prudential Bank and Trust Co.

Petitioner granted a Cost Of Living Allowance of 17.50 to its Naga branch employees pursuant to Wage Order RB 05-
03 (issued by RTWPB which provided for COLA to workers of the private sector who had rendered services for at
least 3 months before its effectivity). It also integrated 150 per month COLA into the basic pay of its rank-and-file
employees at its Cebu, Mabolo, and P. del Rosario branches.

Prubankers Association wanted to extend the application of the order to its employees outside regions V and VII
claiming that regional implementation resulted in a wage distortion. The matter was submitted to a voluntary
arbitration which held that there was a wage distortion. On an appeal to the CA, it was held that there was no wage
distortion Thus this petition for review on certiorari.

Issue: WON there was wage distortion Held: NO. Quantitative difference in compensation between different pay
classes remained the same in all branches in the affected region Disparity in wages between employees holding
similar positions but in different regions does not constitute wage distortion but is expected by the law. Wage

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distortion arises when a wage order engenders wage parity between employees in different rungs of the
organizational ladder of same establishment

Wage distortion involves four elements:

 an existing hierarchy of positions with corresponding salaries

 a significant change in the salary rate of a lower pay class without a concomitant increase in the salary
rate of a higher one
 elimination of the distinction between the 2 levels
 existence of the distortion in the same region of the country

RA 6727 recognizes that there are different needs for the different situations in different regions. The fact that a
person is receiving more in one region does not mean that she/he is better off than a person in another region.
Wages per region depends on the situation per region as determined by the RTWPB as explained in RA 6727. Petition
denied.

*establishment (NWPC Guideline No 1) an economic unit which engages in one or predominantly one kind of
economic activity with a single fixed location

5. Freedom to Bargain (6727, Sec 2, 2nd par)

Art. 125. Freedom to bargain. No wage order shall be construed to prevent workers in particular firms or
enterprises or industries from bargaining for higher wages with their respective employers. (As amended by Republic
Act No. 6727, June 9, 1989)

6. Penalty for violation (RA 8188) AN ACT INCREASING THE PENALTY AND INCREASING DOUBLE
INDEMNITY FOR VIOLATION OF THE PRESCRIBED INCREASES OR ADJUSTMENT IN THE WAGE
RATES, AMENDING FOR THE PURPOSE SECTION TWELVE OF REPUBLIC ACT NUMBERED SIXTY-
SEVEN HUNDRED TWENTY-SEVEN, OTHERWISE KNOWN AS THE WAGE RATIONALIZATION
ACT

SECTION 1. Section 12 of Republic Act Numbered Sixty-seven hundred twenty-seven is hereby amended to read
to as follows: "Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or
fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall
be punished by a fine not less than Twenty-five thousand pesos (P25,000) nor more than One hundred thousand
pesos (P100,000) or imprisonment of not less than two (2) years nor more than four (4) years, or both such fine
and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be
entitled to the benefits provided for under the Probation Law. "The employer concerned shall be ordered to pay an
amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall
not absolve the employer from the criminal liability imposable under this Act. "If the violation is committed by a
corporation, trust or firm, partnership, association or any other entity the penalty of imprisonment shall be imposed
upon the entity's responsible officers, including, but not limited to, the president, vice-president, chief executive
officer, general manager, managing director or partner."

SECTION 2. All laws, presidential decrees, executive orders, rules and regulations or parts thereof inconsistent
with the provisions of this Act are hereby repealed or modified accordingly.
SECTION 3. This Act shall take effect fifteen (15) days after its complete publication in a newspaper of general
circulation.

C. WAGE PAYMENT AND PROTECTION

1. Form of Payment

Art. 102. Forms of payment. No employer shall pay the wages of an employee by means of promissory notes,
vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by
the employee.
Payment of wages by check or money order shall be allowed when such manner of payment is customary on the
date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate

51
regulations to be issued by the Secretary of Labor and Employment or as stipulated in a collective bargaining
agreement.

1705,CC The laborer's wages shall be paid in legal currency.

Book III, Rule VIII, Sec 1-2 SECTION 1. Manner of wage payment. — As a general rule, wages shall be paid in
legal tender and the use of tokens, promissory notes, vouchers, coupons, or any other form alleged to represent
legal tender is absolutely prohibited even when expressly requested by the employee.

SECTION 2. Payment by check. — Payment of wages by bank checks, postal checks or money orders is allowed
where such manner of wage payment is customary on the date of the effectivity of the Code, where it is so stipulated
in a collective agreement, or where all of the following conditions are met:

(a) There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;

(b) The employer or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly
from the arrangement;

(c) The employees are given reasonable time during banking hours to withdraw their wages from the bank which
time shall be considered as compensable hours worked if done during working hours; and

(d) The payment by check is with the written consent of the employees concerned if there is no collective agreement
authorizing the payment of wages by bank checks.

 Congson v. NLRC
Dominico Congson is the owner of Southern Fishing Industry and Respondents are hired as piece rate workers. They
were paid P1 per tuna weighing 30 to 80 kilos. They unloaded the fish from the fishing boats to the truck haulers
then unloaded them again at the cold storage plant of the petitioner. Petitioner announced that it will reduce the
rate-per-tuna and Respondents resisted the said reduction. When they reported for work the next day, they had
been replaced. They filed a case for underpayment of wages, nonpayment of overtime pay, holiday pay, restday
pay, 5 day incentive leave pay, for constructive dismissal as well as for violation of the minimum wage law alleging
that with the petitioner’s rates and the scarcity of tuna, their earnings did not exceed P1k a month.
Petitioners claim that the respondents abandoned their work for 1 month and that they failed to return to work when
asked. LA ruled for respondents (illegally dismissed!) and NLRC affirmed this decision. Thus this petition. Petitioners
claim that they paid the respondents with up to 3 kilos of the valuable liver and intestines of the tuna which is highly
convertible to cash (15 to 20 pesos per kilo). Combined with the per-tuna rate, this exceeds the minimum wage.
Court explains that as stated in Art 102 of the LC, wages shall be paid only by means of legal tender. The only
instance when an employer is permitted to pay wages in forms other than legal tender is by checks or money order.
NLRC affirmed.

2. Time of Payment
Art. 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals
not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the employer’s control,
payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages
immediately after such force majeure or circumstances have ceased. No employer shall make payment with less
frequency than once a month.
The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall
be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award:
1. That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work
completed;
2. That final settlement is made upon completion of the work.

Book III, Rule VIII SECTION 3. Time of payment. — (a) Wages shall be paid not less than once every two (2)
weeks or twice a month at intervals not exceeding sixteen (16) days, unless payment cannot be made with such
regularity due to force majeure or circumstances beyond the employer's control in which case the employer shall pay
the wages immediately after such force majeure or circumstances have ceased.

52
(b) In case of payment of wages by results involving work which cannot be finished in two (2) weeks, payment shall
be made at intervals not exceeding sixteen days in proportion to the amount of work completed. Final settlement
shall be made immediately upon completion of the work.

3. Place of Payment
Art. 104. Place of payment. Payment of wages shall be made at or near the place of undertaking, except as
otherwise provided by such regulations as the Secretary of Labor and Employment may prescribe under conditions to
ensure greater protection of wages.

Book III, Rule VIII SECTION 4. Place of payment. — As a general rule, the place of payment shall be at or near
the place of undertaking. Payment in a place other than the work place shall be permissible only under the following
circumstances:

(a) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity
rendering payment thereat impossible;

(b) When the employer provides free transportation to the employees back and forth; and

(c) Under any other analogous circumstances; Provided, That the time spent by the employees in collecting their
wages shall be considered as compensable hours worked;

(d) No employer shall pay his employees in any bar, night or day club, drinking establishment, massage clinic, dance
hall, or other similar places or in places where games are played with stakes of money or things representing money
except in the case of persons employed in said places.

4. Person to Pay
Art. 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except:
a. In cases of force majeure rendering such payment impossible or under other special circumstances to be
determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be
paid through another person under written authority given by the worker for the purpose; or
b. Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs
of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an
affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all
other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or
next-of-kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor
and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as
referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the
employer of any further liability with respect to the amount paid.

Book III, Rule VIII SECTION 5. Direct payment of wages. — Payment of wages shall be made direct to the
employee entitled thereto except in the following cases:

(a) Where the employer is authorized in writing by the employee to pay his wages to a member of his family;

(b) Where payment to another person of any part of the employee's wages is authorized by existing law, including
payments for the insurance premiums of the employee and union dues where the right to check-off has been
recognized by the employer in accordance with a collective agreement or authorized in writing by the individual
employees concerned; or

(c) In case of death of the employee as provided in the succeeding Section.

SECTION 6. Wages of deceased employee. — The payment of the wages of a deceased employee shall be made to
his heirs without the necessity of intestate proceedings. When the heirs are of age, they shall execute an affidavit

53
attesting to their relationship to the deceased and the fact that they are his heirs to the exclusion of all other
persons. In case any of the heirs is a minor, such affidavit shall be executed in his behalf by his natural guardian or
next of kin. Upon presentation of the affidavit to the employer, he shall make payment to the heirs as representative
of the Secretary of Labor.

 Bermiso v. Escano, Inc. et al.

Case was originally instituted by the Democratic Labor Association and the Katubsanan sa Mamumuo in the CIR
praying for reinstatement with backwages and direct payment to the workers rather than to the union. CIR found
that Hijos de F. Escano is a corporation engaged in transporting people and goods for compensation. The unions are
laborers from Visayas and Mindanao who load and unload vessels in cebu and have respondent Jose Muana and
Vitaliano Sabay as general president and gen treasurer respectively. Its members in cebu are numerous and divided
to chapters. One of these chapters are headed by Sabay (SABAY group). CIR ordered the reinstatement of the
SABAY group but without backwages . Thus this petition for certiorari. The court found that the workers are
employees of Escano. However, the work of stevedoring was taken as a group and not as individuals. There was also
no evidence that racketeering was employed by the unions. Futhermore, Escano did not pay for the stevedoring
charges. They were collected by the group from the shippers themselves, there is no ground for escano to pay
backwages. Petition denied.

D. WAGE PROHIBITIONS
Prohibition against interference in disposal of wages
Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the
freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees
to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store
or services of such employer or any other person.

Book III Rule VIII SECTION 12. SECTION 12. Non-interference in disposal of wages. — No employer shall limit or
otherwise interfere with the freedom of any employee to dispose of his wages and no employer shall in any manner
oblige any of his employees to patronize any store or avail of the setrvices offered by any person.

Prohibition against wage deduction

Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except:
a. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance;
b. For union dues, in cases where the right of the worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker concerned; and
c. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

Book III Rule VIII SECTION 13. Wage deduction. — Deductions from the wages of the employees may be made by
the employer in any of the following cases:

(a) When the deductions are authorized by law, including deductions for the insurance premiums advanced by the
employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the
employer or authorized in writing by the individual employee himself.

(b) When the deductions are with the written authorization of the employees for payment to the third person and the
employer agrees to do so; Provided, That the latter does not receive any pecuniary benefit, directly or indirectly,
from the transaction.

 Apocada v. NLRC + Jose Mirasol+ Intrans Phil Corp

Ernesto Apocada is employed in Intrans. Mirasol persuaded him to subscribe to 1,500 shares of the corporation at
100 per share (150k). He made an initial payment of 37,500. On 1975, Apocada was appointed President and
General Manager of the Company. He resigned in 1986. That same year, he instituted a complaint with the NLRC for
payment of unpaid wages, cost of living allowance, gasoline etc. Respondents admitted the money due to the
petitioner but said that the same was offset to the unpaid balance of his subscription. Petitioner said that he was not
even informed or notified for the unpaid subscription and thus the obligation is not enforceable. NLRC ruled for the

54
co. thus this petition wherein it is held that the NLRC has NO jurisdiction to resolve a claim for nonpayment of stock
subscriptions to a corporation. This jurisdiction belongs to the SEC. Furthermore, the unpaid subscriptions are not yet
due and demandable and such setoff was without lawful basis. Petition granted.
Prohibition against requirement to make deposits for loss or damage
Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by
the employer, except when the employer is engaged in such trades, occupations or business where the practice of
making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor and
Employment in appropriate rules and regulations.

Art. 115. Limitations. No deduction from the deposits of an employee for the actual amount of the loss or damage
shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown.

Book III Rule VIII SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade,
occupation or business where the practice of making deductions or requiring deposits is recognized to answer for the
reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the employee, the
employer may make wage deductions or require the employees to make deposits from which deductions shall be
made, subject to the following conditions:

(a) That the employee concerned is clearly shown to be responsible for the loss or damage;

(b) That the employee is given reasonable opportunity to show cause why deduction should not be made;

(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and

(d) That the deduction from the wages of the employee does not exceed 20 percent of the employee's wages in a
week.

 Dentech Manufacturing Corp v. NLRC

Respondents used to work as welders, upholsterers, and painters of company making dental equipment. They were
dismissed: allegedly because of union activities (Confederation of Citizens Labor Union) They wanted to get their 13 th
month pay as well as refund of cash bond filed. They cited PD 851 saying that they are receiving more than 1k per
month and thus they are entitled (under the PD) to 13 th month pay. Company claimed that due to financial losses,
they are, under the same PD, exempted as distressed employers. LA ruled for reinstating complainants and NLRC
affirmed LA. Case was elevated to the Supreme Ct. by the Pet saying that Respondents abandoned their work and
that Memorandum No. 28 (eliminating 1k salary ceiling) does not apply to the case since it was enforced long after
he case was instituted.
Court held that 1k salary ceiling in PD 851 pertains to basic salary and not monthly compensation and that in
invoking exemption, the company must be deemed qualified after prior authorization from the Secretary of Labor and
Employment. As to another Issue: As for refund of the cash bond, the company said that these have been given to a
certain carinderia to pay for the outstanding accounts of private respondents. The main issue is WON such
requirement of cash bond is valid. No. Company failed to show that it is authorized by law to require workers to file
cash bond. Refund! Petition dismissed.

 Five J Taxi v. NLRC

The two drivers of Five J Taxi failed to report for work.
Maldigan: allegedly working with Mine of Gold
Sabsalon: allegedly working with Bulaklak Company after not reporting for work after a holdap incident while driving
taxi. LA and NLRC dismissed the case
 abandoned cab in Makati without fuel refill worth 300
 refused to work
Wanted reimbursement of daily cash deposit:
20- car washing
15- for any deficiency in their boundary for every actual day

55
Issue: WON such deposits may be reimbursed
Court Held: Yes to 15, no to 20
Ratio:
1. to defray deficiency in boundary is not contemplated by 114 (loss or damage to tools, materials,
equipment). The same is illegal.
2. Also, when they stopped working, alleged purpose for deposits no longer existed and should be returned
20 pesos:
1. not entitled to refund
2. nothing prevents them from washing cars themselves
NLRC decision modified. 15 deposit reimbursable.

Prohibition against Withholding of wages

Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up
any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever
without the worker’s consent.

Art. 1706, CC. Withholding of the wages, except for a debt due, shall not be made by the employer.

Prohibition against deduction to ensure employment

Art. 117. Deduction to ensure employment. It shall be unlawful to make any deduction from
the wages of any employee for the benefit of the employer or his representative or intermediary as
consideration of a promise of employment or retention in employment.

Prohibition against retaliatory measures

Art. 118. Retaliatory measures. It shall be unlawful for an employer to refuse to pay or reduce
the wages and benefits, discharge or in any manner discriminate against any employee who has
filed any complaint or instituted any proceeding under this Title or has testified or is about to
testify in such proceedings.

Prohibition against false reporting

Art. 119. False reporting. It shall be unlawful for any person to make any statement, report, or
record filed or kept pursuant to the provisions of this Code knowing such statement, report or
record to be false in any material respect.

Book III, Rule X, SECTION 13. False reporting. — It shall be unlawful for any employer or any person to make any
false statement, report or record on matters required to be kept or maintained pursuant to the provisions of this
Rule.

Prohibition against keeping of employee’s records in a place other than the work place

Book III, RULE X, SECTION 11. Place of records. — All employment records of the employees shall be kept and
maintained by the employer in or about the premises of the work place. The premises of a work-place shall be
understood to mean the main or branch office of the establishment, if any, depending upon where the employees are
regularly assigned. The keeping of the employee's records in another place is prohibited.

SECTION 12. Preservation of records. — All employment records required to be kept and maintained by employers
shall be preserved for at least three (3) years from the date of the last entry in the records.

 South Motorists Enterprises v. Tostoc

On the strength of an inspection report, an order was issued by Labor Officer Domingo Reyes directing South
Motorists to pay Tostoc his ECOLA. MFR filed were all denied. Hence this petition by South Motorists questioning the
monetary award as well as his jurisdiction to grant the same and claiming that only the labor arbiter may determine
the existence of an employer employee relationship. Art 129 (Recovery of Wages) and Art 217 (Jurisdiction of LA)
were applied by the court to this case in explaining that regional directors are empowered to hear and decide in
summary proceeding claims for recovery of wages and other monetary claims or benefits. It is only when the ff
requisites do not concur that the jurisdiction falls with the LA:

56
 - claim of a worker employed as a domestic helper or household service under the code
- claim arises from employer-employee relations
- does not seek reinstatement
- money claim does not exceed 5k, < Art 217 (6)>

The court ruled that 11 out of the 46 respondents, the money claims being above 5k should be remanded to the LA.
Decision Modified and Petition partially granted.

Prohibition against garnishment or execution

Art. 1708, CC. The laborer's wages shall not be subject to execution or attachment, except for debts incurred for
food, shelter, clothing and medical attendance.

 Rosario Gaa v. CA +Europhil Industries Corporation

Gaa was building admin of Trinity Building. Europhil Industries filed a civil action in CFI for damages against
petitioner for cutting off its electricity, removing its name from building directory, gate passes of their employees. CFI
ruled for Europhil. Writ of garnishment of Gaa’s salary, commission, and/or remuneration was served to El Grande
Hotel where petitioner worked due to these acts. She filed a motion to lift the writ on the ground that her salaries,
commission/remuneration are exempted from execution according to Art 1708 of the NCC. This was denied by the CA
because Gaa, being a person who holds a managerial position, is not a laborer as the word is contemplated in 1708.
1708 used the word wages and not salary. Salary is contemplated as to relate to a person of office or position.
Wages refer to those who look to the reward of a day;s labor for immediate or present support, and thus in need of
the exeption of 1708. Gaa is not part of this group. CA affirmed.
1. wages vs salary: wages for manual labor, skilled or unskilled, paid at stated times, and measured by day,
week, month or season while salary denotes a higher degree of employment

E. WORKER PREFERNCE IN THE EVENT OF BANKRUPTCY

Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation
of an employer’s business, his workers shall enjoy first preference as regards their wages and other
monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and
monetary claims shall be paid in full before claims of the government and other creditors may be
paid. (As amended by Section 1, Republic Act No. 6715, March 21, 1989)

Book III, Rule VIII Sec SECTION 10. Payment of wages and other monetary claims in case of bankruptcy. — In
case of bankruptcy or liquidation of the employer’s business, the unpaid wages and other monetary claims of the
employees shall be given first preference and shall be paid in full before the claims of government and other
creditors may be paid (as amended by Sec 1 of the IRR of RA 6715, 1989)

Civil Code
Art. 1707. The laborer's wages shall be a lien on the goods manufactured or the work done
Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall be preferred:

(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;

(2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed in the
performance of their duties, on the movables, money or securities obtained by them;

(3) Claims for the unpaid price of movables sold, on said movables, so long as they are in the possession of the
debtor, up to the value of the same; and if the movable has been resold by the debtor and the price is still unpaid,
the lien may be enforced on the price; this right is not lost by the immobilization of the thing by destination, provided
it has not lost its form, substance and identity; neither is the right lost by the sale of the thing together with other
property for a lump sum, when the price thereof can be determined proportionally;

(4) Credits guaranteed with a pledge so long as the things pledged are in the hands of the creditor, or those
guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the value thereof;

(5) Credits for the making, repair, safekeeping or preservation of personal property, on the movable thus made,
repaired, kept or possessed;

57
(6) Claims for laborers' wages, on the goods manufactured or the work done;

In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully taken, the
creditor may demand them from any possessor, within thirty days from the unlawful seizure. (1922a)

Art. 2242. With reference to specific immovable property and real rights of the debtor, the following claims,
mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:

(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors,
engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals
or other works;

Art. 2244. With reference to other property, real and personal, of the debtor, the following claims or credits shall be
preferred in the order named:

(2) Credits for services rendered the insolvent by employees, laborers, or household helpers for one year preceding
the commencement of the proceedings in insolvency;
F. WAGE RECOVERYJURIDICTION
ADMINISTRATION AND ENFORCEMENT
Art. 128. Visitorial and enforcement power.
a. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers,
shall have access to employer’s records and premises at any time of the day or night whenever work is being
undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any
labor law, wage order or rules and regulations issued pursuant thereto.
b. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives
shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730,
June 2, 1994).
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article
may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from.
(As amended by Republic Act No. 7730, June 2, 1994)
c. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any
unit or department of an establishment when non-compliance with the law or implementing rules and regulations
poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a
hearing shall be
conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not.
In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries
or wages during the period of such stoppage of work or suspension of operation.
d. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders
of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority
granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining
order or
otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.
e. Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after
appropriate administrative investigation, be subject to summary dismissal from the service.
f. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain
such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code.
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested
party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing
officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any

58
matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an
employee or person
employed in domestic or household service or househelper under this Code, arising from employeremployee
relations: Provided, That such complaint does not include a claim for reinstatement:
Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand
pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the
Secretary of Labor and
Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to
the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a
period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used
exclusively for the amelioration and benefit of workers.
Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on
the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said
decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10)
calendar days from the submission of the last pleading required or allowed under its rules.
The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid
wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper
under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989)
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a. Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural
or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
b. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
c. Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from
the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As
amended by Section
9, Republic Act No. 6715, March 21, 1989)
Art. 111. Attorney’s fees.
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten
percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the
recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered

BOOK III RULE X Administration and Enforcement

SECTION 1. Visitorial power. — The Secretary of Labor and Employment or his duly authorized representatives,
including Labor Regulations Officers or Industrial Safety Engineers, shall have access to employer's records and
premises at any time of the day or night whenever work is being undertaken therein, and right to copy therefrom, to
question any employee, and to investigate any fact, condition or matter relevant to the enforcement of any provision
of the Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

SECTION 2. Enforcement power. — (a) The Regional Director in cases where employer relations shall exist, shall
have the power to order and administer, after due notice and hearing, compliance with the labor standards

59
provisions of the Code and other labor legislations based on the findings of the Labor Regulation Officers or Industrial
Safety Engineers (Labor Standard and Welfare Officer) and made in the course of inspection, and to issue writs of
execution to the appropriate authority of the enforcement of his order. In line with the provisions of Article 128 in
relation to Articles 289 and 290 of the Labor Code as amended in cases, however, where the employer contests the
findings of the Labor Standards and Welfare Officers and raises issues which cannot be resolved without considering
evidentiary matters that are not verifiable in the normal course of inspection, the Regional Director concerned shall
indorse the case to the appropriate arbitration branch of the National Labor Relations Commission for adjudication.

(b) The Regional Director shall give the employer fifteen (15) days within which to comply with his order before
issuing a writ of execution. Copy of such order or writ of execution shall immediately be furnished the Secretary of
Labor and Employment.

SECTION 3. Enforcement power on health and safety of workers. — (a) The Regional Director may likewise order
stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance
with the law, safety order or implementing rules and regulations poses grave and imminent danger to the health and
safety of workers in the workplace.

(b) Within 24 hours from issuance of the order of stoppage or suspension, a hearing shall be conducted to determine
whether the order for the stoppage of work or suspension of operation shall be lifted or not. The proceedings shall
be terminated within seventy-two (72) hours and a copy of such order or resolution shall be immediately furnished
the Secretary of Labor and Employment. In case the violation is attributable to the fault of the employer, he shall pay
the employees concerned their salaries or wages during the period of such stoppage of work or suspension of
operation.

SECTION 4. Power to review. — (a) The Secretary of Labor and Employment, at his own initiative or upon request of
the employer and/or employee, may review the order of the Regional Director. The order of the Regional Director
shall be immediately final and executory unless stayed by the Secretary of Labor and Employment upon posting by
the employer of a reasonable cash or surety bond as fixed by the Regional Director.

(b) In aid of his power of review, the Secretary of Labor and Employment may direct the Bureau of Working
Conditions to evaluate the findings or orders of the Regional Director. The decision of the Secretary of Labor and
Employment shall be final and executory.

SECTION 5. Interference and injunctions prohibited. — It shall be unlawful for any person or entity to obstruct,
impede, delay or otherwise render ineffective the exercise of the enforcement power of the Secretary of Labor and
Employment, Regional Director or their duly authorized representatives pursuant to the authority granted by the
Code and its implementing rules and regulations, and no inferior court or entity shall issue temporary or permanent
injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders
issued in accordance with the Code. In addition to the penalties provided for by the Labor Code, any government
employees found guilty of violation or abuse of authority, shall be subject to the provisions of Presidential Decree No.
6
6. Thirteenth Month Pay (PD 851)
PRESIDENTIAL DECREE NO. 851; REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13th-MONTH PAY

WHEREAS, it is necessary to further protect the level of real wages from the ravage of worldwide inflation;

WHEREAS, there has been no increase in the legal minimum wage rates since 1970;

WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of the working
masses so they may properly celebrate Christmas and New Year.

NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested in me by the Constitution, do hereby
decree as follows:

Section 1. All employers are hereby required to pay all their employees receiving a basic salary of not more than
P1,000 a month, regardless of the nature of their employment, a 13th-month pay not later than December 24 of
every year.

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Sec. 2. Employers already paying their employees a 13th-month pay or its equivalent are not covered by this Decree.

Sec. 3. This Decree shall take effect immediately.

a. History of the Law

 Dentech Mfg. Corp v. NLRC
Respondents used to work as welders, upholsterers, and painters of company making dental equipment. They were
dismissed: allegedly because of union activities (Confederation of Citizens Labor Union) They wanted to get their 13 th
month pay as well as refund of cash bond filed. They cited PD 851 saying that they are receiving more than 1k per
month and thus they are entitled (under the PD) to 13 th month pay. Company claimed that due to financial losses,
they are, under the same PD, exempted as distressed employers. LA ruled for reinstating complainants and NLRC
affirmed LA. Case was elevated to the Supreme Ct. by the Pet saying that Respondents abandoned their work and
that Memorandum No. 28 (eliminating 1k salary ceiling) does not apply to the case since it was enforced long after
he case was instituted.
Court held that 1k salary ceiling in PD 851 pertains to basic salary and not monthly compensation and that in
invoking exemption, the company must be deemed qualified after prior authorization from the Secretary of Labor and
Employment. As to another Issue: As for refund of the cash bond, the company said that these have been given to a
certain carinderia to pay for the outstanding accounts of private respondents. The main issue is WON such
requirement of cash bond is valid. No. Company failed to show that it is authorized by law to require workers to file
cash bond. Refund! Petition dismissed.

b. Coverage
REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW.

1. Removal of Salary Ceiling.

On August 13, 1986, President Corazon C. Aquino issued Memorandum Order No. 28 which provides as follows:

"Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are hereby required to
pay all their rank-and-file employees a 13th month pay not later than December 24 of every year."

Before its modification by the aforecited Memorandum Order, P.D. No. 851 excludes from entitlement to the 13th
month pay those employees who were receiving a basic salary of more than P1,000.00 a month. With the removal of
the salary ceiling of P1,000.00, all rank and file employees are now entitled to a 13th month pay regardless of the
amount of basic salary that they receive in a month if their employers are not otherwise exempted from the
application of P.D. No. 851. 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
one (1) month during a calendar year.

2. Exempted Employers.

The following employers are still not covered by P.D. No. 851:

a. The Government and any of its political subdivisions, including government-owned and controlled corporations,
excepts those corporations operating essentially as private subsidiaries of the Government;

b. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the
time of this issuance;

c. Employers of household helpers and persons in the personal service of another in relation to such workers; and

d. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed
amount for performing specific work, irrespective of the time consumed in the performance thereof, except where

61
the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such
workers.

As used herein, workers paid on piece-rate basis shall refer to those 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.

The term "its equivalent" as used on paragraph (b) hereof shall include 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, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-
monetary benefits. Where an employer pays less than required 1/12th of the employees basic salary, the employer
shall pay the difference.

3. Who are Rank-and File Employees.

The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial
employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered rank-and-file employees.

The above distinction shall be used as guide for the purpose of determining who are rank-and-file employees entitled
to the mandated 13th month pay.

4. Amount and payment of 13th Month Pay

(a) Minimum of the Amount. — The minimum 13th month pay required by law shall not be less than one-twelfth of
the total basic salary earned by an employee within a calendar year. For the year 1987, the computation of the 13th
month pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee
pursuant to Executive Order 178.

E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for non-agricultural workers
shall be integrated into the basic pay of covered employees effective 1 May 1987, and the remaining P8.00 effective
1 October 1987. For establishments with less than 30 employees and paid-up capital of P500,000 or less, the
integration of COLAs shall be as follows: P4.50 effective on 1 May 1987; P4.50 on 1 October 1987; and P8.00
effective 1 January 1988. Thus, in the computation of the 13th month pay for 1987, the COLAs integrated into the
basic pay shall be included as of the date of their integration.

Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said COLA as part
of the of the basic pay for the purpose of computing the 13th month pay shall be reckoned from the date of actual
integration.

The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all remunerations
or earning paid by this employer for services rendered but does not include allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused
vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th
month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the
basic salary of the employees.

(b) Time of Payment. — The required 13th month pay shall be paid not later than December 24 of each year. An
employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of
the regular school year and the other half on before the 24th of December of every year. The frequency of payment
of this monetary benefit may be the subject of agreement between the employer and the recognized/collective
bargaining agent of the employees.

5. 13th Month Pay for Certain Types of Employees.

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(a) Employees Paid by Results. — Employees who are paid on piece work basis are by law entitled to the 13th
month pay.

Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month
pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and
commission.

(b) Those with Multiple Employers. — Government employees working part time in a private enterprise, including
private educational institutions, as well as employees working in two or more private firms, whether on full or part
time basis, are entitled to the required 13th month pay from all their private employers regardless of their total
earnings from each or all their employers.

(c) Private School Teachers. — Private school teachers, including faculty members of universities and colleges, are
entitled to the required 13th month pay, regardless of the number of months they teach or are paid within a year, if
they have rendered service for at least one (1) month within a year.

6. 13th Month Pay of Resigned or Separated Employee.

An employee who has resigned or whose services were terminated at any time before the time for payment of the
13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar year up to the time of his resignation or termination
from the service. Thus, if he worked only from January up to September his proportionate 13th month pay should be
equivalent of 1/12 his total basic salary he earned during that period.

The payment of the 13th month pay may be demanded by the employee upon the cessation of employer-employee
relationship. This is consistent with the principle of equity that as the employer can require the employee to clear
himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him
upon the termination of the relationship.

7. Non-inclusion in Regular Wage.

The mandated 13th month pay need not be credited as part of regular wage of employees for purposes of
determining overtime and premium pays, fringe benefits insurance fund, Social Security, Medicare and private
retirement plans.

Prohibitions against reduction or elimination of benefits.

Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or
other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this
issuance.

c. Rationale (Whereas Clauses)

d. Amount and Date of Payment- Revised Guidelines

Revised Guidelines, Sec 4. Amount and payment of 13th Month Pay

(a) Minimum of the Amount. — The minimum 13th month pay required by law shall not be less than one-twelfth of
the total basic salary earned by an employee within a calendar year. For the year 1987, the computation of the 13th
month pay shall include the cost of living allowances (COLA) integrated into the basic salary of a covered employee
pursuant to Executive Order 178.

E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for non-agricultural workers
shall be integrated into the basic pay of covered employees effective 1 May 1987, and the remaining P8.00 effective
1 October 1987. For establishments with less than 30 employees and paid-up capital of P500,000 or less, the
integration of COLAs shall be as follows: P4.50 effective on 1 May 1987; P4.50 on 1 October 1987; and P8.00

63
effective 1 January 1988. Thus, in the computation of the 13th month pay for 1987, the COLAs integrated into the
basic pay shall be included as of the date of their integration.

Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said COLA as part
of the of the basic pay for the purpose of computing the 13th month pay shall be reckoned from the date of actual
integration.

The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all remunerations
or earning paid by this employer for services rendered but does not include allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused
vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th
month pay if by individual or collective agreement, company practice or policy, the same are treated as part of the
basic salary of the employees.

(b) Time of Payment. — The required 13th month pay shall be paid not later than December 24 of each year. An
employer, however, may give to his employees one half (½) of the required 13th month pay before the opening of
the regular school year and the other half on before the 24th of December of every year. The frequency of payment
of this monetary benefit may be the subject of agreement between the employer and the recognized/collective
bargaining agent of the employees.

1. Basic Wage/ Commissions – Sec 4

 Songco v. NLRC
F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the gound of
retrenchment. The petitioners opposed this claiming that the company is not suffering from any losses but later on,
contended that they are no longer contesting their dismissal but rather wanted to receive separation pay including
the commissions, allowances etc which they receive every month. LA excluded the commissions and NLRC dismissed
the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that “computation of
backwages and separation pay should include transportation and emergency living allowances.” As for commissions,
the court held that commission is not part of the basic salary but is the reward of an agent or salesman and that the
nature of his job as a salesman demonstrates that such type of remuneration is part of their salary. Petition is
Granted.
 Boie Takeda v. De La Serna
A routine inspection was conducted in the premises of Boie Takeda Chemicals and it was found that BT had not been
including the commissions earned by its medical representatives in the computation of their 13 th month pay. Labor
Dept issued a notice of inspection results which was disputed by BT expressing that commissions are not part of the
basic or regular pay of their med reps. Regional Director issued the order of payment/ BT filed a motion for
reconsideration which the Labor Secretary ruled on, affirming the regional director. Hence this petition.
The court rules for BT. Memorandum 28 issued by Corazon Aquino did not repeal PD 851 but rather merely modified
Sec 1 of PD 851 removing the P1k salary ceiling. Therefore, the interpretation of basic salary in PD 851 should be
followed in memorandum 28 which is “rate of pay for a standard work period exclusive of such additional payments
as bonuses and overtime”. Petitions Granted.
 Phil. Duplicators v. NLRC
LA directed petitioner to pay 13th month pay to private respondent employees plus the sales commissions. NLRC
affirmed this order and the petition for certiorari was dismissed. Thus this petition for reconsideration submitting that
the decision in Boie Takeda has reversed the decision of Philippine Duplicators and should thus be applicable in their
case.
The court said that Boie Takeda is not a precedent under stare decisis and that the petirion of PD has been decided
with finality. Also, PD did not raise the issue of the validity of the 13 th month pay law as issued by Franklin Drilon and
that the doctrines in the two cases actually co-exist.
Sales commissions received for every duplicating machine sold are part of the basc compensatin of the salesmen of
Philippine Duplicators in doing their job and that these are not over time payments or profit sharing payments not
any other benefit. These salesmen’s commissions form part of the definition of basic salary. A bonus is a gratuity or
act of liberality on the part of the giver which the recipient has no right to demand. Productivity bonuses, although
similar to Sales commission (both being incentives) are tied to productivity or profit generation whereas sales
commissions are directly proportional to the extent or energy of the employees endeavors such as in the case of BT
and PD. Petition is denied.

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 2. Substitute Payment – Sec 2
7. Bonus
a. Nature
b. Definition, When demandable
8. Working Conditions for Special Groups of Workers
A. Women
RA 7192 Women in Development and Nation Building Act
RA 7877 Anti sexual Harassment Act
1. Women under the constitution
Art II Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental
equality before the law of women and men.
Art XIII Section 14. The State shall protect working women by providing safe and healthful working conditions,
taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and
enable them to realize their full potential in the service of the nation.

2. Coverage

Book III, Rule XII, SECTION 1. General statement on coverage. — This Rule shall apply to all employers, whether
operating for profit or not, including educational, religious and charitable institutions, except to the Government and
to government-owned or controlled corporations and to employers of household helpers and persons in their
personal service insofar as such workers are concerned.

3. Prohibited Acts
a. Night Work/Exception
Art. 130. Nightwork prohibition. No woman, regardless of age, shall be employed or permitted or suffered to
work, with or without compensation:
a. In any industrial undertaking or branch thereof between ten o’clock at night and six o’clock in the morning of the
following day; or
b. In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between midnight and
six o’clock in the morning of the following day; or
c. In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine (9)
consecutive hours.
Art. 131. Exceptions. The prohibitions prescribed by the preceding Article shall not apply in any of the following
cases:
a. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake,
epidemic or other disasters or calamity, to prevent loss of life or property, or in cases of force majeure or imminent
danger to public safety;
b. In case of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the
employer would otherwise suffer;
c. Where the work is necessary to prevent serious loss of perishable goods;
d. Where the woman employee holds a responsible position of managerial or technical nature, or where the woman
employee has been engaged to provide health and welfare services;
e. Where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be
performed with equal efficiency by male workers;
f. Where the women employees are immediate members of the family operating the establishment or undertaking;
and
g. Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations.
b. Discrimination
Art. 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against any woman
employee with respect to terms and conditions of employment solely on account of her sex.
The following are acts of discrimination:
a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a
female employees as against a male employee, for work of equal value; and
b. Favoring a male employee over a female employee with respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes. Criminal liability for the willful commission of any unlawful act as
provided in this Article or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be
penalized as

65
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this
provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for money claims,
which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall proceed
independently of each other. (As amended by Republic Act No. 6725, May 12, 1989)

c. Stipulation against Marriage

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

Book III Rule XII SECTION 13. Prohibited acts. — It shall be unlawful for any employer:

(e) To require as a condition for a continuation of employment that a woman employee shall not get married or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated,
or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

d. Discharge to prevent enjoyment of benefits (137, 1)

Art. 137. Prohibited acts.
a. It shall be unlawful for any employer:
1. To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by
him for the purpose of preventing her from enjoying any of the benefits provided under this Code.

Book III Rule XII SECTION 13. Prohibited acts. — It shall be unlawful for any employer:

(a) To discharge any woman employed by him for the purpose of preventing such woman from enjoying the
maternity leave, facilities and other benefits provided under the Code;

e. Discharge on account of pregnancy (137, 2-3)

Art. 137. Prohibited acts.
a. It shall be unlawful for any employer:
2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her
pregnancy;
3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be
pregnant.

Book III Rule XII SECTION 13. Prohibited acts. — It shall be unlawful for any employer:

(b) To discharge such woman employee on account of her pregnancy, or while on leave or in confinement due to her
pregnancy;

(c) To discharge or refuse the admission of such woman upon returning to her work for fear that she may be
pregnant;

f. Discharge on account of testimony

Book III Rule XII SECTION 13. Prohibited acts. — It shall be unlawful for any employer:

(d) To discharge any woman or child or any other employee for having filed a complaint or having testified or being
about to testify under the Code; and

4. Facilities
Art. 132. Facilities for women. The Secretary of Labor and Employment shall establish standards that will ensure
the safety and health of women employees. In appropriate cases, he shall, by regulations, require any employer to:

66
a. Provide seats proper for women and permit them to use such seats when they are free from work and during
working hours, provided they can perform their duties in this position without detriment to efficiency;
b. To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for
women;
c. To establish a nursery in a workplace for the benefit of the women employees therein; and
d. To determine appropriate minimum age and other standards for retirement or termination in special occupations
such as those of flight attendants and the like.
Art. 134. Family planning services; incentives for family planning.
a. Establishments which are required by law to maintain a clinic or infirmary shall provide free family planning
services to their employees which shall include, but not be limited to, the application or use of contraceptive pills and
intrauterine devices.
b. In coordination with other agencies of the government engaged in the promotion of family planning, the
Department of Labor and Employment shall develop and prescribe incentive bonus schemes to encourage family
planning among female workers in any establishment or enterprise.

Book III Rule XII SECTION 14. Facilities for woman employees. — Subject to the approval of the Secretary of
Labor and Employment, the Bureau of Women and Young Workers shall, within thirty (30) days from the effective
date of these Rules, determine in an appropriate issuance the work situations for which the facilities enumerated in
Article 131 of the Code shall be provided, as well as the appropriate minimum age and other standards for retirement
or termination of employment in special occupations in which women are employed.

5. Special Women Matters

Art. 138. Classification of certain women workers. Any woman who is permitted or suffered to work, with or
without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishments under the
effective control or supervision of the employer for a substantial period of time as determined by the Secretary of
Labor and Employment, shall be considered as an employee of such establishment for purposes of labor and social
legislation.

6. Maternity Leave
Social Security Act of 1997, RA 8282, Sec 14-A Maternity Leave Benefit. - A female member who has paid
at least three (3) monthly contributions in the twelve-month period immediately preceding the semester of her
childbirth or miscarriage shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her
average daily salary credit for sixty (60) days or seventy-eight (78) days in case of caesarian delivery, subject to the
following conditions:

"(a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth,
which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide;

"(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of the maternity leave
application;

"(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act
for the same period for which daily maternity benefits have been received;

"(d) That the maternity benefits provided under this section shall be paid only for the first four (4) deliveries or
miscarriages;

"(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount of
maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment
and legality thereof; and

"(f) That if an employee member should give birth or suffer miscarriage without the required contributions having
been remitted for her by her employer to the SSS, or without the latter having been previously notified by the
employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which
said employee member would otherwise have been entitled to.

Art. 133. Maternity leave benefits.

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a. Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least
six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the expected date
of delivery and another four (4) weeks after normal delivery or abortion with full pay based on her regular or average
weekly wages. The employer may require from any woman employee applying for maternity leave the production of
a medical certificate stating that delivery will probably take place within two weeks.
b. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the
pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused
leave credits from which such extended leave may be charged.
c. The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a
woman employee after the effectivity of this Code.

7. Sexual Harrassment (RA 7877)

B. Minors
Art. 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 and Employment 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 and Employment.
Art. 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.

Omnibus Rules RULE XII Employment of Women and Minors

SECTION 2. Employable age. — Children below fifteen (15) years of age may be allowed to work under the direct
responsibility of their parents or guardians in any non-hazardous undertaking where the work will not in any way
interfere with their schooling. In such cases, the children shall not be considered as employees of the employers or
their parents or guardians.

SECTION 3. Eligibility for employment. — Any person of either sex, between 15 and 18 years of age, may be
employed in any non-hazardous work. No employer shall discriminate against such person in regard to terms and
conditions of employment on account of his age.

For purposes of this Rule, a non-hazardous work or undertaking shall mean any work or activity in which the
employee is not exposed to any risk which constitutes an imminent danger to his safety and health. The Secretary of
Labor and Employment shall from time to time publish a list of hazardous work and activities in which persons 18
years of age and below cannot be employed.

1. Minors under the constitution

Art II Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect
their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and
nationalism, and encourage their involvement in public and civic affairs.

2. Coverage

RA 9231 Section 2. Section 12 of the same Act, as amended, is hereby further amended to read as follows:

"Sec. 2. Employment of Children - Children below fifteen (15) years of age shall not be employed except:

"1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only
members of his/her family are employed: Provided, however, That his/her employment neither endangers his/her
life, safety, health, and morals, nor impairs his/her normal development: Provided, further, That the parent or legal
guardian shall provide the said child with the prescribed primary and/or secondary education; or

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"2) Where a child's employment or participation in public entertainment or information through cinema, theater,
radio, television or other forms of media is essential: Provided, That the employment contract is concluded by the
child's parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: Provided, further, That the following requirements in all instances are
strictly complied with:

"(a) The employer shall ensure the protection, health, safety, morals and normal development of the child;

"(b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into
account the system and level of remuneration, and the duration and arrangement of working time; and

"(c) The employer shall formulate and implement, subject to the approval and supervision of competent
authorities, a continuing program for training and skills acquisition of the child.

"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.

"For purposes of this Article, the term "child" shall apply to all persons under eighteen (18) years of age."

Book III RULE XII, Employment of Women and Minors.

SECTION 1. General statement on coverage. — This Rule shall apply to all employers, whether operating for profit or
not, including educational, religious and charitable institutions, except to the Government and to government-owned
or controlled corporations and to employers of household helpers and persons in their personal service insofar as
such workers are concerned.

3. Employment of Children
Art. 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 and
Employment 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 and Employment.

RA 7610 ARTICLE VIII WORKING CHILDREN SECTION 12. Employment of Children. — Children below
fifteen (15) years of age may be employed: Provided, That the following minimum requirements are present:

(a) The employer shall secure for the child a work permit from the Department of Labor and Employment;

(b) The employer shall ensure the protection, health, safety and morals of the child;

(c) The employer shall institute measures to prevent exploitation or discrimination taking into account the system and
level of remuneration, and the duration and arrangement of working time; and

(d) The employer shall formulate and implement a continuous program for training and skill acquisition of the child.

The Department of Labor Employment shall promulgate rules and regulations necessary for the effective
implementation of this section.

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SECTION 13. Non-formal Education for Working Children. — The Department of Education, Culture and
Sports shall promulgate a course design under its non-formal education program aimed at promoting the intellectual,
moral and vocational efficiency of working children who have not undergone or finished elementary or secondary
education. Such course design shall integrate the learning process deemed most effective under giver circumstances.

SECTION 14. Prohibition on the Employment of Children Certain Advertisements. — No person shall
employ child models in all commercials or advertisements promoting alcoholic beverages, intoxicating drinks, tobacco
and its byproducts and violence.

SECTION 15. Duty of Employer. — Every employer shall comply with the duties provided for in Articles 108 and
109 of Presidential Decree No. 603.

SECTION 16. Penalties. — Any person who shall violate any provision of this Article shall suffer the penalty of a
fine of not less than One thousand pesos (P1,000) but not more than Ten thousand pesos (P10,000) or
imprisonment of not less than three (3) months but not more than three (3) years, or both at the discretion of the
court; Provided, That, in case of repeated violations of the provisions of this Article, the offender's license to operate
shall be revoked.

Department Order No. 4: RE: Hazardous Work and Activities to Persons Below 18 Years of Age

The Department of Labor and Employment’s (DOLE) Order No. 4 of 1999 outlines categories of hazardous work and
prohibits the employment of children in these categories. The list includes work with dangerous substances (e.g.,
adhesives used in footwear manufacture), work hazardous to morals (e.g., employment in dance halls), work that
entails exposure to extreme elements of cold, heat, noise or pressure (e.g., deep-sea diving and underground work),
and work that is hazardous by its nature (e.g., mining, logging and pyrotechnics production).

4. Hours of Work

RA 9231 Section 3. The same Act, as amended, is hereby further amended by adding new sections to be
denominated as Sections 12-A, 12-B, 12-C, and 12-D to read as follows:

"Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions provided in Section 12 of this Act, as
amended:

"(1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours a week:
Provided, That the work shall not be more than four (4) hours at any given day;

"(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8)
hours a day, and in no case beyond forty (40) hours a week;

"(3) No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the evening and six
o'clock in the morning of the following day and no child fifteen (15) years of age but below eighteen (18) shall be
allowed to work between ten o'clock in the evening and six o'clock in the morning of the following day."

5. Prohibitions against Worst forms of child labor

RA 9231 Sec 3 "Sec. 12-D. Prohibition Against Worst Forms of Child Labor . - No child shall be engaged in the worst
forms of child labor. The phrase "worst forms of child labor" shall refer to any of the following:

"(1) All forms of slavery, as defined under the "Anti-trafficking in Persons Act of 2003", or practices similar
to slavery such as sale and trafficking of children, debt bondage and serfdom and forced or compulsory
labor, including recruitment of children for use in armed conflict; or

"(2) The use, procuring, offering or exposing of a child for prostitution, for the production of pornography or
for pornographic performances; or

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 "(3) The use, procuring or offering of a child for illegal or illicit activities, including the production and
trafficking of dangerous drugs and volatile substances prohibited under existing laws; or

"(4) Work which, by its nature or the circumstances in which it is carried out, is hazardous or likely to be
harmful to the health, safety or morals of children, such that it:

"a) Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or

"b) Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful psychologically or may
prejudice morals; or

"c) Is performed underground, underwater or at dangerous heights; or

"d) Involves the use of dangerous machinery, equipment and tools such as power-driven or explosive power-
actuated tools; or

"e) Exposes the child to physical danger such as, but not limited to the dangerous feats of balancing, physical
strength or contortion, or which requires the manual transport of heavy loads; or

"f) Is performed in an unhealthy environment exposing the child to hazardous working conditions, elements,
substances, co-agents or processes involving ionizing, radiation, fire, flammable substances, noxious components and
the like, or to extreme temperatures, noise levels, or vibrations; or

"g) Is performed under particularly difficult conditions; or

"h) Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes and other
parasites; or

"i) Involves the manufacture or handling of explosives and other pyrotechnic products."

6. Discrimination

Art. 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.

7. Jurisdiction

RA 9231 Section 9. The same Act is hereby further amended by adding new sections to Section 16 to be
denominated as Sections 16-A, 16-B and 16-C to read as follows:

"Sec. 16-A. Jurisdiction - The family courts shall have original jurisdiction over all cases involving offenses
punishable under this Act: Provided, That in cities or provinces where there are no family courts yet, the
regional trial courts and the municipal trial courts shall have concurrent jurisdiction depending on the
penalties prescribed for the offense charged.

"The preliminary investigation of cases filed under this Act shall be terminated within a period of thirty (30)
days from the date of filing.

"If the preliminary investigation establishes a prima facie case, then the corresponding information shall be
filed in court within forty eight (48) hours from the termination of the investigation.

"Trial of cases under this Act shall be terminated by the court not later than ninety (90) days from the date
of filing of information. Decision on said cases shall be rendered within a period of fifteen (15) days from
the date of submission of the case.

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 "Sec. 15. Exemptions from Filing Fees. - When the victim of child labor institutes a separate civil action for
the recovery of civil damages, he/she shall be exempt from payment of filing fees.

"Sec. 16-C. Access to Immediate Legal, Medical and Psycho-Social Services - The working child shall have
the right to free legal, medical and psycho-social services to be provided by the State."

C. HOUSEHELPERS/ CAREGIVERS
1. Definition, Section 1b

RULE XIII Employment of Househelpers

SECTION 1. General statement on coverage. — (a) The provisions of this Rule shall apply to all househelpers
whether employed on full or part-time basis.

(b) The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to any
person, whether male or female, who renders services in and about the employer's 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 employer's family.
2. Coverage
Art. 141. Coverage. This Chapter shall apply to all persons rendering services in households for compensation.
"Domestic or household service" shall mean service in the employer’s home which is usually necessary or desirable
for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the
members of the employer’s household, including services of family drivers.

3. Non Household Work

Art. 145. Assignment to non-household work. No househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-
agricultural workers as prescribed herein.

 Apex Mining Co v. NLRC

Candido performed laundry services at the staff house of company. Began as piece rate worker then later was paid
on monthly basis. On Dec. 18, 1987, while she was hanging laundry, she fell on her back. She immediately reported
incident to dela Rosa, her immediate supervisor who offered her 2thou then 5thou for her to quit her job. She
refused and preferred to return to work but petitioner did not allow her to work and she was dismissed. Petitioner
claims that Candido should be treated as a mere househelper or domestic servant and not as a regular employee.
Issue: WON Candida was a householder; Held: No;
Ratio:
1. (b) The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to any
person, whether male or female, who renders services in and about the employer's 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 employer's family.
2. criteria: personal comfort and enjoyment of the family of the employer in the home of said employer
Separation pay granted. Reinstatement no longer possible.

4. Conditions of Employment
141; Art. 142. Contract of domestic service. The original contract of domestic service shall not last for more
than two (2) years but it may be renewed for such periods as may be agreed upon by the parties.
Art. 143. Minimum wage.
a. Househelpers shall be paid the following minimum wage rates:
1. Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan cities and
municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Parañaque, Las Piñas, Pasig,
Marikina, Valenzuela,
Taguig and Pateros in Metro Manila and in highly urbanized cities;
2. Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class municipalities; and
3. Five hundred fifty pesos (P550.00) a month for those in other municipalities. Provided, That the employers shall
review the employment contracts of their househelpers every three (3) years with the end in view of improving the
terms and conditions thereof.

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Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be
covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder. (As amended by
Republic Act No. 7655, August 19, 1993)
Art. 144. Minimum cash wage. The minimum wage rates prescribed under this Chapter shall be the basic cash
wages which shall be paid to the househelpers in addition to lodging, food and medical attendance.
145; Art. 146. Opportunity for education. If the househelper is under the age of eighteen (18) years, the
employer shall give him or her an opportunity for at least elementary education. The cost of education shall be part
of the househelper’s compensation, unless there is a stipulation to the contrary.
Art. 147. Treatment of househelpers. The employer shall treat the househelper in a just and humane manner. In
no case shall physical violence be used upon the househelper.
Art. 148. Board, lodging, and medical attendance. The employer shall furnish the househelper, free of charge,
suitable and sanitary living quarters as well as adequate food and medical attendance.
Art. 149. Indemnity for unjust termination of services. If the period of household service is fixed, neither the
employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause.
If the househelper is unjustly dismissed, he or she shall be paid the compensation already earned plus that for fifteen
(15) days by way of indemnity. If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid
salary due
him or her not exceeding fifteen (15) days.
Art. 150. Service of termination notice. If the duration of the household service is not determined either in
stipulation or by the nature of the service, the employer or the househelper may give notice to put an end to the
relationship five (5) days before the intended termination of the service.
Art. 151. Employment certification. Upon the severance of the household service relation, the employer shall
give the househelper a written statement of the nature and duration of the service and his or her efficiency and
conduct as househelper.
Art. 152. Employment record. The employer may keep such records as he may deem necessary to reflect the
actual terms and conditions of employment of his househelper, which the latter shall authenticate by signature or
thumbmark upon request of the employer.

Civil Code
Art. 1689. Household service shall always be reasonably compensated. Any stipulation that household service is
without compensation shall be void. Such compensation shall be in addition to the house helper's lodging, food, and
medical attendance.

Art. 1690. The head of the family shall furnish, free of charge, to the house helper, suitable and sanitary quarters as
well as adequate food and medical attendance.

Art. 1691. If the house helper is under the age of eighteen years, the head of the family shall give an opportunity to
the house helper for at least elementary education. The cost of such education shall be a part of the house helper's
compensation, unless there is a stipulation to the contrary.

Art. 1692. No contract for household service shall last for more than two years. However, such contract may be
renewed from year to year.

Art. 1693. The house helper's clothes shall be subject to stipulation. However, any contract for household service
shall be void if thereby the house helper cannot afford to acquire suitable clothing.

Art. 1694. The head of the family shall treat the house helper in a just and humane manner. In no case shall physical
violence be used upon the house helper.

Art. 1695. House helper shall not be required to work more than ten hours a day. Every house helper shall be
allowed four days' vacation each month, with pay.

Art. 1696. In case of death of the house helper, the head of the family shall bear the funeral expenses if the house
helper has no relatives in the place where the head of the family lives, with sufficient means therefor.

Art. 1697. If the period for household service is fixed neither the head of the family nor the house helper may
terminate the contract before the expiration of the term, except for a just cause. If the house helper is unjustly
dismissed, he shall be paid the compensation already earned plus that for fifteen days by way of indemnity. If the

73
house helper leaves without justifiable reason, he shall forfeit any salary due him and unpaid, for not exceeding
fifteen days.

Art. 1698. If the duration of the household service is not determined either by stipulation or by the nature of the
service, the head of the family or the house helper may give notice to put an end to the service relation, according to
the following rules:

(1) If the compensation is paid by the day, notice may be given on any day that the service shall end at the close of
the following day;

(2) If the compensation is paid by the week, notice may be given, at the latest on the first business day of the week,
that the service shall be terminated at the end of the seventh day from the beginning of the week;

(3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the month, that
the service shall cease at the end of the month.

Art. 1699. Upon the extinguishment of the service relation, the house helper may demand from the head of the
family a written statement on the nature and duration of the service and the efficiency and conduct of the house
helper.

D. HOMEWORKERS
1. Coverage and Regulation
Art. 153. Regulation of industrial homeworkers. The employment of industrial homeworkers and field
personnel shall be regulated by the government through the appropriate regulations issued by the Secretary of Labor
and Employment to ensure the general welfare and protection of homeworkers and field personnel and the industries
employing them.
Art. 154. Regulations of Secretary of Labor. The regulations or orders to be issued pursuant to this Chapter
shall be designed to assure the minimum terms and conditions of employment applicable to the industrial
homeworkers or field personnel involved.
Art. 155. Distribution of homework. For purposes of this Chapter, the "employer" of homeworkers includes any
person, natural or artificial who, for his account or benefit, or on behalf of any person residing outside the country,
directly or indirectly, or through an employee, agent contractor, sub-contractor or any other person:
1. Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a
home and thereafter to be returned or to be disposed of or distributed in accordance with his directions; or
2. Sells any goods, articles or materials to be processed or fabricated in or about a home and then rebuys them after
such processing or fabrication, either by himself or through some other person.

D.O 5 now Book IIII Rule XIV, SECTION 1. General statement on coverage. — This Rule shall apply to any
homeworker 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.

DEPARTMENT ORDER NUMBER 5

2. Definition
DEPARTMENT ORDER NUMBER 5; SEC 2

D.O 5 now Book IIII Rule XIV, SECTION 2. Definitions. — As used in this Rule, the following terms shall have the
meanings indicated hereunder:

(a) "Home" means any room, house, apartment, or other premises used regularly, in whole or in part, as a dwelling
place, except those situated within the premises or compound of an employer, contractor, and the work performed
therein is under the active or personal supervision by, or for, the latter.

(b) "Employer" means any natural or artificial person who, for his own account or benefit, or on behalf of any person
residing outside the Philippines, directly or indirectly, or through any employee, agent, contractor, sub-contractor; or
any other person:

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(1) Delivers or causes to be delivered any goods or articles to be processed in or about a home and thereafter to be
returned or to be disposed of or distributed in accordance with his direction; or

(2) Sells any goods or articles for the purpose of having such goods or articles processed in or about a home and
then repurchases them himself or through another after such processing.

(c) "Contractor" or "sub-contractor" means any person who, for the account or benefit of an employer, delivers or
caused to be delivered to a homeworker goods or articles to be processed in or about his home and thereafter to be
returned, disposed of or distributed in accordance with the direction of the employer.

(d) "Processing" means manufacturing, fabricating, finishing, repairing, altering, packing, wrapping or handling any
material.

3. Registration
DEPARTMENT ORDER NUMBER 5; 4 AND 6

4. Conditions of Employment/ Deductions

DEPARTMENT ORDER NUMBER 5; 6 TO 9

Book IIII Rule XIV, SECTION 4. Deductions. — No employee, contractor, or sub-contractor shall make any deduction
from the homeworker's earnings for the value of materials which have been lost, destroyed, soiled or otherwise
damaged unless the following conditions are met:

(a) The homeworker concerned is clearly shown to be responsible for the loss or damage;

(b) The employee is given reasonable opportunity to show cause why deductions should not be made;

(c) The amount of such deduction is fair and reasonable and shall not exceed the actual loss or damages; and

(d) The deduction is made at such rate that the amount deducted does not exceed 20% of the homeworker's
earnings in a week.

Book IIII Rule XIV, SECTION 5. Conditions for payment of work. — (a) The employer may require the homeworker to
re-do work which has been improperly executed without having to pay the stipulated rate more than once.

(b) An employer, contractor, or sub-contractor need not pay the homeworker for any work which has been done on
goods and articles which have been returned for reasons attributable to the fault of the homeworker.

5. Joint and Several Liability of Employment/ Contractor

DEPARTMENT ORDER NUMBER 5; SEC 11

Book IIII Rule XIV, SECTION 7. Liability of employer and contractor. — Whenever an employer shall contract with
another for the performance of the employer's work, it shall be the duty of such employer to provide in such contract
that the employees or homeworkers of the contractor and the latter's sub-contractor shall be paid in accordance with
the provisions of this Rule. In the event that such contractor or sub-contractor fails to pay the wages or earnings of
his employees or homeworkers as specified in this Rule, such employer shall be jointly and severally liable with the
contractor or sub-contractor to the workers of the latter, to the extent that such work is performed under such
contract, in the same manner as if the employees or homeworkers were directly engaged by the employer.
6. Prohibitions
DEPARTMENT ORDER NUMBER 5; SEC 13

7. Enforcement
DEPARTMENT ORDER NUMBER 5; SEC 10

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 9. Medical Dental and Occupational Safety
a. Coverage

BOOK FOUR Health, Safety and Welfare Benefits RULE I Medical and Dental Services

SECTION 1. Coverage. — This Rule shall apply to all employers, whether operating for profit or not, including the
Government and any of its political subdivisions and government-owned or controlled corporations, which employs in
any workplace one or more workers.

The development and enforcement of dental standards shall continue to be under the responsibility of the Bureau of
Dental Health Services of the Department of Health.

b. First Aid Treatment

Art. 156. First-aid treatment. Every employer shall keep in his establishment such first-aid medicines and
equipment as the nature and conditions of work may require, in accordance with such regulations as the Department
of Labor and Employment shall prescribe. The employer shall take steps for the training of a sufficient number of
employees in first-aid
treatment.

c. Emergency Medical and Dental Services

1. When Required
Art. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his
employees in any locality with free medical and dental attendance and facilities consisting of:
a. The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than
two hundred (200) except when the employer does not maintain hazardous workplaces, in which case, the services
of a graduate first-aider shall be provided for the protection of workers, where no registered nurse is available. The
Secretary of Labor and Employment shall provide by appropriate regulations, the services that shall be required
where the number of employees does not exceed fifty (50) and shall determine by appropriate order, hazardous
workplaces for purposes of this Article;
b. The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the
number of employees exceeds two hundred (200) but not more than three hundred (300); and
c. The services of a full-time physician, dentist and a full-time registered nurse as well as a dental clinic and an
infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of
employees exceeds three hundred (300). In cases of hazardous workplaces, no employer shall engage the services of
a physician or a dentist
who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on
part-time basis, and not less than eight (8) hours, in the case of those employed on full-time basis. Where the
undertaking is non-hazardous in nature, the physician and dentist may be engaged on retainer basis, subject to such
regulations as the Secretary of Labor and Employment may prescribe to insure immediate availability of medical and
dental treatment and
attendance in case of emergency. (As amended by Presidential Decree NO. 570-A, Section 26)

2. When Not Required

Art. 158. When emergency hospital not required. The requirement for an emergency hospital
or dental clinic shall not be applicable in case there is a hospital or dental clinic which is accessible
from the employer’s establishment and he makes arrangement for the reservation therein of the
necessary beds and dental facilities for the use of his employees.

d. Employer Assistance
Art. 161. Assistance of employer. It shall be the duty of any employer to provide all the
necessary assistance to ensure the adequate and immediate medical and dental attendance and
treatment to an injured or sick employee in case of emergency.

e. Occupational Safety and Health Standards, training of supervisor or technician

1. When Required

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Book IV Rule II SECTION 5. Training of personnel in safety and health. — Every employer shall take steps to train a
sufficient number of his supervisors or technical personnel in occupational safety and health. An employer may
observe the following guidelines in the training of his personnel:

(a) In every non-hazardous establishment or workplace having from fifty (50) to four hundred (400) workers each
shift, at least one of the supervisors or technical personnel shall be trained in occupational health and safety and
shall be assigned as part-time safety man. Such safety man shall be the secretary of the safety committee.

(b) In every non-hazardous establishment or workplace having over four hundred (400) workers per shift, at least
two of its supervisors shall be trained and a full-time safety man shall be provided.

(c) In every hazardous establishment or workplace having from twenty (20) to two hundred (200) workers each shift,
at least one of it supervisors or technical man shall be trained who shall work as part-time safety man. He shall be
appointed as secretary of the safety committee therein.

(d) In every hazardous establishment or workplace having over two hundred (200) workers each shift, at least two of
its supervisors or technical personnel shall be trained and one of them shall be appointed full-time safety man and
secretary of the safety committee therein.

2. When Not Required

Book IV Rule II SECTION 5. Training of personnel in safety and health. — Every employer shall take steps to train a
sufficient number of his supervisors or technical personnel in occupational safety and health. An employer may
observe the following guidelines in the training of his personnel:

(e) The employment of a full-time safety man not be required where the employer enters into a written contract
with a qualified consulting organization which shall develop and carry out his safety and health activities; Provided,
That the consultant shall conduct plant visits at least four (4) hours a week and is subject to call anytime to conduct
accident investigations and is available during scheduled inspections or surveys by the Secretary of Labor and
Employment or his authorized representatives.

The provisions of this Section shall be made mandatory upon orders of the Secretary of Labor and Employment as
soon as he is satisfied that adequate facilities on training in occupational safety and health are available in the
Department of Labor and Employment and other public or private entities duly accredited by the Secretary of Labor
and Employment.

f. Enforcement or DOLE obligations

Chapter II OCCUPATIONAL HEALTH AND SAFETY
Art. 162. Safety and health standards. The Secretary of Labor and Employment shall, by appropriate orders, set
and enforce mandatory occupational safety and health standards to eliminate or reduce occupational safety and
health hazards in all workplaces and institute new, and update existing, programs to ensure safe and healthful
working conditions in all places of employment.
Art. 163. Research. It shall be the responsibility of the Department of Labor and Employment to conduct
continuing studies and research to develop innovative methods, techniques and approaches for dealing with
occupational safety and health problems; to discover latent diseases by establishing causal connections between
diseases and work in environmental conditions; and to develop medical criteria which will assure insofar as
practicable that no employee will suffer impairment or diminution in health, functional capacity, or life expectancy as
a result of his work and working conditions.
Art. 164. Training programs. The Department of Labor and Employment shall develop and implement training
programs to increase the number and competence of personnel in the field of occupational safety and industrial
health.
Art. 165. Administration of safety and health laws.
a. The Department of Labor and Employment shall be solely responsible for the administration and enforcement of
occupational safety and health laws, regulations and standards in all establishments and workplaces wherever they
may be located; however, chartered cities may be allowed to conduct industrial safety inspections of establishments
within their
respective jurisdictions where they have adequate facilities and competent personnel for the purpose as determined
by the Department of Labor and Employment and subject to national standards established by the latter.

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b. The Secretary of Labor and Employment may, through appropriate regulations, collect reasonable fees for the
inspection of steam boilers, pressure vessels and pipings and electrical installations, the test and approval for safe
use of materials, equipment and other safety devices and the approval of plans for such materials, equipment and
devices. The fee so collected shall be deposited in the national treasury to the credit of the occupational safety and
health fund and shall be expended exclusively for the administration and enforcement of safety and other labor laws
administered by the Department of Labor and Employment.

Article 166 to 208 is repealed by the SSS Law of 1997

Re: Art. 209 See: NHI Law
Art. 209. Medical care. The Philippine Medical Care Plan shall be implemented as provided under RA 6111, as
amended.

Book IV Rule II SECTION 8. Administration and enforcement. — (a) Every employer shall give to the Secretary of
Labor and Employment or his duly authorized representative access to its premises and records at any time of the
day and night when there is work being undertaken therein for the purpose of determining compliance with the
provisions of this Rule.

(b) Every establishment or workplace shall be inspected at least once a year to determine compliance with the
provisions of this Rule. Special inspection visits, however, may be authorized by the Regional Office to investigate
accidents, conduct surveys requested by the Bureau of Working Conditions, follow-up inspection, recommendations
or to conduct investigations or inspections upon request of an employer, worker or a labor union in the establishment

III. Employee Classification

Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of Employment

Section 1. Coverage. — This Rule shall apply to all establishments and undertakings, whether operated for profit or
not, including educational, medical, charitable and religious institutions and organizations in cases of regular
employment with the exception of the Government and its political subdivisions including government-owned or
controlled corporations.

1. Coverage –
Art. 278. Coverage. The provisions of this Title shall apply to all establishments or undertakings, whether for profit
or not.
Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of Employment Section 1.
Coverage. — This Rule shall apply to all establishments and undertakings, whether operated for profit or not,
including educational, medical, charitable and religious institutions and organizations in cases of regular employment
with the exception of the Government and its political subdivisions including government-owned or controlled
corporations.
2. Employee Classification – 280 to 281
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall
be considered a regular employee.
Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of Employment Section 5.
(a) Regular employment. - The provisions of written agreements to the contrary notwithstanding and regardless of

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the oral agreements of the parties, employment shall be deemed regular for purposes of Book VI of the Labor Code
where employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of the
employee or where the job, work or service to be performed is seasonal in nature and the employment is for the
duration of the season.
(b) Casual employment. - There is casual employment where an employee is engaged to perform a job, work or
service which is merely incidental to the business of the employer, and such job, work or service is for a definite
period made known to the employee at the time of engagement: Provided, that any employee who has rendered at
least one year of service, whether such service is continuous or not, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such activity exists.
Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and privileges, and shall be
subject to the duties and obligations, as may be granted by law to regular employees during the period of their
actual employment."
Section 6. Probationary employment. - There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.
"Probationary employment shall be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in accordance with the
standards prescribed by the Department of Labor and Employment, the period of probationary employment shall be
limited to the authorized learnership or apprenticeship period, which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment shall not exceed
six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only for a just or
authorized cause, when he fails to qualify as a regular employee in accordance with reasonable standards prescribed
by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular employee.
a. Employer recognition
 Romares v. NLRC
Artemio Romares was employed by PILMICO Foods Corporation in its Maintenance/Projects/Engineering Department
to paint, repair and conduct maintenance on the Corporation’s business premises. Upon his dismissal from the
company he filed a complaint with the LA for illegal dismissal. The LA agreed with him saying that the records
revealed that he was hired, terminated, and rehired again 3 times in a span of more than 3 years and performed the
same functions in the same department.
In Kimberly Independent Labor Union v. Hon. Franklin Drilon, the court classified 2 kinds of regular employees
1.) Those engaged to perform activities which are usually necessary or desirable in the usual business or trade
of the employer
2.) Those who have rendered at least one year of service whether continuous or broken.
The LA ruled that Romares falls within the 2nd classification and thus a regular employee.
As for his illegal dismissal the 2 requisites laid down in National Service Corp v. NLRC which are:
1.) Notice which apprises the employee of particular acts or omissions
2.) Subsequent notice which informs the employee of the employer’s decision to dismiss him.
Both of which were not complied with by PILMICO.
NLRC ruled that the termination was due to the expiration of the contracts and reversed the ruling f the LA.
They said that the applicable rule is Art 280, LC which governs employment contracts for fixed or temporary periods.
Thus this petition. The court found the petition meritorious because the petitioner’s work with the company as a
mason is usually necessary and desirable in the business and trade of PILMICO and during each rehiring, he was
assigned to the same position. The contracts were not of Romares’ temporary employment but a clear circumvention
of the employee’s right to security of tenure.
The court cited Brent School v. Zamora which laid down criteria under which the “term employment” cannot be said
to be in circumvention of the law of security of tenure (279,LC)
1.) Fixed Period of employment was knowingly and voluntarily agreed upon by the parties without any force,
duress or improper pressure. (with consent)
2.) ER and EE dealt with each other in equal terms with no moral dominance exercised by the former on the
latter.
The court held that none of the requisites were complied with by PILMICO and thus the petition is granted.

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 b. Employer Determination/ Designation
 Phil Federation v. NLRC and Victoria Abril
Victoria Abril was employed by Philippine Federation of Credit Cooperatives (PFCCI) in different positions within the
company such as secretary in 1985 and cashier and again as secretary in 1988, shortly after resuming her position,
she gave birth and upon her return in Nov 1989, she found that she was already replaced. However, she accepted
the offer of the position of Regional Field Officer as evidenced by the contract prepared by PFCCI which stipulated tat
respondent’s employment status shall be probationary for 6 months. She was dismissed in 1991.
She then filed a case for illegal dismissal which was dismissed by the LA for lack of merit. NLRC reversed the decision
thus this petition. The court found no merit in the company’s petition.
International Catholic Migration v. NLRC defined a probationary employee as one who is on trail by an employer who
determines whether he is qualified for permanent employment. However, probationary employees are also afforded
by the Labor Code with security of tenure, except for a just cause, he cannot be terminated.
The petitioners argue that Abril is a casual employee under Art 280, LC. Art 280 defines 3 kinds of employees:
1.) Regular employees: those whose work is necessary and desirable to the usual business of the employer
2.) Project employees: those whose employment has been fixed for a specific project (only for the duration of
the season)
3.) Casual employees: neither regular nor private.
Upon construing the contract, it can be seen that the stipulations are ambiguous and thus because a contract of
employment is a contract of adhesion, it must be construed strictly against the party who prepared it. Therefore the
dismissal is illegal and the petition is dismissed.
c. Management Prerogative
 Industrial Timber v. Ababon
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant leased to Industrial Timber Corporation
(ITC) on August 30, 1985 for a period of five years. They hired 387 workers. ITC notified the Department of Labor
and Employment (DOLE) and its workers that effective March 19, 1990 it will undergo a “no plant operation” due to
lack of raw materials. IPGC notified ITC of the expiration of the lease contract in August 1990 and its intention not to
renew the same. ITC notified the DOLE and its workers of the plant’s shutdown due to the non-renewal of anti-
pollution permit that expired in April 1990. This was followed by a final notice of closure or cessation of business
operations on August 17, 1990 with an advice for all the workers to collect the benefits due them under the law and
CBA.
IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit which included the anti-
pollution permit, by the DENR on the same day the ITC ceased operation of the plant.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal,
LA ruled for ITC. Ababon, et al. appealed to the NLRC. NLRC ordered the reinstatement of the employees to their
former positions. ITC and IPGC filed a Motion for Reconsideration; it was dismissed for being filed out of time. CA set
aside the decision of the NLRC.
Both parties filed their respective motions for reconsideration which were denied, hence, the present consolidated
petitions. The court allowed the petition for relief despite procedural defect of filing the motion for reconsideration
three days late.
The court also held that the right to close the operation of an establishment or undertaking is one of the authorized
causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose
of circumventing the provisions on termination of employment embodied in the Labor Code. Article 283 of the Labor
Code provides that a partial or total closure or cessation of operations of establishment or undertaking may either be
due to serious business losses or financial reverses or otherwise.
Three requirements are necessary for a valid cessation of business operations:
(a) service of a written notice to the employees and to the DOLE at least one month before the intended date
thereof;
(b) the cessation of business must be bona fide in character; and
(c) payment to the employees of termination pay amounting to one month pay or at least one-half month pay for
every year of service, whichever is higher.
The court found that ITC’s closure or cessation of business was done in good faith and for valid reasons. Records
reveal that the decision to permanently close business operations was arrived at after a suspension of operation for
several months precipitated by lack of raw materials used for milling operations, the expiration of the anti-pollution
permit.
But although the closure was done in good faith and for valid reasons, we find that ITC did not comply with the
notice requirement. ITC notified its employees and the DOLE of the ‘no plant operation’ on March 16, 1990 due to
lack of raw materials. This was followed by a ‘shut down’ notice dated June 26, 1990 due to the expiration of the

80
anti-pollution permit. However, this shutdown was only temporary as ITC assured its employees that they could
return to work once the renewal is acted upon by the DENR.
The court said that where dismissal is based on an authorized cause under Article 283 of the Labor Code but the
employer failed to comply with the notice requirement, the sanction should be stiff because the dismissal process
was initiated by the employer’s exercise of his management prerogative. P50,000.00 to each employee was awarded
as nominal damages. CA reversed. NLRC affirmed.
A. Regular Employees
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists.
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall
be considered a regular employee.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
a. The names and addresses of the learners; b. The duration of the learnership period, which shall not exceed three (3) months; c. The wages or
salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum wage; and
d. A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership.
All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular
employees if training is terminated by the employer before the end of the stipulated period through no fault of the
learners.
Omnibus Rules Book VI Rule I Sec 5 A&B and 6
Section 5. (a) Regular employment. - The provisions of written agreements to the contrary notwithstanding and
regardless of the oral agreements of the parties, employment shall be deemed regular for purposes of Book VI of the
Labor Code where employee has been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of the
employee or where the job, work or service to be performed is seasonal in nature and the employment is for the
duration of the season.
(b) Casual employment. - There is casual employment where an employee is engaged to perform a job, work or
service which is merely incidental to the business of the employer, and such job, work or service is for a definite
period made known to the employee at the time of engagement: Provided, that any employee who has rendered at
least one year of service, whether such service is continuous or not, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such activity exists.
Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and privileges, and shall be
subject to the duties and obligations, as may be granted by law to regular employees during the period of their
actual employment."
Section 6. Probationary employment. - There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.
"Probationary employment shall be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in accordance with the
standards prescribed by the Department of Labor and Employment, the period of probationary employment shall be
limited to the authorized learnership or apprenticeship period, which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment shall not exceed
six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only for a just or
authorized cause, when he fails to qualify as a regular employee in accordance with reasonable standards prescribed
by the employer.

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(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular employee.
i.) Nature of Work
 Poseidon Fishing v. NLRC
Jimy S. Estoquia was hired by Poseidon Fishing as a Chief Mate and was promoted to Boat Captain 5 years later
(1993). He was demoted to radio operator in 1999 for unknown reasons. On July 2000, he failed to record a 7:25am
call in the log book but was able to record it after the 7:30 call. This prompted Poseidon to demand from him an
explanation and he was instructed the same day to collect his separation pay from the company. Estoquia filed for
illegal dismissal with the LA who ruled in his favor. The LA ruled that even if he was hired as a casual employee, he
earned the status of regular employee after 12 years of service. Petitioners filed their memorandum of appeal with
the NLRC for the reversal of the aforesaid decision. NLRC affirmed the LA. Thus this petition. The petitioner claims
that he was paid on a por viaje scheme and that Estoquia was hired on a fixed term contract. They also say that
deep sea fishing is seasonal in nature and thus he was only a project employee (assigned to carry out a specific
project for the project’s duration and scope only). The court held that in Brent v. Zamora, the acid test in considering
fixed term contracts as valid if from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy. In
Pakistan International Airlines Corporation v. Ople it ruled that the critical consideration is the presence or absence of
a substantial indication that the period specified in an employment agreement was designed to circumvent the
security of tenure of regular employees. In the case at bar, the Kasunduan was not only vague, it also failed to
provide an actual of specific date or period for the contract.
It was shown by the respondent through his SSS employee contribution and payrolls that he was repeatedly hired as
an employee of the company for 12 years. Poseidon, who was supposed to carry the records was not able to refute
the payrolls and SSS shown by Estioquia. Also, the court held in Philex Mining v. NLRC that fishing is not seasonal but
continuous in nature. In the same case, project employees were defined as 1) those hired for a specific project or
undertaking 2. the completion of which has been determined at the time of employment or engagement of the
employee.
The test is WON the project employees were assigned to carry out a specific project for a duration which was already
specified to the employees at the time they were engaged. These were not complied with by the petitioner; Estoquia
is a regular employee. Petition denied.
 Eddie Pacquing v. Coca Cola
Eddie Pacquing was one of the sales route helpers or cargadores-pahinantes of Coca-Cola Bottlers Philippines, Inc.
Petitioners were part of a complement of three personnel comprised of a driver, a salesman and a regular route
helper, for every delivery truck. Petitioners filed a Complaint against respondent for unfair labor practice and illegal
dismissal with claims for regularization, recovery of benefits. Petitioners alleged that they should be declared regular
employees of respondent since the nature of their work as cargadores-pahinantes was necessary or desirable to
respondent's usual business.Respondent denied liability to petitioners and countered that petitioners were temporary
workers who were engaged for a five-month period to act as substitutes for an absent regular employee.
LA dismissed the complaint NLRC affirmed the LA. The petitioners filed a Petition for Certiorari with the CA who
dismissed the petition. It held that the failure of all the petitioners to affix their signatures in the verification and
certification against non-forum shopping rendered the petition dismissable. Thus this petition. The court held it is
sufficient, for one of the plaintiffs, acting as representative, to sign the certificate provided that the plaintiffs share a
common interest in the subject matter of the case or filed the case as a collective raising only one common cause of
action or defense. In the instant case where petitioners have filed their case as a collective group, sharing a common
interest and having a common single cause of action against respondent.
The issue left to be resolved is WON the petitioners are regular employees of the respondent. The basic law on the
case is Article 280 of the Labor Code. An employment shall be deemed to be casual if it is not covered by the
preceding paragraph. The applicable test is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. Even if he is a project or season employee, if
he has been performing the job for at least one year the law deems the repeated and continuing need for its
performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the
employer. The repeated rehiring of respondent workers and the continuing need for their services clearly attest to
the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company.
Being regular employees of respondent, petitioners are entitled to security of tenure. Petition GRANTED.

 Dante D. Dela Cruz v. Maersk Filipinas Crewing

Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third engineer. The contract of employment
was for a period of nine months. Petitioner was deployed UAE> His chief engineer expressed dissatisfaction over

82
petitioner's performance and wrote this is a log book. He was subsequently informed of hid dismissal. Petitioner
thereafter filed a complaint for illegal dismissal with claims for the monetary equivalent of the unexpired portion of
his contract. LA ruled for petitioner. NLRC affirmed LA. CA reversed NLRC because it deemed the logbook entries to
be sufficient compliance with the first notice requirement of the law. Petitioner filed a motion for reconsideration of
the CA decision. It was denied. Hence, this petition.
The question is whether or not petitioner was illegally dismissed by respondents. The court held that an employer
has the burden of proving that an employee's dismissal was for a just cause. it should also comply with the
rudimentary requirements of due process, The employer is bound to furnish him two notices: (1) the written charge
and (2) the written notice of dismissal (in case that is the penalty imposed). Contrary to the decision of the CA the
logbook entries did not substantially comply with the first notice because it was only a vague and general accusation
and the nature of the acts or omissions relied upon as basis for the termination of petitioner's employment were not
given.
It was petitioner's position that he was already a regular employee when his services were terminated; respondents,
on the other hand, insisted that he was then still on probationary status. In Brent School, Inc. v. Zamora the court
already held that seafarers are not covered by the term regular employment they are considered contractual
employees whose rights and obligations are governed primarily by the POEA Standard Employment Contract for
Filipino Seamen in no case shall a contract of employment concerning seamen exceed 12 months. It is an accepted
maritime industry practice that the employment of seafarers is for a fixed period only. In using the terms
"probationary" and "permanent" vis-Ã -vis seafarers, what was really meant was "eligible for re-hire” and not
employees. Petition is hereby GRANTED.
ii.) Extended Period
 Tomas Lao Construction v. NLRC
Respondents filed individual complaints against petitioner for illegal dismissal. Respondents claim that they are
working under the Lao Group of Companies: Tomas Lao Corp, Thomas and James Developers, and LVM Construction
Company, which enter into joint venture agreements with each other and lease tools and equipment to one another.
In 1989, Lao (Managing Director of LVM and president of T&J) issued a memorandum asking the employees to sign
employment contract forms allegedly for audit purposes. However, the contracts described the construction workers
as project employees. All but one refused to sign the contract. They were asked to explain why they refused to sign
and were later on dismissed. They filed a case with the LA who ruled that the workers were project employees and
agreed with the Lao company that they were merely trying to formalize their position as project employees. The
NLRC reversed the LA holding that the workers were already regularized and the NLRC pierced the corporate veil of
the companies holding they solidarily liable for the payment of wages. Thus this petition saying that the petitioners
were merely trying to formalize the workers’ status as project employees. The court found that the principal test is
whether the project employees are assigned to carry out specific project or undertaking, the duration of which are
specified at the time the employees were engaged for the project. The court also reiterated their ruling that project
employees whose service has been employed long after the supposed project has been finished are considered
regular employees. In the case at bar, the fact that the workers were continuously being rehired due to the demands
of the petitioners business satisfied the court as proof of their regular employment. Moreover, the Lao corporations
should have immediately submitted the report of termination as required by DOLE for termination of project
employees. The court upheld NLRC. Petition Dismissed.
iii.) Repeated renewal of contract
 Beta Electric Corp v. NLRC
Luzviminda Petilla was hired as a clerk typist and was given 5 extensions after which, her services were terminated.
LA, NLRC and the court ruled in her favor. The court held that she was already a regular employee, her tenure
having exceeded six months. Her work is not temporary just because her employment hinged from contract to
contract. Contrary to the allegations of the petitioner, the nature of the work is not seasonal or specific but rather, it
was engaged as an activity which I necessary and desirable in the usual business of the employer. Specific
undertaking means: a special type of venture or project whose duration is coterminous with the completion of the
project; this does not apply to the case at bar. Petition is dismissed.
B. Project Employees – 1st paragraph 280
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or service to be performed is seasonal in nature and the employment is for the duration of the season.
Policy Instructions 20 on 1977 entitled "Stabilizing Employer-Employee Relations in the
Construction Industry", provides in relevant part:

83
"In the interest of stabilizing employer-employee relations in the construction industry and taking into consideration
its unique characteristics, the following policy instructions are hereby issued for the guidance of all concerned:
Generally, there are two types of employees in the construction industry, namely: 1) Project employees, and 2) Non-
Project employees.

Project employees are those employed in connection with a particular construction project. Non-project employees
are those employed by a construction company without reference to any particular project.

Project employees are not entitled to termination pay if they are terminated as a result of the completion of the
project or any phase thereof in which they are employed, regardless of the number of projects in which they have
been employed by a particular construction company. Moreover, the company is not required to obtain a clearance
from the Secretary of Labor in connection with such termination. What is required of the company is a report to the
nearest Public Employment Office for statistical purposes.

If a construction project or any phase thereof has a duration of more than one year and a Project employee
is allowed to be employed therein for at least one year, such employee may not be terminated until the completion of
the project or of any phase thereof in which he is employed with a previous written clearance from the Secretary of
Labor. If such an employee is terminated without a clearance from the Secretary of Labor, he shall be entitled to
reinstatement with backwages.

The employees of a particular project are not terminated at the same time. Some phases of the project are
completed ahead of others. For this reason, the completion of a phase of the Project is the completion of the project
for an employee employed in such phase. In other words, employees terminated upon the completion of their phase
of the project are not entitled to separation pay and exempt from the clearance requirement.

On the other hand, those employed in a particular phase of a construction project are also not terminated at the
same time. Normally, less and less employees are required as the phase draws closer to completion. Project
employees terminated because their services are no longer needed in their particular phase of the project are not
entitled to separation pay and are exempt from the clearance requirement, provided they are not replaced. If they
are replaced, they shall be entitled to reinstatement with backwages.

Members of a work pool from which a construction company draws its project employees, if considered employees of
the construction company while in the work pool, are non-project employees or employees for an indefinite period.
If they are employed in a particular project, the completion of the project or of any phase thereof will not mean
severance of employer-employee relationship.

However, if the workers in the work pool are free to leave anytime and offer their services to other employers then
they are project employees employed by a construction company in a particular project or in a phase thereof.

Generally, there are three (3) types of non-project employees: first, probationary employees; second, regular
employees; and third, casual employees.

Probationary employees are those who, upon the completion of the probationary period, are entitled to
regularization. Regular employees are those who have completed the probationary period or those appointed to fill
up regular positions vacated as a result of death, retirement, resignation, or termination of the regular holder
thereof. On the other hand, casual employees are those employed for a short term duration to perform work not
related to the main line of the business of the employer.

xxx xxx xxx.

Policy Instructions No. 20 was subsequently superseded by Department Order No. 19 (series of 1993) dated April
1, 1993 of the Department of Labor and Employment.

D.O. No. 19 of 1993

According to the Department of Labor and Employment Order No. 19, [April 1, 1993] Series of 1993, the following
are considered indicators of project employment:

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(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.

In ABC, Inc. v. NLRC, the Supreme Court has ruled that “the length of service of a project employee is not the
controlling test of employment tenure but whether or not the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee.’”

It is also worthy to note Clause 3.3(a) of Department Order No. 19, which states: “Project employees whose
aggregate period of continuous employment in a construction company is at least one year shall be considered
regular employees, in the absence of a “day certain” agreed upon by the parties for the termination of their
relationship. Project employees who have become regular shall be entitled to separation pay.

A “day” as used herein, is understood to be that which must necessarily come, although is may not be known exactly
when. This means that where the final completion of a project or phase thereof is in fact determinable and the
expected completion is made known to the employee, such project employee may not be considered regular,
notwithstanding the one-year duration of employment in the project or phase thereof or the one-year duration of two
or more employments in the same project or phase of the object.

Considering the above facts and circumstances, what are the rights of a project employee under labor laws if he has
been illegally dismissed? Well settled is the rule that the burden of proving that an employee was lawfully dismissed
lies with the employer. Thus employers who hire project employees are mandated to state the actual basis for the
project employees’ dismissal.

Section 3.2 of Department Order No. 19, Series of 1993 states that:

“Project employees are not entitled to separation pay if their services are terminated as a result of the completion of
the project or any phase thereof in which they are employed. Likewise, project employees whose services are
terminated because they have no more to do or their services are no longer needed in the particular phase of the
project are not by law entitled to separation pay.”
The rights of an illegally dismissed project employee is based only in the current project contract where he was
illegally terminated. If the employer fails to prove that the project was already completed, there is a presumption
that the services of the project employee has been terminated with no valid cause prior to the expiration of the
period of his project employment. In such a case, the illegally dismissed project employee is entitled to
reinstatement with full back wages, inclusive of allowances and other benefits. If the project has already been
completed during the pendency of the labor suit, the project employee can no longer be reinstated. Instead, he shall
be entitled to the payment of his salary and other benefits corresponding to the unexpired portion of his
employment, specifically from the time of the termination of his employment, until the date of completion of the
project.
i.) Definition
 Imbuido v. NLRC
Vivian Imbuido was employed as a data encoder by International Information Services Inc. She was employed for a
span of 3 years (August 1988 to October 1991) wherein 13 separate contracts of employment were entered into by

85
the petitioner, each lasting 3 months. She was terminated allegedly due to low volume of work. Imbuido filed a case
for illegal dismissal claiming that she was fire not because of the volume of her work but because she signed a
petition for certification election among the rank and file employees of the company. The company insisted that she
was terminated due to her work as well as because of the expiration of the complainant’s contact, she being a
project employee. The LA ruled in favor of petitioner and ordered her reinstatement finding her to be a regular
employee while the NLRC reversed the decision and ruled that she is a project employee employed for a specific
project of the company.
Thus she filed a petition for certiorari in the SC. The SC ruled that petitioner is a project employee using the principal
test which is determining WON the employee was assigned to carry out a specific project, the duration and scope of
which were specified at the time the employee was engaged for that project. As observed by the court through the
employment contracts, Imbuido worked for a specific undertaking, the completion or termination of which had been
determined at the time of her engagement. Although she is a project employee, in Maraguinot v. NLRC it was held
that a project employee or a member of the work pool may acquire the status of a regular employee when
1.. there is a continuous rehiring of project employees even after a cessation of the project
2.. the tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business
or trade of the employer.
To rule otherwise would be to allow circumvention of labor laws in industries not falling within the ambit of Policy
instruction 20 or DO 19.
Being a regular employee, Imbuido is entitiled to security of tenure (Art 279). Petition is granted.
ii.) project employment
 Uy v. NLRC
Rizalino Uy, a private contractor, were charged by his employees (masons, laborers, carpenters) with illegal
dismissal. The employees claimed that they also rendered services in their other business of UY. The LA dismissed
the complaints for lack of merit and NLRC reversed the LA after finding private respondents to be regular employees
and not project employees. Petitioner filed a motion for reconsideration and a manifestation to admit and consider
evidence. Thus this petition. Uy insists that the employees are just project employees and as such they were validly
terminated. The court held that according to 280 of the LC project employees are those workers hired for 1. a
specific project or undertaking 2. the completion or termination of which has been determined at the time of
engagement of the employee.
In the present case, Uy did not identify the specific project or the phase of the project for which the employees were
hired. Termination reports, required to be submitted to DOLE upon termination of project employees, were also not
presented. Their jobs were continuous and ongoing.
According to Policy Instructions No. 20: members of a work pool from which a construction company draws its
project employees are non-project employees if considered employees of the construction company while in the work
pool, for an indefinite period. If they are employed in a particular project, the completion of the project or any phase
therof will non means severance of EE-ER relationship.
The court held that. the private respondents are non-project employees
 Villa v. NLRC + National Steel Corporation
NSC is one of the biggest modern steel mills in southeast asia. They embarked on a 5 year program using 100%
scrap venturing into a ship breaking operation wherein a ship would be cut up into large chunks and brought to land
to be further cut into smaller sizes. This was stopped due to high costs as well as lack of ships. Felix Villa and the
other petitioners were the workers for this particular project and were terminated from their service once the project
was stopped. The NSC association filed a notice of strike with the company for illegal termination. The La ruled for
the company stating that the short periods wherein the company hired the petitioners clearly show the intent of the
company to hire them on a per project basis only. NLRC affirmed the LA upon the factual findings it reviewed saying
that the test in determining regularity or employment is the nature of the functions performed which should be
necessary and desirable in the usual business or trade of the employer. However, the exception is that if it is fixed
for a specific project or undertaking, the completion of which has been predetermined at the time of engagement or
where the services to be performed is seasonal in nature, the same is considered as casual or temporary in nature.
Motions for reconsideration were denied. But upon appeal, the NLRC accepted the motion and ruled that project
employees are not regular employees within the purview of Art 280 of the LC. Thus this petition.
The court held that Art 280 contemplates on 3 kinds of employees:
i.. regular employees (engaged to perform activities which are necessary and desirable in the usual business and
trade of the employer)
ii.. project employees (whose employment has been fixed for a specific project the termination of which has been
predetermined at the time of engagement)
iii... casual employees (those who are neither regular nor project employees)
The court held that contracts of project employment are valid under our law. A project employment terminates as
soon as the project is completed. The services of project employees are coterminous with the project and may be

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terminated upon the end or completion of the project for which they were hired. There are two kinds of projects a
business or industry may undertake
1.. a project referring to a particular job or undertaking that is within the usual business of company but is distinct
and separate from other undertakings of the company
2.. a project may refer to a particular job or undertaking that is not within the regular business of the corporation
NSC’s project falls under the second type.
Regardless of how many projects the employees worked on, they remain project employees. Art. 280 stating that
employees working for more than 1 year are deemed to be regular employees pertain to casual and not project
employees. Petition dismissed.
 Sapio v. Undaloc
A complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal by
Virgilio Sapio saying that he had been employed as watchman for 3 years when he was terminated on the ground
that the project he was assigned to was already finisished.
Petitioner asserted he was a regular employee having been engaged to perform works which are "usually necessary
or desirable" in respondents' business. Cirilo Undaloc maintained that petitioner was hired as a project employee and
was assigned as watchman from one project to another until the termination of the project on 30 May 1998. LA
found complainant to be a project employee and his termination was for an authorized cause. Respondents appealed
the award of salary differential to NLRC which sustained the findings of the Labor Arbiter. Court of Appeals which
deleted the award of salary differential and attorney's fees. Thus, this petition for review on the ground that
respondents failed to attach certified true copies of the NLRC's decision and resolution denying the motion for
reconsideration. It is only now before this Court that petitioner proffered the same.
That petitioner was a project employee became a non-issue beginning with the decision of the Labor Arbiter. He
should have contested this issue when Undaloc filed a motion for reconsideration of award with the NLRC. Petitioner
avers that he was paid a daily salary way below the minimum wage provided for by law
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets. Labor Arbiter and
NLRC concluded that the entries were susceptible to change or erasure and that that susceptibility in turn rendered
the other payroll sheets though typewritten less credible. Court of Appeals did not subscribe to the common findings
of the Labor Arbiter and the NLRC. The appellate court pointed out that allegations of fraud in the preparation of
payroll sheets must be substantiated by evidence. Moreover, absent any evidence to the contrary, good faith must be
presumed in this case. Petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of
regularity. Petition is partially granted.
iii.) application of rule in non construction industries
 Maraguinot v. NLRC + Viva Films
Alejandro Maraguinot and Paulino Enero claim that they have been employed by Viva films as part of their filming
crew tasked to load, unload and arrange the movie equipment. They claim that they asked for an increase in their
wage in accordance with the minimum wage law and that thereafter, they were asked to sign a blank employment
contract and when they refused to sign, they were terminated. Viva films on the other hand, claims that they
contracts producers or associate producers who produce the movies and hire project employees such as petitioner.
Petitioners filed for illegal dismissal and the LA declared them to be illegally dismissed, NLRC reversed the LA. Thus
this petition.
The OSG rejects their contention that since they were hired for a series of projects, they are deemed as regular
employees. The court disagrees with the OSG. According to Sec 8 Rule VIII Book VIII of the Omnibus rules
implementing the LS, job contracting is permitted id the contractor has substantial capital and creates the job
according to his own mean or method. The court found in the case at hand that the movie-making equipment are
supplied BY Viva and that the associate producer merely leases the equipment from VIVA (Viva’s generators broke
down and they had to rent generators, equipment and crew fro another company) This was, as found by the court,
labor only contracting. The relationship between Viva and its producers or associate producers are that of agency
and the control as to the quality of the film lies with Viva. It may not be argued that petitioners are subject to the
control of the Movie Director and not Viva’s control.
The court then said that a project employee or a member of the work pool ma acquire the status of a regular
employee when the following concur:
1.. there is continuous rehiring of project employees even after cessation of the project; and
2.. the tasks performed by the alleged “project employee” are vital, necessary and indispensable to the usual
business or trade of the employer.
The court further held that once these requisites are complied with, he is a regular employee because to rule
otherwise would be to prevent the acquisition of tenurial security by project or work pool employees who have
already gained the status of employee due to the employer’s conduct. Petition is granted.
C. Casual Employees

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Art. 280. 2nd paragraph. Regular and casual employment. An employment shall be deemed to be casual if it is
not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exists.
Omnibus Rules Book VI Rule 1 Sec 5b
Section 5. (b) Casual employment. - There is casual employment where an employee is engaged to perform a job,
work or service which is merely incidental to the business of the employer, and such job, work or service is for a
definite period made known to the employee at the time of engagement: Provided, that any employee who has
rendered at least one year of service, whether such service is continuous or not, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall continue while such activity
exists.
Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and privileges, and shall be
subject to the duties and obligations, as may be granted by law to regular employees during the period of their
actual employment."
i.) Nature of Work
 A.M. Oreta and Co. v, NLRC
Sixto Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M.
Oreta and Co. as a carpenter in its project n Saudi for a period of 12 months. 10 days into the job, Grulla met an
accident which fractured his lumbar vertebrae while working at the jobsite. He was discharged from the hospital 12
days after and he underwent therapy for 2 weeks before he was told that he was physically fit to go back to work.
He started working again but was later given a notice of termination due to his alleged unsatisfactory performance.
Grulla filed a complaint for illegal dismissal with the POEA who ruled for Grulla. NLRC dismissed the appeal for lack
of merit. Thus this petition.
The issue is WON the employment of Grulla was illegally terminated. A.M. Oreta contends that since he is still a
probationary employee, Grulla is validly dismissed. The court rules otherwise satying that Grulla was employed in the
company for 12 month before he was dismissed and it is clear from the contract that the company hired him as a
regular employee and not just a probationary employee; there was no stipulation in the contract that the latter shall
undergo a probationary period and there is no evidence that he has been apprised of is probationary status. Even
given that he was a project employee, as gleaned from the provision of Art 281 in the LC probationary employees
may be terminated only for a just cause. In the case at bar, the ground of unsatisfactory performance is not one of
the just causes of dismissal in Art 282, LC. Also the twin requirements of notice and hearing were not complied with.
NLRC affirmed.
ii.) One Year Service
 Tabas v. California Manufacturing Co. Inc
Petitioners were prior employees of Livi Manpower Services who assigned them to work as promotional
merchandisers wherein an agreement was made stipulating that California Manufacturing company had no control
over the employees and that the assignment shall be on a seasonal and contractual basis. Petitioners signed a 6-
month contract.
Petitioners now allege that they have become regular California employees and demand similar benefits as the
employees of California due to their being terminated by the company. LA found no EE-ER relationship to exist. NLRC
affirmed LA. Thus this petition. The court reverses saying that the EE-ER relationship cannot be subject to agreement
but rather must be proved through evidence as well as the four fold test. In the case at bar, the court found that Livi
contracts out labor in favor of its clients thus falling within the ambit of Labor only contracting.
What is the Liability of Livi and California? The court holds that they have become regular employees of California
and acquired security of tenure after performing 6 months of servces which was renewed for another 6 months.
California did not show evidence that it had suffered serious business reverses as to warrant valid retrenchment of
petitioners. Petition granted.
 Fortunato Mercado Sr. v. NLRC+Sto. Nino Realty Incorporated +Aurora Cruz
Petitioners are agricultural workers utilized by private respondents in all phases of the work on the 7 ½ hectares of
rice land and 10 hectares of sugar land owned by the company, they demand for benefits in accordance with the fact
that they are regular employees. Aurora Cruz denied the allegations saying that she engaged the services of
petitioners through Sps. Fortunato Mercado. LA ruled in favor of Sto. Nino saying that the workers are not permanent
workers because the nature of the terms and conditions of their hiring reveal that they were required to perform
phases of agricultural work for a definite period of time only. However, the LA awarded them financial assistance.
Both parties appealed to the NLRC who affirmed the decision of the LA deleting the financial assistance. NLRC denied
the MFR. Thus this petition.
The court held that based on the sworn statements of the Mercados, the petitioners were only hired as casuals. A
project employee is defined as to be one whose employment has been fixed for a specific project or undertaking the

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completion or termination of which has been determined at the time of the engagement of the employee. Petitioners
were found to be project employees or seasonal employees and that their employment legally ends upon the
completion of the project. Petition dismissed.
 Cansino v. Prudential Shipping and Management Corporation
Deogracias Cansino worked as a seaman in the Medbulk Maritime Management Corporation for a term of 12 mos.
Capt. Nikolaos Kandylis altered the terms and conditions of the contract asnd changed his position to pumpman.
Several derogatory reports were received by the Captain against Cansino for drunkenness, insubordination and
abandonment of post. 7 members of the crew including Cansino submitted a request for early repatriation because f
family problems which were granted. Upon his return, he filed a complaint for illegal dismissal. LA dismissed the
complaint, NLRC reversed and ruled for Cansino. CA set aside the decision of NLRC. The court relied on the Master’s
Report signed by the Captain as to the illegal consumption of alcoholic drinks of the crew. The court held that
drunkenness is equivalent to serious misconduct and thus a valid cause of termination in Art 282 of the LC. Petition
denied.
D. Fixed Term Employees
 Brent School v. Zamora
Doroteo Alegre was engaged as athletic director by Brent School by virtue of a contract fixed at a specific term of 5
years. Three months before its expiration, Alegre was given a copy of the application for clearance filed by Brent with
the Department of Labor advising the termination of his services stating the ground of completion of contract as its
reason. Alegre filed a protest to his termination with the Labor Director saying his services are usual and necessary to
the business of Brent. The Labor Director denied the application and required his reinstatement. Brent school filed a
MFR and the Regional Director denied it, forwarding the case to the Secretary of Labor who affirmed the decision.
The school appealed to the office of the president but the appeal was dismissed. Thus this petition.
Before the advent of the labor code, term employment was already recognized as valid due to the Termination pay
law (RA1052), Code of Commerce (Article 302 discusses the mesada who is given the salary of the month;
mes=month in Spanish) and the civil code which repealed the code of commerce specifically provisions of oblicon
which discusses contracts with a period. The court held that there is nothing contradictory with fixing the term of
employment of an employer who renders usual and necessary services to the company. Although the Labor Code is
more strict than the Civil code as to fixed term employments, the law, in this case Art 280 LC, must be given a
reasonable interpretation as to reflect the intent of the law which is to prevent the circumvention of the employee
right to security of tenure. It should have no application to instances when the employee knowingly and voluntarily
entered into the contract of employment for a fixed term. The court cited Escudero v. Office of the president and
applied it to Alegre’s case saying that in a fixed term contract, no notice is needed as he already knows the dae of its
expiration at the time of engagement. Petition granted.
 Dumpit Murillo v. CA
Thelma Dumpit-Morillo was employed by the Associated Broadcasting company (ABC) as a newscaster and a co-
anchor of Balitang Balita and Live on Five for which her contract of 3 months was constantly renewed. After four
years of constant renewals of her talent contract, she sent a letter to the VP of ABC saying that she was interested in
renewing her contract subject to a salary increase. She stopped reporting for work after and a month later ABC still
has not replied thus prompting Thelma to send a demand letter to ABC asking for her reinstatement as well as
backwages. She then filed a case of illegal constructive dismissal with the LA who dismissed the complaint. Upon
appeal to the NLRC, it found that an ER-EE relationship existed and that she was a regular employee. CA, in a
petition for certiorari by ABS, reversed the decision saying that she entered into the contract knowingly and that she
was a fixed term employee and not a regular employee according to Art 280. Thus this petition.
The court held that the talent contracts are valid but not as to categorizing her as a fixed term employee. Applying
the four fold test (selection and engagement, wages, dismissal, control) the court found that it applies to the case.
The law also recognizes those who 1. perform activities necessary and desirable in the usual business and trade of
the employer as well as 2. those who have worked for more than a year as regular employees. For the contract to be
valid as a fixed term contract, no force, duress or improper pressure should be brought upon the employee thus in
effect vitiating her consent, in the case at hand, Thelma had no choice but to sign her name every 3 months without
objection as to maintain the job she loved and the workplace she has grown accustomed to. As a regular employee,
she is entitled to security of tenure and can be dismissed only for just cause. CA reversed. 1

 AMA Computer College Paranaque v. Austria

Respondent Rolando A. Austria (respondent) was hired by AMA Computer College, Parañaque on probationary
employment as a college dean on his appointment as dean was confirmed by AMA’s Officer-in-Charge. Sometime in
August 2000, respondent was charged with violating AMA’s Employees’ Conduct and Discipline provided in its

1 How do you reconcile this with Brent? Shouldn’t ABC have let her work again instead of ignored her “constructive resignation” in order to recognize her services as regularized? The 4 fold test is present in Brent
also… but is it necessary to use the 4 fold test as to fixed term employment? E wala namang conflict sa job nila and sa term kasi they know the day certain. M confused. Does the time matter (5 years v. 3 months)?
Or does the amount of renewing matter (none v. 14 times)? So if Alegre’s contract was renewed and the again, the day certain came and his services were terminated, does it make him a regular employee???

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Orientation Handbook. Respondent refuted the charges against him but was placed on preventive suspension and
eventually dismissed due to the loss of trust and confidence in hisr credibility as a company officer holding a highly
sensitive position. Respondent filed a Complaint for Illegal Dismissal.
LA held that respondent substantially refuted the charges of gross inefficiency, incompetence, and leaking of test
questions filed against him but held that the nature of respondent's employment is one for a fixed term. The NLRC
and the CA both held that respondent is a regular employee because respondent had fully served the three (3)-
month probationary period required in the Handbook, which the petitioners failed to deny or contravene. Hence, this
Petition asking the nature of respondent's employment? And WON he lawfully dismissed?
As an exception to the general rule, the court held in Molina v. Pacific Plans, Inc. that when the findings of the
National Labor Relations Commission contradict those of the Labor Arbiter, this Court, in the exercise of its equity
jurisdiction, may look into the records of the case.
The court held that the letter of appointment states that he was officially confirmed as Dean of AMA College,
Parañaque, effective from April 17, 2000 to September 17, 2000 and that the nature of respondent's employment as
dean is one with a fixed term. Art. 280 of the Labor Code does not proscribe or prohibit an employment contract with
a fixed period.
Citing Brent School, Inc. v. Zamora, the court said that as to appointments to the positions of dean,
assistant dean, college secretary, which are by practice or tradition rotated among the faculty
members, and where fixed terms are a necessity without which no reasonable rotation would
be possible, these are normally an employment for a fixed term.
The resolution of the second question requires full cognizance of respondent’s fixed term of employment and all the
effects thereof. It is axiomatic that a contract of employment for a definite period terminates on its own force at the
end of such period. Petition is GRANTED. LA decision REINSTATED.
E. Seasonal Employees
 Phil Tobacco v. NLRC
Philippine Tobbaco has 2 groups of employees, the Lubat group and the Luris groups
The Lubat group is composed of seasonal workers who were not rehired for the next year’s season (1994) at the
start of the season, they were informed that their employment has been terminated as of the 1993 season.
The Luris group is made up of seasonal employees who worked for the 1994 season in the Balintawak plant and was
informed that due to serious business losses, petitioner planned to move its operations to Ilocos Sur. They were
given separation pay which was not based on the number of years served but rather based only on the duration of
the 1994 season.
Both groups filed a case for illegal dismissal against the petitioner to which the LA ruled that the petitioner should
pay separation pay and differential plus attorney’s fees ACCORDING TO THE NUMBER OF YEARS SERVED, ruling that
the closure of the business was due to serious financial losses and thus the termination of employment is due to a
legal cause. The NLRC affirmed the decision upon appeal thus this petition.
The court ruled that the petition is not meritorious.
The court found that the business losses pertain only to a unit or division and not the WHOLE business of the
petitioner which is the “loss” that is referred to in Art 283 LC. This is so that a company will not be able to easily
feign excuses to get rid of unwanted employees. Serious business losses as contemplated by Art 283 was not proved
by the petitioners, infact, the financial statement given by the petitioner reflects not only its tobacco business but
also its other businesses. A perusal made by the court shows that there is a net gain made by the petitioner for each
year of business.
As to the Luris group, there was defective notice given by the petitioner as they did not inform their employees 1
month before their termination which is a requisite under Art 283 LC. Thus, the Luris group is entitled to 1 month pay
or at least ½ month pay for every year of service, whichever is higher.
As for the Lubat group, the court ruled that they were illegally dismissed citing Manila Hotel Company v. CIR which
ruled that seasonal workers who are called to work from time to time are temporarily laid off during the off-season
are not separated from service during this period but are merely considered on unpaid leave until employed.
Petitioners tried to invoke Mercado v. NLRC and Magcalas v. NLRC but the court ruled that the facts in this case are
different from those cases because Mercado and Magcalas offered their services to other farm owners which makes
them project employees.
The court computed a seasonal worker’s separation pay as No. of days worked/ No. of total working days in one year
x Daily rate of 15 days.
For this case, the court held that separation pay should be at ½ of their average monthly pay times the number of
years worked. NLRC affirmed with modification.
F. Probationary Employees
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when

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he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall
be considered a regular employee.
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the
wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for
wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum
wage, may be entered into only in accordance with
apprenticeship programs duly approved by the Secretary of Labor and Employment. The
Department shall develop standard model programs of apprenticeship. (As amended by Section 1,
Executive Order No. 111, December 24, 1986)
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
a. The names and addresses of the learners; b. The duration of the learnership period, which shall not exceed three (3) months; c. The wages or
salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum wage; and
d. A commitment to employ the learners if they so desire, as regular employees upon completion of the learnership.
All learners who have been allowed or suffered to work during the first two (2) months shall be deemed regular
employees if training is terminated by the employer before the end of the stipulated period through no fault of the
learners.
Omnibus Rules Book VI Rule I Sec 6 Section 6. Probationary employment. - There is probationary
employment where the employee, upon his engagement, is made to undergo a trial period during which the
employer determines his fitness to qualify for regular employment based on reasonable standards made known to
him at the time of engagement. "Probationary employment shall be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in accordance with the
standards prescribed by the Department of Labor and Employment, the period of probationary employment shall be
limited to the authorized learnership or apprenticeship period, which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment shall not exceed
six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only for a just or
authorized cause, when he fails to qualify as a regular employee in accordance with reasonable standards prescribed
by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular employee.
i.) Definition/Purpose
 Cebu Marine Beach Resort v. NLRC
CBMR is owned by Victor Dualan and recruited respondent employees. The resort caters primarily to Japanese
tourists and thus Dualan hired Tsuyoshi Sasaki to give respondents special training in Japanese customs, traditions,
discipline as well as hotel and resort services. One day Sasaki suddenly scolded respondednts and hurld at them
brooms, iron trays etc. warning them not to come back. They filed a case for illegal dismissal pending which the
company sent letters to them demanding them to explain why they shuld not be terminated from work due to
abandonment and FAILURE TO QUALIFY WITH THE STANDARDS OF PROBATIONARY EMPLOYEES. LA dismissed
complaint but held that respondents should go back to work. On appeal, NLRC ruled that the employees have been
illegally dismissed. Petitioners filed a petitioner for certiorari which was referred to the CA who then affirmed the
decision of the NLRC. Thus this petition for review. The court ruled that they were illegally dismissed and that the
utterances of Sasaki was tantamount to a dismissal despite his lack of authority to terminated the employees. The
dismissal was ratified due to petitioners subsequent acts of sending the letter to employees demanding explanation
of their failure to qualify with the standards. The petitioner in this case, did not give time to employees to rove that
they possess the qualifications to meet reasonable standards for permanent employment due to premature dismissal.
The court ruled in Lopez v. Javier that probationary employees who are unjustly dismissed from work during the
probationary period shall be entitled to reinstatement and payment of full backwages. CA affirmed.
 Espina v. Hon. Court of Appeals
Respondent M.Y. San Biscuits, Inc. (M.Y. San) was previously engaged in the business of manufacturing biscuits and
other related products. In a conciliation proceeding M.Y. San Worker’s Union was informed of the closure or
cessation of business operations because of the intended sale of the business to Monde. A separation package and
cash equivalents of their vacation and sick leaves were given to the employees. The written notice of the sale and
purchase of the assets of respondent M.Y San to respondent Monde. All the employees of respondent M.Y. San
received their separation pay and the cash equivalent of their vacation and sick leaves. Thereafter, they signed their
respective Quitclaims.

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Monde commenced its operations. All the former employees of respondent M.Y. San who were terminated upon its
closure and who applied and qualified for probationary employment, including petitioners herein, started working for
respondent Monde on a contractual basis for a period of six months. Subsequently, petitioners were terminated on
various dates.
Petitioners filed a Complaint for illegal dismissal alleging that sale of respondent M.Y. San to respondent Monde was
merely a ploy to circumvent the provisions of the Labor Code.
M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist, respondent Monde
alleged that petitioners had no cause of action saying that the probationary employees of Monde who passed the
performance appraisal and who qualified as regular employees thereof were accordingly appointed as such. Out of
the one hundred sixteen (116) probationary employees engaged by respondent Monde, a total of seventy-four
employees qualified for regular employment.
LA dismissed the case for lack of merit. NLRC affirmed the Decision of the Labor Arbiter. CA denied petition. Thus
this petiton. The court held that as long as the company’s exercise of the same is in good faith to advance its
interest and not for the purpose of circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld. Thus, since private respondent M.Y. San’s closure and cessation of
business was lawful, there was no illegal dismissal of petitioners to speak of. In the case at bar, petitioners were
notified of the standards they have to meet to qualify as regular employees of respondent Monde when the latter
apprised them, at the start of their employment, Respondent Monde exercised its management prerogative in good
faith when it dismissed petitioners due to absence without leave (AWOL), gross and habitual neglect of duties, failure
to qualify as regular employees in accordance with the terms and conditions of their probationary employment with
respondent Monde.
During the probationary period, the employer is given the opportunity to observe the skill, competence and attitude
of the employee to determine if he has the qualification to meet the reasonable standards for permanent
employment. The length of time is immaterial in determining the correlative rights of both the employer and the
employee in dealing with each other during said period. Thus, as long as the termination was made before the
expiration of the six-month probationary period, the employer was well within his rights to sever the employer-
employee relationship. CA reversed.
ii.) Duration: Rule/ Exception
 Dela Cruz v. NLRC+Shemberg Marketing Corporation (SMC)
Florencio Dela Cruz was hired by SMC as senior sales manager with a probationary period of 6 months. He was
subsequently fired 4 months after due to his failure to meet the required company standards and for loss of trust and
confidence (alleged poor performance, the dissatisfaction of his subordinates over his management style, his
unauthorized use of company cellular phone and the unauthorized plane tickets of his wife and child.) He filed a case
for illegal dismissal. LA declared he was illegally dismissed. NLRC dismissed the appeal. CA dismissed the case for
lack of merit. Hence this petition. The court found the petition to be without merit. The evidence shows that
petitioner was informed of the standards to be met before he could qualify as a regular employee. For a given period
of a time, a probationary employee is placed under observation and evaluation to determine WON he is qualified for
permanent employment. As the termination was made before the expiration of the 6 month probationary period, the
employer was within his right to terminate the ER-EE relationship. Petition dismissed.
 Cathay Pacific Airways Ltd v. Philip Luis Marin
Marin applied as a Reservation Officer in Cathay Pacific wherein he was accepted with an initial probationary period
of 6 months. He was terminated before the end of the probationary period and he filed for illegal dismissal. He
claimed that he started to work without even being briefed as to the rules and regulations of Cathay and that he did
not commit any infraction during his probationary period as shown by his performance ratings. He said that he never
received any memorandum calling attention to his alleged infractions and that he did not resign as Cathay was
impleading against him. Cathay Pacific as represented by Marin’s supervisor Gozun, testified that Marin has been
constantly caught chatting with his workers who are not on break and thus disrupting their work. He was also caught
chatting while on the job leaving calls unanswered. He was informed of this as disruptive conduct and was asked to
mend his ways. He was also, despite his denials, informed of the rules and regulations of the company as testified to
by the reservations manager. Cathay recommended Marin that he should resign so as not to prejudice him in
applying in other companies. LA dismissed the complaint. NLRC affirmed LA. CA reversed NLRC. Thus this petition.
The court held that the employment of a probationary employee may only be terminated either
1.. for a just cause ; or
2.. when the employee fails to qualify as a regular employee in accordance with the reasonable standards made
known to him at the start of the employment.
_____________________________________
Power of an employer to terminate an employee on probation is subject to the following conditions:
1.. it must be exercised in accordance with the specific requirements of the contract

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2.. the dissatisfaction on the part of the employer must be real and in good faith (not violating the contract nor the
law)
3.. there must be no unlawful discrimination in the dismissal
The burden of proof rests on the employer.
A probationary employee remains secure in his employment during the time of contract remains in effect but once it
expires, the employee can no longer invoke the constitutional protection because it is in the discretion of the
employer WON to renew the contract.
The court found that based on his staff assessment reports, his work was unsatisfactory especially conduct wise
which is a very important field in a working environment. Petition granted.
iii.) Extension of Contract
 Phil Federation v. NLRC+Victoria Abril supra
Victoria Abril was employed by Philippine Federation of Credit Cooperatives, Inc. (PFCCI), Respondent, shortly after
resuming her position as office secretary, subsequently went on leave until she gave birth to a baby girl. When she
returned, she had already been replaced and thus she was offered the position of Regional Field Officer as evidenced
by a contract which stipulated, among other things, that respondent’s employment status shall be probationary for a
period of six (6) months, which she accepted. Respondent was allowed to work until PFCCI presented to her another
employment contract for a period of one year after which period, her employment was terminated.
She filed a complaint for illegal dismissal. LA dismissed the same for lack of merit. NLRC reversed LA. Thus this
petition. The court found no merit in the petition. Article 281 of the Labor Code, as amended, allows the employer to
secure the services of an employee on a probationary basis which allows him to terminate the latter for just cause or
upon failure to qualify in accordance with reasonable standards set forth by the employer. Probationary employees,
notwithstanding their limited tenure, are also entitled to security of tenure. Except for just cause as provided by law,
or under the employment contract, a probationary employee cannot be terminated.
In the instant case, petitioner refutes the findings of the NLRC arguing that, after respondent had allegedly
abandoned her secretarial position for eight (8) months, she applied for the position of Regional Field Officer.
Petitioner insisted that respondent was employed to perform work related to a project funded by the World Council
of Credit Unions (WOCCU) and hence, her status is that of a project employee.
The court cited Villanueva v. NLRC, where the Court ruled that where a contract of employment, being a contract of
adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it. The
court found from the facts that the respondent has become a regular employee
Regardless of the designation petitioner may have conferred upon respondent’s employment status, having
completed the probationary period and allowed to work thereafter, she became a regular employee who may be
dismissed only for just or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended. Petition
is hereby DISMISSED.
iv.) Absorbed Employees
 Cebu Stevedoring Co. Inc. v. Regional Director/Minister of Labor
Arsenio Gelig and Maria Quijano were former employees of Cebu Customs Arrastre Service (CCAS) which was
abolished by a resolution by the Secretary of Finance for which all the employees of CCAS were given their
termination pay. All the employees of CCAS were absorbed by herein petitioner Cebu Stevedoring with the same
positions they formerly held. 5 months after they were terminated allegedly for redundancy and retrenchment and
that their probationary period has already expired. A complaint for reinstatement with backwages was filed by the
respondents. The Labor Regional Director ruled for the employees saying that there was no need to employ them as
probationary employees as they have been doing the same work for a long time prior to being absorbed by the
petitioner company. The Minister of Labor affirmed this ruling. Petitioner appealed to the Office of the President who
dismissed the appeal. Thus this petition. The petitioner claimed that the employees, being casuals, can be terminated
within the 6 month period without clearance from the Minister of Labor. The court however, agrees with the Minister
of Labor that the private respondents cannot be considered as probationary employees as they were already well-
trained in their respective functions. Also, the petitioners were unable to substantiate supposed business losses.
Petitions dismissed.
v.) Standards- not-determined
 Orient Express v. NLRC + Flores
Antonio Flores was hired as a crane operator by Orient Express Placement Philippines in behalf of Nadrico Saudi
Limited. After only a month, Flores was repatriated to the Philippines allegedly due to poor job performance for his
uncooperative attitude. He filed a complaint for illegal termination with the POEA who decided in his favor. NLRC
affirmed this decision saying that he was originally assigned as a crane operator and was instead assigned to be a
floorman thus, his employer could not have observed his work as a crane operator. Thus this petition. The court held
that petitioner failed to specify the reasonable standards by which the private respondent’s poor performance was
evaluated. They were also not able to prove that these standards were made known to him at the time of his

93
recruitment in Manila. That there was a Licensure Examination on which depended his ultimate employment cannot
be attributable as the fault of Flores. Art 281 LC implicitly requires that reasonable standards be made known to the
employee AT THE TIME OF HIS ENGAGEMENT. NLRC affirmed.
vi.) Private School Teachers Rule
 La Salette of Santiago Inc. v. NLRC
La Salette of Santiago hired Clarita Javier as a highschool principal for 3 years. She then became a college instructor
for the company’s college and became head of the College’s Education and Liberal Arts Department. She later on
accepted the offer to return to the highschool as assistant principal. She then finished her doctorate degree and
worked only part time at the college. After this, she transferred back to the highschool as its principal for one year.
Her term was extended for another year. Before the term ended, the school wrote to her asking her to move to the
college as a certain Sister Saturnina Pascual will replace her as principal. Javier wrote to the board of trustees of La
Salette questioning her sudden removal. They did not inform her of the reason but rather advised her of her teaching
load in the college. Clarita filed a complaint for illegal dismissal. The President of La Salette College wrote to her
saying that there would be no dimunition of compensation or loss of seniority in her transfer. Despite this, she still
refused to report to her teaching assignment. LA ruled in her favor. NLRC upon appeal affirmed the LA. An MFR was
denied thus this petition. The court held that she had not acquired permanency or tenure as a principal of La Salette.
As observed by the court, she had been regularly moved from the highschool to the college department and that she
was aware that her position with the highschool as an administrative staff is not a permanent one but rather at the
pleasure of the school or at a fixed term. It is her work as a teacher that is continuous. Unlike teachers, those
appointed as department heads or administrative officials (college or department secretaries, dean, assistant dean,
principal, director) should not expect to acquire a second status of permanency. The petition is granted. 2
 Escorpizo v. University of Baguio
Esperanza Escorpizo was hired as a highschool teacher. Attainment of permanent status depended on passing the
professional board examination for teachers (PBET). She failed. She appealed her employment and asked for a
second chance. She failed again. She took the next exam at the end of the same school year. As the results were not
yet given, she was not included in the final list of the accepted teachers for the incoming school year. Even though
she passed, the school no longer renewed her contract of employment. She filed a case for illegal dismissal. The LA
ruled that the school had permissible reason not to hire her. NLRC affirmed the LA. Thus this petition. The court held
that a probationary employee is one who, for a given period of time, is being observed and evaluated to determine
WON he is qualified for permanent employment. She was made aware of the fact of the rules given to her at the
time of her engagement that she had to pass the PBET before she becomes a permanent employee and that she was
on probation for a period of four semesters of two years. Also, the court cited DECS Order No. 38 of 1990 saying that
‘no teacher in the private schools shall be allowed to teach unless he or she is a registered professional teacher.
Undoubtedly, Escorpizo was entitled to security of tenure during her probationary period but it is the discretion of
management WON they will rehire her once the contract expires. Her separation is not without justifiable cause as
the university was not under the obligation to rehire her. Petition dismissed.
 Aklan College v. Guarino
Rodolfo Guarino was hired as an instructor and was later on appointed as Dean of the Commerce and Secretarial
Department and was dean for 17 years. Guarino eventually took a 1 year leave. A month before the end of his leave,
he informed the school of his intention to resume his position in the college to which Aklan wrote back saying that he
is not qualified for the position due to DECS Order No. 5 of 1990 which required that appointment as a Dean
depended on graduation in an MBA course; and also that the position was already filled up by the regular incumbent.
The respondent filed a case for illegal dismissal against petitioner. LA dismissed the case for lack of merit. NLRC
reversed the LA saying that Guarino should he reinstated. The CA affirmed the NLRC. Hence this petition. Aklan cited
La Salette of Santiago v. NLRC which lad down the rule that while an employee attains security of tenure as a
member of the teaching staff, he cannot aspire for a second tenure in an administrative position. The court sides
with Aklan saying that the facts of La Salette are similar to this case. The court cited Achacoso v. Macaraig saying
that a permanent employment can only be issued to a person who meets all of the requirement s for the position to
which he is being appointed. In the case at hand, Guarino was not able to finish his MBA. Also, DECS Order No. 35 of
1990 and the Manual of Regulations of Private Schools required that an incumbent dean should have finished his
masters and that he should have taught for 3 years at the college. The court also cited La Salette saying that ‘unlike
teachers, those appointed as department heads or administrative officials (college or department secretaries, dean,
assistant dean, principal, director) should not expect to acquire a second status of permanency.’ Petition is granted.
(No separation pay. He was not dismissed. He was still an instructor.)
IV. Termination of Employment

2 I think the issue here more than anything is her unceremonious termination as a principal WITHOUT ANY EXPLANATION except that the benefits and the seniority will still be the same. Its more of besmirched
feelings and reputation. I don’t know why the court did not dwell on this given that EXACTLY, she knows the position is not permanent but that it had a TERM, her term was inappropriately and without reason
suddenly deprived from her. Weird.

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Constitution, ARTICLE XIII – LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and
growth.
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative
in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
d. Commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has
been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary
for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1)
whole year.
Art. 285. Termination by employee.
a. An employee may terminate without just cause the employee-employer relationship by serving a written notice on
the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the
employee liable for damages.
b. An employee may put an end to the relationship without serving any notice on the employer for any of the
following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the employee or any
of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty
shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.
A. General Concepts
i.) Coverage

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Art. 278. Coverage. The provisions of this Title shall apply to all establishments or undertakings,
whether for profit or not.
Omnibus Rules Book VI (Post Employment) TITLE I: Termination of Employment Section 1. Coverage. —
This Rule shall apply to all establishments and undertakings, whether operated for profit or not, including
educational, medical, charitable and religious institutions and organizations in cases of regular employment with the
exception of the Government and its political subdivisions including government-owned or controlled corporations.
 Equitable PCI Bank v. Caguioa
Generosa Caguioa was a senior manager of Equitable PCI Bank and had been serving the bank for 35 years when
she was discharged for alleged connection with accounting activities specifically discounting checks which caused
Antonio Jarina (the customer who instituted the complaint against her) considerable damage. She denied any
connection with the said activities and filed a case of illegal dismissal. The LA upheld the dismissal of the private
respondent ruling that the dismissal was a valid exercise of management prerogative for having violated the code of
conduct on loyalty and honesty. Upon appeal, the same was denied and thus it was raised to the CA who held that
the testimonies of the people who were in on her with the scheme were insufficient to prove her involvement and
justify her dismissal. CA held that she has been illegally dismissed. Hence this petition. The court held that it was the
petitioner bank who had the burden of proving the legality of the dismissal through substantial evidence. The court
found that there was more than substantial evidence supporting the decision of the labor arbiter in Caguioa’s
participation in the check-discounting scheme when the LA used bank records of Jarina and Caguioa which showed
21 matches of deposits and withdrawals, the letter of Jarina to the bank as well as the testimonies of the audit
examiner. Caguioa only had denials and imputation of lack of probative value of the evidence to counter the bank’s
evidence. Despite her 35 years of service, the court held being a managerial employee and because of her proven
acts, Caguioa may be validly terminated for breach of trust. Petition granted.
ii.) Security of Tenure
Art. 277. Miscellaneous provisions.
b. Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal
by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving
that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department
of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event
of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such
dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.
(As amended by Section 33, Republic Act No. 6715, March 21, 1989)
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34,
Republic Act No. 6715, March 21, 1989)
 Espina v. Hon of Court of Appeals
Respondent M.Y. San Biscuits, Inc. (M.Y. San) was previously engaged in the business of manufacturing biscuits and
other related products. In a conciliation proceeding M.Y. San Worker’s Union was informed of the closure or
cessation of business operations because of the intended sale of the business to Monde. A separation package and
cash equivalents of their vacation and sick leaves were given to the employees. The written notice of the sale and
purchase of the assets of respondent M.Y San to respondent Monde. All the employees of respondent M.Y. San
received their separation pay and the cash equivalent of their vacation and sick leaves. Thereafter, they signed their
respective Quitclaims.
Monde commenced its operations. All the former employees of respondent M.Y. San who were terminated upon its
closure and who applied and qualified for probationary employment, including petitioners herein, started working for
respondent Monde on a contractual basis for a period of six months. Subsequently, petitioners were terminated on
various dates.
Petitioners filed a Complaint for illegal dismissal alleging that sale of respondent M.Y. San to respondent Monde was
merely a ploy to circumvent the provisions of the Labor Code.

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M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist, respondent Monde
alleged that petitioners had no cause of action saying that the probationary employees of Monde who passed the
performance appraisal and who qualified as regular employees thereof were accordingly appointed as such. Out of
the one hundred sixteen (116) probationary employees engaged by respondent Monde, a total of seventy-four
employees qualified for regular employment.
LA dismissed the case for lack of merit. NLRC affirmed the Decision of the Labor Arbiter. CA denied petition. Thus
this petiton. The court held that as long as the company’s exercise of the same is in good faith to advance its
interest and not for the purpose of circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld. Thus, since private respondent M.Y. San’s closure and cessation of
business was lawful, there was no illegal dismissal of petitioners to speak of. In the case at bar, petitioners were
notified of the standards they have to meet to qualify as regular employees of respondent Monde when the latter
apprised them, at the start of their employment, Respondent Monde exercised its management prerogative in good
faith when it dismissed petitioners due to absence without leave (AWOL), gross and habitual neglect of duties, failure
to qualify as regular employees in accordance with the terms and conditions of their probationary employment with
respondent Monde.
During the probationary period, the employer is given the opportunity to observe the skill, competence and attitude
of the employee to determine if he has the qualification to meet the reasonable standards for permanent
employment. The length of time is immaterial in determining the correlative rights of both the employer and the
employee in dealing with each other during said period. Thus, as long as the termination was made before the
expiration of the six-month probationary period, the employer was well within his rights to sever the employer-
employee relationship. CA reversed.
 Philippine Daily Inquirer v. Magtibay
PDI hired Leon Magtibay on a contractual basis for 5 months as a phone operator. Magtibay’s contract was extended
for 15 days, after the expiration of the contract, PDI announce the availability of a position for telephone operator for
which Magtibay was hired for an initial 6 month probationary period. A week before the end of the probationary
period, PDI terminated Magtibay for failure to meet company standards. Magtibay filed a complaint for illegal
dismissal saying that he had been employed for 10 months, more than the 6 month probationary period requires and
that he was not appraised of the company standards and thus, there was no basis for his dismissal. PDI denied this
and also countered that the period of his contractual employment does not count as probationary period. LA ruled for
PDI saying that the dismissal is for a valid reason since he repeatedly violated the company rule of letting
unauthorized people to enter the operators room, he did not say that he has a child and that he locked the room
without switching the proper lines to the company guards such that no calls were entertained. NLRC reversed LA
saying that the probationary employment has already ripened into a regular one. CA agreed with the NLRC because it
said that PDI failed to prove that the standards were made known to him at the time of engagement. Thus this
petition.
The court held that Magtibay is not a regular employee. Art 279 provides security of tenure for both regular as well
as probationary employees. Art 281 or probationary employment stresses that employment shall not exceed 6
months from the day the employee started working and that they may be terminated only for
1. just cause or
2. when he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement.
The court held that all employees, regular or probationary are expected to comply with company imposed rules and
regulations. The rationale that Magtibay did not follow this because he was not advised to follow these rules does not
convince the court. PDI was only exercising its hiring prerogative in not hiring Magtibay. CA reversed.

a. Nature of Right/ Rationale

 Alhambra Industries Inc. v. NLRC
Alhambra is a Filipino cigar manufacturing company. It employed Danilo Rupisan as a salesman on a 6 month
probationary basis. A surprise audit was conducted on the records of Rusipan where the company found he incurred
cash shortages due to “reimburseable expenses” he has incurred. He was suspended for one month and was
eventually terminated at the end of that month for serious misconduct. He filed a complaint for illegal dismissal. LA
ruled for the company finding his termination is for a just cause but it also ruled that the company violated Rupisan’s
right to due process when he was not given a copy of the audit report on which his dismissal was based. Both parties
appealed to the NLRC. NLRC ruled for Rupisan’s reinstatement due to lack of due process. Thus this petition. The
court held that the LA found a valid ground for dismissal which was not disputed by the NLRC and that to order
reinstatement would be circuitous because the case would have to be remanded to the LA. The desicion to dismiss

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Rupisan was not according to the rules (then Sec 6 Rule XIV Book V) because it did not state the reason for his
termination but having been found guilty of serous misconduct, reinstatement and separation pay cannot be
awarded. He is only entitiled to damages. Petition granted.
b. Management Prerogative
 Suldao v. Cimech Systems Construction Inc.
Ruperto Suldao was hired as a machinist by Cimech for 5 months on a contractual status. His services were
continually contracted by the company until he became a permanent employee. Due to the lack of jobs that could be
assigned to him, he was asked to take a leave of absence for 15 days in which he complied. He was then asked to
make a letter request for field work transfer which he did. He failed to report for work the following day because he
was sick and he was barred from entering the premises. He filed a case of constructive dismissal. The LA found that
he was indeed constructively dismissed. NLRC affirmed the LA. The CA reversed the NLRC, dismissing the petition.
Thus this petition. The court held that constructive dismissal is equal to quitting because continued employment is
rendered impossible, unreasonable or unlikely. In cases of constructive dismissal, the burdn of proof is in the
employer to show that his dismissal is for a just and valid cause. In this case, the employers say that Suldao
committed insubordination and abandonment in his refusal to move to the fabrication department, his arrogant
asking for a raise as well as not reporting for work also, that he was not constructively dismissed as he participated
in the Christmas party. The court found that even if the transfer is valid, the manner in which he was barred after the
transfer runs counter to good faith. The court also found that, upon presentment of a medical certificate, that he was
indeed sick that day and that because of his letter request as required by the company, it can be shown that he
readily accepted the transfer. As to the christmas party, the court held that this not prove that he has not been
constructively dismissed. Petition granted.
 Duldulao v. CA
Constancia Duldulao was hired by Baguio Colleges Foundation as a secretary or clerk typist in their College of Law. A
law student filed a case against her for irregularities in the performance of her work as well as fraternizing with
students of the College. The petitioner was asked to submit her answer to the complaint but she failed to do so. The
Dean recommended her assignment outside the College of Law because of this, the Vice President of Administration
issued a Department Order asking her to move to the highschool. She filed a motion to extend her answer with the
dean which was not allowed as the matter was already elevated to the Executive Board. The petitioner filed a case
with the BCF Grievance Committee but the case was transferred to the Administrative Investigating Committee who
found the Department Order appropriate since it was intended to prevent to prevent the controversy from affecting
the harmonious relationship within the College of Law. The respondednt constituted a Fact Finding Committee to
investigate the allegations concerning the administrative matters and found the petitioner guilty of the charges
against her.
The petitioner did not report for work and instead took a vacation leave and several other leave of absences.
Petitioner then finally filed a complaint for constructive dismissal. She claimed that she was arbitrarily asked to
transfer from her place of work which is far from her original place of assignment. LA ruled in Duldulao’s favor. NLRC
reversed LA saying that petitioner was neither demoted nor dismissed and her salary remained he same. CA upheld
the NLRC. Thus this petition saying that the constructive dismissal was tainted in bad faith and that it was intended
as a punishment. The court held that there is “constructive dismissal if an act of clear discrimination, insensibility or
disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by
him except to forego his continued employment” . It exists when there is cessation of work because “continued
employment is rendered impossible, unreasonable or unlikely as an offer involving a demotion in rank and a
dimunition in pay.”
The court held that at the onset, the petitioner has no vested tight to the position of secretary/clerk typist to the
college of law because petitioner was employed not by the college but the BCF system itself and thus, BCF can
exercise its management prerogative, transfer her to any of the departments as long as the transfer does not result
in a demotion in rank or diminution in benefits or salary of the employee. In this case, she merely had to change the
route she took for her new assignment, almost the same distance from her house as that of her job in the college of
law. The court ruled that the transfer is not as a penalty but a preventive measure to avoid further damage to the
college. Petitioner cannot claim constructive dismissal simply becaue her transfer to another department was against
her wishes. Petition denied.
c. Requisites for Lawful dismissal: Concurrence of Substantive and
Procedural Due Process
 Landtex Industries v. CA
Landtex hired Salvador Ayson, who is also an officer of the union, as a knitting operator. Ayson later on received a
letter requiring him to explain within 24 hours why no disciplinary action should be taken against him for spreading
damaging rumors about the personal life of an unspecified person and for having an altercation with one of the
company owners when he was asked to submit an ID picture. Ayson replied that he cannot defend himself as to the

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rumors because he does not know what those rumors are and that as to the ID pictures, he was carrying something
and he merely replied in a loud voice for which he apologized for his actions. Landtex decided to conduct an
investigation. In a letter, the company informed Ayson of his termination due to his lack of cooperation during the
investigations. The union asked to hold meeting with Landtex to discuss Ayson’s case. Landtex reaffirmed its decision
to terminate and thus, Ayson and the union filed a complaint before the LA. The LA ruled in favor of Ayson saying
that it has jurisdiction and that it did not find any evidence supporting Landtex’s allegations that Ayson spread
malicious rumors he allegedly spread during a drinking session about Wiliam Go (owner of Landtex) and in shouting
at Go’s wife regarding the ID picture. NLRC agreed with Landtex that Ayson’s case falls in the original and exclusive
jurisdiction of the voluntary arbitrators as provided in Art 261 of the LC and as agreed by them in their CBA. Upon
appeal, the CA ruled that the jurisdiction in with the LA and found Ayson to be illegally dismissed as there was no
proof or reason of his alleged acts and that his termination was characterized by “bad faith and wanton and reckless
exercise of management prerogative.” The court awarded him separation pay. Both Landtex and Ayson filed a
petition for review. Landtex wanted to overturn the decision and insists that the subject of the petition is covered by
the CBA provision on voluntary arbitration and thus excluded from the LA’s jurisdiction. Ayson wanted reinstatement.
Substantive and Procedural Due Process
Art 217, 261, 262 of the LC tackle the jurisdiction of the LA. According to the NLRC, when the union called for a
meeting with Landtex, it initiated the grievance procedure and Ayson’s case should have been subjected to voluntary
arbitration. However, there is nothing in the records which show that the meetings are already the grievance
machinery contemplated in their CBA. It did not comply with the requisite number of participants, (CBA: 3 members
from union and landtex; 2 landtex, 7 union in their meeting) and there was nothing in the minutes that shows that
the attendes constituted a Management-Employement Committee (as mandated in their CBA during a grievance
proceeding). Lastly, if Landtx believed that the LA does not have jurisdiction, it should have filed a motion to dismiss
and not have participated in the proceedings before the LA.
The requisites for valid dismissal are
1. For any of the causes in Art 282
2. Opportunity to be heard and to defend one’s self.
Landtex invokes the second requisite and says that it invokes its management prerogative in dismissing Ayson for
insubordination. However, as earlier stated, there was not evidence of the alleged offenses of Ayson.
Procedural due process in the dismissal of the employee requires notice and hearing. Landtex failed to understand
the law’s purpose in requiring the opportunity of being heard. All the meetings conducted were not free from
arbitrariness and Ayson was not able to defend himself from the accusations. No witness was ever presented against
Ayson. A suspicion no matter how sincerely felt cannot substitute for factual findings carefully established through an
orderly procedure. Petition Denied.
 Coca-cola Bottlers v. Valentina Garcia
Coca-Cola Bottlers Philippines, Inc. hired Valentina G. Garcia as Quality Control Technician on probationary status. Petitioner
adopted some modernization programs which resulted in increased efficiency and production. Likewise, the work load of
their employees was substantially reduced. As a result, one employee in the Department became redundant. Respondent, as
the most junior employee of the Department could be validly terminated. However, instead of terminating respondent on
ground of redundancy, petitioner decided to assign her to its Iloilo plant.
Petitioner informed respondent that she would be transferred to the Iloilo plant for being an excess or redundant employee in
the Tacloban plant. Respondent refused to be transferred.
Petitioner gave respondent notice of her transfer to take effect on July 2, 1990. Yet, on said date, respondent reported for
work at the Tacloban plant. After she was refused entry, respondent filed a complaint for illegal dismissal with Regional
Arbitration Branch. LA ruled for her. NLRC reversed. CA held that abandonment of work was a just cause to effect
respondent's dismissal, it found that the dismissal was ineffectual since it did not comply with due process requirements, It
held petitioner liable for backwages from the time respondent was dismissed
Petitioner and respondent filed their respective motions for partial reconsideration. Hence, the present petition.
The sole issue for resolution in the present petition is whether respondent was accorded procedural due process
before her separation from work. The court answered in the negative.
In dismissing an employee, the employer has the burden of proving that the dismissed worker has been served two notices:
(1) the first to inform the employee of the particular acts or omissions for which the employer seeks his dismissal, and
(2) the second to inform the employee of his employer’s decision to terminate him.
The first notice must state that the employer seeks dismissal for the act or omission charged against the employee;
otherwise, the notice does not comply with the rules. According to the case of Maquiling v. Philippine Tuberculosis
Society, Inc this notice will afford the employee an opportunity to avail all defenses and exhaust all remedies to
refute the allegations hurled against him for what is at stake is his very life and limb his employment.
Petitioner argues that the purpose of the notice requirement was achieved when petitioner sent several notices to
respondent at her last known address. The Court is not persuaded by such argument. Article 277 of the Labor Code
explicitly provides that the employer shall furnish the worker whose employment is sought to be terminated a written notice

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containing a statement of the causes for termination Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the
Labor Code provides the proper Standards of due process: requirements of notice. In the case, proof that respondent was
properly apprised of the charges against her and given an opportunity to explain her side is lacking. Respondent's dismissal
was effected without the notice required by law. Thus, petitioner failed to satisfy the two-notice requirement. Petition is
DENIED
d. Burden of Proof
Art. 277. 3rd sentence. Miscellaneous provisions.
b. Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal
by filing a complaint with the regional branch of the National Labor Relations Commission . The burden of proving
that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute
in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before
whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a
mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)
 Chavez v. NLRC + Supreme Packaging Inc.
Pedro Chavez is a truck driver for Supreme Packaging Inc. since 1984. In 1992, he wanted to be regularized to get
the benefits of the regular employees. In 1995, this not being granted, he filed complaint for regularization but he
was terminated (due to gross negligence in proper maintenance of truck, wanting to sever ties with the company
etc) before the case was heard. LA ruled for Chavez finding them guilty of illegal dismissal. NLRC affirmed the
decision of the LA. The respondents sought reconsideration which was granted by the NLRC saying that the fixed
period f employment was already included in the contract of employment and dismissed the petition. Upon appeal,
the CA affirmed the decision of the LA. It also disbelieved the respondent’s clam that the petitioner abandoned his
job noting that he just filed a complaint for regularization. However, on a motion for reconsideration, the CA made a
complete turn and reinstated the decision of the NLRC. Thus this petition.
The court found that the ER-EE relationship is present due to the four fold test. (Same work, paid by SPI, dismissed
by SPI, his truck is owned by SPI and his truck routes are controlled by SPI.) That he was paid on a per trip basis is
not significant. That there is ER-EE relationship, there is an illegal dismissal. As a rule, the employer bears the burden
of proving that the dismissal was for a valid and just cause. In this case, the respondents failed to prove
abandonment as the cause for the petitioner’s dismissal. To constitute abandonment, there are 2 factors that must
concur
1. the failure to report for work or absence without valid or justifiable reason
2. a clear intention to sever employer-employee relationship.
The court found that he just filed a complaint for regularization and that a charge of abandonment s totally
inconsistent with the immediate filing of a complaint for illegal dismissal. Negligence can’t also be invoked by the
company as a reason because it implied want or absence or failure to exercise slight care or diligence. The single and
isolated case of petitioner’s negligence in proper maintenance of the truck does not amount to gross and habitual
neglect. Due to the lack of valid and just causes in terminating the services of the petitioner thus violating Art 279 LC
or security of tenure of Chavez, he is reinstated to his work with full backwages. However due to the circumstances
of the case, separation pay instead of reinstatement is more equitable in this case. Petition granted.

 Pepsi Cola Product Philippines v. E.V. Santos

Emmanuel V. Santos was employed by petitioner Pepsi Cola Products Phils he was promoted as Acting Regional Sales
Manager. 11 months later, he received from petitioner Ernesto F. Gochuico a memorandum charging him with
violation of company rules and Article 282(a) of the Labor Code.
The charges arose out of alleged artificial sales by the sales personnel of the Libis Sales Office allegedly upon the
instruction of respondent which resulted in damage to petitioners amounting to P795,454.54. It is petitioners’ view
that since respondent never denied these allegations, he is deemed to have admitted the same. Petitioners found
respondent guilty of the aforesaid charges
Respondent filed a case for illegal dismissal which the Labor Arbiter. The Labor Arbiter ruled that petitioners failed to
satisfactorily prove the serious charges against respondent. Petitioners appealed to the NLRC which affirmed the LA.
Petitioners appealed to the CA who affirmed the NLRC decision ruling that the charges in the memorandum of
suspension and the notice of termination were not satisfactorily proven. The only evidence submitted by petitioners

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was the notice of termination which narrated what happened during the administrative investigation. It also
observed that while petitioners discovered the alleged fictitious sales in April 1996, it was only on February 14, 1997
that petitioners placed respondent on preventive suspension and commenced administrative investigation. Thus this
petition.
The court held that in an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of
an employee is for a valid cause. In the instant case, petitioners failed to present evidence to justify respondent’s
dismissal. Save for the notice of termination, there is no other evidence which would clearly and convincingly show
that respondent was guilty of the charges imputed against him. Petition is PARTIALLY GRANTED.
e. Measure of Penalty
 Bago v. NLRC + Standard Insurance Co Inc.
Arlyn Bago was hired by Standard as an encoder. A complaint was filed by Celia Abordo, the head of the Tuguegarao
Branch of SICI, against Bago for manipulating money out of the agent’s commissions and for the spreading of rumors
that Abordo was having an affair with the claims assistant. An audit was conducted against Bago which disclosed that
the commission slips were not signed and were pocketed by those in connivance in the scheme to get part of the
commission. The audit also disclosed that the rumor started when she asked the claims assistant to drive her home
and allowed him to bring home her car. HRD asked Arlyn and those liable to explain why appropriate sanction should
not be imposed. Arlyn wrote back asking for forgiveness. HRD wrote back asking why proper sanction should not be
given them due to their admission. Later on Arlyn stated that she admitted to the offense deliberately as to end the
form of dishonesty served against her and that she had not been involved in any act of dishonesty. The accused
employees were soon terminated from employment and Bago filed a complaint for illegal dismissal with the LA. The
LA found the employees to be illegally dismissed. NLRC reversed the LA and found them to be validly terminated. CA
denied the petition. Thus this petition. The court held that the dismissal is valid. That loss of trust is one of the
reasons for her termination and that she is NOT a management employee does not lie as her work required a
substantial amount of trust and confidence on the part of her employer. Even given that she is an ordinary rank and
file employer, there is sufficient evidence to show her involvement in the dishonest scheme of pocketing the
commissions. Even if Arlyn has been working there for 8 years, the court held in the cases of Salvador v. Phil. Mining
Service Corp and Flores v. NLRC that the measure of penalty takes the length of time of service into consideration
but given that the offense is pilferage by petitioner which shoes a lack of loyalty, the same cannot be used as a
mitigating factor for it will be like rewarding disloyalty. Petition is denied.
 Supreme Steel Pipe Corporation v. Bardaje
Rogelio Bardaje was hired by Petitioner Supreme as a warehouseman. Supreme employees are required to wear the
yellow uniform while at work but it was common practice for warehousemen to wear longsleeved shirts over their
uniform to serve as protection from heat and dust while working. A security guard arrogantly ordered him to remove
his shirt and Bardaje feeling singled out and offended challenged him to fight wherein a scuffle ensued but was later
on subdued by another security guard.
Bardaje later on received a memorandum of his 1 month suspension due to his violation of the rule prohibiting the
inciting of a fight. When he reported back after his suspension, he was terminated due to previous infraction of
company rules. He filed a complaint for illegal dismissal with the LA. LA ruled that Bardaje is illegally dismissed and
that the company failed to substantiate its claim that complainant was guilty for serious misconduct but that the
suspension was proper as he could just have called the attention of his superiors instead of inciting a fight.
Petitioners appealed but pending this reinstated the petitioner in their payroll. NLRC dismissed the complaint and
imposed the penalty of dismissal. On appeal, the CA reversed the NLRC and reinstated the decision of the LA finding
the penalty of dismissal too harsh. Thus this petition.
The court ruled that for the reason to be a just cause of termination under Art 282 of the LC, the misconduct must
be serious or that it must be of such grave and aggravated character and not merely trivial or unimportant . Thus for
misconduct or improper behavior to be a just cause of dismissal (Lopez v. NLRC):
1. it must be serious
2. 2. it must relate to the performance of the employee’s duties
3. it must show that the employee has become unfit to continue working with the employer.
The court said that not every fight within the company premises would automatically warrant a dismissal from
service. The court found that the accusations of violent temper of the respondent were due to the provocations of
the security guard as corroborated by witnesses from the company. As to the penalty, the court agrees that the same
is too harsh and that it is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the
gravity of the misdeed. Petition Denied.
 Jackqui R. Moreno v. San Sebastian Collegio Recoletos
San Sebastian College-Recoletos, Manila (SSC-R), a domestic corporation and an educational institution employed
petitioner Jackqui R. Moreno (Moreno) as a teaching fellow. Moreno became a member of the permanent college
faculty. She was also offered the chairmanship of the Business Finance and Accountancy Department. Reports and

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rumors of Moreno’s unauthorized external teaching engagements allegedly circulated and reached SSC-R. Moreno
had unauthorized teaching assignments at the Centro Escolar University and at the College of the Holy Spirit. Moreno
received a memorandum from the Dean of her college, requiring her to explain the reports allegedly violated
Section 2.2 of Article II of SSC-R’s Faculty Manual. Moreno sent a written explanation in which she admitted
her failure to secure any written permission before she taught in other schools. Moreno admitted she did not formally
disclose her teaching loads and that she went beyond the maximum limit because she needed to support her mother
and sister. On the same day that Moreno sent her letter, the grievance committee unanimously found that she
violated the prohibition and her employment was to be terminated.
Moreno thus instituted with the NLRC a complaint for illegal termination against SSC-R, LA dismissed Moreno’s
complaint for lack of merit. SSC-R filed a Motion for Reconsideration of the NLRC Decision, which was denied for lack
of merit. SSC-R instituted with the Court of Appeals which granted the petition saying that: “Willful disobedience of
the employer’s lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two
(2) requisites: the employee’s assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful or perverse attitude; and the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been engaged to discharge and that the
charges are present in the case”
Moreno impugns the CA decision. Moreno insists that her right to security of tenure is a more significant
consideration in this case. The court said that: No worker shall be dismissed from employment without the
observance of substantive and procedural due process and in termination cases, the burden of proof rests on the
employer to show that the dismissal is for just cause.
Respondent SSC-R contends that Moreno’s dismissal from employment was valid because she knowingly violated the
prohibition and in so doing, Moreno allegedly committed serious misconduct and willful disobedience against the
school. The court held that: Under Art. 282(a) of the Labor Code, willful disobedience of the employer’s lawful orders
as a just cause for termination of employment envisages the concurrence of at least two requisites: (1) the
employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a
"wrongful and perverse attitude"; and (2) the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he has been engaged to discharge. SSC-R miserably failed to
prove that Moreno’s misconduct was induced by a perverse and wrongful intent as required in Art. 282(a) of the
Labor Code. The Court finds the punishment to be disproportionate to the offense. Court deems it appropriate to
impose the penalty of suspension of one (1) year on Moreno, to be counted from her illegal dismissal. However,
given the period of time in which Moreno was actually prevented from working in the respondent school, the said
suspension should already be deemed served. Petition for Review is GRANTED.
B. Termination of Employment by Employee
i.) Resignation
Oriental Shipmanagement Co Inc. v. NLRC + Felecisimo Cuesta, Wilfredo Gonzaga
Orental is a recruitment agency duly licensed by the Philippine Overseas Employment Administration (POEA) to
recruit seafarers for employment on board vessels accredited to it. Kara Seal Shipping Co., Ltd. is petitioner's foreign-
based principal, which owns and manages M/V Agios Andreas, a vessel accredited to petitioner. Respondents Cuesta
and Gonzaga were hired as Third Engineers on board the said vessel for a one-year contract. Kara Seal through its
vessel’s Shipmaster signed an Agreement with the International Transport Workers Federation (ITF for brevity)
increasing the monthly salary. Later, the ITF inspector found out that the vessel’s crew has not been paid properly.
The Shipmaster assured him that the workers will be paid accordingly. Upon reaching Port Piombino, however,
respondents were ordered repatriated to Manila and before such repatriation, they were made to sign Letters of
Indemnity saying “the contract of employment of the above crewmember is terminated by mutual agreement…
consequently he declares to have no claim whatever against the Shipowner.”
Respondents received from Kara Seal payments not in accordance with the Agreement. As such respondents filed
Complaint against Oriental and Kara Seal for illegal dismissal. LA dismissed the complaint saying “The voluntariness
of their resignation is confirmed and reflected from the Letter of Indemnity they executed. They were executed in
the presence and with the participation of the ITF… there is no evidence of threat or intimidation to the
complainant's resignation.” NLRC affirmed LA. Upon appeal, the CA reversed the NLRC decision saying that the
Letters of Indemnity were void. The CA also denied the MFR filed by Oriental and Kara Seal. Thus this petition.
The court used the doctrine of Pacta privata juri publico derogare non possunct. Private agreements between parties
cannot derogate from public right in ruling that the quitclaims are invalid. Public policy dictates that they be
presumed to have been executed at the behest of the employer. It is the employer's duty to prove that such
quitclaims were voluntary. The employee's acknowledgment of his termination is not enough to satisfy the
requirement of voluntariness on his part.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and he has no other choice but to
disassociate himself from his employment.

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It would have been illogical for respondents to resign and then claim that they were illegally terminated. Well-
entrenched is the rule that resignation is inconsistent with the filing of a complaint for illegal dismissal. Based on the
foregoing disquisition, The SC is convinced that respondents were forced to sign the Letters of Indemnity. Thus, said
Letters of Indemnity must be deemed void. Given this, the court ruled that they were illegally dismissed since there
was no justification for terminating their services and there was no due process as Oriental did not serve two written
notices to respondents prior to their termination from employment, as required by the Labor Code. Petition DENIED.
(As an add on if ma’am asks)
paragraph 5; Section 10 of Republic Act No. 8042 provides:
In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract,
the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less. The SC also noted that there is no evidence on record of payment of
placement fee. Hence, it is unable to award reimbursement of the same. Cuesta is also entitled to vacation leave pay.
Lastly, for petitioner's breach of contract and bad faith, respondents should be awarded P50,000 in moral damages
and another P50,000 as exemplary damages. In addition, they should also be awarded attorney's fees equivalent to
ten percent (10%) of the aggregate monetary awards.
Globe Telecom v. Jenette Marie Crisologo
Marie Crisologo is a lawyer who was employed by Globe as a manager in its corporate legal services department.
During her pregnancy, she was rushed to the hospital due to profuse bleeding and possible miscarriage and after a
week tendered her resignation citing the advise of the doctor for her to rest for the duration of her pregnancy. Globe
accepted her resignation. A few weeks after, she was informed that an email was circulating within the company that
she solicited money from one of the company’s suppliers. She requested a copy but was declined as there was no
longer any reason to pursue the matter. She also asked for a certification to clear her reputation and said that she
resigned because of the damaging email. The certification was not given, instead, a certification of her resignation
was issued. She filed a complaint for illegal dismissal saying that she was fired on the basis of a rumor, the veracity
of which was never proven. LA dismissed the complaint saying that a lawyer like her would never sign her rights
away. NLRC affirmed LA. Upon appeal, the CA granted the petition stating that given that there is no sufficient proof
that she voluntarily resigned and that it is unlikely that a person receiving a high salary to resign. Thus this petition.
The court said that the resignation letter was drafted in a clear, concise and categorical language; that a person of
her professional standing will not easily relinquish her legal rights; and that she resigned because of the health of her
child. The court defined resignation as the voluntary act of an employee who finds herself in a situation where she
believes that personal reasons cannot be sacrificed in favor of the exigency of the service. The court noted that her
letter of resignation expressed gratitude towards the company and in Michael Academy v. NLRC , the court held that
expressions of gratitude cannot possibly come from an employee who is just forced to resign since it belies the
allegation of coercion. Petition Granted.
Lazaro v. Dacut et al
Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala were crew members of the LCT “BASILISA”, an inter-island
cargo vessel owned by private respondent Sta. Clara International Transport and Equipment Corporation. Dacut
discovered a hole in the vessel’s engine room. The company had the hole patched up with a piece of iron and
cement. Despite the repair, Dacut and Tungala resigned in July 1999 due to the vessel’s alleged unseaworthiness.
Cajote went on leave from April 12-28, 1999 to undergo eye treatment. Fearing that he will be charged as Absent
Without Leave (AWOL), Cajote resigned in June 1999.
Petitioners filed a complaint for constructive dismissal amounting to illegal dismissal.
Dacut and Tungala claimed that they resigned after Reynalyn G. Orlina, the secretary of the Personnel Manager, told
them that they will be paid their separation pay if they voluntarily resigned. They also resigned because the vessel
has become unseaworthy after the company refused to have it repaired properly. Cajote alleged that he resigned
because the company hired a replacement while he was still on leave. When he returned, the Operations Manager
told him that he will be paid his separation pay if he voluntarily resigned;
Labor Arbiter dismissed petitioners’ complaint. There was sufficient evidence to prove that the vessel was
seaworthy. Thus, the fear of Dacut and Tungala was unfounded; also, Cajote has incurred excessive unauthorized
absences which would warrant his dismissal under the Labor Code.
Petitioners appealed to the NLRC. NLRC affirmed the Labor Arbiter’s decision. Petitioners elevated the case to the
Court of Appeals which likewise affirmed the findings of the NLRC. Thus this petition.
The court is asked to resolve: (1) whether the Labor Arbiter erred in admitting the company’s reply after the case
had been submitted for decision; (2) whether Dacut, Tungala and Cajote voluntarily resigned from their employment;
and (3) whether petitioners were entitled to their monetary claims.
1. Technical rules of procedure are not binding in labor cases. The fact that the Labor Arbiter admitted the
company’s reply after the case had been submitted for decision did not make the proceedings before him
irregular.

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 2. Here, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in their findings that they
voluntarily resigned. In fact, the company tried to give Cajote another assignment but he refused it. The
court rules that all factual findings are amply supported by substantial evidence.
3. There is insufficient evidence to prove petitioners’ entitlement thereto. As crew members, petitioners were
required to stay on board the vessel by the very nature of their duties, the correct criterion in determining
whether they are entitled to overtime pay or night shift differential is not whether they were on board. The
petitioners failed to submit sufficient proof that overtime and night shift work were actually performed to
entitle them to the corresponding pay.
Petition is DENIED.
a. Just Causes
Art. 285. Termination by employee.
b. An employee may put an end to the relationship without serving any notice on the employer for any of the
following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the employee or any
of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
b. Without Just Cause
Art. 285. Termination by employee.
a. An employee may terminate without just cause the employee-employer relationship by serving a written notice on
the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the
employee liable for damages.
ARTICLE III – BILL OF RIGHTS Section 18. (1) No person shall be detained solely by reason of his political beliefs and
aspirations.
(2) No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have
been duly convicted.
Azcor Manufacturing Inc. v. NLRC + Candido Capulso
Azcor Manufacturing hired Capulso as a ceramics worker for more than 2 years. He asked to go on sick leave as
recommended by his doctor because he had developed bronchial asthma due to his work at the ceramic factory
(inhaled ceramic dust due to the lack of safety gadgets). He was allowed to do so but upon returning to work, his
supervisor informed him that only the owner can allow him to continue his job. When it became apparent that he will
not be reinstated, he filed the complaint for illegal dismissal. The company claims that Capulso resigned as evidenced
by a letter of resignation. LA dismissed the complaint. NLRC reversed and ruled that there is illegal dismissal. Hence
this petition. During the pendency of the case, Capulso died of the asthma and a heart disease.
The court held that to constitute a resignation, it must be unconditional and with the intent to operate as such. There
must be an intent to relinquish a portion of the term of office. In this case, Capulso signified his desire to return to
work after he recuperated. The court looked at the subject resignation letters and found that the letters were pre
drafted with blank spaces filled up with the alleged date of resignation and it was in English which was not the
normal vernacular of Capulso given his low level of education. The court said that the company failed to show that
the dismissal of the employee is for a valid reason and that they are now liable for illegal dismissal. Separation pay.
Petition dismissed.
A’ Prime Security Services Inc. v. NLRC
Othello Moreno had been working as a security guard for a year with the Sugarland Security Services, Inc., a sister
company of petitioner A Prime. He was rehired as a security guard by the petitioner and assigned to the same post at
the U.S. Embassy Building after A Prime absorbed Sugarland. He was forced by petitioner to sign new probationary
contracts of employment for 6 months and before the period was over, her was terminated.
A Prime said that Moreno was caught sleeping on post for which he was sent a memorandum giving him a last
warning after which he had a quarrel with another security guard, which resulted in a near shootout. Also that based
on a psychological test in which he did not pass the company standard and therefore, he could not be hired as a
regular employee. Moreno filed a complaint for illegal dismissal. LA ruled for Moreno. NLRC affirmed the LA. Thus this
petition.
The court ruled that Moreno’s employment with A Prime is just a continuation of his employment in Sugarland.
Petitioner’s failure to deny that Sugarland is its sister company and that petitioner absorbed Sugarland’s security
contract and security personnel assumes overriding significance over the resignation theorized upon, evincing
petitioner’s design to ignore or violate labor laws through the use of the veil of corporate personality. The court said
that Moreno has already gained the status of regular employee upon completing the probationary period imposed on
him when he was employed in Sugarland.

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The court, having found that Moreno is a regular employee, ruled that he has been illegally dismissed because there
was just, legal and valid basis to do so. What is more, he was not given a chance to contest his dismissal. He was
deprived of an opportunity to be heard.
The dismissal of private respondent was presumably based on the results of his behavioral and neuropsychological
tests and on his violation of a company rule on sleeping on post.
With respect to the behavioral and neuropsychological tests, the Court agrees with NLRC’s assessment:
"Complainant’s result of his behavioral research and neuropsychological test to our mind, is of no moment,
considering that the said test appeared to have been conveniently contrived to be conducted, and the result
produced on the very day of his dismissal, in question.
Also, private respondent’s alleged violations of sleeping on post, and quarrelling with a co-worker, may not be proper
grounds for dismissal, as the same were first infractions. Circular No. I of A’ Prime, governing discipline, suspension
and separation from the service of security guards, provides:
"SECTION VIII - SLEEPING ON POST
1st Offense........- Warning
2nd Offense.......- 30 days suspension without pay
3rd Offense........- Dismissal
SECTION IX - CHALLENGING A POSTED SECURITY/LADY GUARD AND SUPERIORS
1st Offense - One (1) month suspension
2nd Offense – Dismissal
The infractions of Sections VIII and IX of Circular No. 1 by private respondent were first offenses, they were not
punishable by dismissal. They were not valid grounds for terminating the employment of private respondent. Petition
is DISMISSED
ii.) Performance of Military of Civic Duty
Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty
shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.
Book VI, Rule I, SECTION 12. Suspension of relationship. — The employer-employee relationship shall be deemed
suspended in case of suspension of operation of the business or undertaking of the employer for a period not
exceeding six (6) months, unless the suspension is for the purpose of defeating the rights of the employees under
the Code, and in case of mandatory fulfillment by the employee of a military or civic duty. The payment of wages of
the employee as well as the grant of other benefits and privileges while he is on a military or civic duty shall be
subject to special laws and decrees and to the applicable individual or collective bargaining agreement and voluntary
employer practice or policy.
iii.) Forced Resignation
JSS Indochina Corp v. Ferrer
Gerardo Ferrer and the other respondents were deployed to Taiwan but only 20 workers were employed as
construction workers at the Formosa Plastics Corporation. The respondents sought assistance from the Manila
Economic and Cultural Office who directed them to sign separate affidavits saying that they were assigned at Shin
Kwan Enterprise and not at Formosa. They were soon repatriated to the Philippines. The employees filed a complaint
for illegal dismissal with the LA. The Company said that they refused to work after being assigned as pipe tract
workers in Shin Kwan. The LA ruled for the employees saying that they have been forced to resign. Upon appeal, the
NLRC affirmed the LA. In the petition with the CA, the CA dismissed the petition saying that the corporation was not
able to prove that the private respondent’s dismissal was for just, valid or authorized cause. Thus this petition.
The court held that the petitioners violated their contract by not hiring the respondents as construction workers as
agreed upon. The respondent’s decision to resign from their employment was made by force of circumstances not
attributable to their own fault. The respondents were forced to resign and pre-terminate their employment contracts
in view of the petitioners breach of its provisions. RA 8042 (Migrant workers act) provides that in cases of
termination of contract without valid cause, they shall be entitled to full reimbursement of placement fee plus salaries
for the unexpired portion of the contract or for 3 months for every year of the unexpired term. Petition denied.
C. Termination of Employment by Employer
i.) Substantive Requirements – Just Causes
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative
in connection with his work;
b. Gross and habitual neglect by the employee of his duties;

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c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
d. Commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
Art. 277. Miscellaneous provisions.
b. Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal
by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving
that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department
of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event
of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such
dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off.
(As amended by Section 33, Republic Act No. 6715, March 21, 1989)
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34,
Republic Act No. 6715, March 21, 1989)
a. Basis – Employer Right
Ocean East Agency Corp v. NLRC + Capt. Pepito Gucor
Ocean East hired Capt. Gucor as a master of M/V Alpine for one year. He was later on informed of his transfer to
another vessel pursuant to the transfer clause of the Standard Employment Contract (SEC). He viewed this as an
insult and he signified that all his benefits should be accorded him and that the cause for his repatriation is
unreasonable. The company assured him that he is not being terminated and that the repatriation s for documentary
purposes only. He finally agreed to be repatriated to the M/V Eleptheria but failed to disembark when ordered to do
so. On the ground of serious misconduct or willful disobedience, Ocean East terminated his services. He filed a
complaint for illegal dismissal. LA dismissed the complaint. NLRC reversed the LA. Thus this petition.
The court held that the transfer clause in the SEC is not violative of Art 34 I of the LC which provides that it shall be
unlawful to substitute or alter employment contracts approved by the DOLE without the approval of the Secretary of
Labor and that in fact it is complementary as a transfer is sanctioned only if it is to any vessel owned by the same
employer and that the rating (terms of service and wages) are in no way inferior or that the period of employment is
not shortened. The transfer clause is incorporated into the original contract and so the approval of the Sec of Labor
is no longer necessary. In AHS Philippines v. CA the court held that an employer may terminate an employee on the
ground of willful disobedience or to the employer’s order, regulation or instruction.
(given that the regulations are:
1. reasonable and lawful
2. sufficiently known to the employee at the time of his engagement
3. in connection with the duties which the employee has been engaged to discharge.)
In the case at hand, respondent’s defiance of the order posed a considerable prejudice to the business of the
employer; there is a valid and legal cause for the termination of the respondent. Petition granted.
b. Just Causes – Requisites
- Serious Misconduct, Willful disobedience (Insubordination)
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative
in connection with his work;
Ha Yuan Restaurant v. NLRC
Juvy Soria worked as a cashier in petitioner’s establishment located inside the SM Food Court Makati. Respondent’s
co-worker Sumalague was eating at the back of the store, when respondent rushed toward Ma. Teresa Sumalague
and hit the latter on the face causing injuries and resulting in a scuffle between the two. Despite the intervention of
their supervisor Fiderlie Recide, they were not pacified. They were brought to the SM Food Court Administration
Office and then to the Customer Relations Office for further investigation.

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SM Food Court Manager banned the two from working within the SM Food Court’s premises. Respondent then filed
with the Labor Arbiter a complaint for illegal dismissal
LA dismissed case. NLRC affirmed. CA affirmed NLRC. Hence, herein petition
The court held in Philippine Long Distance Telephone Co. vs. NLRC that separation pay shall be allowed as a measure
of social justice only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Separation pay therefore, depends on the
cause of dismissal, and may be accordingly awarded provided that the dismissal does not fall under either of two
circumstances: (1) there was serious misconduct, or (2) the dismissal reflected on the employee’s moral character.
The Court holds that respondent’s cause of dismissal in this case amounts as a serious misconduct and as such,
separation pay should not have been awarded to her. Thus, the petition should be granted.Her cause of dismissal
amounting to a serious misconduct, respondent is not entitled to an award of separation pay. As further stated in
Philippine Long Distance Telephone Co. vs. NLRC: The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the underprivileged. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the punishment of the guilty. Petition is GRANTED.
First Dominion Resources Corp v. Penarenda
Petitioner is a domestic corporation engaged in textile manufacturing. It employed Peñaranda as packer and Vidal as
drugman. Both were assigned to the night shift. Peñaranda was caught sleeping on the job on two occasions for
which he was asked to explain why he should not be terminated for committing the same offense. Peñaranda merely
denied the allegations against him. Petitioner, however, found his denial insufficient and terminated his employment
on June 20, 2001. Respondents filed separate complaints for illegal dismissal which were consolidated. NLRC
reversed the decision of the labor arbiter, ruling that the dismissal was without just cause, but withheld
reinstatement and payment of backwages. Respondents elevated the case to the Court of Appeals ruled that the
dismissal was illegal. Both parties moved for reconsideration of the decision but both motions were denied. Thus this
petition.
The court held that under Article 282 of the Labor Code, willful disobedience of a lawful order of the employer is a
valid cause for dismissal. Willful disobedience of the employer’s lawful orders, as a just cause for the dismissal of an
employee, requires the concurrence of at least two requisites: (1) the employee’s assailed conduct must have been
willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he
had been engaged to discharge.
On the first requisite, it is undisputed that respondents violated Company Rule 8 twice. Vidal cleverly tried to avoid
being caught sleeping a second time by sneaking inside the container van. Peñaranda, after being awakened and
warned by his supervisor, ignored the same and continued sleeping.
The second requisite is also present in this case. As a manufacturer of finished textile, petitioner utilizes machines
which are operated continuously. The machines’ functions are interlocked in a way that a disruption in one interrupts
the entire operation.
Court has recognized that management has the right to formulate reasonable rules to regulate the conduct of its
employees for the protection of its interests. We find Company Rule 8 to be a valid exercise of management
prerogative. As for affording due process to the respondents, Petitioner not only satisfied the two-notice requirement,
it also conducted an investigation, albeit summary, to determine the culpability of the respondents. Respondents
were confronted in detail with the charges against them and given the opportunity to present their side. As long as
the employee is given the opportunity to explain his side and to present evidence in support of his defense, due
process is served. Petition is hereby GRANTED.
Citibank NA v. NLRC
Rosita Paragas was hired by Citibank as Secretary to several important people but because of the reorganization,
respondent bank declared Paragas’ position redundant. She was moved around from task to task until she was
assigned to undertake the special project of reorganizing the Universal Account Opening Forms. The company went
thru 9 files boxes only and found 9 misfiles. This level of errors is not acceptable because a misfiled document is
considered LOST and you will have to go through the file one by one to be able to retrieve it.
As she failed to complete the project she was given another 30 days to complete it. AVP Ferrera directed complainant
to explain in writing why her employment should not be terminated on the ground of serious misconduct, willful
disobedience, gross and habitual neglect of her duties and gross inefficiency. Correspondingly, complainant was
placed under Preventive suspension.
An administrative conference took place with the complainant, her counsel and the Union President in
attendance. Respondent bank notified complainant that her written explanation were found self-serving, and
consequently, terminating her employment on the ground of serious misconduct, willful disobedience, gross
and habitual neglect of duties and gross inefficiency.
Following the termination of her services, respondent filed a complaint for illegal dismissal

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LA dismissed the complaint for lack of merit, NLRC affirmed LA. Respondent filed a MOTION FOR PARTIAL
RECONSIDERATION of the NLRC Resolution. She no longer challenged her dismissal on the ground of work
inefficiency, but prayed that petitioner be ordered to pay her the “Provident Fund” benefits under its retirement plan
for which she claimed to be qualified pursuant to petitioner’s “Working Together” Manual,
Finding that respondent’s dismissal was “for causes other than misconduct,” the NLRC, by the above-mentioned
October 24, 2001 Resolution granted respondent’s motion for partial reconsideration.
Petitioner thereupon filed a petition for certiorari with the Court of Appeals to set aside and nullify the NLRC
Resolution. Ca dismissed for lack of merit. Thus this present petition.
The court held that: her “Notice of Appeal and Appeal Memorandum” was filed after she had already submitted her
position paper. Thus, any mention of the Provident Fund therein would fail to adhere to the above-ruling in the
Mañebo case cited by the court which requires all facts, evidence, and causes of action should already be proffered in
the position papers and the supporting documents thereto, not in any later pleading. Also, the court held that
respondent is not entitled to retirement benefits as this Court finds that she was validly dismissed for serious
misconduct and not merely for work inefficiency.
In support of its ruling that respondent’s dismissal was valid, the labor arbiter relied on the performance appraisals of
respondent wherein the court noted significant behavioral problems in respondent. Evaluation of respondent cited
above finds corroboration in her admission that “she may have been tactless and insolent in dealing with her superior
but it does not allegedly warrant the supreme penalty of dismissal.”
In the case of Cathedral School of Technology v. NLRC, the court held that her unreasonable behavior and
unpleasant deportment in dealing with the people she closely works with in the course of her employment, is
analogous to the other “just causes” enumerated under the Labor Code. It is respondent’s obstinate refusal to reform
herself which ultimately persuades this Court to find that her dismissal on the ground of serious misconduct was
valid. Having been validly dismissed on the ground of serious misconduct, respondent is thus disqualified from
receiving her retirement benefits pursuant to the provision of petitioner’s “Working Together” Manual. petition is
GRANTED
Cosmos Bottling Co v. P Nagrama
Cosmos Bottling Corporation hired Pablo Nagrama, Jr. as a maintenance mechanic he was elected by the local union
as chief shop steward. Respondent was designated by petitioner as waste water treatment operator. Petitioner hired
Clean Flow Philippines, Inc. to conduct training seminars and Respondent was instructed to attend the seminar. He
failed to attend the first two (2) days of the seminar. His immediate supervisor, Josephine D. Calacien wrote a letter
to Nagrama informing him that the charges of abandonment of duty and gross insubordination had been lodged
against him. He was required to submit his written explanation. Respondent filed his explanation and contended that
he had to attend to an administrative hearing for fellow unionists. He averred that as a union official, he is obligated
to attend to the problems of his fellow union members.
LA rendered judgment sustaining the legality of the dismissal due to the letter Nagrama sent to Cosmos apologizing,
considering it as a judicial admission of guilt. Respondent appealed the matter to the NLRC who affirmed the decision
of the LA. On petition for certiorari to the CA, it reversed the NLRC. Thus this petition.
The court held that the there is no evidence to justify Nagrama’s termination. Two (2) elements must be satisfied for
an employee to be guilty of abandonment. The first is the failure to report for work or absence without valid or
justifiable reason. The second is a clear intention to sever the employer-employee relationship. A review of the facts
discloses that these twin elements are not present here. He also asked for and was given permission.
For the second charge against him: for gross insubordination, also called “willful disobedience of a lawful order,” to
lie, two (2) requisites are also necessary. First, the assailed conduct must have been intentional and characterized
by a wrongful and perverse attitude. Second, the order violated must have been reasonable, lawful, and made
known to the employee and should pertain to the duties which he has been engaged to discharge. These were not
found to be present in the case. Petition is DENIED for lack of merit.
Oscar P. Garcia and Alex Morales v. Malayan Insurance
Petitioners were employed as risk inspectors by Malayan Insurance Company, Inc. Malayan issued to petitioner
Garcia an Inter-Office Memorandum giving him 24 hours to explain his involvement in the theft of company property.
Private respondent also issued to petitioner Morales a similar memorandum but with additional instruction for his
preventive suspension for 30 days pending investigation. Petitioners denied their involvement in the theft and
countered that the filing of the charges against them was a form of harassment against their union. Malayan notified
petitioner Garcia, through a letter dated February 28, 2000, of the termination of his employment. Petitioners filed
before the Labor Arbiter (LA) a Complaint for illegal dismissal, LA dismissed their Complaint. Petitioners appealed
to NLRC who affirmed the LA. CA affirmed the NLRC. Hence, the present petition.
LA and the NLRC declared the dismissal of petitioners valid in view of substantial evidence that petitioner Garcia was
involved in the theft of private respondent's confidential records and that petitioner Morales participated in the cover-
up thereof relying on the affidavits of Umila and De Guzman. The NLRC found these witnesses credible because they
were not shown to hold any “grudge against [petitioners], much more because said witnesses are ordinary members

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of the union. While the CA did not elaborate on its view, it bound itself by the concurrent factual findings of the LA
and NLRC. Petitioners argue that the affidavits of Umila and De Guzman have no probative value for neither had
direct knowledge of the taking of private respondent's properties. De Guzman's statement detailed the effort to bring
said properties back into the premises of private respondent and to make it appear that these were merely
misplaced. Court cannot agree that no direct evidence was presented on the theft of the properties or the cover-up
thereof.While the participation of petitioner Garcia in said theft and cover-up is detailed in said affidavit, the same
cannot be said of the connection of Morales to said incidents. The only evidence of petitioner Morales's involvement
in the cover-up is the statement of De Guzman that it was said petitioner who instructed him to get a parcel from a
third person. There is no proof that Morales knew the contents of the parcel. Nowhere does it appear that petitioner
Morales had knowledge of what was to happen or had participation in it. Court finds the affidavit of De Guzman so
lacking in crucial detail as to Morales. dismissal.
Petition is PARTLY GRANTED as to Morales only.
- Gross and Habitual Neglect of Duties
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
d. Commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
National Book Store v. CA
National Bookstore Inc. employed Marietta Ymasa and Edna Gabriel as Cash Custodian and Head Cashier
respectively. They were assigned to the SM North Branch. They reported for work to count the previous day’s sales
as a matter of routine. The money is to be deposited with INTERBANK and PCIB. After preparing the deposit slips,
the counted money was placed inside 2 separate plastic bags sealed with scotch tapes and rubber bands. Ymasa
placed the money n her cabinet and locked it. It was only in the evening when the plastic bags were taken out
because the branch manager was not in his office, It was handed over to the Assistant Manager for safekeeping in
the Branch vault. The private respondents retrieved the bags from the Assistant Manager the next day in order to
give the money to the roving tellers of PCIB and INTERBANK. It was again counted before being deposited. It was
found that the amount was short of 42,000. The management asked the respondents why they should not be
dismissed for the loss of company funds. In writing, the employees explained that they had no access to the
Bookstore’s vault and that before leaving the office, they were subjected to a thorough body search. They also
claimed that they have served the petitioner for 13 years without being required to have a proof of receipt in turning
over the collection. They were subsequently terminated for gross neglect of duty and loss of confidence. The
employees filed a complaint for illegal dismissal against the company. LA ruled for them, entitling them t
reinstatement. NLRC affirmed the LA. Upon appeal, the CA affirmed the NLRC. Hence this petition. The court held
that for valid dismissal, the
1. employee must be afforded due process
2. the dismissal must be for a valid and just cause as provided in Art 282 of the LC
As to the requirement of due process, the employer should give 2 written notices, 1 to inform the cause of the
termination 2. to inform the employee of the decision to dismiss him. National Bookstore complied with this
requirement but they also carry the burden of showing convincing evidence that the dismissal is based on the just
causes enumerated in Art 282 of the LC. The records show that they were not even remotely negligent of their duties
and that they had no access to the vault. Even given arguendo that they are negligent, it was only a single and
isolated act and this does not constitute gross or habitual neglect of duties. The court found the respondents to have
been illegally dismissed and they are entitled to full backwages inclusive of allowances. LA is affirmed.
Tres Reyes v. Maxim’s Tea House
Maxim’s Tea House employed Ariel Tres Reyes as a driver. In the wee hors of the morning as he was driving to fetch
the employees from a ballroom dancing establishment, he figured in an accident when a 10 wheeler truck failed to
stop during a red light and struck the van he was driving. The management of Maxim required him to explain what
happened that morning but upon finding his explanation unsatisfactory, he was terminated, thus he filed the
complaint for illegal dismissal where the LA found him grossly negligent in failing to avoid the collision. The NLRC
reversed the decision of the La saying that there was no negligence on his part. Upon appeal, the CA ruled in favor of
the employer. Hence the instant case. The court held that the case before the Labor Arbiter depended primarily on
the position papers of the parties and no trial was held thus the finding of the CA that the LA was in a better position
to observe the parties cannot be applied to this case. Upon looking at the evidence, the court found that truck was n
the wrong lane and that it was purely an accident. Thus, the immediate dismissal of the petitioner is unjustified. The
argument that it was already his second vehicular accident is not also applicable to the case because the court found
that the same was also a pure accident wherein Tres Reyes was a victim. Defenisve driving is also not a defense. The

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test to determine the existence of negligence is the question: Did the petitioner, in doing the alleged negligent act,
use that reasonable care and caution which an ordinarily prudent person would use in the same situation?
The court, as stated earlier said yes as he was the victim of the vehicular accident. Petition is granted.
- Loss of Trust and Confidence
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
Mercury Drug Corp v. Zenaida Serrano
Zenaida Serrano was employed by Mercury Drug as a pharmacy assistant who was tasked to attend to customers
and handing the money paid to them to the cashier for the receipt. Mercury, upon decision of the Branch Manager,
put Serrano under observation due to the reports from other pharmacy assistants that she has been pocketing
money. The Branch Manager enlisted the help of a mason and 2 students. After the 2 students bought the medicine
furnished with the receipt, the mason soon bought 10 capsules of squalene worth 120 pesos which was the exact
amount given by the mason. He was not given the receipt. He soon came back as per the Branch Manager’s
instruction, asking for the receipt and pinpointing Zenaida as the woman who served him. She then took out the 120
pesos from her pocket and gave it to the cashier. The Branch Manager confronted her and thus she gave a
resignation letter apologizing as well as saying that she as tempted because it was the exact amount. Mercury did
not accept this and made her undergo an investigation who subsequently found her guilty. Mercury sent a letter to
Zenaida terminating her employment due to loss of trust and confidence. She filed a complaint for illegal dismissal
saying that she had a lot customers at the time and that she just forgot about the 120 pesos. LA found that the
allegations against Zenaida were fabricated and the the evidence was not substantial to prove her dishonesty. NLRC
dismissed the petition finding the respondent dishonest in her duties. CA upheld the LA. Thus this petition. The court
held that although the reason for her termination, loss of trust and confidence, generally applies to management
employees, if the employee holds a position whose functions may only be performed by someone who has the
confidence f management or has a greater duty to management than ordinary workers, can be terminated due to the
betrayal of trust. Loss of trust and confidence does not need proof beyond reasonable doubt. In this case, mercury
alleged that the pocketing of the 120 pesos was a ground for her termination due to her dishonesty. Furthermore,
she was already convicted of the crime of qualified theft to which the mason testified aganst her. Adding credence to
her committing of the offense. However, Mercury failed to abide by the two notice rule and thus deprived her of due
process. Thus, she may be awarded damages. Petition partly granted.
Amelia R. Enriquez v. BPI
Enriquez and Sia were the branch manager and assistant branch manager of BPI-Bacolod. They maintain
their branch experienced a heavy volume of transactions owing to the fact that it was the last banking day of the
year and that Descartin, one of the tellers had a cash shortage of P36,000.00 due to an innocent oversight of her
mother-in-law, Remedios Descartin (Remedios), to sign the withdrawal slip when the latter withdrew P36,000.00
earlier that day. Descartin was permitted to leave the bank to look for Remedios so that the latter could sign the
withdrawal slip. Thus, petitioners aver, the transaction was regularized before the end of the day. It is the position of
petitioners that as there was neither shortage nor loss to the bank. Initial discrepancy was accounted for.
Respondents, however, have a different version of what transpired. Descartin confided to her co-teller Fregil, was
incurred because she had temporarily borrowed the money that week. Fregil was allegedly informed that teller
Descartin was going to prepare a “white lie” report. Petitioners were instructed to report to the BPI head office for
polygraph testing. Petitioners submitted their respective replies in which they denied the charges against them.
Petitioners were dismissed from employment on grounds of breach of trust and confidence and dishonesty.
Petitioners filed their respective Complaints for illegal dismissal against respondents and prayed for reinstatement. LA
found that petitioners had been illegally dismissed. NLRC ruled that respondents had just cause to terminate their
employment. Petitioners thereafter elevated the case to the Court of Appeals. The appellate court, agreeing with the
NLRC, denied petitioners’ appeal and affirmed in toto the latter’s assailed decision. Thus this petition.
The petition should be denied. There is no denying that loss of trust and confidence is a valid ground for termination
of employment. Also, it must be shown that the employee is a managerial employee, since the term “trust and
confidence” is restricted to said class of employees. A review of the teller’s transaction summary of teller Descartin
reinforces the conclusion that the shortage in her pico box was due to a “temporary borrowing,” under BPI’s bank
policy, failure to report a shortage is not a ground to terminate employment.
Taken together with the attending circumstances of the case, the failure of petitioners to report the cash shortage of
teller Descartin, even if done in good faith, nonetheless resulted in their abetting the dishonesty committed by the
latter. It is well-settled that the power to dismiss an employee is a recognized prerogative that is inherent in the
employer’s right to freely manage and regulate his business. Their manifest condonation and even concealment of an
offense prejudicial to their employer’s interest committed by a subordinate under their supervision reflect a
regrettable lack of loyalty which they should have reinforced, instead of betrayed. Petition is DENIED.

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 Uniwide Sales Warehouse Club v. NLRC
Amalia P. Kawada was employed by Uniwide and was promoted to Full Assistant Store Manager in 1995. In 1998, Uniwide received
reports from the other employees regarding some problems in Kawada’s departments. Uniwide, through Store Manager Apduhan,
issued a Memorandum summarizing the various reported incidents signifying unsatisfactory performance (commingling of good and
damaged items, sale of a voluminous quantity of damaged stocks)
Private respondent answered all the allegations. Unsatisfied, Apduhan sent 2 other Memorandums where Apduhan claimed that the
answers given by the private respondent were all hypothetical; and seeking from the private respondent an explanation regarding the
incidents. Private respondent sought medical help due to complaints of dizziness. Finding private respondent to be suffering from
hypertension, Dr. Zambrano advised her to take five days sick leave. Dr. Zambrano mistakenly wrote the wrong surname in the med
cert which led to a shouting match between Apduhan and Kawada which allegedly caused her to collapse. Private respondent
reported the confrontation between her and Apduhan to the Central Police District.
Apduhan issued a Memorandum advising Kawada of a hearing and warning her that failure to appear shall constitute as waiver and
the case shall be submitted for decision based on available papers and evidence.
Private respondent filed a case for illegal dismissal before the LA.
Apduhan issued a Memorandum stating that since private respondent was unable to attend the scheduled hearing, the case was
evaluated on the basis of the evidence on record;
LA dismissed the complaint for lack of merit. Private respondent appealed the LA’s decision to NLRC the NLRC ruled in favor of
private respondent, Petitioners appealed the NLRC Decision to the CA. CA affirmed in toto the NLRC Decision. Hence, the present
petition. The court found the petition to be meritorious.
The Court agrees with the findings of the LA that the termination of private respondent was grounded on the existence of just cause
under Article 282 (c) of the Labor Code or willful breach by the employee of the trust reposed on him by his employer or a duly
authorized representative.
Private respondent occupies a managerial position. As a managerial employee, mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal.
In Caoile v. National Labor Relations Commission
managerial employee, mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable
doubt is not required.
The irregularities and offenses committed by private respondent, corroborated by the various pieces of evidence supporting such
charges, i.e. records, reports and testimonies of Uniwide employees, in the mind of the Court, constitute substantial evidence.
Although she worked for Uniwide for almost 17 years with a clean bill of record, this is not sufficient to overcome the findings of
petitioners that the private respondent is guilty of the charges imputed to her.
The September 1, 1998 Memorandum where the private complainant was dismissed for loss of trust and confidence is valid and
complies with the due process requirement. Clearly, private respondent was given an opportunity to be heard. However, private
respondent chose not to attend the scheduled hearing because of her mistaken belief that she had already been constructively
dismissed. Petition is GRANTED.
Mitsubishi Motors Phil v. Rolando Simon
Rolando Simon and Constantino Ajero (respondents) were employees of petitioner and members of the Hourly
Union. Simon was designated as Union Chairman. Rodolfo Siena, one of the accredited rice suppliers complained to
petitioner that respondents had extorted money from him in exchange for union protection for his rice store’s
continued accreditation. He detailed that he was approached by respondents who introduced themselves as newly
elected union officers, and demanded that he pay them P50.00 per sack of rice given to petitioner’s employees
threatening him that they would no longer get him as a rice supplier. Petitioner, through its Industrial Relations
Department, issued a Notice of Disciplinary Charge with Preventive Suspension against respondents. Administrative
hearings were conducted, after which respondents were found guilty. Respondents filed a case for illegal dismissal
but their complaint was dismissed by the LA. NLRC affirmed the LA but deleted the award of financial assistance,
considering that respondents were dismissed for cause on the ground of serious misconduct. Upon appeal CA
granted the petition. Thus this petition.
The court finds for the petitioner. According to petitioner, said act is “a clear case of serious misconduct, fraud and
willful breach of trust, and disloyalty to the Company as their employer” as it “sabotages the Company’s Rice Subsidy
Program and disrupts the efficient administration of services and benefits to employees.” Thus, they claim that
respondents betrayed not only the Company, but also the union members whom they had sworn to serve. We find
substantial evidence to support respondents’ dismissal. The core of petitioner’s decision to dismiss respondents is
the statements of the spouses Siena. However, testimonies are to be weighed, not numbered; thus it has been said
that a finding of guilt may be based on the uncorroborated testimony of a single witness when the tribunal
finds such testimony positive and credible. We see no reason to doubt their credibility, nor any motive for them to
make up the story. They are not employees of petitioner; even respondents admitted that they could not think of
any motive why Siena would accuse them of extortion. Respondent’s denials and alibi of committing said act fall flat
in the face of the credible testimonies of the spouses Siena.

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Respondents’ acts constitute serious misconduct and willful breach of trust reposed by the employer, which are just
causes for termination under the Labor Code. For serious misconduct to exist, the act complained of should be
corrupt or inspired by an intention to violate the law or a persistent disregard of well-known legal rules. On the other
hand, in loss of trust and confidence, it must be shown that the employee concerned is responsible for the
misconduct or infraction and that the nature of his participation therein rendered him absolutely unworthy of the
trust and confidence demanded by his position. Petition is GRANTED
- Commission of a Crime
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
d. Commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representatives; and
- Analogous Cases
Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:
e. Other causes analogous to the foregoing.
Cathedral School of Technology v. NLRC
Teresita Vallejera aspired to be a nun in their congregation and thus she came to live with the sisters. During her
stay, she volunteered to assist as a library aide and in return for her work she was given 200/month. Later on, she
confessed to the sisters that she no longer wanted to be an nun, she pleaded however, t that they allow her to live
with them. The sisters agreed and tasked her as a library aide with a salary of more than 1k. The sisters then began
receiving numerous complaints about her sour disposition at work and her difficult personality both the students as
well as with her co-workers. She even managed to have the chief librarian resign She was summoned to the office of
the directress where she walked out upon hearing the negative comments about her while saying OK I will resign”
The school, after trying to settle her differences with the directress after storming out of the meeting, was informed
that her resignation has been accepted. She filed a case for illegal dismissal and the LA ruled for her saying she was
illegally dismissed. The NLRC and the CA affirmed the decision of the LA Thus this petition. The court held that her
unreasonable behavior and unpleasant deportment in dealing with the people she closely works with in the course of
her employment, is analogous to the other “just causes” enumerated under the Labor Code. It is respondent’s
obstinate refusal to reform herself which ultimately persuades this Court to find that her dismissal on the ground of
serious misconduct was valid. Being a Catholic School, it is expected that good behavior and proper deportment is
exercised at all times. The lack of procedural due process in giving her notice and hearing, this does not make her
illegally dismissed. The court further held that there can be no backwages or separation pay given that the
termination was for a just cause. NLRC’ s decisions annulled.
Lim v. NLRC
Sixta Lim was employed by the Pepsi Cola Company as a secretary since 1981 and when she was dismissed due to
low performance levels, she was already the staff accountant. Pepsi evaluated its employees as Marginal, Fair,
Commendable, Superior and Distinguished wherein Lim rated as Superior. Later on, the Ratings were changed to
Significantly Above Target, AT, On T, Below T, Significantly BT. This time, she has rated BT since she was poor in
production reporting which was raised to 40% of the overall rating. She was appraised negatively regarding this
matter. She asked for a reappraisal which returned with the same results. She wrote to the Mr. Yasuki Mihara of
PepsiCo Japan but before Mihara could visit the Philippines, she was asked to voluntarily resign but she refused to do
so. Petitioner was verbally informed of her termination. She filed a complaint for dismissal without due process. The
LA ruled for her. NLRC Reversed the LA. Thus this petition.
The court agrees with PEPSI that gross inefficiency falls within the purview of other causes analogous to those
enumerated in Art 282. gross Inefficiency is related to gross neglect because both involve specific acts of omission on
the part of the employee resulting in damage to the employer or to his business. In the case however, she was never
informed of her gross inefficiency and the brochure of PEPSI entitled “Managing Performance”, BT rating does not
merit a dismissal, infact, even the SBT is just a ground for probation not termination. PEPSI did not characterize the
deficiencies it attributed to the petitioner as gross inefficiency. As for procedure, PEPSI violated her right to due
process when they served her with the notice of her resignation but did not afford her a venue to be heard or defend
herself of the charges before her actual termination. Petition Granted.
Genuino v. NLRC + CITIBANK v. NLRC
Marilou Genuino was employed by Citibank as a Treasury Sales Division Head. Later on, she received a letter from
the bank charging her with knowledge or involvement which was irregular or even fraudulent. Genuino asked for a
bill of particulars. She was accused of using her family corporations in order to participate in the diversion of bank
client funds from Citibank. The company set an investigation and Genuino, who did not attend, found her guilty of
using their family’s corporation Global Pacific in diversion of bank client’s funds to their products which yielded higher
interests that what Citibank offered. She was terminated on grounds of serious misconduct, willful breach f trust and
commission of crime against the bank. She filed a complaint for illegal dismissal. LA ruled fro her reinstatement. Both
parties appealed to the NLRC who ruled that the dismissal was valid and legal. On appeal to the CA, the court

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dismissed both petitions. Thus these petitions. The court held that Genuino was dismissed for just cause but without
the observance of due process since even if the bank gave Genuino an opportunity to deny the truth of the
allegations in writing and participate in the administrative investigation, the fact remains that the charges were too
general to enable Genuino to intelligently and adequately prepare her defense. However, the dismissal remains valid
since the employer, according to Art 282 of the LA, may terminate an employee for fraud or willful breach of trust.
For loss of trust and confidence to be a valid ground, it must be substantial and not arbitrary and must be founded
on clearly established facts but t need not be proven beyond reasonable doubt. The evidence shows that Genuino did
not have her employer’s interest during these transactions. Genuino’s petition dismissed. Citibank affirmed.
c. Other Causes
- Abandonment
Padilla Machine Shop v. Rufino Javilgas
Rufino Javilgas was hired by Padilla Machine Shop. His work consisted of reconditioning machines. Petitioners made
regular deductions for his SSS contributions, but sometime in 2002, he found out that his employer was not remitting
the contributions to the SSS; when he complained about the failure of his employer to remit his SSS contributions,
the latter transferred him to the Novaliches branch office.
Rodolfo Padilla called him by telephone and told him to “stop working,” but “without giving any reason therefor.” He
stopped reporting for work and sued petitioners for illegal dismissal,
Padilla (Rodolfo), proprietor of Padilla Machine Shop, alleged that SSS and Medicare contributions were deducted
from Javilgas’ salary and remitted to the SSS; that in 2000, they (petitioners) submitted a report to the SSS that
Javilgas had voluntarily left and abandoned his work, some months after, Javilgas returned and pleaded to be re-
employed with them; that Rodolfo Padilla took Javilgas back to work, but their customers were not satisfied with the
quality of his work; hence Javilgas was assigned to the Novaliches branch.
He alleged that Javilgas had opened his own machine shop and even “pirated” the clients of petitioners; and finally,
Javilgas again voluntarily left Padilla Machine Shop without prior notice.
LA held that Javilgas was illegally dismissed, The NLRC found no sufficient evidence to show that Javilgas was
dismissed or prevented from reporting for work; CA reinstated decision of LA. It held that the burden of proof is on
the petitioners, to show that Javilgas was dismissed for a valid and just cause. Thus this petition.
The court found Javilgas was found to be illiterate, as he did not even get to finish Grade School. It likewise declared
as without basis the petitioners’ claim that Javilgas was operating a rival machine shop, since petitioners failed to
prove with sufficient evidence the veracity of said claim.
In illegal dismissal cases, the burden of proof is on the employer to show that the employee was dismissed for a valid
and just cause. Petitioners have failed to discharge themselves of the burden. With respect to Javilgas’ claim of
illegal dismissal, petitioners merely alleged that Javilgas did not anymore report for work. He did not elaborate or
show proof of the claimed abandonment.
For abandonment to exist, it is essential
(a) that the employee must have failed to report for work or must have been absent without valid or justifiable
reason; and,
(b) that there must have been a clear intention to sever the employer-employee relationship manifested by some
overt acts. The establishment of his own shop is not enough proof that Javilgas intended to sever his relationship
with his employer.
Petitioners, in like manner, consistently deny that Javilgas was dismissed from service; that he abandoned his
employment when he walked out after his conversation with Rodolfo and never returned to work again. But denial, in
this case, does not suffice; it should be coupled with evidence to support it. In the instant case, petitioners failed to
adduce evidence to rebut Javilgas’ claim of dismissal and satisfy the burden of proof required. Petition is DENIED.
Big AA Manufacturer v. Antonio
Big AA Manufacturer is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo who fired the
respondents due to abandonment. Respondents filed a complaint with the LA for illegal lay-off and illegal deductions
saying that they worked from 8:00 a.m. to 5:00 p.m. at petitioner’s office manufacturing company using petitioner’s
tools and equipment and they received P250 per day. Big AA denied that respondents were its regular employees. It
claimed that Eutiquio Antonio was one of its independent contractors who used the services of the other
respondents. It said that its independent contractors were paid by results and were responsible for the salaries of
their own workers. Allegedly, it allowed respondents to use its facilities to meet job orders. It also claimed that the
workers are project employees only. It added that since Eutiquio Antonio had refused a job order of office tables,
their contractual relationship ended.
LA ruled against petitioners. Both appealed to NLRC. Respondents appealed for not ordering their reinstatement to
their former positions. The NLRC modified the Labor Arbiter’s decision. It ordered petitioner to reinstate respondents
to their former positions or to pay them separation pay in case reinstatement was no longer feasible, with full
backwages in either case. The NLRC ruled that respondents were regular employees, not independent contractors. It

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further held that petitioner failed to justify its reason for terminating respondents and its failure to comply with the
due process requirements. CA affirmed NLRC ruling. Thus this petition. The court found that respondents were
employed for more than 1 year and their work as carpenters was necessary or desirable in petitioner’s usual trade or
business of manufacturing office furniture. Under Art. 280 of the Labor Code, the applicable test to determine
whether an employment should be considered regular or non-regular is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. Also, the
court found that respondents cannot be considered project employees. Petitioner had neither shown that
respondents were hired for a specific project the duration of which was determined at the time of their hiring nor
identified the specific project or phase thereof for which respondents were hired.
The court also held that they were illegally dismissed. The consistent rule is that the employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause, failing in which would make the
termination illegal, as in this case. Contrary to petitioner’s claim of abandonment as a valid just cause for
termination, herein respondents did not abandon their work. Petitioner failed to prove that
(1) not only of respondents’ failure to report for work or absence without valid reason, but
(2) also of respondents’ clear intention to sever employer-employee relations as manifested by some overt acts.
By filing the complaint for illegal dismissal within two days of their dismissal and by seeking reinstatement in their
position paper, respondents manifested their intention against severing their employment relationship with petitioner
and abandoning their jobs. It is settled that an employee who forthwith protests his layoff cannot be said to have
abandoned his work. Petition denied.
Nueva Ecija Electric Corp v. NLRC
Nueva Ecija Electric Cooperative (NEECO) II employed private respondent Eduardo M. Cairlan in 1978 as driver.
Danilo dela Cruz, petitioner’s General Manager, terminated private respondent’s services on ground of abandonment.
Immediately thereafter, private respondent talked with Mr. dela Cruz regarding this and dela Cruz promised that he
would talk to the Board of Directors about it, which he never did thus Cairlan filed a complaint for illegal dismissal
with prayer for reinstatement and payment of backwages. Dela Cruz said that since he assumed the position of
General Manager he never saw Cairlan also, that he sent a memorandum to Cairlan asking him to report for duty.
Dela Cruz also said that upon investigation, he found that Cairlan has been working for the Provincial Government of
Nueva Ecija under a different name. LA rules that he was illegally dismissed. NLRC dismissed for lack of merit. Court
of Appeal upheld the decisions of the NLRC and the Labor Arbiter.
Thus this petition. As for the due process issue, the court ruled that the Labor Arbiter is given the latitude to
determine the necessity for a formal hearing or investigation, once the position papers and other documentary
evidence of the parties have been submitted before him.
As for the issue of illegal dismissal, the memorandum was not found in the records and the claim of him working for
another was not sufficiently proven by evidence. The court found that petitioner miserably failed to establish the fact
of abandonment to justify private respondent’s dismissal. The evidence submitted by petitioner to buttress its
allegation that private respondent abandoned his work consists merely of indexes of payments to employees under
the name Eduardo Caimay without any further evidence showing that Eduardo Caimay and private respondent
Eduardo Cairlan. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment; it
is a form of neglect of duty hence, a just cause for termination of employment by the employer under Article 282 of
the Labor Code.Cairlan is entitled to reinstatement without loss of seniority rights and other privileges and full
backwages. Petition is hereby DENIED.
- Courtesy Resignation
Batongbacal v. Associatied Bank
Bienvenido R. Batongbacal, a lawyer, appointed assistant vice-president of Rizal Devt Bank. The bank merged with
Associated Banking Corporation and here, the petitioner resumed his position as assistant VP. More than six years
later or in March, 1982, petitioner learned that the salary and allowances he was receiving were very much below the
standard remuneration of the bank's other assistant vice presidents. He wrote the bank's board of directors asking
foe the money due him. Bank's board of directors met and approved the resolution asking all those with the rank of
manager or higher to submit their courtesy resignations due to the DEWEY DEE scandal. Petitioner did not submit his
courtesy resignation but was later on set a letter thanking him for his service and saying that his resignation has
been accepted. He filed a complaint for illegal dismissal. LA upheld the petitioner's arguments and claims. NLRC
found the petitioner's dismissal valid. Thus this petition.
The court said that to "streamline" its operation, the new management of the bank called upon all its employees to
submit their courtesy resignations and considered all executive positions vacant. However, by directing its employees
to submit letters of courtesy resignation, the bank in effect forced upon its employees an act which they themselves
should voluntarily do. Resignation means voluntary relinquishment of a position or office. The court added that
Batongbacal’s dismissal was effected through a letter "accepting" his resignation and based on the pleadings, also
because of insubordination in view of his failure to comply with the order to submit his letter of courtesy resignation.
The court held that insubordination may not be imputed to one who refused to follow an unlawful order.

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As to the salary, the NLRC merely relied on the presumption that Batongbacal is a management employee. Thus, the
case is remanded to the NLRC to determine WON he is a management employee.
212(k) of the Labor Code defines a managerial employee as "one who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial
actions."
Policy Instructions No. 8 which was issued by the then Secretary of Labor and which took effect on April 23, 1976, managerial employees are those
(1) who have the power to lay down management policies; (2) who have the power to hire, fire, demote, promote, etc.; and (3) who have the power
to recommend effectively (1) and (2).
- Change of Ownership
Manlimos v. NLRC
Super Mahogany Plywood Corporation hired petitioners as patchers, taper-graders, and receivers-dryers. A new
owner/management group headed by Alfredo Roxas acquired complete ownership of the corporation. The petitioners
were advised of such change of ownership and thus they were terminated. The new owner published a notice for the
hiring of workers. The petitioners then filed their applications for employment and were hired on probationary basis
for six months as patchers or tapers, but were compensated on piece-rate or task basis.
For their alleged absence without leave, Perla Cumpay and Virginia Etic were considered, as of 4 May 1992, to have
abandoned their work. The others, were considered as not up to the standards of production of the company. They
were all dismissed. They filed a complaint for illegal dismissal. LA ruled for the employees saying that the transfer of
ownership partook of a cessation of business operation not due to business reverses under Article 283 of the Labor
Code and the following requisites must be complied with before the dismissal of employees may be effected:
(1) service of a written notice to the employees and to the Ministry of Labor and Employment (MOLE) at least one
month before the intended date thereof,
(2) the cessation of or withdrawal from business operations must be bona fide in character; and (3) payment to the
employees of termination pay amounting to at least one half month pay for each year of service or one month pay
whichever is higher.
The Labor Arbiter ruled that the first and third requisites were present in this case. NLRC reversed LA saying that the
general rule is that "(C)hange of ownership or management of a business establishment or enterprise however, is not
one of the just causes x x x terminate employment without a definite period."
Thus, "an innocent transferee of a business has no liability to the employees of the transfer or to continue employing
them hiring of employees on probationary basis is an exclusive management prerogative. subsequent hiring of
complainants on probationary basis by the new management/corporate owners being the prerogative of
management must be sustained
As probationary employees, they are therefore on trial to afford new management to determine whether or not they
would qualify for permanent employment. In the case at bar, the change in ownership of the management was done
bona fide. Because the transfer was in good faith, the transferee is under no legal duty to absorb the transferor's
employees as there is no law compelling such absorption. Thus, the employees have been validly dismissed. As to
Cumpay and Etic, however, they should have been accorded the constitutional protection of security of tenure such
that they may only be terminated for just cause. Petition is partly GRANTED (as to Cumpay and Etic only.
Elecee Farms Inc. v. NLRC
Elcee Farms entered into a Lease Agreement with Garnele Aqua Culture Corporation (Garnele).
Garnele sub-leased Hacienda Trinidad to Daniel Hilado, who operated HILLA. The contract of lease executed between
Garnele and HILLA stipulated the continued employment of 120 of the former employees by the latter, but the
contract was silent as to the benefits which may accrue to the employees
Soon after HILLA took over it entered into a CBA with another union and due to their refusal to join the labor union,
the private respondents were terminated by HILLA. Pampelo Semillano and one hundred forty-three (143) other
complainants, represented by their labor union, Sugar Agricultural Industrial Labor Organization (SAILO), filed this
complaint for illegal dismissal.
Labor Arbiter dismissed their claim for damages and denied all claims. Complainants appealed and NLRC affirmed the
amount awarded by the Labor Arbiter as separation pay. The three sets of parties (1) the complainants; (2) Elcee
Farms and Corazon Saguemuller; and (3) HILLA filed their own Motions for Reconsideration. The NLRC ruled that the
simulation of the lease agreement between Elcee Farms and Garnele was made in bad faith. Thus this Petition for
Certiorari.
The court held that the above findings show that even after the execution of the lease agreement between Elcee and
Garnele, Elcee continued to act as the employer of the farm workers of Hacienda Trinidad. Elcee Farms effectively
ceased to operate and manage Hacienda Trinidad when, through Garnele, it leased the hacienda to HILLA. After the
said lease was executed, the employer-employee relationship between the farm employees and Elcee Farms was
severed. The lease agreement between Garnele and Daniel Hilado identified the employees who will continue
working with the new management and stipulated that workers who were not in the list, whether new or employed
in the past, will not be employed by the lessee.

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Clearly, there was a cessation of operations of Elcee Farms, which renders it liable for separation pay to its
employees, under Section 283 of the Labor Code. In a similar case, Abella v. National Labor Relations Commission,
the Court ruled that an employer whose lease agreement had already expired, and therefore no longer manages and
controls the hacienda, is still required to pay the separation pay. But although they were absorbed by the new
management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the
former employer, they will be considered as new employees. Petition is partially granted. (modification: Corazon
Saguemuller should not be held subsidiarily liable)
- Habitual Absenteeism
Manila Electric Co v. NLRC
Jeremias Cortez, Jr. was employed on probationary status by Meralco as a lineman driver. Cortez’ service with
petitioner is his perennial suspension from work and he was found to have grossly neglected his duties by not
attending to his work as lineman. He filed a complaint for illegal dismissal against petitioner. LA dismissed the case
for lack of merit. NLRC set aside the decision of the Labor Arbiter and ordered petitioner to reinstate respondent with
backwages. Hence, this petition. The court held that the regulation of manpower by the company clearly falls within
the ambit of management prerogative. This court had defined a valid exercise of management prerogative as the
employer being free to regulate, according to his own discretion and judgment, all aspects of employment. The
nature of Cortez’ job as a lineman-driver requires his physical presence to minister to incessant complaints often
faulted with electricity. “In the case at bar, it was established that complainant violated respondent’s Code on
Employee Discipline, not only once, but ten (10) times and an employee’s habitual absenteeism without leave, which
violated company rules and regulation is sufficient to justify termination from the service. The petition is GRANTED.
RB Michael Press v. Nicasio Galit
Galit was employed by petitioner R.B. Michael Press as an offset machine operator and he was tardy for a total of
190 times and was absent without leave for a number of days. When he was ordered to render overtime service in
order to comply with a deadline, he refused to do so, supposedly because he was not feeling well. And so her was
told not to work, and to return later in the afternoon for a hearing. In the hearing, respondent was terminated from
employment. Galit filed a complaint for illegal dismissal. LA found him to be illegally dismissed. NLRC affirmed the LA.
CA affirmed the NLRC. Petitioners aver that Galit was dismissed due to the following offenses:
(1) habitual and excessive tardiness;
(2) commission of discourteous acts and disrespectful conduct when addressing superiors;
(3) failure to render overtime work despite instruction to do so; and
(4) insubordination
The court held that habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come
to work on time everyday exhibit the employee’s deportment towards work. The fact that the numerous infractions of
respondent have not been immediately subjected to sanctions cannot be interpreted as condonation of the offenses
or waiver of the company to enforce company rules.
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) conduct must have
been characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. In
the present case, there is no question that petitioner’s order for respondent to render overtime service to meet a
production deadline complies with the second requisite and that the excuse he used will not hold water as not
evidence was shown to support it. CA REVERSED
- Fixed Term Employment
Medenilla v. PVB
Because of the liquidation of Philippine Veteran’s banks, petitioners were terminated but were rehired on the
condition that the employment shall be strictly on a temporary basis and only for the duration of the particular
undertaking. Petitioners received a uniform notice of dismissal containing the reasons justifying the termination. The
petitioners instituted a case for illegal dismissal. LA came out with a decision declaring petitioners' dismissal illegal.
NLRC reversed the decision of the LA and dismissed the Complaints for lack of merit. Thus this petition.
The court held that the important features of the contract were that the employment shall be on a strictly temporary
basis and only for the duration of the particular undertaking for which he was hired and only for the particular days
during which actual work is available.
The Court has repeatedly upheld the validity of fixed-term employment. Guidelines by which fixed contracts of
employment can be said NOT to circumvent security of tenure, are either:
1. 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
2. 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.

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The employment contract entered into by the parties herein appears to have observed the said guidelines since the
termination of petitioners' employment was in line with the objective of the Central Bank of the Philippines to reduce
costs and expenses in the liquidation of closed banks. In cases of illegal dismissal, the burden is on the employer to
prove that there was a valid ground for dismissal. Mere allegation of reduction of costs without any proof to
substantiate the same cannot be given credence by the Court. As the respondents failed to rebut petitioners’
evidence, the irresistible conclusion is that the dismissal in question was illegal. As held by this Court, if the contract
is for a fixed term and the employee is dismissed without just cause, he is entitled to the payment of his salaries
corresponding to the unexpired portion of the employment contract. But because PVB is already liquidated, cannot be
reinstated. Petition is PARTLY granted.
Pamantasan ng Lungsod ng Maynila v. Civil Service Commission
16 individual private respondents were full-time instructors of PLM under "temporary contracts" of employment
renewable on a yearly basis. They were given uniform notices of termination informing them of "the expiration of
their temporary appointments and that their retention was not recommended by their respective Deans. Respondents
filed a complaint for illegal dismissal and unfair labor practice against petitioner with the Public Sector Labor-
Management Council 1 ("PSLMC"). PLM denied having committed any unfair labor practice or having illegally
dismissed private respondents. In its defense, PLM interposed (1) the temporary nature of private respondents'
contracts of employment and (2) reasons that could justify the non- renewal of the contracts. PSLMC found petitioner
guilty of "Unfair Labor Practice" PSLMC transmitted the case to the CSC for appropriate action who then held that the
findings of PSLMC are entitled to respect and there is no need to conduct an investigation of their own, sustaining
the findings of the PSLMC.
Thus this petition. The court held that unfair labor practice charge and the complaint for illegal dismissal both filed by
private respondents are linked since the non-renewal of an employment contract with a term, it is true, is ordinarily a
valid mode of removal at the end of each period. This rule, however, must yield to the superior constitutional right of
employees to self-organization. While, a temporary employment may be ended with or without cause, it certainly
may not, however, be terminated for an illegal cause. PSLMC found that on two occasions, PLM was directed to
produce the evaluation results of the 16 complainants, evidence points to the fact that PLM seeks to remove their
employees that have been appointed as officers of the union. The finding of the PSLMC that the non-renewal by
petitioner of the questioned contracts of employment had been motivated by private respondents' union activities is
conclusive on the parties. Petition for certiorari is DISMISSED
- Past Offenses
Janssen Pharmaceuticals v. Silayro
Janssen employed Benjamin Silayro as a Medical Representative. During his employment, respondent received from
petitioner several awards and citations and a Nomination as one of the Ten Outstanding Philippine Salesmen but he
was also investigated and was found guilty of several administrative charges. A Notice of Disciplinary Action was
issued finding respondent guilty of
(1) delayed submission of process reports, for which he was subjected to a one-day suspension without pay, and
(2) cheating in his ROL test, for which he was subjected again to a one-day suspension.
A Notice of Preventive Suspension against respondent was also issued for
(1) Failure to turn over company vehicles assigned after the receipt of instruction to that effect from superiors, and
(2) Refusing or neglecting to obey Company management orders to perform work without justifiable reason.
Silayro was terminated and thus he filed a complaint for illegal dismissal. LA ruled that he breached company rules,
and which were sufficient grounds for dismissal but found that the penalty of dismissal is too harsh and
recommended his reinstatement. NLRC declared that reinstatement was improper where respondent was dismissed
for just and authorized causes. CA affirmed LA decision. Thus this petition.
The court ruled that to constitute a valid dismissal from employment, two requisites must concur:
(1) the dismissal must be for any of the causes provided in Article 282 of the Labor Code; and,
(2) the employee must be given an opportunity to be heard and to defend himself.
Petitioner had not been able to identify an act of dishonesty, misappropriation, or any illicit act, which the respondent
may have committed in connection with the erroneously reported product samples. As for the three other offenses,
Silayro already admitted to them. The court said that even if the respondent was already punished for the three prior
infractions, these offenses, among other offenses, may still be used as justification for his dismissal.
The court found him negligent in preparing his reports and he was guilty of giving free samples and in answering the
ROL exam. However, the records show that in the same year it was committed, in 1994, petitioner still gave
respondent two awards (5 year service and Wild Boar Arard) Also, the rest of the infractions were committed during
the time he was undergoing serious family problems. As for the ROL exam, the court found him guilty of such but
ratiocinated that his inability to comply with the deadlines for his process reports are the result of his preoccupation
with very serious problems and that due consideration must be given because of the ill fortune that befell a normally
excellent employee. The petitioner had not shown that during his employment, respondent took a willfully defiant

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attitude against it. It also failed to show a pattern of negligence which would indicate that respondent is incapable of
performing his responsibilities. Petition is DISMISSED. Silayro subjected to 5 months suspension without pay.
Ramoran v. Jardine CMG
Virginia Ramoran started working with Jardine as an accounting clerk and later on was promoted to junior accountant
with Antonio Robles as her immediate supervisor. The HRD noticed some irregularities in the overtime slips submitted
by Ramoran and upon confirmation of its invalidity with Robles, petitioner was terminated from employment.
Petitioner stated that she just wanted to catch up with work backlog caused by her serving a previous penalty of
suspension for tampering with the receipt for her 6K glasses (she bought P100 worth contacts lang naman talaga)
and, for that reason, she did not immediately file her OT authorization slips and submitted only when she was
reminded by the HRD.
On the other hand, Robles, consistently denied having signed and approved the OT
She filed a complaint of illegal dismissal. Jardine filed a complaint with the Arbitration Board of the National Labor
Relations Commission. Jardine also filed a criminal complaint against petitioner. LA dismissed the case. The MTC
acquitted her of the crime. Believing that the decision of the Panel of Voluntary Arbitrators may now be overturned
following her acquittal in the two criminal cases filed against her, petitioner filed with CA. Hence, this petition.
The court held that conclusions of voluntary arbitrator (or a panel as in this case) when they are sufficiently
corroborated by the evidence on record, should be respected by appellate tribunals.
It should be noted that the panel did not have the benefit of examining the other evidence apparently adduced by
RAMORAN. Even if the trial court found the same documentary evidence to be inadequate to sustain Ramoran's
conviction, by no means does it prevent the panel from considering the evidence sufficient to warrant dismissal.
The authorized time must be indicated in the overtime authorization for the purpose of establishing and limiting the
basis of overtime to be performed by an employee. After the same was signed by Mr. Robles she entered her alleged
overtime. Also, due to her previous infraction with the company causing her suspension, she was already issued a
memorandum, warning her that "any future violation of the same nature, irrespective of the time frame that it is
repeated or committed, would result in the imposition of the maximum penalty of dismissal." Dismissal on the basis
of loss of trust and confidence calls for substantial evidence and in the instant case, petitioner was apprised of the
charges against her but petitioner offers no evidence to disprove her accusation.Petition is hereby DENIED.
- Habitual Infractions
Gustilo v. Wyeth Phil
Gustilo was employed by Wyeth Phils Inc. as a pharmaceutical territory manager and among his tasks was submitting
periodic reports of his daily call visits, monthly itinerary and weekly locator and expenses but he was often
suspended or reprimanded for neglecting to submit his periodic reports.
- Wyeth put Gustilo in charge of promoting 4 Lederle (W’s sister company) pharmaceutical products. G then
submitted to W a plan of action but Gustilo failed to achieve his objectives so W sent him 2 notices charging him with
willful violation of company rules and regulations and directed him to submit a written explanation. G explained that
he was overworked and an object of reprisal by his immediate supervisor. Wyeth, upon the recommendation of a
review panel, terminated Gustilo’s services.
G filed a complaint for illegal dismissal. LAfound that G was illegally dismissed. NLRC- affirmed. W’s MR was denied.
CA- reversed NLRC’s decision and dismissed G’s complaint for illegal dismissal (as G was terminated based on A282
of the LC-gross and habitual neglect by the employee of his duties) but awarded him separation pay considering the
Gustilo isn’t entitled to his SP OR to reinstatement as there was a just cause for dismissal.
- Piedad v Lanao del Norte Electric Cooperative, Inc.- a series of irregularities when put together may
constitute serious misconduct, which under A282 of the LC, as amended, is a just cause for dismissal.
- The rule embodied in the Omnibus Rules Implementing the Labor Code is that a person dismissed for cause as
defined therein is not entitled to separation pay.
In the case at bar, there is NO exceptional circumstances to warrant the grant of financial assistance or separation
pay to petitioner. G did not only violate company disciplinary rules and regulations. He falsified his
employment application form by not stating therein that he is the nephew of Mr. Danao, respondent
Wyeth’s Nutritional Territory Manager. G manifested his slack of moral principle through his
infractions. In simple terms, he is dishonest. Petition is DENIED
- Immorality
Santos v. NLRC
Jose Santos and Arlene T. Martin both married to different people and employed by the same school Hagonoy
Institute Inc. fell in love with each other. Rumors of their affair spread and prompted the school officials to inquire
about the matter. She was asked to take a leave of absence but she continued to work and was eventually
terminated by force. Martin filed a compliant for illegal dismissal. LA dismissed petition. NLRC reversed the petition
because of lack of due process.

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Meanwhile, Santos was charged administratively for immorality and was dismissed from service. he filed a complaint
for illegal dismissal. LA dismissed complaint but awarded monetary sums as financial assistance. NLRC dismissed
appeal and removed the awards. Thus this petition.
The court upheld the NLRC saying that in order to constitute a valid dismissal, two requisites must concur:
(a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and
(b) the employee must be accorded due process, basic of which are the opportunity to be heard and defend himself.
Also, under Section 94 (E) of the Manual of Regulations for Private Schools: is says that school personnels, including
faculty, may be terminated for disgraceful or immoral conduct. The court held that teachers must adhere to the
exacting standards of morality and decency. There is no dichotomy of morality and when a teacher engages in extra-
marital relationship, especially when the parties are both married, such behavior amounts to immorality, justifying his
termination from employment.
In this case, the burden of proof rests upon the employer to show that the dismissal was for a just and valid cause
and the testimonies of nine witnesses (a fourth year student, a security guard, a janitor and six co-teachers) as well
as the absence of any motive on their part to falsely testify against the petitioner led to the court’s decision to
dismiss petition.
- Conviction or Commission of a Crime
Sampaguita Garments Corp v. NLRC
Emilia Santos, an employee of petitioner Sampaguita Garments Corporation was charged with theft for attempting to
bring out of the company premises a piece of cloth belonging to the petitioner. She was dismissed and so she filed a
complaint for illegal dismissal LA ruled for the company and the decision was reversed by the NLRC, which ordered
her reinstatement. Sampaguita also filed a criminal action against Santos. After trial, she was found guilty
Court dismissed the petition for certiorari against the decision of the NLRC. The decisions in both cases became final
and executory; the petitioner opposed, invoking her conviction in the criminal case. However, the NLRC sustained her
on the ground that its decision had long become final and executory. Thus this petition. The court held that even if
once a judgment has become final and executory, it can no longer be disturbed but reinstatement is no longer
feasible in view of the subsequent conviction of the private respondent. A contrary rule would have the effect of
rewarding rather than punishing the erring employee for his offense. The punishment is not dismissal only because if
the employee who steals from the company is granted separation pay even as he is validly dismissed, he might
commit a similar offense in the future. Santos’ conviction of the crime of theft of property belonging to the petitioner
has affirmed the existence of a valid ground for her dismissal and thus removed the justification for the decision
ordering her reinstatement with back wages. Petition is GRANTED.
Eduardo Bughaw Jr. v. Treasure Island Industrial
Eduardo Bughaw was employed as production worker by Treasure Island. Erlito Loberanes (Loberanes), who was
caught in flagrante delicto by the police officers in possession of shabu implicated Bughaw as providing him the
money to buy the illegal drugs. Treasure Island served a Memo for Explanation to Bughaw but he failed to appear
before the counsel during the hearing date to explain his side. A second letter was sent to him asking him to attend
an administrative hearing but he failed to show up. A third letter as issued terminating the services of the petitioner.
Bughaw filed a complaint for illegal dismissal. He claimed that he was suspended for 30 days based on the
unfounded allegation of his co-worker that he used illegal drugs within company premises and that when he reported
back to work he was no longer allowed to enter the work premises and was told not to report back to work. LA ruled
in favor of Bughaw saying that the company failed to substantiate the charge against him. NLRC affirmed the
decision of the LA saying that Treasue Island failed to accord due process to petitioner when it dismissed him from
employment and that the use of illegal drugs can be a valid ground for terminating employment only if it is proven
true. An accusation of illegal drug use, standing alone, without any proof or evidence presented in support thereof,
would just remain an accusation. CA reversed NLRC saying that the petitioner was afforded the opportunity to
explain and defend himself from. Hence this petition.
The court ruled that the requirements for the lawful dismissal of an employee are two-fold, the substantive and the
procedural aspects. 2 facets of a valid termination of employment are: (a) the legality of the act of dismissal, i.e., the
dismissal must be under any of the just causes provided under Article 282 of the Labor Code; and (b) the legality of
the manner of dismissal, which means that there must be observance of the requirements of due process.
Loberanes’s statements given to police during investigation is evidence which can be considered by the respondent
against the petitioner. Bughaw failed to controvert Loberanes’ claim that he too was using illegal drugs through the
administrative hearings which were set. The respondent cannot be faulted for considering only the evidence at hand,
which was Loberanes’ statement.
The burden therefore is on respondent to present clear and unmistakable proof that petitioner was duly served a
copy of the notice of termination. The Agabon v. NLRC doctrine enunciates the rule that if the dismissal was for just
cause but procedural due process was not observed, the dismissal should be upheld. Where the dismissal is for just
cause the lack of statutory due process should not nullify the dismissal or render it illegal or ineffectual. Petition is
DENIED.

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 - Qualification Requirements
Santos + St Luke’s Medical Center Employees Association AFW v. St. Lukes
Maribel Santos was hired as X-Ray Technician in the Radiology department of St. Luke’s Medical Center. At this time,
congress passed and enacted RA 7431 known as the “Radiologic Technology Act of 1992” which requires radiology
and/or x-ray technologists in the Philippines to get a proper certificate of registration from the Board of Radiologic
Technology. Director of the Institute of Radiology issued a final notice to petitioner Maribel S. Santos requiring her to
comply with RA 7431. Another memorandum to petitioner Maribel S. Santos advising her that only a license can
assure her of her continued employment at the Institute of Radiology of the private respondent SLMC. A month later,
Santos was imformed that the management of private respondent SLMC has approved her retirement in lieu of
separation pay. She filed a complaint for illegal dismissal. LA ruled for Santos ordering SLMC to pay her separation
pay but denied all her other requests. NLRC and CA affirmed the LA. Thus this petition. The court held that in section
2 of RA 7431, it clearly states that:
Sec. 2. Statement of Policy. — It is the policy of the State to upgrade the practice of radiologic technology in
the Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to
ensure safe and proper diagnosis, treatment and research through the application of machines and/or
equipment using radiation.
And that the enactment of R.A. 7431 is an exercise of the State’s inherent police power. No malice or ill-will can be
imputed upon private respondent as the separation of petitioner Santos was undertaken by it conformably to an
existing statute. It is undeniable that her continued employment without the required Board certification exposed the
hospital to possible sanctions and even to a revocation of its license to operate. Private respondent is free to
determine, using its own discretion and business judgment, all elements of employment, "from hiring to firing"
except in cases of unlawful discrimination or those which may be provided by law. None of these exceptions is
present in the instant case. Furthermore, the records show that Ms. Santos did not even seriously apply for another
position in the company. Petition is DENIED
d. Constructive Dismissal
Uniwide Sales v. NLRC supra 23
Amalia P. Kawada was employed by Uniwide and was promoted to Full Assistant Store Manager in 1995. In 1998, Uniwide received
reports from the other employees regarding some problems in Kawada’s departments. Uniwide, through Store Manager Apduhan,
issued a Memorandum summarizing the various reported incidents signifying unsatisfactory performance (commingling of good and
damaged items, sale of a voluminous quantity of damaged stocks)
Private respondent answered all the allegations. Unsatisfied, Apduhan sent 2 other Memorandums where Apduhan claimed that the
answers given by the private respondent were all hypothetical; and seeking from the private respondent an explanation regarding the
incidents. Private respondent sought medical help due to complaints of dizziness. Finding private respondent to be suffering from
hypertension, Dr. Zambrano advised her to take five days sick leave. Dr. Zambrano mistakenly wrote the wrong surname in the med
cert which led to a shouting match between Apduhan and Kawada which allegedly caused her to collapse. Private respondent
reported the confrontation between her and Apduhan to the Central Police District.
Apduhan issued a Memorandum advising Kawada of a hearing and warning her that failure to appear shall constitute as waiver and
the case shall be submitted for decision based on available papers and evidence.
Private respondent filed a case for illegal dismissal before the LA.
Apduhan issued a Memorandum stating that since private respondent was unable to attend the scheduled hearing, the case was
evaluated on the basis of the evidence on record;
LA dismissed the complaint for lack of merit. Private respondent appealed the LA’s decision to NLRC the NLRC ruled in favor of
private respondent, Petitioners appealed the NLRC Decision to the CA. CA affirmed in toto the NLRC Decision. Hence, the present
petition. The court found the petition to be meritorious.
Court finds the records bereft of evidence to substantiate the conclusions of the NLRC and the CA that private respondent was
constructively dismissed from employment.
Case law defines constructive dismissal as a cessation of work because continued employment is rendered impossible, unreasonable
or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee. The test of constructive dismissal is whether a reasonable person in the
employee’s position would have felt compelled to give up his position under the circumstances. It is an act amounting to dismissal
but made to appear as if it were not. (dismissal in disguise.) The law recognizes and resolves this situation in favor of employees in
order to protect their rights and interests from the coercive acts of the employer.
In the present case, private respondent claims that she had been subjected to constant harassment, ridicule and inhumane treatment
by Apduhan. The Court finds that private respondent’s allegation of harassment is a specious statement which contains nothing but
empty imputation. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given
credence in court.

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Petitioners gave private respondent successive memoranda so as to give the latter an opportunity to explain herself. The memoranda are
not forms of harassment, but petitioners’ compliance with the requirements of due process. As to the September 1, 1998
Memorandum where the private complainant was dismissed for loss of trust and confidence, the Court finds the notice of the
scheduled August 12, 1998 hearing sufficient compliance with the due process requirement. Respondent was given an opportunity to
be heard. However, private respondent chose not to attend the scheduled hearing because of her mistaken belief that she had
already been constructively dismissed. The court adopts the findings of the LA: In fact, as it even appears the “constructive
dismissal” allegedly committed on complainant looks simply an excuse to avoid and/or evade the investigation and
consequences of the violations imputed against her while employed and/or acting as respondent’s assistant store
manager. Petition is GRANTED.
Duldulao v. CA supra 21
Constancia Duldulao was hired by Baguio Colleges Foundation as a secretary or clerk typist in their College of Law. A
law student filed a case against her for irregularities in the performance of her work as well as fraternizing with
students of the College. The petitioner was asked to submit her answer to the complaint but she failed to do so. The
Dean recommended her assignment outside the College of Law because of this, the Vice President of Administration
issued a Department Order asking her to move to the highschool. She filed a motion to extend her answer with the
dean which was not allowed as the matter was already elevated to the Executive Board. The petitioner filed a case
with the BCF Grievance Committee but the case was transferred to the Administrative Investigating Committee who
found the Department Order appropriate since it was intended to prevent to prevent the controversy from affecting
the harmonious relationship within the College of Law. The respondednt constituted a Fact Finding Committee to
investigate the allegations concerning the administrative matters and found the petitioner guilty of the charges
against her.
The petitioner did not report for work and instead took a vacation leave and several other leave of absences.
Petitioner then finally filed a complaint for constructive dismissal. She claimed that she was arbitrarily asked to
transfer from her place of work which is far from her original place of assignment. LA ruled in Duldulao’s favor. NLRC
reversed LA saying that petitioner was neither demoted nor dismissed and her salary remained he same. CA upheld
the NLRC. Thus this petition saying that the constructive dismissal was tainted in bad faith and that it was intended
as a punishment. The court held that there is “constructive dismissal if an act of clear discrimination, insensibility or
disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by
him except to forego his continued employment” . It exists when there is cessation of work because “continued
employment is rendered impossible, unreasonable or unlikely as an offer involving a demotion in rank and a
dimunition in pay.”
The court held that at the onset, the petitioner has no vested tight to the position of secretary/clerk typist to the
college of law because petitioner was employed not by the college but the BCF system itself and thus, BCF can
exercise its management prerogative, transfer her to any of the departments as long as the transfer does not result
in a demotion in rank or diminution in benefits or salary of the employee. In this case, she merely had to change the
route she took for her new assignment, almost the same distance from her house as that of her job in the college of
law. The court ruled that the transfer is not as a penalty but a preventive measure to avoid further damage to the
college. Petitioner cannot claim constructive dismissal simply becaue her transfer to another department was against
her wishes. Petition denied.
e. Transfer
Norkis Trading Co v. Melvin Gnilo
Melvin Gnilo held various positions in the company until he was appointed as Credit and Collection Manager. A special audit
team was conducted and Gnilo admitted his negligence for the monthly collection reports of his subordinates which were all
overstated. Norkis placed him in a 15 day suspension. Another memorandum was issued to him to report to the head office
for a re-training or a possible new assignment. Petitioner requsted that he be assigned as Sales Engineer or to any position
commensurate with his qualifications. However, he was appointed as Marketing Assistant. He filed a complaint for illegal
dismissal with the LA who dismissed the case for lack of merit. NLRC reversed the LA. The NLRC ruled that respondent was
constructively dismissed and therefore he was entitled to reinstatement. CA affirmed the NLRC. Thus this petition.
Petitioners submit that the positions of Credit and Collection Manager and Marketing Assistant does not constitute
demotion, since respondent's position is more encompassing and vital to the company and he is receiving the same
salary. Well-settled is the rule that it is the prerogative of the employer to transfer and reassign employees for valid
reasons and according to the requirement of its business however, the employer bears the burden of showing that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; and does not involve a demotion in rank or a
diminution of his salaries.
Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable
or unlikely; when there is a demotion in rank or a diminution of pay. Likewise, constructive dismissal exists when an
act of clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee, leaving him
with no option but to forego his continued employment.

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A transfer is defined as a “movement from one position to another which is of equivalent rank, level or salary,
without break in service.”
Promotion, on the other hand, is the “advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in salary.”
A demotion involves a situation in which an employee is relegated to a subordinate or less important position
constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and
usually accompanied by a decrease in salary.
In this case, while the transfer of respondent from Credit and Collection Manager to Marketing Assistant did not
result in the reduction of his salary, there was a reduction in his duties and responsibilities which amounted to a
demotion tantamount to a constructive dismissal since the position of Credit and Collection Manager entails great
duties and responsibilities and involves discretionary powers. The work of a Marketing Assistant, on the other hand, is
clerical in nature. While petitioners have the prerogative to transfer respondent to another position, such transfer should be
done without diminution of rank and benefits which has been shown to be present in respondent's case. Petition is DENIED
Westmont Pharmaceuticals v. Ricardo Samaniego
Unilab hired Samaniego as Professional Service Representative of its marketing arm, Westmont. Later, Unilab
promoted him as Senior Business Development Associate and assigned him in Isabela as Acting District Manager of
Westmont. He was transferred to Metro Manila pending investigation of his involvement in a sales discount and Rx
trade-off controversy. He was then placed under "floating status" and assigned to perform duties not connected with
his position, like fetching at the airport physicians coming from the provinces; making deposits in banks; fetching
field men and doing messengerial works. His transfer to Metro Manila resulted in the diminution of his salary. Ricardo
Samaniego then filed a complaint for illegal dismissal with the LA who ordered his reinstatement and payment of his
full backwages. NLRC declared the LA’s Decision null and void. CA reinstated LA. Hence, these consolidated petitions.
Samaniego claims that upon his reassignment and/or transfer to Metro Manila, he was placed on "floating status"
and directed to perform functions not related to his position. For their part, Westmont and Unilab explain that his
transfer is based on a sound business judgment, a management prerogative. In constructive dismissal, the employer
has the burden of proving that the transfer of an employee is for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee. It must not involve a demotion in rank or a diminution of salary and other benefits. If the employer
cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive
dismissal. Westmont and Unilab failed to discharge this burden. Samaniego was unceremoniously transferred from
Isabela to Metro Manila. We hold that such transfer is economically and emotionally burdensome on his part. He was
constrained to maintain two residences. Worse, immediately after his transfer to Metro Manila, he was placed "on
floating status" and was demoted in rank, performing functions no longer supervisory in on the part of the employee
that it could foreclose any choice by him except to forego his continued employment. This was what happened to
Samaniego. CA AFFIRMED.

SMC v. Angel C. Pontillas

San Miguel Corporation employed Angel Pontillas as a daily wage company guard. Ricardo Elizagaque, SMC’s Vice
President issued a Memorandum ordering the transfer of responsibility of the Oro Verde Warehouse to the newly-
organized VisMin Logistics Operations. Respondent continued to report at Oro Verde Warehouse. He alleged that he
was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his
immediate superior. Respondent also alleged that he was wary of the transfer because of his pending case against
petitioner. Petitioner informed of an administrative investigation relative to his alleged offenses of Insubordination or
Willful Disobedience in Carrying Out Reasonable Instructions of his superior. During the investigation, respondent
was given an opportunity to present his evidence and be assisted by counsel. He was eventually terminated for
violating company rules and regulations. Angel filed an amended complaint against petitioner for illegal dismissal. LA
dismissed the case for lack of merit. NLRC ruled that respondent was not informed of his transfer and that her was a
victim of discrimination. CA affirmed NLRC. Thus this petition.
The court held that an employer may terminate an employment for serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his work.
Willful disobedience requires the concurrence of two elements:
(1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and
(2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge.
The records show that respondent was not singled out for the transfer and that it was the effect of the integration of
the functions of the company’s 2 operations. The employer exercises the prerogative to transfer an employee for
valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in

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rank or diminution of the employee’s salary, benefits, and other privileges. In this case, we found that the order of
transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics. Petiion
Granted.
f. Promotion
Phil Telegraph Telephone Company (PT&T) v. CA
Petitioner came up with a Relocation and Restructuring Program designed to (a) sustain its (PT&T’s) retail
operations; (b) decongest surplus (c) lower expenses and (d) avoid retrenchment Respondents Cristina Rodiel, Jesus
Paracale, Romeo Tee, Benjamin Lakandula, Avelino Acha, Ignacio Dela Cerna and Guillermo Demigillo rejected the
petitioner’s offer of giving them the option of the branch of transfer. The petitioner sent letters to the private
respondents requiring them to explain in writing why no disciplinary action should be taken against them for their
refusal to be transferred/relocated. The private respondents explained that their new assignment involve distant
places which would require their separation from their respective families. Dissatisfied with this explanation, the
petitioner considered the private respondents’ refusal as insubordination and willful disobedience to a lawful order;
hence, the private respondents were dismissed from work. PT&T Workers Union-NAFLU-KMU, filed a complaint
against the petitioner for illegal dismissal. LA dismissed the complaint. NLRC ruled that the employees have been
illegally dismissed thus said transfers of the respondents as a promotion; that the movement was not merely lateral
but of scalar ascent, considering the movement of the job grades, and the corresponding increase in salaries. As
such, the respondents had the right to accept or refuse the said promotions.. CA affirmed the NLRC. Thus this
petition.
The court held that the transfer of the complainants is not unreasonable nor does it involve demotion in rank. They
are being moved to branches where the complainants will function with maximum benefit to the company and they
were in fact promoted not demoted from a lower job-grade to a higher job-grade and receive even higher salaries
than before and considering the fact that they were being moved to provinces provides them with greater spending
power. The increase in the respondents’ responsibility can be ascertained from the scalar ascent of their job grades.
With or without a corresponding increase in salary, the respective transfer of the private respondents were in fact
promotions. Promotion, as defined in Millares v, Subido, is “the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary.
The admissions of the petitioner are conclusive on it. An employee cannot be promoted, even if merely as a result of
a transfer, without his consent. A transfer that results in promotion or demotion, advancement or reduction or a
transfer that aims to ‘lure the employee away from his permanent position cannot be done without the employees’
consent. Hence, the exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer. As such, there was no valid cause for the
private respondents’ dismissal. The court ruled for their reinstatement. CA affirmed.
g. Preventive Suspension
Book V, RULE XIV: Termination of Employment (OLD RULES)
SECTION 3. Preventive suspension. — The employer may place the worker concerned under preventive suspension if
his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-
workers.
SECTION 4. Period of suspension. — No preventive suspension shall last longer than 30 days. The employer shall
thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the
period of suspension provided that during the period of extension, he pays the wages and other benefits due to the
worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the
employer decides, after completion of the hearing, to dismiss the worker.
Renato Gabonton v. NLRC + Mapua Institute of Technology
Renato Gatbonton is an associate professor of respondent Mapua Institute of Technology (MIT), Faculty of Civil
Engineering. A civil engineering student of respondent MIT filed a complaint against petitioner for unfair/unjust
grading system, sexual harassment and conduct unbecoming of an academician. Pending investigation Gatbonton
was placed under a 30-day preventive suspension. He filed a complaint for illegal suspension, damages and
attorney’s fees. LA ruled that his suspension is illegal. Both respondents and petitioner filed their appeal from the
Labor Arbiter’s Decision, with petitioner questioning the dismissal of his claim for damages. NLRC granted
respondents’ appeal and set aside the Labor Arbiter’s decision. CA affirmed the NLRC. Hence, the present petition.
The court held that: Preventive suspension is a disciplinary measure for the protection of the company’s property
pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may
place the worker concerned under preventive suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers. However, when it is determined that there is no
sufficient basis to justify an employee’s preventive suspension, the latter is entitled to the payment of salaries during
the time of preventive suspension. R.A. No. 7877 imposed the duty on educational or training institutions to
“promulgate rules and regulations in consultation with and jointly approved by the employees or students or trainees

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and Gatbonton’s preventive suspension was based on respondent MIT’s Rules and Regulations for the Implemention
of the Anti-Sexual Harassment Act of 1995, or R.A. No. 7877.
Rule II Section 1 of the MIT Rules and Regulations provides: Section 1. Preventive Suspension of Accused in Sexual
Harassment Cases. Any member of the educational community may be placed immediately under preventive
suspension during the pendency of the hearing of the charges of grave sexual harassment against him if the
evidence of his guilt is strong and the school head is morally convinced that the continued stay of the accused during
the period of investigation constitutes a distraction to the normal operations of the institution or poses a risk or
danger to the life or property of the other members of the educational community.
The Mapua Rules is one of those issuances that should be published for its effectivity, since its purpose is to enforce
and implement R.A. No. 7877, In fact, the Mapua Rules itself explicitly required publication of the rules for its
effectivity thus, at the time of his suspension, the Mapua Rules were not yet legally effective, and therefore the
suspension had no legal basis. Moreover, even assuming that the Mapua Rules are applicable, the Court finds that
there is no sufficient basis to justify his preventive suspension since it is not shown that evidence of petitioner’s guilt
is strong and that the school head is morally convinced that petitioner’s continued stay during the period of
investigation constitutes a distraction to the normal operations of the institution; or that petitioner poses a risk or
danger to the life or property of the other members of the educational community.
Even under the Labor Code, petitioner’s preventive suspension finds no valid justification. As provided in Section 8,
Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:
Sec. 8. Preventive Suspension. The employer may place the worker concerned under preventive suspension if his
continued employment poses a serious threat to the life or property of the employer or of his coworkers.
Petition is PARTIALLY GRANTED. (damages denied because no showing of Badfaith by MIT)
Federito Pido v. NLRC + Cherubim Security Services (2007)
Federito Pido was hired on October 1, 1995 by Cherubim Security and General Services, Inc. (respondent) as a
security guard at the tower and Exchange Plaza of Ayala Center where he worked as a computer operator at the
Console Room, responsible for observing occurrences. He had an altercation with Richard Alcantara of the ASF
because Alcantara allegedly questiones the expiration of the gun of Pido and tried to grab the gun from his holster.
Respondent thus conducted an investigation. After more than nine months had elapsed since the investigation was
conducted by respondent with no categorical findingsmade, Pido filed a complaint for illegal constructive dismissal.
The company denied this saying that Pido, after a new assignment was offered to him, said “pahinga muna ako.” La
found him to be constructiveley dismissed. NLRC found that petitioner was indeed constructively dismissed, it set
aside the award of separation pay. CA upheld the NLRC decision and accordingly dismissed petitioner’ s appeal.
Thus this petition.
ART. 286. When employment not deemed terminated. The bona fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months
or the fulfillment of the employee of a military or civic duty shall not terminate employment. In all such cases
the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his employer or from
his relief from the military or civic duty.
In Philippine Industrial Security Agency Corporation v. Dapiton, the court held that Article 286 applies only when
there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding
six (6) months. In such a case, there is no termination of employment but only a temporary displacement of
employees, albeit the displacement should not exceed six (6) months. When a security guard is placed on a "floating
status," he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences
to the employee, the employer should bear the burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned. Cherubim failed to discharge this burden.
Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code
SEC. 8. Preventive suspension.
The employer may place the worker concerned under preventive suspension if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his coworkers.
SEC. 9. Period of suspension.
No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in
his former or in a substantially equivalent position or the employer may extend the period of suspension provided
that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the
worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.
In the event the employer chooses to extend the period of suspension, he is required to pay the wages and other
benefits due the worker and the worker is not bound to reimburse the amount paid to him during the extended
period of suspension even if, after the completion of the hearing or investigation, the employer decides to dismiss

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him. In this case, the respondent did not inform petitioner that it was extending its investigation, nor did it pay him
his wages and other benefits after the lapse of the 30-day period of suspension. Court of Appeals are AFFIRMED
ii.) Substantive Requirements – Business Related Causes
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
a. Basis – Employer’s Right
 Edge Apparel Inc. v. NLRC
Edge Apparel, Inc., dismissed private respondents due to retrenchment and thus Antipuesto, et al., averred that the
retrenchment program was a mere subterfuge used by Edge Apparel to give a semblance of regularity and validity to
the dismissal of the complainants. LA dismissed the complaint of Antipuesto, et al., against Edge Apparel. NLRC held
that "There is therefore basis in the retrenchment of these 27 workers. Redundancy exists where the services of an
employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Edge Apparel
filed a motion for a partial reconsideration due to the award of separation pay. NLRC denied the motion; thus this
petition. The court held that: the employer has a right to dismiss employees for valid causes after proper observance
of due process. Retrenchment, in contrast to redundancy, is an economic ground to reduce the number of
employees. In order to be justified, the termination of employment by reason of retrenchment must be due to
business losses or reverses which are serious, actual and real. The payment of separation pay would be due when a
dismissal is on account of an authorized cause. The amount of separation pay depends on the ground for the
termination of employment.
But business enterprises today are faced with the pressures of economic recession, stiff competition, and labor
unrest. Thus, businessmen are always pressured to adopt certain changes and programs in order to enhance their
profits . The Court sustains the position of the LA. Additional award of separation pay deleted.
b. Business Related or Authorized Causes
- Installation of Labor Devices
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
 Complex Electronics Employees Association v. NLRC
Complex Electronics Corporation received a message from their client Lite-On Philippines requiring it to lower its price
by 10%. Due to this demand, Complex informed its Lite-On personnel that such request of lowering their selling price
by 10% was not feasible as they were already incurring losses at the present prices of their products and thus the
employees were informed Complex was closing down the operations of the Lite-On Line. The Union of Complex, on
the other hand, pushed for a retrenchment pay.
Eventually, machinery, equipment and materials being used for production at Complex were pulled-out from the
company premises and transferred to the premises of Ionics Circuit, Inc.
The union filed a complaint for illegal closure and filed a notice of strike. Ionics contended that it was an entity
separate and distinct from Complex and had been in existence since July 5, 1984 or eight (8) years before the labor
dispute arose at Complex. LA ruled for the Union asking Complex to reinstate them. NLRC reversed the LA and
ordered the company to pay the employees in lieu of notice and separation pay. Hence these petitions. The Union
claimed that the said clipping showed that both corporations, Ionics and Complex are one and the same. The court

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held that the mere fact that one or more corporations are owned or controlled by the same or single stockholder is
not a sufficient ground for disregarding separate corporate personalities.
The court cited Del Rosario vs. National Labor Relations Commission where the Court stated that substantial identity
of the incorporators of two corporations does not necessarily imply that there was fraud committed to justify piercing
the veil of corporate fiction.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough reason to pierce
the veil of corporate fiction of the corporation. The closure, therefore, was not motivated by the union activities of
the employees, but rather by necessity since it can no longer engage in production without the much needed
materials, equipment and machinery. The purpose of the notice requirement is to enable the proper authorities to
determine after hearing whether such closure is being done in good faith. While the law acknowledges the
management prerogative of closing the business, it does not, however, allow the business establishment to disregard
the requirements of the law.
The case of Magnolia Dairy Products v. NLRC as cited by the court says that: The installation of these devices is a
management prerogative, and the courts will not interfere with its exercise in the absence of abuse of discretion,
arbitrariness, or maliciousness on the part of management, as in this case. Nonetheless, this did not excuse
petitioner from complying with the required written notice to the employee and to the Department of Labor and
Employment (DOLE) at least one month before the intended date of termination. NLRC is AFFIRMED.
- Retrenchment to Prevent Losses -283
Art. 283. Closure of Establishment and Reduction of Personnel. – The employer may also terminate the employment
of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or
the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the worker and the Department of Labor and
Employment, at least one (1) month before the intended date thereof. x x x. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of the establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
 TPI Philippines Cement Corp v. Cajucom
TPI Philippines Cement Corporation employed Atty. Benedicto A. Cajucom VII, respondent, as Vice-President for
Legal Affairs. As a result of the economic slowdown of the Philippines, TPI had cut on its expenses. Petitioners sent
Cajucom a notice terminating his services. He contested TPI’s action, claiming that the termination of his services
was based erroneously on petitioners’ probable losses, instead of their actual, substantial and imminent losses, as
shown by the following:
(1) an increase or raise in his monthly salary from
(2) hiring by petitioners of more marketing and accounting
(3) acquisition by petitioners in 1998 of a warehouse;
(4) expansion in 1998 of their operations by including sales and marketing of oil products. Cajucom filed a
complaint for illegal dismissal. LA held that TPI failed to adduce sufficient evidence to show thattheir alleged losses
are substantial and imminent. NLRC reversed the LA. CA affirmed the NLRC. Hence this petition.
The court held that: Retrenchment is an authorized cause for the dismissal of an employee from the service.
The court held that in Trendline Employees Association-Southern Philippines Federation of Labor v.
NLRC, the requisites of retrenchment are:
(1) The retrenchment is necessary to prevent losses and the same is proven;
(2) Written notice to the employees and to the DOLE at least one month prior to the intended
date thereof;
(3) Payment of separation pay equivalent to one month pay or at least ½ month pay for every year
of service, whichever is higher.
Records show that on December 3, 1998, petitioners sent respondent and the DOLE separate notices of
retrenchment effective December 30, 1998. Following the provision of Article 283, these notices
should have been served one month before, or on November 30, 1998. Clearly, petitioners
failed to comply with the one-month notice requirement. We reiterate that the dismissal of respondent
from the service is by reason of retrenchment, an authorized cause. But due process was not
observed as the required notices were not sent to respondent and the DOLE one month prior to the
effectivity of his termination. Thus, petitioners should be liable for violation of his right to due process
and should pay him indemnity in the form of nominal damages, pursuant to our ruling in Agabon, which
we fix at P20,000.00. Petition is partly GRANTED
 AMA Computer College v. Ely Garcia and Teresa Balla

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Ely Garcia was hired as a janitress by ACC and Balla was hired as a Social Worker. ACC informed Garcia and Balla and
52 other employees of the termination of their employment. Balla and Garcia filed a complaint for illegal dismissal LA
affirmed by NLRC and CA, ruled for the employees. Hence, this Petition.
The court held that in termination cases, the burden of proving just and valid cause for dismissing an employee from
his employment rests upon the employer, and the latter's failure to discharge that burden would result in a finding
that the dismissal is unjustified. At the outset that ACC raised different grounds to justify its dismissal of Garcia and
Balla: LA, retrenchment; NLRC, redundancy; CA, both retrenchment and redundancy. ACC itself is confused as to the
real reason why it terminated Garcia and Balla's employment. Both retrenchment and redundancy are authorized
causes for the termination of employment as enumerated in Article 283 of the Labor Code but retrenchment and
redundancy are two distinct grounds for termination arising from different circumstances, thus, they are in no way
interchangeable.
Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of
the business enterprise. (overhiring of workers, decreased volume of business, dropping of a particular product line) Requisites of a
valid redundancy program are:
(1) the good faith of the employer in abolishing the redundant position; and
(2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished
ACC presented several memoranda to prove that Garcia and Balla had been remiss in the performance of their duties, as well as
perennially tardy and absent. Other than being self-serving, said memoranda are irrelevant to prove redundancy of the positions
held by Garcia and Balla.
Redundancy arises because there is no more need for the employee's position in relation to the whole business organization, and
not because the employee unsatisfactorily performed the duties and responsibilities required by his position.
Among the accepted criteria in implementing a redundancy are: (a) less preferred status, e.g., temporary employee; (b) efficiency;
and (c) seniority. There is no showing that ACC applied any of these criteria in determining that, among its employees, Garcia and
Balla should be dismissed, thus, making their dismissal arbitrary and illegal.
Retrenchment is the termination of employment effected by management during periods of business recession,
industrial depression, seasonal fluctuations, lack of work or considerable reduction in the volume of the employer's
business. There are three basic requisites for a valid retrenchment to exist:
(a) the retrenchment is necessary to prevent losses and such losses are proven;
(b) written notice to the employees and to the DOLE at least one (1) month prior to the intended date of
retrenchment; and
(c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher.
In a number of cases, the Court has identified the necessary conditions for the company losses to justify
retrenchment:
(1) the losses incurred are substantial and not de minimis;
(2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and
(4) the alleged losses or the expected imminent losses are proven by sufficient and convincing evidence.
ACC miserably failed to prove any of the foregoing. In the case at bar, ACC claimed that the retrenchment of Garcia
and Balla was justified due to the financial difficulties experienced by the college. Not only was ACC unable to prove
its losses, it also failed to present proof that it served the necessary notice to the DOLE one month before the
purported retrenchment of Garcia and Balla. Petition DENIED.
 Juvy Manatad v. Phil Telegraph and Tel. Co
Manatad was employed by respondent Philippine Telegraph and Telephone Corporation (PT&T) as junior clerk. She
was separated from employment due to the Temporary Staff Reduction Program adopted by respondent due to
serious business reverses which gave her the option to avail of the Staff Reduction Program Package. She did not
avail of the package and was subsequently retrenched from employment. She filed a complaint for illegal dismissal
saying that respondent was obtaining profits and was that it was economically viable for respondent to continue its
business operations without downsizing its workforce. LA ruled that the retrenchment program is invalid. NLRC
affirmed the LA. CA reversed the NLRC. Thus this petition.
The court defines retrenchment as the termination of employment initiated by the employer through no fault of the
employees and without prejudice to the latter, resorted to by management during periods of business recession;
industrial depression; or seasonal fluctuations. Retrenchment is a valid management prerogative but subject to
faithful compliance with the substantive and procedural requirements.
For a valid retrenchment, the following requisites must be complied with:
(a) the retrenchment is necessary to prevent losses and such losses are proven;
(b) written notice to the employees and to the DOLE at least one month prior to the intended date of retrenchment;
(c) payment of separation pay equivalent to one-month pay or at least one-half month pay for every year of service,
whichever is higher.

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In the case at bar, respondent instituted a retrenchment program to arrest its alleged escalating financial losses by
downsizing its workforce. The financial statements prepared by SGV & Co. reflect that respondent suffered
substantial loss in the amount of P558 Million. The company was fully justified in implementing a retrenchment
program since it was undergoing business reverses, not only for a single fiscal year, but for several years prior to and
even after the program. The fact that the financial statements were audited by independent auditors settles any
doubt on the authenticity of these documents for lack of signature of the person who prepared it. Even if there were
no losses, the company is still authorized by Article 283 of the Labor Code to cease its business operations . The law
recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling
economic factors which would endanger its existence or stability.
In this case, Juvy failed to refute that she received the written notice of retrenchment from respondent. Although
respondent failed to furnish DOLE with a formal letter notifying it of the retrenchment, it still substantially complied
with the requirement. Since the National Conciliation and Mediation Board, the reconciliatory arm of DOLE,
supervised the negotiation for separation package, we agree with the petitioner is not entitled to backwages. Petition
is DENIED.
- Retrenchment vis-à-vis closure
 Alabang Country Club Inc. v. NLRC + Union
Francisco Ferrer, then President of ACCI found that the profitability of ACCI’s Food and Beverage Department was
not profitable and thus management decided to cease from operating the department and to open the same to a
contractor, such as a concessionaire, which would be willing to operate its own food and beverage business within
the club. ACCI subsequently entered on December 1, 1994 into an agreement with La Tasca Restaurant Inc. ACCI
sent its F & B employees letters of termintation. A complaint for illegal dismissal was filed against ACCI. LA dismissed
the complaint for illegal dismissal on the ground that a business entity has the right to reduce its work force if
necessitated by compelling economic factors which endanger its existence or stability. NLRC acknowledged the right
of ACCI to regulate, according to its own discretion and judgment, all aspects of employment including the lay-off of
workers and dismissed the appeal. CA reversed those of the NLRC. It held that due to ACCI’s failure to prove by
sufficient and competent evidence that its alleged losses were substantial, continuing. Thus this petition.
The court held that the case is not retrenchment but of the closure of a business undertaking. Retrenchment and
closure of a business establishment or undertaking are are independent authorized causes for termination of
employment.
Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of
salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of
work and considerable reduction in the volume of business.
Closure of a business or undertaking due to business losses is the reversal of fortune of the employer whereby there
is a complete cessation of business operations to prevent further financial drain upon an employer who cannot pay
anymore his employees since business has already stopped. One of the prerogatives of management is the decision
to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as
to minimize expenses and reduce capitalization.
In the present case, when petitioner decided to cease operating its F & B Department and open the same to a
concessionaire, it did not reduce the number of personnel assigned thereat. It terminated the employment of all
personnel assigned at the department.Petitioner’s failure to prove that the closure of its F & B Department was due
to substantial losses notwithstanding, this Court finds that individual respondents were dismissed on the ground of
closure or cessation of an undertaking not due to serious business losses or financial reverses. For any bona fide
reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can
compel anybody to continue the same. Management’s exercise of its prerogative to close a section, branch,
department, plant or shop will be upheld as long as it is 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.
Petition GRANTED.
- Redundancy - 283
 Dusit School Nikko v. NUWHRAIN
Rowena Agoncillo was employed by the Hotel and after some time, she was promoted as Supervisor of Outlet
Cashiers and later promoted as Senior Front Office Cashier. The Hotel though an Inter-Office Memorandum offered a
Special Early Retirement Program (SERP) to all its employees. A total of 243 employees, including Agoncillo, 161 of
whom were Union officers and members, were separated from the Hotel’s employment. Her supervisor advised
Agoncillo to just avail of the Hotel's SERP. Agoncillo wanted to a complaint for illegal dismissal against the Hotel but
before she could do so, she was offered to be reinstated but not to her former position, she suggested the position
of reservation clerk but the Hotel only allowed her the option of Linen Dispatcher of Head of Houekeeping “para
nakatago” because the Hotel wanted fresh graduates and new faces since “nagpabaya na daw si Agoncillo sa
katawan niya” Agoncillo filed a complaint for illegal dismissal. LA dismissed the complaint. SOLE issued an Order in

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NCMB-NCR-NS-11-425-96 in favor of the Union. On March 10, 2000, the Union and the Hotel executed a MOA
however, the MOA was not submitted to the NLRC for its approval. Neither did Agoncillo receive any monetary
benefits based on the MOA. NLRC reversed the LA relying on the evidence of the complainant and the Order of the
SOLE. CA dismissed the petition. Thus this petition.
The court held that the requisites of a valid redundancy program are:
(1) the good faith of the employer in abolishing the redundant position; and
(2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished.
It is the prerogative of management to transfer an employee from one office to another within the business
establishment based on its assessment and perception of the employee’s qualification, aptitude and competence but
the managerial prerogative to transfer personnel must be exercised without grave abuse of discretion. In the present
case, the petitioners recalled the termination of respondent Agoncillo when they learned that she was going to file a
complaint against them with the NLRC for illegal dismissal. However, instead of reinstating her to her former position,
she was offered the position of Linen Dispatcher in the hotel basement or Secretary of the Roomskeeping Section,
which are lower positions than what she held before. Offers by the petitioners to transfer respondent Agoncillo to
other positions were made in bad faith; in fact, respondent Agoncillo had not been transferred to another position at
all. Petition Denied.
 Andrada v. NLRC
Petitioners Ruben Andrada et al. were hired on various dates from 1995 up to 1997 and worked as architects,
draftsmen, operators, engineers, and surveyors in the Subic Legend Resorts and Casino, Inc. Legend sent notice to
the DOLE of its intention to retrench and terminate the employment of thirty-four (34) of its employees due to its
last-in-first-out basis on the strength of the status report of its Project Development Division. Legend sent the 34
employees their respective notices of retrenchment. Legend gave said employees a period of one week or until
January 14, 1998 to choose their option, with option number 2 (permanent retrenchment) as the default choice in
case they failed to express their preferences. The petitioners filed a complaint for illegal dismissal when they found
out that Legend was hiring (on the same day) new employees for the positions they vacated. LA ruled for petitioners.
NLRC reversed the LA. The CA held that the retrenched employees were validly dismissed from employment due to
redundancy and not retrenchment. The CA ratiocinated that Legend had validly terminated the employment of its
employees since it had proven that complainants’ positions were superfluous. Thus this petition.
Retrenchment is an exercise of management’s prerogative to terminate the employment of its employees en
masse, to either minimize or prevent losses. In the present case, Legend glaringly failed to show its financial
condition prior to and at the time it enforced its retrenchment program. It failed to submit audited financial
statements regarding its alleged financial losses. Legend also failed to establish redundancy. Retrenchment and
redundancy are two different concepts; they are not synonymous and therefore should not be used interchangeably.
Redundancy exists when the number of employees are in excess of what is reasonably necessary to operate the
business. Retrenchment, on the other hand, is used interchangeably with the term “lay-off.” It is an act of the
employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable
reduction on the volume of his business. It is however not enough for a company to merely declare that positions
have become redundant. It must produce adequate proof of such redundancy to justify the dismissal of the affected
employees. The pieces of evidence submitted by Legend (such as a status review of its project division where it
reported that the 78-man personnel exceeded the needs of the company ) are mere allegations and conclusions not
supported by other evidence. Legend also failed to establish by the same quantum of proof the fact of redundancy;
hence, petitioners’ termination from employment was illegal. Petition is GRANTED.
 Smart Communications Inc. v. Regina Astorga
Regina M. Astorga was employed by respondent Smart Communications as District Sales Manager. SMART launched
an organizational realignment to achieve more efficient operations and entered into a joint venture agreement with
NTT forming SNMI. Since SNMI was formed to do the sales and marketing work, SMART abolished the CSMG/FSD,
Astorga’s division. NMI agreed to absorb the CSMG personnel who would be recommended by SMART. SMART then
conducted a performance evaluation of CSMG personnel and those with the highest ratings were recommended.
Astorga landed last in the performance evaluation so she was not recommended but she was offered a supervisory
position in the Customer Care Department, but she refused the offer because the position carried lower salary rank
and rate. SMART issued a memorandum advising Astorga of the termination of her employment on ground of
redundancy. Astorga filed a complaint for illegal dismissal. LA ruled that the dismissal was illegal. NLRC ruled for
Smart. CA affirmed the NLRC that the reorganization undertaken by SMART resulting in the abolition of CSMG was a
legitimate exercise of management prerogative. Thus this petition.
Astorga was terminated due to redundancy. The nature of redundancy in Wiltshire File Co., Inc. v. National
Labor Relations Commission, is that it ordinarily refers to duplication of work. Astorga claims that the
termination of her employment was illegal and tainted with bad faith and that the reorganization was done
in order to get rid of her but she did not substantiate these claims. Moreover, Astorga never denied that

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SMART offered her a supervisory position in the Customer Care Department. The court held that if SMART
wanted to get rid of her, it would not have offered her a position in any department in the
enterprise. However, SMART failed to comply with the mandated one (1) month notice prior to termination.
CA affirmed with modification of 50K to be paid as damages for not issuing the proper notices.
- Closure of Business -283
 Business Services of the Future today Inc +Ramon Allado v. CA + Sps. Veruasa
Mailboxes, Etc.’’s sstockholders are petitioner Ramon Allado et al. They hired spouses Gilbert and Ma. Celestina
Veruasa, as manager and assistant manager. Allado personally gave notices of termination effective immediately to
the spouses due to negative cashflow. No written notice of closure of business was given to DOLE. Allado then
padlocked the office and appropriated for himself all the transferable rights and equipment of the office. The sps filed
a complaint for illegal dismissal. LA ruled for them. NLRC dismissed the case saying that (1) Gilbert was both a BSFTI
employee and stockholder (2) BSFTI was not obliged to pay separation benefits to the spouses since there was a
valid closure of business due to serious financial losses; (3) the spouses were not entitled to backwages. CA reversed
the NLRC and the LA saying that using the 4fold test, the sps are in fact employees of the Company. Thus this
petition.
The court cited Agabon v. National Labor Relations Commission, where it was held that if the dismissal is for an
authorized cause, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual.
Since the NLRC and the CA found bonafide reason for closing shop ang that the records before us revealed that there
were losses from 1996 to 1998, absent the requisite of due notice, P40,000 as nominal damages are awarded.
Petition is PARTIALLY GRANTED.
 John Mcleod v. NLRC + Filipinas Synthetic Corporation (Filsyn), Far Eastern Textile
Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu.
Mcleod was hired as the Assistant Spinning Manager of Universal Textiles, Inc. (UTEX) and was eventually promoted
to Senior Manager. He retired and demanded the full benefits of his retirement plan, rejecting offers of other motary
awards by the company. He filed a complaint for retirement benefits, vacation and sick leave benefits, non-payment
of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and exemplary damages,
attorney’s fees plus interest against the respondents. LA ruled that the companies are solidarily liable for Mcleod’s
money claims. NLRC reversed the LA ordering Peggy Mills alone to pay the money claims. CA upheld the NLRC.
Hence, this petition. The court found that records disclose that McLeod was a managerial employee only of PMI. PMI
hired McLeod as its acting Vice President and General Manager and PMI confirmed McLeod’s appointment as Vice
President/Plant Manager in the Special Meeting of its Board of Directors. When PMI’s rank-and-file employees staged
a strike PMI incurred serious business losses and thus PMI closed shop and sent a notice of closure to DOLE.
As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation,
provided the former acted in good faith and paid adequate consideration for such assets. In this case, PMI
transferred its assets to SRTI to settle its obligation to SRTI. There was also no merger or consolidation of PMI
and SRTI.
Consolidation is the union of two or more existing corporations to form a new corporation called the consolidated
corporation. It is a combination by agreement between two or more corporations by which their rights
Franchises and property are united and become those of a single
new corporation.
Merger on the other hand is a union whereby one corporation absorbs one or more existing corporations
and the absorbing corporation survives and continues the combined business.
McLeod is not entitled to payment of vacation leave and sick leave as well as to holiday pay. Article 82, Title I, Book
Three of the Labor Code, on Working Conditions and Rest Periods, provides:
Coverage. ─ The provisions of this title shall apply to employees in all establishments and undertakings whether for
profit or not, but not to government employees, managerial employees, field personnel, members of the family
of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another,
and workers who are paid by results
McLeod knew that PMI was then suffering from serious business losses. In fact, McLeod testified that PMI was not
able to operate or a period because of the strike. As Vice President of PMI, McLeod was aware that the company had
incurred “huge loans from DBP.”
Since PMI has no retirement plan, we apply Section 5, Rule II of the Rules Implementing the New Retirement Law
which provides:
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the
Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.

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5.2 Components of One-half (1/2) Month Salary. ─ For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term “one-half month salary” shall include all of the
following: (a) Fifteen (15) days salary of the employee based on his latest salary rate.
With McLeod having worked with PMI for 12 years, from 1980 to 1992, he is entitled to a retirement pay equivalent
to ½ month salary for every year of service based on his latest salary rate of P50,495 a month. CA affirmed.

 Antonio Carag v. NLRC + NAFLU, and MAC LABOR UNION

Without notice of any kind Mariveles Apparel Corporation for unknown reasons ceased operations with the intention
of completely closing its shop as manifested in a letter filed on the same day the company closed. MAC’s employees
filed a complant for illegal closure of business through their labor union. LA found them liable for illegal closure. NLRC
dismissed the petitions and affirmed the LA. Thus this petition. The court held that the LA’s decision to hold Antonio
Carag as MAC’s stockholder and Chairman has not basis since Complainants did not allege or prove, and Arbiter
Ortiguerra did not make any finding, that Carag approved or assented to any patently unlawful act to which the law
attaches a penalty for its commission. On this score alone, Carag cannot be held personally liable for the separation
pay of complainants. As for his liability as an employer as enumerated under Article 212(e) of the Labor Code
(‘Employer' includes any person acting in the interest of an employer, directly or indirectly. The term shall not include
any labor organization or any of its officers or agents except when acting as employer.)
The court recounted the cases of McLeod v. NLRC and Spouses Santos v. NLRC that Article 212(e) of the Labor Code,
by itself, does not make a corporate officer personally liable for the debts of the corporation. The governing law on
personal liability of directors for debts of the corporation is still Section 31 of the Corporation Code.
Thus in McLeod: Personal liability of corporate directors, trustees or officers attaches only when
(1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence
in directing its affairs,
(2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable with the corporation; or
(4) they are made by specific provision of law personally answerable for their corporate action.
Thus, it was error for Arbiter Ortiguerra, the NLRC, and the Court of Appeals to hold Carag personally liable for the
separation pay owed by MAC to complainants based on Article 212(e) since it does not state that corporate officers
are personally liable for the unpaid salaries or separation pay of employees of the corporation. The liability of
corporate officers for corporate debts remains governed by Section 31 of the Corporation Code. Petition Granted.
- Temporary Closure/ Bona fide suspension of operations –
Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty
shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief from the military or civic duty.
 JPL Marketing Promotions v. CA
JPL Marketing and Promotions is a domestic corporation engaged in the business of recruitment and placement of
workersmand they hired Noel Gonzales, Ramon Abesa and Faustino Aninipot as merchandisers. JPL notified
respondents that it would stop its direct merchandising activity in the Bicol Region and that they would be ransferrd
to other clients effective 15 August 1996. On 17 October 1996, respondents filed complaints for illegal dismissal. LA
dismissed the complaints for lack of merit. The Labor Arbiter found that Gonzales and Abesa applied with and were
employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period
given by law to JPL to provide private respondents a new assignment. NLRC affirmed the LA. CA affirmed the NLRC
but was required by law to grant the 13th month pay and that since its exemption from paying service incentive leave
pay was not shown, it should be liable for it as well. Thus the petition.
The court held that under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of
dismissals due to any of these reasons:
(a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business;
(e) when the employee is suffering from a disease and his continued employment is prohibited by law or is
prejudicial to his health and to the health of his co-employees.
However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character, but only when he was
illegally dismissed.
In the the employees were not dismissed at all, whether legally or illegally. What they received from JPL was not a
notice of termination of employment, but a memo informing them of the termination of CMC’s contract with JPL.

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Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period
not exceeding (6) months, wherein an employee is placed on a “floating status.” After 6 months, he may be
considered illegally dismissed. But in this case, the 6 month period has not yet elapsed and also as they admitted in
their comment, all three of them applied for and were employed by another establishment after they received the
notice from JPL. In seeking and obtaining employment elsewhere, private respondents effectively terminated their
employment with JPL. Petition partly granted. Only liable for 13th month pay.

iii.) Disease
Art. 284. Disease as ground for termination. An employer may terminate the services of an employee who has
been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at
least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction
of at least six (6) months being considered as one (1) whole year.
 Vicente Sy v. CA supra
Jamie Sahot was with SB Trucking (owned by Sy) since 1965. In 1994, Sahot strated to have thigh pains and filed for
leave. He found out later that his SSS premiums were not paid by employers. He asked for extension of leave but he
was later dismissed for failure to go to work. LA ruled for Sy. NLRC found Sahot to be an employee of Sy. CA
affirmed NLRC. Thus this petition.
Court found that an ER-EE relationship is present between SBT and Sahot and he was not, infact, an industrial
partner as ruled by the LA (since he did not receive any share of the division of profits and he was not shown to be
part of any managerial duty; he was in fact content to follow the instructions of petitioners during those years). The
court also held that dismissal was not valid and it was without notice (he was simply threatened then dismissed).
Even if he was offered a job which is less strenuous is of no matter; also, being terminated of a disease under 284
requires a medical certificate by the employer and is indispensable which was not complied with by Sy. The burden is
on the employer to show that all the requisites for valid dismissal due to disease have been complied with. He is
entitled to separation pay. Petition Denied.
 Crayons Processing v. Felipe Pula
Crayons Processing, Inc. employed Felipe Pula as a Preparation Machine Operator. At a young age of 34, Pula
suffered a heart attack and was rushed to the hospital, where he was confined for a week. Pula was advised to rest
for 3 months. After an angiogram procedure he was certified as “fit to work.” However, 13 days after returning to
work, he was taken to the company clinic after complaining of dizziness. Diagnosed as having suffered a relapse, he
was advised by his physician to take a leave of absence from work for one (1) month.
When he returned for work, he was asked by the company to resign and to accept P12,000 as financial assistance.
Pula refused the offer and instead filed a complaint for illegal dismissal. LA ruled for Pula.
It was pointed out that under Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code,
implementing in particular Article 284 of the Labor Code, termination on the ground of disease is prohibited unless
there is a certification by a competent public health authority that the disease is of such nature or at such a stage
that it cannot be cured within a period of six months even with proper medical treatment.
NLRC ruled for Crayons saying that the fact that Pula was on leave for more than six months due to his illness
rendered unnecessary the certification from a public health authority as required under the Omnibus Implementing
Rules. CA reinstated the decision of the LA.
The termination as upheld by the NLRC was grounded on Article 284 of the Labor Code, which reads:
An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Sec. 8. Disease as a ground for dismissal. — Where the employee suffers from a disease
unless there is a certification by a competent public health authority that the disease is of such nature
or at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment.
For a dismissal on the ground of disease to be considered valid, two requisites must concur:
(a) the employee must be suffering from a disease which cannot be cured within six months and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees; and
(b) a certification to that effect must be issued by a competent public health authority.
The burden falls upon the employer to establish these requisites, and in the absence of such certification, the
dismissal must necessarily be declared illegal. Without the required certification, the characterization or even
diagnosis of the disease would primarily be shaped according to the interests of the parties rather than the studied

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analysis of the appropriate medical professionals. The requirement of a medical certificate under Article 284 cannot
be dispensed with. Petition is DENIED. Decision of LA reinstated.
D. Procedural Requirements
Art. 277. Miscellaneous provisions.
b. Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to
be heard and to defend himself with the assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any
decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality
of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary
of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the
dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment
before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation
of a mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989)
Omnibus Rules Book VI (Post Employment) TITLE I: Termination of Employment
Section 1. Coverage. — This Rule shall apply to all establishments and undertakings, whether operated
for profit or not, including educational, medical, charitable and religious institutions and organizations in cases of
regular employment with the exception of the Government and its political subdivisions including government-owned
or controlled corporations.
Section 2. Security of tenure. - (a) In cases of regular employment, the employer shall not terminate the services
of an employee except for just or authorized causes as provided by law, and subject to the requirements of due
process.
(b) The foregoing shall also apply in cases of probationary employment: Provided, however, that in such cases,
termination of employment due to failure of the employee to qualify in accordance with the standards of the
employer made known to the former at the time of engagement may also be a ground for termination of
employment.
(c) In cases of employment covered by contracting or subcontracting arrangements, no employee shall be dismissed
prior to the expiration of the contract between the principal and contractor or subcontractor as defined in Rule VIII-
A, Book III of these Rules, unless the dismissal is for just or authorized cause, or is brought about by the completion
of the phase of the contract for which the employee was engaged but, in any case, subject to the requirements
of due process or prior notice.
(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:
For termination of employment based on just cases as defined in Article 282 of the Labor Code:
"(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.
"(ii) A hearing or conference during which the employee concerned, with the assistance of counsel, if he so
desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against
him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall
be deemed complied with upon service of a written notice to the employee and the appropriate
Regional Office of the Department of Labor and Employment at least thirty days before effectivity of
the termination, specifying the ground or grounds for termination.
If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to
meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written
notice is served the employee within a reasonable time from the effective date of termination.
Section 3. Reinstatement – An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to backwages.
i.)In General/Liability for non-compliance with procedural
requisites/Essential Elements of Due Process
 Agabon v. NLRC and Riviera Home
Riviera Home Improvements, employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers and after years under their employ, were dismissed for abandonment of work. Petitioners then filed a
complaint for illegal dismissal and payment of money claims. LA declared the dismissals illegal. NLRC reversed the

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LA.CA ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but
ordered the payment of money claims. Hence, this petition.
The court held that abandonment is the deliberate and unjustified refusal of an employee to resume his employment.
It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding
of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship through overt acts.
The court found that the Agabond were frequently absent having subcontracted for an installation work
for another company. Subcontracting for another company clearly showed the intention to sever
the employer-employee relationship with private respondent
Standards of due process: requirements of notice. – In all cases of termination of employment, the following
standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices
shall be served on the employee’s last known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee
Dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to
terminate employees.
A termination for an authorized cause requires payment of separation pay.
Procedurally
(1) if the dismissal is based on a just cause under Article 282 the employer must give the employee two written
notices and a hearing or opportunity to be heard
(2) if the dismissal is based on authorized causes under Articles 283 and 284
the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to
the effectivity of his separation.
From the foregoing rules four possible situations may be derived:
(1) the dismissal is for a just cause under Article 282 of the Labor Code for an authorized cause under Article 283
or for health reasons under Article 284 and due process was observed;
(2) the dismissal is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was no due process; and
(4) the dismissal is for just or authorized cause but due process was not observed. ( Wenphil or Belated Due Process
Rule.)
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural
requirements of due process.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, Book VI, Rule I,
Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of these due process requirements violate the
Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due
process. The case at bar squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Petition Denied.
 Serrano v. NLRC and Isetann
Ruben Serrano was hired by private respondent Isetann Department Store as a security checker to apprehend
shoplifters and prevent pilferage of merchandise. To cut costs, Isetann phased out its entire security section and
engage the services of an independent security agency. Serrano filed a complaint for illegal dismissal upon his
termination. The LA found this termination to be illegal. NLRC held that the phase-out of private respondent’s
security section and the hiring of an independent security agency constituted an exercise by private respondent of a
legitimate business decision. Hence this petition.
The court held that contrary to the allegations of Serrano, the dismissal falls under Art. 283 of the Labor Code for
redundancy Art. 283 also provides that to terminate the employment of an employee for any of the authorized
causes the employer must serve "a written notice on the workers and the DOLE at least one (1) month before the
intended date thereof."

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In this case, Serrano was given notice the same day of his termination
The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause
or the termination of employment is for an authorized cause, the dismissal or termination is illegal if effected without
notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC. The Court holds that the
policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his
wages during the period of his separation until his actual reinstatement but not exceeding three (3) years should be
re-examined.
The remedy is to order the payment to the employee of full backwages from the time of his dismissal until the court
finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be
reinstated. This is because his dismissal is ineffectual
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a labor-
saving device, but the employer did not give him and the DOLE a 30-day written notice of termination in advance,
then the termination of his employment should be considered ineffectual and he should be paid backwages.
There are three reasons why, on the other hand, violation by the employer of the notice requirement cannot be
considered a denial of due process resulting in the nullity of the employee’s dismissal or layoff.
First is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to
the exercise of private power, such as the termination of employment under the Labor Code.
Second reason is that notice and hearing are required under the Due Process Clause before the power of organized
society are brought to bear upon the individual.
Third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause.
Art. 283 of the Labor Code, the employer’s failure to comply with the notice requirement does not constitute a denial
of due process but a mere failure to observe a procedure for the termination of employment which makes the
termination of employment merely ineffectual. Thus, only if the termination of employment is not for any of the
causes provided by law is it illegal and, therefore, the employee should be reinstated and paid backwages.
If the employee’s separation is without cause, instead of being given separation pay, he should be reinstated. In
either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been
laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not
be reinstated. However, he must be paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect. Petition Granted.
 Cabalen Management Co Inc v. Quiambao
The CA Decision held that except for respondents Vizier Inocencio and Vincent Edward Mapa whose petitions were
dismissed , the SC affirmed the CA. Thus this motion of reconsideration because Cabalen argues that the affidavits of
their witnesses, Henry dela Vega Balen and Roderick Malana, as well as the audit report are admissible and of
rational probative value becasue the respondents did not contest the findings of the audit report that the cancelled
Order Slips (OS) and receipts, and the incidents of swapping dining OS with bar OS were beyond the course of
ordinary business and as opined by the LA and NLRC gives a “wholly credible scenario” of tip pocketing by
respondents and the alleged admission of respondent Jesus Quiambao in his Sinumpaang Salaysay of the existence
of the anomalous activity.
However, in this motion of reconsideration, the court held that It is the employer’s burden to prove a valid dismissal.
It is not enough that petitioners showed that Quiambao had confirmed the occurrence of incidents of tip pocketing;
they also had to prove that he and the rest of the respondents were responsible for it. This duty is all the more
pressing in the case of Quiambao considering that it was he who called the management’s attention to the incidents
of tip pocketing among some of his co-employees, only to be charged with the offense he had asked to be
investigated. Petitioners also had to prove that due process was observed in terminating the employment of
respondents. Petitioners unfortunately failed in all respects. Petition Denied except as to Quiambao’s dismissal since
it is still unresolved.
ii.) Right to Counsel
Espero Santos Salaw v. NLRC
Espero Santos Salaw was employed by the private respondents as a credit investigator-appraiser. Criminal
Investigation Service (CIS) of the Philippine Constabulary, National Capital Region, extracted from the petitioner
without the assistance of counsel a Sworn Statement which made it appear that the petitioner, in cahoots with a co-
employee, Reynaldo Madrigal sold twenty sewing machines and electric generators which had been foreclosed by the
respondent bank. Salaw was asked to appear before the bank's Personnel Discipline and Investigation Committee
(PDIC) and he was soon terminated from his employment for alleged serious misconduct or willful disobedience and

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fraud or willful breach of the trust reposed on him by the private respondents. Salaw filed a complaint for illegal
dismissal. LA ruled that the complaint is illegal. NLRC reversed the LA and dismissed the case for lack of merit.
Hence, this petition. The court held that the requirements for the lawful dismissal of an employee by his employer
are two-fold: the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law (Articles 279, 281, 282-284, New Labor Code), but
the rudimentary requirements of due process notice and hearing must also be observed before an employee may be
dismissed.
The investigation of petitioner Salaw by the respondent Bank' investigating committee violated his constitutional right
to due process, in as much as he was not given a chance to defend himself, as provided in Rule XIV, Book V of the
Implementing Rules and Regulations of the Labor Code governing the dismissal of employees. Section 5 of the said
Rule requires that "the employer shall afford the worker ample opportunity to be heard and to defend himself with
the assistance of his representative, if he so desires."
Here petitioner was perfunctorily denied the assistance of counsel during investigation. The court held that the right
to counsel, a very basic requirement of substantive due process, has to be observed as guaranteed by the 1987
constitution. Considering further that the admission by the petitioner was made without the assistance of counsel and
was the sole basis for his dismissal, it can not be admitted in evidence against him. Decision of LA reinstated.
iii.) Notice
King of Kings Transport v. Santiago Mamac
Santiago O. Mamac worked as a bus conductor of King of Kings Transport, Inc. Pending the holding of a
certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange
Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI they
organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE.
Respondent was elected KKKK president. Mamac was required to accomplish a “Conductor’s Trip Report”
and submit it to the company after each trip. Upon audit KKTI noted an irregularity. It discovered that
respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight
hundred and ninety pesos. In his letter of explanation, respondent said that the erroneous declaration was
unintentional. He explained that during that day’s trip, the windshield of the bus assigned to them was
smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a
result of the incident, he got confused in making the trip report. He was later on terminated. He filed a
complaint for illegal dismissal. LA dismissed the complaint for lack of merit. NLRC ordered KKTI to indemnify
complainant in the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to
termination. Affirming the NLRC, the CA held that there was just cause for respondent’s dismissal. It ruled
that respondent’s act in “declaring sold tickets as returned tickets constituted fraud or acts of dishonesty
justifying his dismissal. Hence, we have this petition.
The court held that Due process under the Labor Code involves two aspects: first, substantive––the valid
and authorized causes of termination of employment under the Labor Code; and second, procedural––the
manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC
that the termination of employment of respondent was based on a “just cause.”
Art. 277 of the Labor Code provides the manner of termination of employment. The implementing rule of the
aforesaid provision states: To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period.
“Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to
the employees to enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice
After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice.
In this case, First, respondent was not issued a written notice charging him of committing an infraction. The law is
clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice
requirement.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of
his offense, such would not comply with the requirements of the law. We observe from the irregularity reports
against respondent for his other offenses that such contained merely a general description of the charges against
him.

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Third, no hearing was conducted. Regardless of respondent’s written explanation, a hearing was still necessary in
order for him to clarify and present evidence in support of his defense.
Thus, for non-compliance with the due process requirements in the termination of respondent’s employment,
petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages.
Petition is PARTLY GRANTED. Decision of the CA is MODIFIED by deleting the award of backwages and 13th-
month pay.

Magro Placement v. Cresenciano Hernandez

Cresenciano E. Hernandez filed with Magro Placement for an application for employment abroad as Auto Electrician.
He was hired by Al Yamama in Jeddah, K.S.A. for a two-year contract. Respondent worked at the Al Yamama as an
electrician but because of lack of equipment or tools, the work became harder. Respondent executed a Statement
that: he could no longer continue his job with Al Yamama. He was soon repatriated to the Philippines for the reason
that he was recruited for Al Yamama as Auto Electrician, but he was not qualified since he had no experience as Auto
Electrician; he was allowed to go for a trade test but failed; he was allowed to find a new job, but he was not
qualified to work in Budget Rent-A-Car Company & Nissan; he was given P2,000.00 as financial assistance. He filed a
Complaint for illegal dismissal. LA dismissed the case for lack of merit. NLRC affirmed this ruling and the CA
MODIFIED THE DECISION by ordering private respondents to pay petitioner separation pay equivalent to one (1)
month pay for every year of service since it found that Magro had just cause to effect respondent's dismissal but that
it found the dismissal did not comply with the due process requirements. Thus this petition.
The court held that Al Yamama failed to satisfy the two-notice requirement. Without prior notice or explanation, Al
Yamama took respondent's passport and simply brought him to petitioner's foreign principal, Orbit, and told the latter
that respondent did not know his job as electrician. Respondent heard his employer's complaint against him at that
instance only. From these facts, it is clear that respondent's dismissal was effected without the notice required by
law. Article 277 of the Labor Code explicitly provides:
The Serrano doctrine which awarded full backwages in “ineffectual dismissal cases” where an employee dismissed for
cause was denied due process, which was applied by the CA, has been abandoned by the Court's ruling in
Agabon v. National Labor Relations Commission. In that case, the Court held that if the dismissal was for a cause,
the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual.
However, the employer’s violation of the employee’s right to statutory due process warrants the payment of
indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the
Court, taking into account the relevant circumstances. Court deems the amount of P30,000.00 as sufficient nominal
damages, pursuant to prevailing jurisprudence. Petition is PARTLY GRANTED
iv.)Hearing
a. Hearing
Permex Inc v. NLRC
Permex initially hired Emmanuel Filoteo as a mechanic but he was soon promoted to water treatment operator. One
day, Filoteo entered his time-in at 8:45 p.m. and since he was scheduled to work until 7:00 a.m. the next day, he
wrote 7:00 a.m. in his scheduled time-out but at around 9:20 p.m., Filoteo went to see the Assistant Production
Manager to inquire if "butchering" of fish would be done that evening so they could start operating the boiler. Since
they were informed that no butchering would be done, he asked permission to go home and caught the service jeep
provided by Permex without correcting the 7:00am time out.
Later, he received a memorandum from the Assistant Personnel Officer asking him to explain, in writing, the entry he
made in his DTR. Filoteo complied and submitted his written explanation that same evening. Filoteo was soon
suspended indefinitely and thus he filed a complaint for illegal dismissal. Labor Arbiter dismissed the complaint for
lack of merit. NLRC reversed LA. Thus this petition.
The court held that whether private respondent was illegally dismissed or not is governed by Article 282 of the Labor
Code. To constitute a valid dismissal from employment, two requisites must concur: (a) the dismissal must be for any
of the causes provided for in Article 282 of the Labor Code; and (b) the employee must be afforded an opportunity to
be heard and defend himself.
This means that an employer can terminate the services of an employee for just and valid causes, which must be
supported by clear and convincing evidence. It also means that, procedurally, the employee must be given notice,
with adequate opportunity to be heard, before he is notified of his actual dismissal for cause.
In the present case, the NLRC found that the two-fold requirements for a valid dismissal were not satisfied by the
petitioners.
First, petitioner's charge of serious misconduct of falsification or deliberate misrepresentation was not supported by
the evidence on the record contrary
Second, the private respondent was not afforded an opportunity to be heard. As found by the NLRC

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Such dismissal, in our view, was too harsh a penalty for an unintentional infraction, not to mention that it was his
first offense committed without malice, and committed also by others who were not equally penalized. Considering
the factory practice which management tolerated the court held that Filoteo, in his rush to catch the service vehicle,
merely forgot to correct his initial time-out entry. Petition is DENIED.
Muaje-Tuazon v. Wenphil Corp
Annabelle M. Tuazon and Almer R. Abing worked as branch managers of the Wendy’s food chains in MCU Caloocan and
Meycauayan, respectively, of respondent Wenphil Corporation. From September 14 to November 8, 1998, Wendy’s had
a “Biggie Size It! Crew Challenge” promotion contest. Meycauayan branch won 2 times in a row. Management received
reports that as early as the first round of the contest, the Meycauayan, MCU Caloocan, Tandang Sora and Fairview
branches cheated. An internal investigation ensued. Immediately thereafter, petitioners were notified, in writing, of
scheduled hearings regarding the matter and of their immediate suspension. On February 29, 2000, petitioners were
dismissed. They filed a complaint for illegal dismissal.
Petitioners insisted that the real reason for their termination was their persistent demands for overtime and holiday
pay. Respondents maintained that petitioners were terminated for dishonesty amounting to serious misconduct and
willful breach of trust.

LA ruled in favor of the employees. NLRC affirmed the LA. CA found substantial proof of petitioners’ misconduct. Thus
this petition.
Petitioners aver that their right to due process was violated. They were not notified of the accusation against them
before they were summoned to the main office of Wenphil on February 3, 2000 for investigation.
The court held that First, the law requires that the employee be given two written notices before terminating his
employment, namely: (1) a notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss
him. The records show that the petitioners were given written notices informing them that they were charged with
serious misconduct and dishonesty in relation to the “Biggie Size It! Crew Challenge” program, and notifying them of
the scheduled hearings. The petitioners, thinking that their verbal explanations were sufficient, opted to forego a
written explanation, and did not appear during the set hearing.
Petitioners contend that respondents did not sufficiently prove the existence of a just cause for their termination,
hence they were illegally dismissed.
In the present case, the tape receipts presented by respondents showed that there were anomalies committed in the
branches managed by the petitioners. Additionally, some employees declared in their affidavits that the cheating was
actually the idea of the petitioners. Even without the affidavits, sufficient basis exists for respondents’ loss of trust
and confidence on the petitioners as managerial officers. Petition is DENIED.
b. Use of Position Paper
Seastar Marine Services Inc v. Lucio Bul-an Jr.
Lucio A. Bul-an, Jr. was hired by petitioner Seastar as an Able Seaman for and in behalf of H.S.S. Holland Ship.
Shortly thereafter, Chief Mate Benjamin A. Paruginog mauled the respondent, causing bodily harm and physical
injuries. Bul-An immediately reported the incident to Master Captain Stumpe Jacobus, who assured him that he
would settle the matter. In a Letter, Captain Jacobus reported to his superiors at the Topaz Seal Shipping Company,
that Bul-An was uncooperative, refused to obey his orders and those of the chief officer, and often pretended to be
ill. In a Letter Paruginog reported the respondent’s unusual behavior since boarding the ship. Paruginog denied the
respondent’s allegations that he made threats to kill the respondent. Bul-An was forced to seek help from the
Philippine Embassy at Barcelona, Spain, and executed an Affidavit on the matter.
Bul-An was terminted and thus, the he filed a complaint for illegal dismissal with prayer for payment of back wages,
as well as actual, moral and exemplary damages against the petitioners.
He immediately reported the matter to the petitioners, but instead of receiving assistance, he was even scolded for
returning home. Seastar alleged that the respondent was “psychologically ill” and was dismissed for a justified and
lawful cause. It was averred that even only after a few days of boarding the M/V Blue Topaz, the respondent already
showed unusual behavior. He not only refused to obey orders from his superior officers; he also refused to work,
after about a week on board, he confronted the Master of the vessel and told him “that the vessel was too small
for him and too many work.” Due to the troubles and problems being encountered by the Master of the vessel
and the crew with complainant, he was dismissed and repatriated.
LA ruled that the petitioner was dismissed without just cause. NLRC ruled in favor of the respondent and dismissed
the appeal for lack of merit.
Petitioners allege that the NLRC should have remanded the case to the labor arbiter for further proceedings, the
following pronouncement of the Court in Cañete v. National Labor Relations Commission is instructive: “The case
may be decided on the basis of the pleadings and other documentary evidence presented by the parties. In the
absence of any palpable error, arbitrariness or partiality, the method adopted by the labor arbiter to decide a case

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must be respected by the NLRC.Thus, a formal trial-type hearing is not at all times and in all instances essential to
due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective
sides of the controversy and to present supporting evidence on which a fair decision can be based.
Rule V of the Rules of Procedure of the NLRC, as amended, outlines the procedure to be
followed in cases before the labor arbiter, as follows:
Section 3. Submission of Position Papers/Memorandum . –
Should the parties fail to agree upon an amicable settlement, either in whole or in part, during the conferences, the
Labor Arbiter shall issue an order stating therein the matters taken up and agreed upon during the conferences and
directing the parties to simultaneously file their respective verified position papers.
Those verified position papers shall cover only those claims and causes of action raised in the complaint excluding
those that may have been amicably settled, and shall be accompanied by all the supporting documents including the
affidavits of their respective witnesses which shall take the place of the latter’s direct testimony.
The parties shall, thereafter, not be allowed to allege facts, or present evidence to prove facts, not referred to and
any cause or causes of action not included in the complaint or position papers, affidavits, and other documents.
Unless otherwise requested in writing by both parties, the Labor Arbiter shall direct both parties to submit
simultaneously their position papers/memorandum with the supporting documents and affidavits within fifteen (15)
calendar days from the date of the last conference, with proof of having furnished each other with copies thereof.
Section 4. Determination of Necessity of Hearing . – Immediately after the submission by the parties of their
position papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is a need for a formal
trial or hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask
clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant
documentary evidence, if any from any party or witness.
Section 5. Period to Decide Case. –
(a) Should the Labor Arbiter find it necessary to conduct a hearing, he shall issue an order to that effect setting the
date or dates for the same which shall be determined within ninety (90) days from initial hearing.
He shall render his decision within thirty (30) calendar days, without extension, after the submission of the case by
the parties for decision, even in the absence of stenographic notes: Provided, however, that OFW cases shall be
decided within ninety (90) calendar days after the filing of the complaint and the acquisition by the labor arbiter of
jurisdiction over the parties.
(b) If the Labor Arbiter finds no necessity of further hearing after the parties have submitted their position papers
and supporting documents, he shall issue an Order to that effect and shall inform the parties, stating the reasons
therefore. In any event, he shall render his decision in the case within the same period provided in paragraph (a)
hereof.
Petition is DENIED.

v.) Decision or Award

ARTICLE VIII – JUDICIAL DEPARTMENT, Section 14. No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied
without stating the legal basis therefor.
ABD Overseas v. NLRC + Mohmina Macaraya
Mohmina Macaraya applied for employment as a dressmaker with respondent Mars International Manpower, Inc.
MARS submitted to the POEA an overseas contract worker information sheet stating that she would be employed as a
domestic helper for two years with a monthly salary of US$200.00. Macaraya was soon deployed to Riyadh, Saudi
Arabia where her employer took the only copy of her employment contract and never returned it to her and she was
forced to work as a domestic helper. After working for three months and thirteen days, Macaraya was dismissed by
her employer and repatriated to the Philippines. Macaraya filed with the POEA a complaint for illegal dismissal. POEA,
ruled that Macaraya had been illegally dismissed as both her foreign employer and recruitment agency failed to prove
that the dismissal was for a just and valid cause. On appeal to the NLRC ABB Overseas opined that the failure of
MARS to prove the legality of Macaraya’s dismissal from employment should not mean that the same burden should
fall upon petitioner who was not even privy to Macaraya’s employment contract. If it were to be held liable for the
monetary awards in favor of Macaraya, then it would result in undue enrichment on the part of MARS. NLRC affirmed
the LA. Thus this petition.
The court cited Section 6, Rule I, Book III of the POEA Rules and Regulation which provides: It is clear from the
aforementioned provision of the POEA Rules and Regulation that the transferee agency shall assume full and
complete responsibility to all contractual obligations of the principals to its workers originally recruited and processed
by its former agency.

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In the case at bar, respondent ABD Overseas Manpower Corporation being the transferee agency must assume (the)
full liability of the principal.
Section 13
Rule VII of the New Rules of Procedure of the NLRC provides as follows:
“SEC. 13. Form of Decision/Resolution/Order . – The Decision/ Resolution shall state clearly and distinctly the findings
of facts issues and conclusions of law on which it is based and the relief granted if any. If the decision or resolution
involves monetary awards the same shall contain the specific amount awarded as of the date the decision is
rendered.”
This provision of the Rules is obviously in consonance with Section 14 Article VIII of the Constitution providing that
“(n)o decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law
on which it is based.”
- Nicos Industrial Corporation v. Court of Appeals the Court said: “It is a requirement of due process that the parties
to a litigation be informed of how it was decided with an explanation of the factual and legal reasons that led to the
conclusions of the court. It ill becomes an appellate judge to write his rulings with a pair of scissors and a pot of
paste as if he were a mere researcher. He is an innovator not an echo.”
In the case at bar, petitioner became the accredited recruitment agency of the principal, M.S. Al Babtain Recruitment
In labor cases, however, technical rules of procedure are not applicable, but may apply only by analogy or in a
suppletory character. Basic principles of justice and equity dictate that MARS should not be totally cleared of its
liability to Macaraya under the peculiar circumstances of this case. Considering that it was MARS with whom
Macaraya entered into a contract and that it had been accorded due process at the proceedings before the POEA
MARS is the one to be held accountable for her claims. NLRC Affirmed.
vi.) Burden of Proof
Limketkai Sons Milling Inc. v. Editha Llamera
Limketkai Sons Milling received reports that some of its oil products, particularly Marca Leon Cooking Oil and Corn Oil
had visible impurities and rancid taste. The concerned employees, except respondent who was then on maternity
leave, submitted their respective written explanations and were placed under preventive suspension. LSMI
terminated the services of the suspended employees. Llamera filed against LSMI a complaint for illegal dismissal. LA
ruled in her favor. NLRC reversed the LA. CA affirmd the NLRC with the MODIFICATION that petitioner’s dismissal
was illegal. Thus this petition.
The court held that where there is no showing of a just or authorized cause for termination of employment, the law
considers the case a matter of illegal dismissal. The burden is on the employer to prove that the termination of
employment was for a just or authorized cause. In the case at hand, we find untenable petitioners’ claim of breach of
trust and confidence committed by the employee. The willful breach by the employee of the trust reposed in him by
his employer must be founded on facts established by the employer. The latter must clearly and convincingly prove
by substantial evidence the facts and incidents leading to the loss of confidence in the employee. Petitioners simply
alleged that respondent’s failure to report to the quality control head the batch that did not meet the minimum
standard showed connivance to sabotage petitioners’ business. Not only is petitioners’ logic flawed, it is an instance
of arguing non sequitur. An employee who has been illegally dismissed is entitled to reinstatement and full back
wages, that is, without deducting earnings earned elsewhere during the period of his illegal dismissal. Petition is
DENIED.

Skippers United Pacific Inc v. NLRC

Gervacio Rosaroso was signed up as a Third Engineer with Nicolakis Shipping, S.A. through its recruitment and
manning agency, herein petitioner Skippers United Pacific. The term of the contract was for one year. Barely a month
after boarding the vessel M/V Naval Gent respondent was ordered to disembark in Varna, Bulgaria and repatriated to
the Philippines. Immediately after arriving in the Philippines, respondent filed a complaint for illegal dismissal. Labor
Arbiter found that respondent was illegally dismissed. NLRC and CA affirmed the LA, not giving credence to the
telexed Chief Engineer’s Report saying that Rosaroso was slacking in his duties and was unwilling to help with the
repairs. The reason was that the Report cannot be given any probative value as it is uncorroborated by other
evidence and that it is merely hearsay, having come from a source, the Chief Engineer, who did not have any
personal knowledge of the events reported therein. Thus this Petition.
The court held that the rule in labor cases is that the employer has the burden of proving that the dismissal was for a
just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal.The
two-fold requirements for a valid dismissal are as follows: (1) dismissal must be for a cause provided for in the Labor
Code, which is substantive; and (2) the observance of notice and hearing prior to the employee’s dismissal, which is
procedural

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Substantial evidence is defined as that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. As all three tribunals found, the Report cannot be given any weight or credibility
because it is uncorroborated, based purely on hearsay, and obviously merely an afterthought. Skippers failed to
overcome the burden of proof tasked upon it in proving that the dismissal has a just cause. Petition Denied.

vii.) Degree of Proof/Substantial Evidence

Philtread Tire and Rubber Corp v. Vicente
Alberto M. Vicente was employed by Philtread Tire and Rubber Corporation as a housekeeping coordinator. A
complaint against Vicente was from a sign painter with whom petitioner had a service contract. The painter reported
that he was being forced by respondent to overprice by P1,000.00 his service fee of P3,800.00. Petitioner assigned
respondent to perform janitorial duties, prompting him to request an immediate disposition of his case. But when
petitioner directed him to submit his evidence within three (3) days from notice, he failed to comply. Philtread found
respondent guilty of extortion, fraud, serious misconduct and willful breach of trust and confidence and he was
terminated. LA ruled for Philtread. NLRC reversed the LA and held that the respondent was illegally dismissed. CA
affirmed the NLRC. Hence this petition. The court held that there is neither direct nor documentary evidence to prove
that respondent was involved in extortion. In the minutes of the company’s investigation, it was revelaed that Avis
did not categorically state that he was pressured by respondent to overprice his service fee. The court held that the
petitioner failed to prove its charge by substantial evidence. Substantial evidence is that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. CA affirmed with the
modification that in lieu of reinstatement, respondent is awarded separation pay.
Etcuban v. Sulpicio Lines Inc.
Sulpicio Lines, Inc. hired Vicente Ectuban in 1978 and in 1994 he was the Chief Purser of the M/V Surigao Princess.
The boat was subjected to a surprise inspection an it was discovered that several yellow passenger’s duplicate
original of unissued passage tickets already contained the amount of P88.00 – the fare for adult passengers for the
boat’s route. Suplicio Lines instructed him to report to the main office for an explanation and investigation. He
refused to sign the minutes of the investigation claiming that it was “self-incriminatory.” And thus he was placed
under suspension and replaced by the company. Ectuban thought that he was fired from his work. Barely a week
after the preventive suspension, he filed a compalint for illegal dismissal claiming that the dismissal was without
basis. LA ruled for him. NLRC affirmed LA since the offense allegedly has not been established by clear and
competent evidence that the alleged irregular condition of the tickets was attributable to the complainant or to other
members of the team of inspectors who have equal access to the tickets. CA reversed NLRC saying that there was
sufficient basis for loss of trust and confidence on him since as the custodian of the tickets with the authority to issue
them, and the fact that the tampered tickets were in his possession, it was logical that Etcuban committed the
tampering. Thus this petition. The court held that the degree of proof required in labor cases is not as stringent as in
other types of cases. Uncorroborated assertions and accusations by the employer will not be sufficient but as regards
a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable
doubt is not required, it being sufficient that there is some basis for such loss of confidence.
In the present case, the petitioner is not an ordinary rank-and-file employee. The petitioner’s work is of such nature
as to require a substantial amount of trust and confidence on the part of the employer. The fact that the petitioner
has worked with the respondent for more than 16 years should be taken against him. The infraction that he
committed, vis-a-vis his long years of service with the company, reflects a regrettable lack of loyalty. If an
employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal, it will actually
become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse
its ranks of all undesirables. Petition is DENIED.
De Guzman v. NLRC
Fernandito De Guzman was employed as a bus conductor by private respondent Philippine Rabbit Bus Line Company.
He filed an LOA since he claimed he was experiencing chronic pain from the gunshot wounds he sustained when he
tried to defend the earnings of the company from “brigands.” His leg shrunk by at least two (2) inches and three (3)
feet of his intestines had to be removed. A bullet was still imbedded in his leg which allegedly still gave him chronic
pain. The Company’s operation manager placed him under preventive suspenson when he went beyond the period of
the leave of absence he applied for. De Guzman gave a statement on the reason for his absences. According to him,
he did not report for duty because the left side of his body above his thigh was very painful and rendered him unable
to stand. He thereafter received a memorandum in reply which claims that he has abandoned his post. De Guzman
filed a complaint for illegal dismissal. LA dismissed the complaint.The NLRC granted the appeal and gave DeGuzman
the money clams. CA reinstated the LA. Thus this petition. The court found that there was a dismissal and that for a
dismissal to be completely valid and faultless, the employer must show that the dismissal was for a just or authorized

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cause and that it observed procedural due process. In the case at bar, private respondents contend that petitioner
was validly dismissed for abandonment of work. To constitute abandonment, two elements must concur:
(1) the failure to report for work or absence without valid or justifiable reason, and
(2) a clear intention to sever the employer-employee relationship. The burden of proof is on the employer to show an
unequivocal intent on the part of the employee to discontinue employment. In this case, the respondent company
failed to discharge this burden. Petition is GRANTED.
viii.) Prescription
Menandro B. Laureano v. CA +Singapore Airlines.
Menandro B. Laureano was hired as B-707 captain. He was offered an extension of his two-year contract to five (5)
years. In Zurich Airport he committed a noise violation offense for which he apologized. He also figured in a tail
scraping incident. S’pore Air was hit by a recession and he was one of the pilots who were terminated. He filed a
complaint for illegal dismissal. The trial court found for Menandro. CA reversed the trial court due to prescription and
dismissed the complaint. Thus this petition.
Petitioner raises the issue of whether his action is one based on Article 1144 or on Article 1146 of the Civil
Code.According to him, his termination of employment effective November 1, 1982, was based on an employment
contract which is under Article 1144, so his action should prescribe in 10 years and not 4 years under Article 1146
used as basis by the CA.
The appellate court concluded that the action for illegal dismissal originally filed before the Labor Arbiter on June 29,
1983, but which was withdrawn, then filed again in 1987 before the Regional Trial Court, had already prescribed.
The court held that neither Article 1144 nor Article 1146 of the Civil Code is here pertinent. What is applicable is
Article 291 of the Labor Code:
Art. 291. Money claims. All money claims arising from employee employer relations accruing during the effectivity of
this Code shall be filed within three (3) years from the time the cause of action accrued; In illegal dismissal, it is
settled, that the ten year prescriptive period fixed in Article 1144 of the Civil Code may not be invoked by petitioners,
for the Civil Code is a law of general application,

In the light of Article 291, aforecited, we agree with the appellate court's conclusion that petitioner's action for
damages due to illegal termination filed again on January 8, 1987 or more than four (4) years after the effective date
of his dismissal on November 1, 1982 has already prescribed. We base our conclusion not on Article 1144 of the Civil
Code but on which sets the prescription period at three (3) years and which governs under this jurisdiction. In
Olympia International, Inc., vs., Court of Appeals, the court held that "although the commencement of a civil action
stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by the plaintiff
leaves in exactly the same position as though no action had been commenced at all." CA AFFIRMED.

Victory Liner Inc. v. Race

Pablo Race was employed by Victory Liner as a bus driver and as a requisite for his hiring, the respondent deposited
a cash bond in the amount of P10,000.00 to the petitioner. In Tarlac, the bus Race was driving was bumped by a
Dagupan-bound bus and he suffered a fractured left leg. One month after his release from the hospital, the
respondent was confined again for further treatment of his fractured left leg. Upon his return to the office to report
for work he was informed that he was considered resigned from his job. Race talked with his officer who told him
that he was resigned and asked him to accept 50k. Race, through hi counsel sent a demand letter to the company
and there being no response, they filed a compalont for illegal dismissal. LA dismissed the complaint saying that
respondent was not a regular employee but a mere field personnel and, therefore, not entitled to service incentive
leave, holiday pay, overtime pay and 13th month pay. He also ruled that Race failed to present evidence showing
that Race was entitled to the abovestated money claims. NLRC reversed the LA. It ratiocinated that respondent did
not abandon his work and, instead, continued to be an employee of petitioner after he was discharged from the
hospital. In illegal dismissal cases, the employee concerned is given a period of four years from the time of his
dismissal within which to institute a complaint. This is based on Article 1146 of the New Civil Code which states that
actions based upon an injury to the rights of the plaintiff must be brought within four years. In Callanta v. Carnation
Philippines, Inc, it was held that: [O]ne's employment, profession, trade or calling is a "property right," and the
wrongful interference therewith is an actionable wrong. The right is considered to be property within the protection
of a constitutional guaranty of due process of law.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker.
It is error to conclude that the employment of the respondent was unjustly terminated on 10 November 1994
because he was, at that time, still confined at the Specialist Group Hospital, Dagupan City. It is apparent that
respondent did not abandon his work. His absence from work for a long period of time was obviously due to the fact
that he was still recuperating from two operations on his fractured leg. Petitioner knew this very well. In fact,

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petitioner shouldered the respondent's medication and hospital expenses during the latter's confinement and
operation in two hospitals. Petitioner failed to establish the fact that the respondent ceased to be its employee on 10
November 1994. Except for its flimsy reason that the sick leave, disability leave and physician consultations were
given to the respondent as mere accommodations for a former employee.
It should be stressed that petitioner is a common carrier and, as such, is obliged to exercise extra-ordinary diligence
in transporting its passengers safely.To allow the respondent to drive the petitioner's bus under such uncertain
condition would, undoubtedly, expose to danger the lives of the passengers and the property of the petitioner.
Petition is PARTLY GRANTED insofar as it prays for the non-reinstatement of respondent.

ix.) Quitclaim
RCBC v. Bithao
Leonardo Bithao was hired by Rizal Commercial Banking Corporation and eventually filed a complaint for illegal dismissal
when he was terminated based on his signing of a quitclaim. LA ruled for Bithao; On appeal, except for deleting the award
of moral and exemplary damages, and attorney’s fees, the NLRC affirmed the Labor Arbiter’s decision. CA affirmed the LA
and the NLRC. Hence, this appeal. RCBC says that (1) when respondent executed the quitclaim, the decisions of both
the Labor Arbiter and the NLRC were still pending review by the Court of Appeals; (2) respondent expressly
acknowledged and waived in the quitclaim all amounts due him based on the Labor Arbiter’s decision.
The court ruled that even if Bithao’s quitclaim was to the effect that the amount stated therein was the full and final
settlement of all his claims (including all the amounts due him by reason of the decisions of the Labor Arbiter and the
NLRC) it does not mean that he actually received the judgment award. The SC agreed with the appellate court that
petitioner took undue advantage of respondent’s predicament and dire financial needs to let him sign the quitclaim in
exchange for his retirement benefits. In the instant case, when the quitclaim was executed, petitioner’s appeal before
the Court of Appeals was still pending. Since both the Labor Arbiter and the NLRC have previously ruled in
respondent’s favor, petitioner was aware of the slim chances it had before the appellate court. RCBC could not deny
that the quitclaim was in its own interest. Petition is DENIED.
Solgus Corporation v. CA
The employees of Solgus separately filed complaints for illegal dismissal and underpayment of salaries and related
benefits allegeing that upn hiring there was no stipulation that they were being hired as probationary employees and
that they worked twelve (12) hours daily and were made to sign blank payrolls. They were subsequently dismissed
from employment. Solgus submitted a Memorandum alleging that: complainants Telin, Lacerna, Emano, Ballon,
Menor, Jr., and Alagos had executed Affidavits of Desistance evidencing that their complaints had been amicably
settled; and the complaints of Deseo and Soriano should be dismissed because they failed to complete their six-
month probationary period and were, therefore, not regular employees. LA dismissed the complaints and affirmed
the validity of the Affidavits of Desistance. NLRC reversed the LA and ordered the reinstatement of the employees.
CA affirmed the NLRC with a few modifications in the award such as reintstatement of Diosdado Telin. Thus this
petition. The court held that the Affidavits deserve little consideration. In Periquet v. National Labor Relations
Commission, it was held that: Not all waivers and quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and transaction. But
where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing,
and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking. However, in the case the company presented the Affidavits of Desistance for the 1 st time 7
months after the company received the order of the LA. The Affidavits of Desistance do not even bear the prima
facie evidence of their due execution accorded to private documents, because even the notaries public before whom
they were acknowledged issued a certification that no such affidavit was acknowledged by Telin and Alagos before
them. Quitclaims, releases and other waivers of benefits granted by law or contracts in favor of workers should be
strictly scrutinized to protect the weak and the disadvantaged. The waivers should be carefully examined, in regard
not only to the words and terms used, but also to the factual circumstances under which they have been executed.
The mere fact that the respondents were not physically coerced or intimidated does not necessarily imply that they
freely or voluntarily consented to the terms thereof. Petition is denied.
x.) Dismissal of case purely on a technical ground – frowned upon
Quintano v. NLRC
ANTONIO S. QUINTANO filed a complaint for illegal dismissal against Moldex Group saying that he joined respondent
MLI as Senior Executive Vice-President upon respondent Uy’s inducement of a superior compensation package that
included a signing bonus in the amount of P5,150,000.00. The petitioner alleged that he was to use the said amount
to purchase condominium unit and that the employment contract was for a period of five years.
However, on November 11, 1997, without any warning or explanation, respondents Uy and Vinuya enjoined him to
resign from his position. He refused to do so. Nonetheless, during a company party held on November 13, 1997, to

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the petitioner’s consternation, respondent Uy made a unilateral announcement of the petitioner’s resignation from
the company.
The company averred that when the petitioner joined respondent MRMI, he requested for a cash advance in the
amount of P5,150,000.00 to purchase a condominium unit, a car, and to pay for his outstanding cash advances from
his former employer and that later on the company learned that he mortgaged the condominium unit to Citytrust
Bank. Uy and Vinuya asked the petitioner to resign for loss of trust and confidence,
On November 13, 1997, a despedida party was tendered for the petitioner at the Heritage Hotel in Pasay City. The
LA found that petitioner violated his contractual obligation to the respondents by renting out the condo and resulted
in a loss of trust and confidence in the petitioner.
NLRC dismissed the appeal. CA dismissed the petition saying that Quintano failed to attach to the instant petition for
certiorari certified true copies of the assailed NLRC Orders and copies of the following: his complaint for illegal
dismissal, motion for “formal trial,” notice of appeal, and the Decision of the Labor Arbiter dated April 16, 1999
(Section 1, Rule 65 in relation to Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as amended). Ths this
petition.
The court held that in Section 3, Rule 46, of the Rules of Court it reads:
The submission of the duplicate original or certified true copy of the judgment, order, resolution or ruling subject of a
petition for certiorari is essential to determine whether the court, body or tribunal, which rendered the same, indeed,
committed grave abuse of discretion.[6] The provision states that either a legible duplicate original or certified true
copy thereof shall be submitted. If what is submitted is a copy, then it is required that the same is certified by the
proper officer of the court, tribunal, agency or office involved or his duly authorized representative. The purpose for
this requirement is not difficult to see. It is to assure that such copy is a faithful reproduction of the judgment, order,
resolution or ruling subject of the petition.

In this case, the submission by the petitioner of copies of the assailed NLRC resolutions each bearing the stamp
“certified xerox copy” instead of “certified true copy” is substantial compliance with the aforesaid requirement. Citing
Section 4(b),[8] Rule 48 of the Rules of Court, the appellate court, likewise, justified the dismissal of the petition for
certiorari for the petitioner’s failure to manifest his willingness to post a bond which would answer for whatever
damages that may be caused to the respondents The Court agrees with the petitioner that his failure to manifest his
willingness to post the said bond is not fatal. In this case, the CA did not act upon the petitioner’s application for
injunctive relief. It did not require him to post such bond; neither did the CA determine the amount that he must
post for the grant thereof. The appellate court’s dismissal of the petition for certiorari on the ground that the
petitioner failed to manifest his willingness to post the said bond is, thus, unwarranted. Petition is GRANTED.

xi.) Criminal Cases

Salvador Lacorte v. Inciong
SALVADOR LACORTE was hired by Asean Fabricators as a warehouseman who was tasked to receive and store raw
and junk materials used by the respondent. One day, he asked to purchase the junk of the company and signed a
cash invoice. It was found that he brought out more than he purchased, some of whch were brand new. He was
found to have committed certain acts in breach of the trust and confidence of his employer and was terminated.
ASEAN filed a case for qualified theft against Salvador. The dismissal was upheld but the criminal complaint was
however, dismissed for insufficiency of evidence. On appeal by petitioner, the aforementioned order was affirmed.
Thus this petition. The court held that petitioner was accorded more than ample opportunities to fully present his
side of the case. After private respondent's application for clearance to terminate petitioner's employment was filed
on October 7, 1977, the case was set for hearing in Regional Office No. IV. It defies explanation other than that it
was a mere afterthought why it took petitioner so much time to prepare those two affidavits which contain nothing
more than the bare allegation, obviously self-serving, that his union activities prompted his termination.
Lacorte, however, contends that the dismissal by the Provincial Fiscal of the criminal complaint for qualified theft filed
against him by private respondent for insufficiency of evidence supports his claim that he is innocent of the imputed
acts of stealing.
The purpose of the proceedings before the fiscal is to determine if there is sufficient evidence to warrant the
prosecution and conviction of the accused. In assessing the evidence before him, the fiscal considers the basic rule
that to successfully convict the accused the evidence must be beyond reasonable doubt and not merely substantial.
Respondent company conducted its investigation on the alleged theft before filing the criminal charges and the
application for clearance, and only after having been convinced of the veracity of the reported attempt to steal. That
the company investigated the incident first while allowing petitioner to stay on his job pending the investigation is not
only proper but in accord with fair process. Petition is dismissed.
Quiambao v. NLRC

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Rodolfo Quiambao was hired as officer-in-charge of private respondent Central Cement Corporation’s Tuguegarao
Branch. Six months later, he was made permanent Branch Manager. He was subsequently suspended for an
indefinite period for poor performance in extending credit to customers, violation of company rules and regulations
and gross negligence. As a result of further investigation petitioner was charged with estafa before the Provincial
Fiscal of Tuguegarao, while a civil case for collection was brought against him in the Regional Trial Court of Makati.
The criminal complaint was dismissed but on appeal to the Ministry of Justice the then Deputy Minister of Justice,
now Associate Justice of this Court, Reynato S. Puno reversed the provincial fiscal and ordered the filing of an
information for estafa against Quiambao. Petitioner filed a complaint for illegal dismissal. After hearing, the Labor
Arbiter found petitioner to have been illegally dismissed. NLRC reversed the LA saying that the case was
subsequently dismissed by the RTC of Tuguegarao for failure of the prosecution to prosecute. On the other hand, the
civil suit for collection was dismissed by the RTC of Makati for failure of private respondent to prove its case.
The filing of these cases, therefore, cannot support the private respondent’s claim of loss of trust and confidence in
petitioner. This case is to be distinguished from those cases in which it was held that the acquittal of the employee in
the criminal case was not a bar to his dismissal on the ground of loss of confidence. The rulings in those cases were
based on findings that the evidence in the criminal case was not sufficient to satisfy the requirement of proof beyond
reasonable doubt but otherwise adequate to support a finding that there was substantial evidence that the employee
was guilty. In contrast, in the case at bar, there is entire want of evidence to justify the dismissal of the petitioner.
The NLRC merely relied on the fact that the Ministry of Justice found petitioner probably guilty of estafa. In fact,
the NLRC found that the charges against him had not been substantiated. Moreover there was, in this case, no
investigation by the private respondent. There was only a financial and performance audit conducted. NLRC found
no evidence substantiating the charges nor is there evidence that he misappropriated funds of the company or
extorted money from customers. That case was eventually dismissed by the RTC of Tuguegarao for failure of
prosecution witnesses to testify, as was the civil case brought in the RTC of Makati, which found that it was not
petitioner Quiambao but the company’s cashier, Antonio Kho, who had misappropriated the money. Petition is
GRANTED.
xii.) Good Faith of Employee
Cruz v. Coca-Cola Bottlers Phils Inc
CORNELIO C. CRUZ has been working for respondent company’s plant in Calamba, Laguna, as a driver/helper at
times, he gets designated as Acting Salesman for respondent’s soft drinks and other beverages. He loaded their their
truck with CCBPI products. After the required verification and confirmation of the products loaded petitioner
proceeded to leave the plant vicinity. After gate inspection, however, petitioner drove back inside the plant on the
pretext of refueling. While waiting in line to refuel, petitioner allegedly asked Aguila to load an additional thirty (30)
cases of assorted canned soft drinks as “plus load”. He went out again but when asked to be subjected to inspection
ge shouted, “Ayos na”. Miguel Legaspi, one of the security guards, noticed several cases of canned soft drinks
loaded at the back of the truck which he verified to be unlisted in the truck’s LOGP. He was then directed to return to
the plant and unload the products. At this point, it was confirmed that petitioner did not actually secure any paper
for the added products nor did he follow the established procedure before taking out the extra cases.
An investigation was conducted on the alleged violations committed by petitioner and he was eventually terminated.
Cruz filed a complaint for illegal dismissal. LA dismissed the complaint. NLRC found the penalty of dismissal too
excessive and not proportionate to the alleged infractions committed. Court of Appeals which ruled that while there
was valid cause for petitioner’s termination, respondent company failed to satisfy the procedural requirements
because the notices it sent to petitioner were “legally deficient in failing to notify with particularity the specific acts of
violation he was being charged of”. Thus this peitition.
Several factors militate against petitioner’s claim of good faith. Petitioner’s length of service, which spans almost
fifteen (15) years, works against his favor in this case. We have held that the longer an employee stays in the
service of the company, the greater is his responsibility for knowledge and compliance with the norms of conduct and
the code of discipline in the company. Moreover, in his sworn statement, Aguilar attested that he reminded petitioner
of whether he had secured the gate pass for the products, and petitioner merely replied, “ Ayos na”. Termination of
employment by reason of loss of confidence is governed by Article 282(c) of the Labor Code, which provides that an
employer can terminate the employment of the employee concerned for “fraud or willful breach by an employee of
the trust reposed in him.” The company rules violated by petitioner are punishable, for the first offense, with the
penalty of suspension. However, respondent company has presented evidence showing that petitioner has a record
of other violations from as far back as 1986. To be sure, the nature of petitioner’s offenses is downright inimical to
the interests of respondent company. Petition is DENIED.
E. Reliefs/Remedies in Illegal Dismissal
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his

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compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34,
Republic Act No. 6715, March 21, 1989)
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.
Such appeal may be entertained only on any of the following grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including graft and corruption;
c. If made purely on questions of law; and
d. If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the
appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement
provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable penalty,
including fines or censures, upon the erring parties. In all cases, the appellant shall furnish a copy of the
memorandum of appeal to the other party who shall file an answer not later than ten (10) calendar days from receipt
thereof. The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from receipt
thereof by the parties.
Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the Commission in the
enforcement of decisions, awards or orders. (As amended by Section 12, Republic Act No. 6715, March 21, 1989)
i.) In general
Lopez v. NLRC
Melody Paulino Lopez, then Guidance Counselor of the elementary department, created an agenda where the
students witnessed soldiers exhibit. She wrote a letter to Letran College where she said that the program was a
success but that some quarters had objections. After that event, she couldn’t help but feel that she was being forced
to resign since after the Career Orientation, Mr. Moralino, Elementary Principal, ordered Dr. Ramos to remove
complainant as Elementary Guidance Counselor and she was replaced by another staff who had no experience in the
school set-up. Later, complainant was offered a sizable amount of money by respondents in exchange for her
voluntary resignation. She was soon dismissed by Letran. Labor Arbiter found that petitioner was dismissed for just
cause and with due process. NLRC ruled that there was an illegal
dismissal due to absence of just cause and due process but ordered private respondents to grant petitioner
separation pay in lieu of reinstatement. THE SC HELD that despite a finding of illegal dismissal against private
respondent school, petitioner should not be reinstated. Whether or not complainant uttered defamatory words
against respondent Fr. Edwin Lao is of no moment, the focal inquiry being addressed is whether or not such alleged
misconduct was in connection with, or in relation to, with the work of complainant as Head Psychometrician.
Records are bereft of such fact. In general, the remedy for illegal dismissal is the reinstatement of the employee
to his former position without loss of seniority rights and the payment of backwages. But there may be
instances as when reinstatement is not a viable remedy as where – as in this case – the relations between the
employer and the employee have been so severely strained that it is not advisable to reinstate. The fact remains
that petitioner is not required to prove her innocence on the charges leveled against her but the burden rests
upon private respondents to establish the valid cause of petitioner's termination.

- Bustamante vs. NLRC with regard to illegal dismissals effected after March 21, 1989. We ruled in
recent cases that an illegally dismissed employee is entitled to his full backwages from the time his
compensation was withheld from him up to the time of his actual reinstatement.

- The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly
that, i.e. without deducting from backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal.

NLRC is AFFIRMED subject to the MODIFICATION that private respondents are also ordered to pay petitioner
full backwages.

United Field Sea Watchman and Checkers Agency v. Requillo

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Willie Requillo etc. were security guards of the United Field Sea Watchman and Checkers Agency
(UFSWCA), petitioner and they applied for loans but they founs that their SSS was not remitted. Upon
advice of the SSS, they filed with the Department of Labor and Employment in Surigao del Norte
complaints against UFSWCA. They were transferred but they continued reporting for work at the PPA
office in Surigao City. Hence, UFSWCA refused to pay their salaries for the month of June 1997 as they
were considered absent without leave. They filed a complaint for illegal dismissal. UFSWCA denied
dismissing the respondents from employment. They were merely transferred to other places of work.
LA ruled that they were illegally dismissed. NLRC agreed and deleted the awards. CA set aside the
NLRC. Thus this petition. The sole issue for our resolution is whether the Court of Appeals erred in
holding that petitioners’ appeal to the NLRC was filed beyond the reglementary period. The registry
return slips addressed to Jaime Amamio and Atty. Estanislao Ebarle show a significant difference when
compared to the registry return slips addressed to PPA. The non-submission of the original return slips
is an indication that if the originals were submitted they would reveal that private respondent Jaime
Amamio and Atty. Estanislao Ebarle received the Decision of the Labor Arbiter not on April 27, 1998 but
on a much earlier date. Thus, the appeal not having been filed within the ten (10) day period to appeal,
the appeal filed by private respondents before the NLRC should not have been given due course.
ART. 223. Appeals. – Decisions awards or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions awards or orders.
The right to appeal is not part of due process but a mere statutory privilege that has to be exercised only in the
manner and in accordance with the provisions of law. Petition Denied.
a. Reinstatement
1. Definition
Asian Terminals Inc. v. Villanueva
The 4 respondents were employees of Marina Port Services, Inc. (MPSI) and members of the Associated Workers
Union of the Philippines (AWU). AWU president sought the dismissal from service of respondents who were expelled
from AWU. Respondents filed a complaint for constructive illegal dismissal and unfair labor practice. LA found the
termination to be illegal. NLRC affirmed the decision which became final and executory. Labor Arbiter Dinopol issued
a partial writ of execution. Pursuant thereto, MPSI reinstated respondents. However, respondents alleged that MPSI
did not reinstate them to their former positions or to equivalent positions. Respondents filed a motion for contempt
against AWU and MPSI for non-compliance with the partial writ of execution. Respondents also prayed for additional
backwages because they were allegedly not reinstated to their former positions or to equivalent positions. Labor
Arbiter Bartolabac held that it was proper for MPSI to reinstate them to their former positions. Labor Arbiter
Bartolabac granted additional backwages. NLRC modified the order of Labor Arbiter Bartolabac by deleting the
award of additional backwages. The Court of Appeals held that at the time of respondents’ illegal dismissal,
respondents were already regular employees.
MPSI asserts that it reinstated respondents to their former positions. According to MPSI, respondents were regular
employees and that their designation as casual rotation employees merely meant that they work on rotation.
The NLRC found that MPSI indeed reinstated respondents to their former positions or to substantially equivalent
positions.
Reinstatement means restoration to a state or condition from which one had been removed or separated. The person
reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous
position from which one had been removed still exists, or that there is an unfilled position which is substantially
equivalent or of similar nature as the one previously occupied by the employee.
Reinstatement means restoration to the former position occupied prior to dismissal or to substantially equivalent
position. Reinstatement does not mean promotion. Promotion is based primarily on an employee’s performance
during a certain period. Just because their contemporaries are already occupying higher positions does not
automatically entitle respondents to similar positions. Petition Granted.
Composite Enterprises v. Caparoso
COMPOSITE ENTERPRISES hired EMILIO M. CAPAROSO and JOEVE QUINDIPAN who filed a complaint for illegal
dismissal upon their termination. LA ruled in favor of the employees. Petitioner appealed ans said that it cannot
reinstate respondents to their former positions since their previous positions were no longer available. Labor Arbiter
issued a Writ of Execution directing the Sheriff to effect respondent's reinstatement. Consistent with its stand that
physical reinstatement was no longer possible, petitioner reinstated respondents into its payroll, conditioned on the
NLRC's ruling on its motion to be allowed to pay separation pay in lieu of reinstatement. NLRC set aside the Decision
of the Labor Arbiter, holding that there was no illegal dismissal since respondents' contracts of employment were for
a fixed period. CA dismissed the petition for petitioner's failure to present proof that its General Manager was duly
authorized to sign the petition's Verification and Certification of Non-Forum Shopping. Hence, the present petition.

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Petitioner insists that the NLRC should have ordered the payment of separation pay since respondents' reinstatement
to their former positions was physically impossible due to petitioner's implementation of a retrenchment program.
Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of Republic Act (R.A.) No. 6715, and
Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715, Amending the Labor Code, provide that an
order of reinstatement by the Labor Arbiter is immediately executory even pending appeal.
Reinstatement is the restoration to a state or condition from which one has been removed or separated. The intent of
the law in making a reinstatement order immediately executory is much like a return to work order, i.e., to restore
the status quo in the workplace in the meantime that the issues raised and the proofs presented by the contending
parties have not yet been finally resolved.

Payment of separation pay as a substitute for reinstatement is allowed only under exceptional circumstances, viz:
(1) when reasons exist which are not attributable to the fault or are beyond the control of the employer, such as
when the employer -- who is in severe financial strait, has suffered serious business losses, and has ceased
operations -- implements retrenchment, or abolishes the position due to the installation of labor-saving devices;
(2) when the illegally dismissed employee has contracted a disease and his reinstatement will endanger the
safety of his co-employees; or,
(3) where a strained relationship exists between the employer and the dismissed employee.

Retrenchment: it is a management prerogative consistently recognized and affirmed by this Court. It is

However subject to faithful compliance with the substantive and procedural requirements laid down by law and
jurisprudence. For retrenchment to be considered valid the following substantial requirements must be met: (a) the
losses expected should be substantial and not merely de minimis in extent; (b) the substantial losses apprehended
must be reasonably imminent such as can be perceived objectively and in good faith by the employer; (c) the
retrenchment must be reasonably 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.
In this case, petitioner sought to justify the payment of separation pay instead of reinstatement on the basis of its
implementation of a retrenchment program for “serious and persistent financial difficulties.” However, petitioner only
submitted as evidence the notice of its intention to implement a retrenchment program, which it sent to the
Department of Labor and Employment on July 25, 2000. It did not submit its financial statements. the petition is
GRANTED.
2. Exceptions
Johnson and Johnson v. Johnson Office and Sales Union
Ma. Jesusa Bonsol and Rizalinda Hirondo filed against petitioners Johnson & Johnson (Phils.), Inc. and Janssen
Pharmaceutica. Labor Arbiter dismissed the complaint. NLRC rendered a Resolution, modifying the decision of the
Labor Arbiter. The NLRC ruled that the violations of company procedure committed by respondents did not constitute
serious misconduct or willful disobedience warranting their dismissal; hence, respondents were entitled to
reinstatement. Neither party appealed from the resolution decision of the NLRC within the reglementary period. The
Resolution dated 14 December 2001 became final and executory.
At the conference petitioners reiterated their intention to satisfy respondents’ monetary award but the latter refused
and insisted on their reinstatement. NLRC issued a Resolution, which directed the reinstatement of respondents
Aggrieved, petitioners filed a petition for certiorari with the Court of Appeals. They contended that respondents’
Motion for the Issuance of a Writ of Execution had the effect of altering the Resolution, which had already become
final and executory and which clearly granted petitioners the option to either reinstate respondents to their former
positions or to pay the monetary award.
Court of Appeals rendered the assailed Decision dismissing the petition and affirming the resolutions of the NLRC
Hence, the instant petition.
An illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years, however, case law
developed that where reinstatement is not feasible, expedient or practical, as where reinstatement would only
exacerbate the tension and strained relations between the parties, or where the relationship between the employer
and employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of
separation pay. Petition DENIED.
- Closure of Business
Retuya v. Hon. Dumarpa
“Private respondent, Insular Builders, Inc., is a family-owned corporation managed and operated principally by
Antonio Murillo, father, and his son, Rodolfo Murillo. It is engaged in the construction business. Petitioners, on the
other hand, were workers who have rendered services in various corporations of private respondents.

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At the height of the feud between private respondents Antonio Murillo and Rodolfo Murillo, the former discharged the
latter from his position as manager of Insular Builders, Inc. and assumed control of the company. Petitioners found
themselves in the middle of the crossfire and were told to temporarily stop working. Petitioners filed a complaint for
illegal dismissal. Labor Arbiter found Murillos guilty of illegal dismissal. Hence, this Petition.
In the present case, petitioners were dismissed because of a “change of management.” They were not given any
prior written notice, but simply told that their services were terminated on the day they stopped working for Insular
Builders, Inc. Under the circumstances, the CA was correct in upholding the labor arbiter’s finding that they had
been illegally dismissed. Having been illegally dismissed, petitioners should be awarded back wages in accordance
with Bustamante v. NLRC.
“Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full backwages, inclusive of allowances
and other benefits or their monetary equivalent, from the time their actual compensation was withheld from them up
to the time of their actual reinstatement.”
While it may be true that petitioners continued to work in the same place and office as in their previous employment,
it is equally true that they had in fact been illegally dismissed by their previous employer. Thus, they lost their
former work status and benefits in a manner violative of the law.
The records indicate that reinstatement is no longer feasible. Insular Builders, Inc. has ceased operations. Absent
any showing that its business was deliberately stopped to avoid reinstating the complaining employees, the amount
of back wages shall be computed from the time of their illegal termination, petitioners are entitled to separation pay.
These are distinct and separate reliefs given to alleviate the economic setback brought about by the employee’s
dismissal. The award of one does not bar the other.
WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the CA is AFFIRMED with the MODIFICATION that
petitioners shall be paid full back wages from the date of their dismissal until the cessation of the business operations
- Economic Business Conditions
Union of Supervisors v. Secretary of Labor
Luna filed a complaint against respondent Bank, charging it with unfair labor practice committed against its president
Mr. Norberto Luna. A supplemental complaint was filed by the same petitioner with the allegation that after filing of
the original complaint, the respondent Bank followed up its harassment of Mr. Luna by terminating his employment
as Branch Manager and as trustee. At the meeting of the Board of Trustees of the RB Provident Fund, Mr. de Vera
proposed a reorganization of the fund in order to carry out the instruction of the (respondent's) Board of Directors,
which wants to have control of the fund so as to tie it up with the Investment Money Market Operations of the bank.
Mr. Luna vehemently objected to this, saying that the Provident Fund does not belong to the respondent bank but to
the officers and employees. It was during the ensuing discussion that Mr. Luna allegedly uttered the libelous
remarks.
Respondent bank had wanted to do away with Luna even before that eventful February 12th meeting of the PF
Board of Trustees, when one of its Assistant Vice-Presidents, de Vera, who had just been appointed to fill the
temporary vacancy therein. This is evident from the words of de Vera when he said, "the management proposed a
reorganization because it thinks that a new administration can serve the PF better. You have been tried. Why can we
not appoint a new administrator and give us a chance to do things in our way or fashion ?
Luna challenged the accuracy of the stenographic notes of the said meeting on the ground that Mrs. Unson was not
a court stenographer and her notes do not truly reflect all that transpired during the meeting. These allegations were
never refuted. The minutes should have been signed by him before being officially released. Without such signature,
neither probative value nor credibility could be accorded to such minutes. The other basis for dismissal
insubordination appears to be likewise without justifiable ground. Such charge arose out of the alleged refusal of
Luna to obey the order of his superior, to turn over the records of the Provident Fund to the new administrator. The
Board of Trustees, upon receipt of such written explanation, should have referred the matter to the grievance
machinery under the collective bargaining agreement.
That the respondent bank tried to maneuver Luna's ouster is evident from the way the investigation was conducted
by its Committee on Personnel. As shown in the above narration of events, the testimonies of witnesses who were
not even under oath were taken without notice to Luna and without giving him a chance to cross-examine them.
The respondent bank, however, argues that Luna's union activities had nothing to do with his dismissal, and that the
same was for cause. THE RESPONDENT REPUBLIC BANK IS HEREBY DIRECTED TO IMMEDIATELY REINSTATE
COMPLAINANT NORBERTO LUNA TO HIS FORMER POSITION WITHOUT LOSS OF SENIORITY RIGHTS
??????????????????????????????????????????????????????????????????????????????????????????????????????????
- Employee’s Unsuitability
Divine Word High School v. NLRC
Complaint filed by Luz Catenza, a high school teacher of petitioner Divine Word College, for illegal dismissal. She
alleged in her complaint that she went on a vacation leave but that when she tried to report back to work she was
informed that she is not anymore allowed to teach because of the "misdeeds" and "immoral acts" of her husband

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Pablo Catenza, then the principal of petitioner school. Court agrees with the following finding of the Labor Arbiter
(which finding has also been affirmed by the NLRC);
A careful review and evaluation of the entire records of the case show clearly that complainant was dismissed
without a valid cause. ALL throughout the records of the case it is very apparent that the main reason she was
dismissed was because of the alleged immoral conduct of her husband. Granting that allegation is true, there being
no clear showing that complainant's husband was ever investigated or convicted of the serious act alluded to him,
why should his wife be made to suffer for her husband's indiscretion and infidelity.
Scrutiny of the records shows that petitioners were afforded every opportunity to present their evidence but they
repeatedly failed to appear at the four (4) consecutive hearings scheduled for the purpose.
We hesitate ordering the reinstatement of private respondent Luz Ballano Catenza as a high school teacher in the
petitioner high school, which is a Catholic institution, serving the educational and moral needs of its Catholic
studentry. Pay separation pay equivalent to one month pay for every year of service, plus her backwages.
- Employee’s Retirement/Overage
Espejo v. NLRC
EDUARDO M. ESPEJO was hired by Cooperative Insurance System of the Philippines (CISP) as General Manager.
“cease and desist order” was issued by the Office of the Insurance Commission against CISP on grounds of “capital
impairment and margin of solvency deficiency.” In order to put up the needed capital requirements, Board authorized
the sale of some CISP properties, including the company car assigned to petitioner for his personal use. Petitioner
objected to such sale. Board overruled petitioner’s opposition prompting the latter to tender his resignation.
Petitioner filed a case against CISP for illegal dismissal. Labor Arbiter rendered a decision ordering CISP to (1)
reinstate petitioner to his former position. NLRC promulgated its decision affirming the finding of illegal dismissal by
the Labor Arbiter but modifying the rest thereof by deleting the reinstatement of petitioner for having become moot
and academic considering that he (petitioner) was already 60 years old. SC sustains the challenged decision insofar
as it disallowed reinstatement. The law recognizes as valid any retirement plan, agreement or management policy
regarding retirement at an earlier or older age.
In the case of petitioner, CISP did not have any retirement plan for its employees. In such situation, Sec. 13, Book
IV, of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan, agreement
or policy an employee may be retired upon reaching the age of sixty (60) years. Thus, an employee held to be
illegally dismissed cannot be reinstated if he had already reached the age of sixty (60) years at the time of his
second complaint (pressing for reinstatement). However considering that petitioner has already reached the statutory
retirement age of sixty (60), we agree with NLRC that petitioner is entitled only to backwages.
An award of damages would be improper. The decision to sell certain company properties, including the
complainant’s car, was not that of Director Benjamin Cruz (the complainant’s ostensible enemy) alone, but that of at
least a majority of the respondent’s board of directors.NLRC AFFIRMED.
- Antipathy and Antagonism – Strained Relations
Capitol Medical Center Inc. v. Meris
Capitol Medical Center, Inc. hired Dr. Cesar Meris one of its stockholders, as in charge of its Industrial Service Unit
(ISU). Dr. Meris received from Capitol’s president and chairman of the board, Dr. Thelma Navarette-Clemente (Dr.
Clemente), a notice advising him of the management’s decision to close or abolish the ISU. Dr. Meris thus filed on
September 7, 1992 a complaint against Capitol and Dr. Clemente for illegal dismissal. Labor Arbiter held that the
abolition of the ISU was a valid and lawful exercise of management prerogatives. NLRC modified the Labor Arbiter’s
decision. It held that in the exercise of Capitol’s management prerogatives, it had the right to close the ISU. The
appellate court went on to hold that the ISU was not in fact abolished, its operation and management having merely
changed hands from Dr. Meris to Dr. Clemente. Hence, the present petition.
The right to close the operation of an establishment or undertaking is explicitly recognized under the Labor Code as
one of the authorized causes in terminating employment of workers, the only limitation being that the closure must
not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code.
The phrase “closures or cessation of operations of establishment or undertaking” includes a partial or total closure or
cessation AND That not due to serious business losses or financial reverses recognizes the right of the employer to
close or cease his business operations or undertaking even if he is not suffering from serious business losses or
financial reverses. It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in
management’s prerogative to close or cease its business operations just because said business operation or
undertaking is not suffering from any loss. In the case at bar, Capitol failed to sufficiently prove its good faith in
closing the ISU. Existence of business losses is not required to justify the closure or cessation of establishment or
undertaking as a ground to terminate employment of employees. Even if the ISU were not incurring losses, its
abolition or closure could be justified on other grounds like that proffered by Capitol – extinct demand. Capitol
failed, however, to present sufficient and convincing evidence to support such claim of extinct demand. The

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termination of the services of Dr. Meris not having been premised on a just or authorized cause, he is entitled to
either reinstatement or separation pay if reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee relationship or when the work or
position formerly held by the dismissed employee no longer exists, as in the instant case. Dr. Meris is thus entitled
to payment of separation pay at the rate of one (1) month salary for every year of his employment, with a fraction of
at least six (6) months being considered as one(1) year, and full backwages from the time of his dismissal from April
30, 1992 until the expiration of his term as Chief of ISU. CA affirmed.
Westmont Pharmaceuticals v. Samaniego supra 25
Unilab hired Samaniego as Professional Service Representative of its marketing arm, Westmont. Later, Unilab
promoted him as Senior Business Development Associate and assigned him in Isabela as Acting District Manager of
Westmont. He was transferred to Metro Manila pending investigation of his involvement in a sales discount and Rx
trade-off controversy. He was then placed under "floating status" and assigned to perform duties not connected with
his position, like fetching at the airport physicians coming from the provinces; making deposits in banks; fetching
field men and doing messengerial works. His transfer to Metro Manila resulted in the diminution of his salary. Ricardo
Samaniego then filed a complaint for illegal dismissal with the LA who ordered his reinstatement and payment of his
full backwages. NLRC declared the LA’s Decision null and void. CA reinstated LA. Hence, these consolidated petitions.
Samaniego claims that upon his reassignment and/or transfer to Metro Manila, he was placed on "floating status"
and directed to perform functions not related to his position. For their part, Westmont and Unilab explain that his
transfer is based on a sound business judgment, a management prerogative. In constructive dismissal, the employer
has the burden of proving that the transfer of an employee is for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee. It must not involve a demotion in rank or a diminution of salary and other benefits. If the employer
cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive
dismissal. Westmont and Unilab failed to discharge this burden. Samaniego was unceremoniously transferred from
Isabela to Metro Manila. We hold that such transfer is economically and emotionally burdensome on his part. He was
constrained to maintain two residences. Worse, immediately after his transfer to Metro Manila, he was placed "on
floating status" and was demoted in rank, performing functions no longer supervisory in on the part of the employee
that it could foreclose any choice by him except to forego his continued employment. This was what happened to
Samaniego. However, the circumstances obtaining in this case do not warrant the reinstatement of Samaniego.
Antagonism caused a severe strain in the relationship between him and his employer. A more equitable disposition
would be an award of separation pay equivalent to at least one month pay, or one month pay for every year of
service, whichever is higher (with a fraction of at least six [6 months being considered as one [1 whole year), 9 in
addition to his full backwages, allowances and other benefits.CA AFFIRMED.
3. Offer to Reinstate
Ranara v. NLRC
Petitioner Carlos Ranara had been working as a driver with Oro Union Construction Supply when he was told by Fe
Leonar, secretary of the other private respondent, Jimmy Ting Chang, not to come back the following day. Thinking
that she was only joking, be reported for work as usual. Chang said he was in a hospital in Manila and that he had
not authorized Leonar, or even his mother who was the officer-in-charge during his absence, to terminate Ranara's
employment.
We reject as a rank falsity the private respondents' claim that the petitioner had not been illegally dismissed and in
fact abandoned his work
Private respondents themselves claim they have a staff of less than ten persons, and Chang or his mother could not
have failed to notice Ranara's absence after November 1, 1989. Yet they took no steps to rectify the secretary's act if
it was really unauthorized. Neither can Ranara's rejection of Chang's offer to reinstate him be legally regarded as an
abandonment because the petitioner had been placed in an untenable situation that left him with no other choice.
Given again the smallness of the private respondents' staff, Ranara would have found it uncomfortable to continue
working under the hostile eyes of the employer who had been forced to reinstate him.It was not as if Ranara were
only one among many other complainants ordered reinstated in a big company, for whatever enmity the employer
might harbor against them would be diluted and less personalized, so to speak. There would be a certain degree of
anonymity, and a resultant immunity from retaliation
It is clear that the petitioner was illegally dismissed without even the politeness of a proper notice. The fact that his
employer later made an offer to re-employ him did not cure the vice of his earlier arbitrary dismissal. The wrong had
been committed and the harm done. NLRC is AFFIRMED.
b. Backwages
1. Effect of Failure Order
Aurora Land etc v. NLRC

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Dagui was hired by Doña Aurora Suntay Tanjangco in 1953 to take charge of the maintenance and repair of the
Tanjangco apartments and residential buildings. Upon the death of Doña Aurora Tanjangco in 1982, her daughter,
petitioner Teresita Tanjangco Quazon, took over the administration of all the Tanjangco properties. Mrs. Quazon
suddenly told him: "Wala ka nang trabaho mula ngayon," on the alleged ground that his work was unsatisfactory.
Private respondent, who was then already sixty-two (62) years old, filed a complaint for illegal dismissal with the
Labor Arbiter. Honorio Dagui earns a measly sum of P180.00 a day (latest salary). Ostensibly, and by no stretch of
the imagination can Dagui qualify as a job contractor. The bare allegation of petitioners, without more, that private
respondent Dagui is a job contractor has been disbelieved by the Labor Arbiter and NLRC. Private respondent Dagui
should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for
more than one year, that is, beginning 1953 until 1982, under Doña Aurora; and then from 1982 up to June 8, 1991
under the petitioners, for a total of twenty-nine (29) and nine (9) years respectively.
The Court, however, is bewildered why only an award for separation pay in lieu of reinstatement was made by both
the Labor Arbiter and the NLRC.
No backwages were awarded.
It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally
dismissed employee. They are separate and distinct from each other. In the event that reinstatement is no longer
possible, as in this case, separation pay is awarded to the employee.
The award of separation pay is in lieu of reinstatement and not of backwages.
In other words, an illegally dismissed employee is entitled to (1) either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and (2) backwages.
Payment of backwages is specifically designed to restore an employee's income that was lost because of his unjust
dismissal. On the other hand, payment of separation pay is intended to provide the employee money during the
period in which he will be looking for another employment. Petition is partly GRANTED.
St. Michaels Institution v. Santos
Carmelita Santos, Florencio Magcamit and Albert Rosarda were regular classroom teachers and Their service with
the school was abruptly interrupted when each of them was served a notice of termination of employment stemming
from a public rally held at the town plaza aimed at calling the attention of the school administration to certain
grievances relative to substandard school facilities and the economic demands of teachers and other employees of
St. Michael’s Institute.
The dismissal meted out on the respondents for dereliction of duty for one school day and denouncing school
authority, appears to be too harsh a penalty. In termination of employment disputes that the burden of proof is
always on the employer to prove that the dismissal was for a just and valid cause. Evidence must be clear,
Misconduct is the transgression of some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful intent and not mere error of judgment. As a just cause for
termination, the misconduct must be serious. On the other hand, disobedience, as a just cause for termination,
must be willful or intentional. In the instant case, evidence is wanting on the depravity of conduct, and willfulness of
the disobedience on the part of the respondents.
On the matter of the award of backwages, petitioners advance the view that by awarding backwages, the appellate
court “unwittingly reversed a time-honored doctrine that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones granted in the appealed decision.” We do not agree.
Article 279 of the Labor Code, as amended, mandates that
an illegally dismissed employee is entitled to the twin reliefs of
(a) either reinstatement or separation pay, if reinstatement is no longer viable, and
(b) backwages.
Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and,
thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be
defeated by mere procedural lapses. Petition is hereby DENIED.
2. Computation
Mercury Drug Co. Inc v. CIR
Nardo Dayao was employed by the petitioners originally as driver, later assigned as delivery man, then as checker
and was last promoted to the position of assistant chief checker in the checking department. Dayao in vain urged
herein petitioners to pay them overtime pay, criticized their, employees' association for failing to protect the welfare
of the employees by not securing such additional compensation for overtime, and campaigned among his co-
employees to organize another labor union. Hearing of Dayao's union activities company told him to resign and
persuaded him to accept the amount of P562.50 as termination pay and to sign a clearance stating to the effect that
he has no claims whatsoever of any kind and nature against herein petitioners. Exactly two years and fifteen days
from his separation on April 10, 1961, Dayao filed a complaint for unfair labor practice against herein petitioners for
dismissing him because of his having campaigned among his co-employees to become members of a new labor union
that he was then organizing.

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Unfair labor practice charge with the prayer for reinstatement with back wages should be filed within a reasonable
period of time. But laches, like estoppel, should also be alleged as a defense in the answer, otherwise the same is
considered renounced.
However, the lapse of two years and 15 days from the dismissal from the service to the filing of the ULP charge is
not an unreasonable period of time under the circumstances.
Finally, if the dismissal of herein private respondent Dayao was for just cause, then there was no reason for
petitioners-employers to give him termination pay; because under the Termination Pay Law, otherwise known as
Republic Act No. 1052, as amended by Republic Act No. 1787, the employee whose services are terminated for just
cause is not entitled to termination pay.
The remaining question is how much back wages shall be allowed private respondent Dayao.
The period of delay in instituting this ULP charge with claim for reinstatement and back wages, although within the
prescriptive period, should be deducted from the liability of the employer to him for back wages.The employer in the
case at bar should be directed to pay private respondent Dayao back wages equivalent to one year, eleven months,
and fifteen days without further disqualifications.In fairness to the employer, he should not be compelled to reinstate
an employee who is no longer physically fit for the job from which he was illegally ousted.
WHEREFORE, THE PETITION IS HEREBY DISMISSED AND PETITIONERS ARE HEREBY DIRECTED:
(1) TO PAY PRIVATE RESPONDENT NARDO DAYAO BACK WAGES EQUIVALENT TO ONE YEAR, ELEVEN MONTHS,
AND FIFTEEN DAYS; .
(2) TO REINSTATE HIM AFTER CERTIFICATION OF HIS PHYSICAL FITNESS BY A GOVERNMENT PHYSICIAN; AND
(3) TO PAY THE COSTS.
Bustamante v. NLRC
The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be
paid to petitioners.
The first labor relations law governing the award of backwages was Republic Act No. 875, the Industrial Peace Act,
approved on 17 June 1953.
Itogon-Suyoc Mines, Inc. v. Sañgilo-Itogon Workers' Union, this Court restated the guidelines for deternination of
total backwages, thus:
"First. To be deducted from the backwages accruing to each of the laborers to be reinstated is the total amount of
earnings obtained by him from other employment
Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled to, account should be
taken of whether in the exercise of due diligence respondents might have obtained income from suitable
remunerative employment. From this ruling came the burden of disposing of an illegal dismissal case on its merits of
determining whether or not
the computation of the award of backwages is correct.
Mercury Drug Co., Inc., et al. v. CIR, et al.: Justice Teehankee dissented from the majority view that the employee in
said case should be awarded backwages only for a period of 1 year, 11 months and 15 days which represented the
remainder of the prescriptive period after deducting the period corresponding to the delay incurred by the employee
in filing the complaint for unfair labor practice and reinstatement. Justice Teehankee opined that: "… an award of
back wages equivalent to three years (where the case is not terminated sooner) should serve as the base figure for
such awards without deduction, subject to deduction where there are aggravating circumstances (e.g. oppression or
dilatory appeals) on the employer's part.
The effectivity of P.D. 442 Art 279. the Court enforced the Mercury Drug rule and in effect qualified the provision
under P.D. No. 442 by limiting the award of backwages to three (3) years. On 21 march 1989 Republic Act No. 6715
took effect amending the Labor Code.
Article 279 thereof states in part:
"ART. 279. Security of Tenure. . . . An employee who unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement." (underscoring supplied)
An illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from
him (which as a rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement.
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e.,
without deducting from backwages the earnings derived elsewhere. Peititon Denied.
Star Paper Corporation v. Espiritu
Complainants in this case worked in respondents’ paper manufacturing business in various capacities as machine
operator, bookbinding head and/or helper. They claimed that, for refusal to sign for the ratification of an addendum
to an existing Collective Bargaining Agreement which was intended to effect a reduction in their leave benefits of

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fifteen (15) days for every year of service, they were subjected to acts of harassment. They were instructed by the
company to receive a Memorandum of Transfer which they refused.
The Court agrees with the analysis and conclusion of the CA that, based on the facts of the case, respondents were
constructively dismissed. It must be stressed that where an employee complains of constructive dismissal, it is the
employer who bears the burden of proving that the transfer of an employee is for just and valid grounds, such as
genuine business necessity, and such transfer is not unreasonable, inconvenient, or prejudicial to the employee. The
combined circumstances of the immediate transfer of respondents to far-off provinces after their refusal to sign the
signature sheet of the document for the ratification of the Addendum to the Collective Bargaining Agreement point to
the fact that the transfers are motivated by ill-will on the part of petitioner. Petitioner, therefore, failed to sufficiently
prove that respondents’ transfer is for a just and valid cause.
the Court has ruled in a long line of cases that where an employee would have been entitled to reinstatement with
full backwages, but circumstances, i.e., strained relationships, makes reinstatement impossible, the more equitable
disposition would be an award of separation pay equivalent to at least one month pay, or one month pay for every
year of service, whichever is higher, in addition to full backwages, inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time the employee’s compensation was withheld from him up to the
time of his supposed actual reinstatement. In this case, since payment of backwages and separation pay were
ordered only upon promulgation of the CA Decision. The computation of full backwages, inclusive of allowances, and
other benefits or their monetary equivalent, should be computed from the time the respondents’ compensation was
withheld from them up to the time of the finality of this decision. Petition is DENIED.
Candano Shipping Lines Inc v. Florantina Sugata-On
Candano Shipping hired Melquiades Sugata-on was employed by Candano Shipping as Third Marine Engineer. The
vessel encountered rough seas and strong winds while traversing the waters of Lianga Bay, Surigao del Sur, causing
her to tilt. M/V David, Jr. sank together with her cargo at around eleven o’clock in the evening. Upon learning of
Melquiades’ fate, Florentina immediately went to the office of Candano Shipping in Manila to claim the death benefits
of her husband but it refused to pay. Such refusal prompted Florentina to institute an action seeking indemnity.
She grounded her case on the provision of Article 1711 of the New Civil Code, which imposes upon the employer
liability for the death of his employee in the course of employment, even if the death is caused by a fortuitous event
RTC resolved the controversy in favor of Florentina and ratiocinated that the provision of Article 391 of the New Civil
Code on presumptive death had become operative since the period of four years had already elapsed since
Melquiades was reported missing
Appellate court applied the standard prescribed by Article 194 of the Labor Code of the Philippines
Hence, this instant Petition
Floresca v. Philex Mining Company: employee cannot pursue both remedies simultaneously but has the option to
proceed by interposing one remedy and waiving his right over the other. As we have explained in Floresca, this
doctrinal rule is rooted on the theory that the basis of the compensation under the Workmen’s Compensation Act is
separate and distinct from the award of damages under the Civil Code.
In the case at bar, Florentina was forced to institute a civil suit for indemnity under the New Civil Code, after
Candano Shipping refused to compensate her husband’s death.
In Villa Rey, the common carrier was made liable for the death of its passenger on board a passenger bus owned and
operated by Villa Rey Transit, Inc. going to Manila from Lingayen, Pangasinan. The obligation of the common carrier
to indemnify its passenger or his heirs for injury or death arose from the contract of carriage entered into by the
common carrier and the passenger. In the same breadth, the employer shall be liable for the death or personal injury
of its employees in the course of employment as sanctioned by Article 1711 of the New Civil Code. In the case at bar,
only the award of actual damages, specifically the award for unearned income is warranted by the circumstances
since it has been duly proven that the cause of death of Melquiades is a fortuitous event for which Candano Shipping
cannot be faulted.
The formula for the computation of unearned income is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 – age of deceased at the time of death]
Life expectancy = 2 / 3 x [80 – age of deceased at the time of death]
2 /3 x [80 – 56]
2 / 3 x [24]
Life expectancy = 16
The argument raised by Candano Shipping that the formula for determining the life expectancy under Villa Rey
cannot be automatically applied without proof of the basis for the expected length of life of a Filipino does not merit
our consideration. In the case at bar, Candano Shipping cannot validly assert that the standard life expectancy factor
laid down in Villa Rey cannot be applied in this case. Petition is DENIED.
3. Fringe Benefits

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  Acesite Corp. v. NLRC
Leo A. Gonzales was hired on October 18, 1993 as Chief of Security of Manila Pavillion Hotel. Gonzales took a 4-day
sick leave and took emergency leave he again took a 12-day vacation leave, thereby using up all leaves that he was
entitled for the year. It appears that on May 7, 1998, Angerbauer issued the following Notice of Termination[10]
through an inter-office memo: Gonzales thus filed on May 27, 1998 a complaint against Acesite for illegal dismissal.
Labor Arbiter, by Decision of February 7, 2000, dismissed the complaint. NLRC reversed that of the Labor Arbiter,
Court of Appeals, finding that Gonzales was illegally dismissed, affirmed with modification the NLRC decision. In the
present case, the records do not show compliance by petitioners with the two (2)-notice rule prescribed in the above
provision of law. Although several telegrams were sent to private respondent Gonzales, there is not one (1) telegram
Moreover, as previously discussed, bad faith or malice was not proven. Angerbauer, acting on behalf of Acesite,
was, like Gonzales, perhaps also too presumptuous in thinking that the telegrams ordering the latter to report for
work were all received on time, drawing him to hastily conclude that Gonzales intentionally disobeyed the orders
contained therein.
As to the deletion of the “fringe benefits or their monetary equivalent,” this Court agrees with Gonzales that it is not
in accord with law and jurisprudence. Article 279 of the Labor Code provides:
ART. 279 SECURITY OF TENURE. – In cases of regular employment, the employer shall not terminate the services of
an employee except for just cause or when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. (Emphasis and underscoring
supplied). Court affirms the assailed decision.
ii.) Damages and Attorney’s fees
 Philippine Aeolus Auto-Motive United Corp v. NLRC
A memorandum was issued to Rosalinda Cortez, the company nurse, requiring her to explain why no disciplinary
action should be taken against her for throwing a stapler at William Chua, the plant manager, for the loss of money
to be deposited and for asking a co-employee to punch in her time card making it appear she was in the office earlier
than her actual time to arrive. The company placed her under preventive suspension. She was terminated from
services. She filed a complaint for illegal dismissal. LA held the termination to be legal. NLRC reversed and found her
the victim of illegal dismissal. Thus this petition.
The court held that for misconduct or improper behavior to be a just cause for dismissal, it must be serious, relate to
the performance of the employee’s duties and must show that the employee has become unfit to continue working
for the employer. The throwing of a stapler though serious misconduct, was not done in the performance of her
duties. Also, the other offenses are not connected to her duties as a company nurse. As for the punching in of the
time card, this is a violation of company rules but is not SERIOUS misconduct. Also, it was found that Chua has been
continually harassing her since her first year at work. That she failed to report the sexual harassment right away is of
no matter. For moral damages, it must be proven that the complainant suffered anxiety, sleepless nights, besmirched
reputation and social humiliation. For exemplary damages are granted by way of example or correction for the public
good. Her dismissal even her 30 day suspension was not found by the court to be commensurate to her offense.
NLRC affirmed.
 Reyes v. CA
Dr. Pedrito demanded PhilMalay for separation payment similar to its employees as well as for underpayment of
salary, a new car, life insurance policy, office rentals and legal service costs he incurred. The LA claimed that the
retrenchment of PhilM is valid. NLRC reduced the awards. His appeal was dismissed by CA for failure to attach
position paper, decision by Labor Arbiter and Memorandul of Appeal.
Court of Appeals should have reconsidered its dismissal of petitioner’s appeal after petitioner submitted a certified
true copy of the MeTC’s decision. It was clear from the petition for review that the RTC incurred serious errors in
awarding damages to private respondents which were made without evidence to support the award and without any
explanation…
In the same vein, there is no basis in awarding moral and exemplary damages, inasmuch as respondents were not
shown to have acted in bad faith in initially refusing to award separation pay equivalent to 1 month salary for every
year of service. Respondents even offered to pay petitioner separation pay, albeit in an amount not acceptable to
petitioner.
Moral damages are recoverable only where the act complained of is tainted by bad faith or fraud, or where it is
oppressive to labor, and done in a manner contrary to morals, good customs, or public policy. Exemplary damages
may be awarded only if the act was done in a wanton, oppressive, or malevolent manner. None of these
circumstances exist in the present case.
In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by
the losing party in a litigation. The instances where these may be awarded are those enumerated in Article 2208 of

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the Civil Code, specifically par. 7 thereof which pertains to actions for recovery of wages, and is payable not to the
lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof. The extraordinary concept of attorney’s fees is the one contemplated in Article 111
of the Labor Code, which provides:
Art. 111. Attorney’s fees. – (a) In cases of unlawful withholding of wages, the culpable party may be assessed
attorney’s fees equivalent to ten percent of the amount of wages recovered…
The afore-quoted Article 111 is an exception to the declared policy of strict construction in the awarding of attorney’s
fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not
be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a
showing that the lawful wages were not paid accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the employee’s welfare
should be the primordial and paramount consideration.
In the case at bar, what was withheld from petitioner was not only his salary, vacation and sick leave pay, and 13 th
month pay differential, but also his separation pay. Hence, pursuant to current jurisprudence, separation pay must
be included in the basis for the computation of attorney’s fees. Petitioner is entitled to attorney’s fees equivalent to
10% of his total monetary award.Petition is GRANTED.
 Elcee Farms v. NLRC
Elcee Farms entered into a Lease Agreement with Garnele Aqua Culture Corporation (Garnele).
Garnele sub-leased Hacienda Trinidad to Daniel Hilado, who operated HILLA. The contract of lease executed between
Garnele and HILLA stipulated the continued employment of 120 of the former employees by the latter, but the
contract was silent as to the benefits which may accrue to the employees
Soon after HILLA took over it entered into a CBA with another union and due to their refusal to join the labor union,
the private respondents were terminated by HILLA. Pampelo Semillano and one hundred forty-three (143) other
complainants, represented by their labor union, Sugar Agricultural Industrial Labor Organization (SAILO), filed this
complaint for illegal dismissal.
Labor Arbiter dismissed their claim for damages and denied all claims. Complainants appealed and NLRC affirmed the
amount awarded by the Labor Arbiter as separation pay and allowed their petition for damages for disturbance of
their right to labor. The three sets of parties (1) the complainants; (2) Elcee Farms and Corazon Saguemuller; and
(3) HILLA filed their own Motions for Reconsideration. The NLRC ruled that the simulation of the lease agreement
between Elcee Farms and Garnele was made in bad faith and thus the award of damages isjustifed. Thus this Petition
for Certiorari.
The court held that the above findings show that even after the execution of the lease agreement between Elcee and
Garnele, Elcee continued to act as the employer of the farm workers of Hacienda Trinidad. Elcee Farms effectively
ceased to operate and manage Hacienda Trinidad when, through Garnele, it leased the hacienda to HILLA. After the
said lease was executed, the employer-employee relationship between the farm employees and Elcee Farms was
severed. The lease agreement between Garnele and Daniel Hilado identified the employees who will continue
working with the new management and stipulated that workers who were not in the list, whether new or employed
in the past, will not be employed by the lessee.
However, the court held that, moral damages are recoverable when the dismissal of an employee is attended by bad
faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good
customs or public policy. Exemplary damages, on the other hand, are recoverable when the dismissal was done in a
wanton, oppressive, or malevolent manner. Bad faith on the part of Elcee Farms is shown by the act of simulating a
lease agreement with Garnele in order to evade paying private respondents the proper amount of separation benefits
based on the number of years they worked in the hacienda, as provided by the Labor Code. Records show that Elcee
Farms did not pay any separation benefits to the private respondents when they allegedly leased the hacienda to
Garnele, and again when the hacienda was leased to Daniel Hilado.
Clearly, there was a cessation of operations of Elcee Farms, but although they were absorbed by the new
management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the
former employer, they will be considered as new employees. Petition is partially granted and the awards of damages
and separation pay are given. (modification: Corazon Saguemuller should not be held subsidiarily liable)

iii.) Separation Pay

 Ha Yuan Restaurant v. NLRC
Juvy Soria worked as a cashier in petitioner’s establishment located inside the SM Food Court Makati. Respondent’s
co-worker Sumalague was eating at the back of the store, when respondent rushed toward Ma. Teresa Sumalague
and hit the latter on the face causing injuries and resulting in a scuffle between the two. Despite the intervention of
their supervisor Fiderlie Recide, they were not pacified. They were brought to the SM Food Court Administration
Office and then to the Customer Relations Office for further investigation.

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SM Food Court Manager banned the two from working within the SM Food Court’s premises. Respondent then filed
with the Labor Arbiter a complaint for illegal dismissal
LA dismissed case. NLRC affirmed. CA affirmed NLRC. Hence, herein petition
The court held in Philippine Long Distance Telephone Co. vs. NLRC that separation pay shall be allowed as a measure
of social justice only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Separation pay therefore, depends on the
cause of dismissal, and may be accordingly awarded provided that the dismissal does not fall under either of two
circumstances: (1) there was serious misconduct, or (2) the dismissal reflected on the employee’s moral character.
The Court holds that respondent’s cause of dismissal in this case amounts as a serious misconduct and as such,
separation pay should not have been awarded to her. Thus, the petition should be granted.Her cause of dismissal
amounting to a serious misconduct, respondent is not entitled to an award of separation pay. As further stated in
Philippine Long Distance Telephone Co. vs. NLRC: The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the underprivileged. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the punishment of the guilty. Petition is GRANTED.
 Amkor Technology Philippine Inc. v. Juanco
In our Decision of September 20, 2006, we affirmed with modification the Decision dated October 20, 2004 of the
Court of Appeals finding that Nory A. Juangco, respondent, was illegally dismissed. We upheld the appellate court’s
ruling that respondent is entitled to separation pay, backwages and other privileges and benefits. However, we
deleted the awards for moral and exemplary damages for lack of basis.
Petitioners anchored their motion for partial reconsideration on our recent Decision in Domondon v. National Labor
Relations Commission
The NLRC, relying on the affidavits of the officers of petitioner-company, found that respondent was not coerced into
signing the notice of voluntary retirement. On the other hand, the Court of Appeals found that respondent was
coerced to retire.
Records show that due to business losses, petitioner-company saw the need to reduce its existing manpower
complement. Several meetings were held among its officers and department heads to discuss actions to be taken to
implement the same. Respondent denied the due execution of her Release Quitclaim and Waiver, alleging that she
signed the same under duress and intimidation. She claimed that she was threatened that she will receive nothing if
she will not sign it. The voluntariness of her retirement is attested and confirmed by top ranking officials of
petitioner- company then present during the meeting in October 2001. She failed to present evidence to contradict
their statements. Respondent is a well-educated woman holding a managerial position. It is highly improbable that
with her employment stature and educational attainment, she could have been duped into signing a retirement letter
against her will.It is safe to conclude that such retirement package was the reason why she opted to retire.
Respondent received her retrenchment backwage a week after she submitted her resignation paper. She had ample
time to mull over what courses of action to take if indeed she was illegally dismissed. Instead, she returned to the
company to sign the Receipt and Release Waiver and Quit Claim and to receive her retirement package. Thereafter,
she looked for employment in other companies.It is thus clear that the filing of the complaint was merely an
afterthought when she failed to find another employment. We GRANT petitioner’s Motion for Partial
Reconsideration and RECONSIDER our Decision.
 Central Pangasinan Electric Cooperative v. NLRC
Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative, Inc.
(CENPELCO). Cagampan received a check amounting to P100,831 from Aurora B. Bonifacio as partial payment for the
installation of a transformer in her building and expansion of a three-phase line. Bonifacio informed CENPELCO’s General
Manager Salvador de Guzman of the said transaction and that Cagampan did not issue a receipt for the partial
payment made. She also requested the immediate installation of the transformer. Thereafter, Cagampan was
directed to explain in writing why he should not be disciplined or dismissed for the unauthorized acceptance of
payments for new electrical connections. Cagampan was found guilty of violating CENPELCO’s Code of Ethics and
Discipline, namely: (1) unauthorized acceptance of payments for new connection; (2) dishonest or unauthorized
activity whether for personal gain or not; and (3) defrauding others by using the name of the company. He was
dismissed from service. Cagampan filed a complaint for illegal dismissal, praying for payment of backwages and
damages, and reinstatement. at issue in this case is the propriety of the award of separation pay to private
respondent. We find for petitioner.
Separation pay should not be awarded.
Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code provides that when the employee is
dismissed for any of the just causes under Article 282 of the Labor Code, he shall not be entitled to termination pay
Separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Separation pay in such case is granted to stand as a
“measure of social justice.” If the cause for the termination of employment cannot be considered as one of mere

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inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a
palpable breach of trust in him, the grant by the Court of separation benefits is hardly justifiable.
Although long years of service might generally be considered for the award of separation benefits or some form of
financial assistance to mitigate the effects of termination
The fact that private respondent served petitioner for more than twenty years with no negative record prior to his
dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable
lack of loyalty and worse, betrayal of the company. petition is GRANTED
- Backwages and Separation Pay, Distinct Reliefs
 Triad Security and Allied Services v. Ortega
Respondents Silvestre Ortega, Jr., Ariel Alvaro, Richard Sevillano, Martin Callueng, and Isagani Capila were formerly
employed by petitioner Triad Security as security guards. Respondents filed a complaint against petitioners According
to respondents, during the time that they were in the employ of petitioners, they were receiving compensation which
was below the minimum wage fixed by law. They were also made to render services everyday for 12 hours but were
not paid the requisite overtime pay. Labor Arbiter issued an alias writ of execution commanding the sheriff to collect
from petitioners the amount of six hundred three thousand seven hundred ninety-four and seventy-seven centavos
(P603,794.77) representing the unsatisfied balance of the judgment award. Given the foregoing, we hold that the
Court of Appeals correctly dismissed the petition for certiorari brought before it. Notwithstanding this procedural
defect committed by petitioners, in the interest of substantial justice, we shall proceed to resolve the other issues
presented by petitioners.
Petitioners insist that their monetary obligation, as contained in the 28 February 2000 decision of the labor arbiter,
had already been fully satisfied. They posit the argument that with respondents’ receipt of their separation pay, they
had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with
petitioner Triad Security. In fact, according to petitioners, respondents had already found new employments and to
award them further backwages would be tantamount to unjust enrichment.
Article 279 of the Labor Code, as amended, states: ART. 279. SECURITY OF TENURE In cases of regular
employment the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
As the law now stands, an illegally dismissed employee is entitled to two reliefs, namely: backwages and
reinstatement. These are separate and distinct from each other. However, separation pay is granted where
reinstatement is no longer feasible because of strained relations between the employee and the employer.
Backwages and separation pay are, therefore, distinct reliefs granted to one who was illegally dismissed from
employment. WHEREFORE, premises considered, this Court AFFIRMS the Decision of the Court of Appeals dated 31
July 2003 and the Order dated 23 April 2003 of the Labor Arbiter declaring petitioners liable for additional accrued
backwages.
 Skippers United Pacific v. NLRC supra 27
Gervacio Rosaroso was signed up as a Third Engineer with Nicolakis Shipping, S.A. through its recruitment and
manning agency, herein petitioner Skippers United Pacific. The term of the contract was for one year. Barely a month
after boarding the vessel M/V Naval Gent respondent was ordered to disembark in Varna, Bulgaria and repatriated to
the Philippines. Immediately after arriving in the Philippines, respondent filed a complaint for illegal dismissal. Labor
Arbiter found that respondent was illegally dismissed. NLRC and CA affirmed the LA, not giving credence to the
telexed Chief Engineer’s Report saying that Rosaroso was slacking in his duties and was unwilling to help with the
repairs. The reason was that the Report cannot be given any probative value as it is uncorroborated by other
evidence and that it is merely hearsay, having come from a source, the Chief Engineer, who did not have any
personal knowledge of the events reported therein. Thus this Petition.
The court held that as all three tribunals found, the Report cannot be given any weight or credibility because it is
uncorroborated, based purely on hearsay, and obviously merely an afterthought. Skippers failed to overcome the
burden of proof tasked upon it in proving that the dismissal has a just cause.
Finally, with regard to the monetary claims of the respondent, the court held that a seafarer is not
a regular employee as defined in Article 280 of the Labor Code. Hence, he is not entitled to full
backwages and separation pay in lieu of reinstatement as provided in Article 279.
Seafarers are contractual employees whose rights and obligations are governed primarily by the POEA Standard
Employment Contract for Filipino Seamen, the Rules and Regulations Governing Overseas Employment, and, more
importantly, by Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995. Section 10
of R.A. 8042 provides for the award of money claims in cases of illegal dismissals, thus:
Section 10. Money Claims.

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In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract,
the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less.
The award of salaries for the unexpired portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less, is not an award of backwages or separation pay, but a form of indemnity for
the worker who was illegally dismissed. The Labor Arbiter may have mislabeled it as separation pay, nonetheless, the
award was made in conformity with law.
Petition Denied. CA affirmed with the modifications that monetary awards of US$2,400.00 and US$186.69 made by
the Labor Arbiter in its Decision should be payable in its equivalent in Philippine currency computed at the prevailing
rate of exchange at the time of payment.
a. Computation/Rationale
 Business Day Information Systems and Services Inc. v. NLRC
Businessday Information Systems due to financial reverses, some plant employees, including the private
respondents, were laid off. BSSI retained some employees in an attempt to rehabilitate its business as a trading
company. However, barely two and a half months later, these remaining employees were likewise discharged
because the company decided to cease business operations altogether.
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that there was unlawful
discrimination in the payment of separation benefits to the employees. They argued that the first batch of employees
was paid "retrenchment" benefits mandated by law, while the remaining employees were granted higher "separation"
benefits because their termination was on account of the closure of the business.
In case of retrenchment of a company to prevent losses and closure of business operation, the law provides:
Art. 283. Closure of establishment and reduction of personnel.-The employer may also terminate the employment of
any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due to the installation
of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking
nut due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year." (Labor Code; emphasis supplied.)
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of
business operations, is recognized by law, but it may not pay separation benefits unequally for such discrimination
breeds resentment and ill-will among those who have been treated less generously than others.
The law requires the granting of the same amount of separation benefits to the affected employees in any of the
cases. The respondent argued that the giving of more separation benefit to the second and third batches of
employees separated was their expression of gratitude and benevolence to the remaining employees who have tried
to save and make the company viable in the remaining days of operations. The law requires an employer to extend
equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater
benefits to some and less to others. Management prerogatives are not absolute prerogatives but are subject to legal
limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758).
Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because of closure of
the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141, 145).NLRC AFFIRMED.
 Songco v. NLRC supra
F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the ground of
retrenchment. The petitioners opposed this claiming that the company is not suffering from any losses but later on,
contended that they are no longer contesting their dismissal but rather wanted to receive separation pay including
the commissions, allowances etc which they receive every month. LA excluded the commissions and NLRC dismissed
the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that “computation of
backwages and separation pay should include transportation and emergency living allowances.”
As for commissions, the court held that commission is not part of the basic salary. The court held that the purpose of
separation pay is to alleviate the difficulties which confront the dismissed employee (thrown to the streets to face the
harsh necessities of life) and in adopting the general rule that commissions aren’t part of the basic salary of
salesmen, the purpose of the separation pay will not be satisfied. The court took judicial notice of the fact that the

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nature of his job as a salesman demonstrates that such type of remuneration is part of their salary since some
salesmen do not receive basic salary but rather, rely on allowances or commissions. Petition is Granted.
b. Effect of Receipt
 San Miguel Corp v. Javate
Private respondent was a casual employee of the petitioner assigned to its B-Meg warehouse in San Miguel, Bulacan.
He figured in an accident and was initially confined at the Figueroa Emergency Hospital. Upon his discharge from the
hospital private respondent was fetched by his immediate supervisor However, they were unable to reach San
Miguel, Bulacan, as the roads were rendered impassable by typhoon "Norming"; to prevent his being declared absent
without leave, private respondent, with the assistance of his supervisor, filed an application for vacation leave for
eleven (11) days with pay.
This being so, the absences incurred by private respondent during said period were charged to his remaining sick
leave benefits with pay, thus fully exhausting them. We find no merit in petitioner's contention. In the case at bar,
the labor arbiter found that the evidence presented by private respondent sufficiently showed his fitness to resume
his work thereby making his termination illegal.
There is likewise no merit to petitioner's contention that private respondent is estopped from assailing his retirement
as he has accepted the benefits under the retirement plan. Private respondent vehemently denied this contention,
and the filing of the complaint for illegal dismissal indisputably strengthens such denial.
Furthermore, even assuming arguendo that private respondent indeed received his retirement benefits, it does not
estop him from questioning the legality of his dismissal. As this Court stated in De Leon vs. NLRC: The contention of
respondents that petitioner is barred from contesting the illegality of his dismissal since he has already received his
separation pay cannot be sustained. Since he was forced to retire, he suddenly found himself jobless with a family of
eight (8) children to support. He had no alternative but to accept what was offered to him. . . . Employees who
received their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those
benefits would not amount to estoppel as held in the leading case of Mercury Drug Co. vs. CIR (56 SCRA 694) as
aptly cited in the decision of the Labor Arbiter. (emphasis supplied). Petition is DISMISSED for lack of merit.
iv.) Financial Assistance (When Allowed/Not Allowed)
 Phil Long Distance Tel Co. v. NLRC
The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who
had been dismissed for cause as found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two
complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her
promise to facilitate approval of their applications for telephone installation.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered
warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or
something graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of
sins, as it were, and to justify the helping hand to the validly dismissed employee whatever the reason for his
dismissal. This policy should be re-examined. It is time we rationalized the exception, to make it fair to both labor
and management, especially to labor.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be
more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his
inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the
receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on
the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the
company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of
separation pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where
the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the
erring employee for his offense.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense
The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed
at the rate of one month salary for every year of service, assuming the length of such service is deemed material.
Petition is GRANTED.
v.) Indemnity
 Serrano v. NLRC and Isetan supra 26

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Ruben Serrano was hired by private respondent Isetann Department Store as a security checker to apprehend
shoplifters and prevent pilferage of merchandise. To cut costs, Isetann phased out its entire security section and
engage the services of an independent security agency. Serrano filed a complaint for illegal dismissal upon his
termination. The LA found this termination to be illegal. NLRC held that the phase-out of private respondent’s
security section and the hiring of an independent security agency constituted an exercise by private respondent of a
legitimate business decision. Hence this petition.
The court held that contrary to the allegations of Serrano, the dismissal falls under Art. 283 of the Labor Code for
redundancy Art. 283 also provides that to terminate the employment of an employee for any of the authorized
causes the employer must serve "a written notice on the workers and the DOLE at least one (1) month before the
intended date thereof."
In this case, Serrano was given notice the same day of his termination
Art. 283 of the Labor Code, the employer’s failure to comply with the notice requirement does not constitute a denial
of due process but a mere failure to observe a procedure for the termination of employment which makes the
termination of employment merely ineffectual. Thus, only if the termination of employment is not for any of the
causes provided by law is it illegal and, therefore, the employee should be reinstated and paid backwages.
If the employee’s separation is without cause, instead of being given separation pay, he should be reinstated. In
either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been
laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not
be reinstated. However, he must be paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect. Petition Granted.
 Agabon v. NLRC supra 26
Riviera Home Improvements, employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers and after years under their employ, were dismissed for abandonment of work. Petitioners then filed a
complaint for illegal dismissal and payment of money claims. LA declared the dismissals illegal. NLRC reversed the
LA.CA ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but
ordered the payment of money claims. Hence, this petition.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. The court found
that the Agabon were frequently absent having subcontracted for an installation work for another
company. Subcontracting for another company clearly showed the intention to sever the employer-employee
relationship with private respondent. Given that abandonment was established, the court held in that where the
dismissal is for a just cause, as in the case, the lack of statutory due process should not nullify the dismissal but the
employer should indemnify the employee for the violation of his statutory rights.
The indemnity to be imposed should be stiffer to discourage the abhorrent practice of “dismiss now, pay later,” which
the court sought to deter in the Serrano ruling.
The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case,
taking into special consideration the gravity of the due process violation of the employer. The violation of the
petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form
of nominal damages. In this case, the award was fixed at P30,000.00. Pettion Dismissed.
vi.) Liability of Corporate Officers
 Petron Corp v. NLRC
Petron, through its Cebu District Office, hired the herein private respondent Chito S. Mantos, an Industrial Engineer,
as a managerial, professional and technical employee. It was while assigned at Petron’s Cebu District Office with
petitioner Peter Maligro as his immediate superior, when Mantos, thru a Notice of Disciplinary Action dated October
29, 1996, a copy of which was received by him on November 18, 1996, was suspended for 30 days for violating
company rules and regulations regarding Absence Without Leave (AWOL), not having reported for work.
Subsequently, in a notice Termination of Services received by him, Mantos’ services were altogether terminated.
We are, however, with the petitioners in their submission that the NLRC erred in holding petitioner Peter Maligro
jointly and severally liable with petitioner Petron for the money claims of the private respondent.
Settled is the rule in this jurisdiction that a corporation is invested by law with a legal personality separate and
distinct from those acting for and in its behalf and, in general, from the people comprising it. Thus, obligations
incurred by corporate officers acting as corporate agents are not theirs but the direct accountabilities of the
corporation they represent. True, solidary liabilities may at times be incurred by corporate officers, but only when
exceptional circumstances so warrant. For instance, in labor cases, corporate directors and officers may be held
solidarily liable with the corporation for the termination of employment if done with malice or in bad faith.
In the present case, the apparent basis for the NLRC in holding petitioner Maligro solidarily liable with Petron were
its findings that (1) the Investigation Committee was created a day after the summons in NLRC RAB-VII Case No.

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11-1439-96 was received, with Maligro no less being the chairman thereof; and (2) the basis for the charge of
insubordination was the private respondent’s alleged making of false accusations against Maligro.
Those findings, however, cannot justify a finding of personal liability on the part of Maligro inasmuch as said findings
do not point to Maligro’s extreme personal hatred and animosity with the respondent. It cannot, therefore, be said
that Maligro was motivated by malice and bad faith in connection with private respondent’s dismissal from the
service.
If at all, what said findings show are the illegality itself of private respondent’s dismissal, the lack of just cause
therefor and the non-observance of procedural due process. Verily, the creation of the investigation committee and
said committee’s consideration of the insubordination charge against the private respondent, were merely aimed to
cover up the illegal dismissal or to give it a semblance of legality.
Besides, the fact that Maligro himself was the committee chairman is not itself sufficient to impute bad faith on his
part or attribute bias against him. It is undisputed that Maligro was private respondent’s superior, being Petron’s
Operations Assistant Manager for Visayas and Mindanao. It is thus logical for him to be part of the committee that
will investigate private respondent’s alleged infractions of company rules and regulations. As well, the committee
was composed of three other Petron officers as members, and nowhere is there any showing that Maligro, as
committee chairman, influenced the other committee members to side against the private respondent.
In any event, it must be stressed that private respondent’s allegation of bad faith on the part of Maligro was not
established in this case. We quote the NLRC’s finding in this regard: Whether he really caught the ire of his
immediate supervisor (respondent Maligro) in view of his alleged closeness to the previous one who migrated to
Canada, and whether or not he was assigned to menial clerical jobs when his designation was that of Operations
Engineer, were not clearly established by complainant.
WHEREFORE, the assailed Resolution of the Court of Appeals is SET ASIDE, and the NLRC decision dated
July 31, 2000 is AFFIRMED
 Carag v. NLRC supra 26
Without notice of any kind Mariveles Apparel Corporation for unknown reasons ceased operations with the intention
of completely closing its shop as manifested in a letter filed on the same day the company closed. MAC’s employees
filed a complant for illegal closure of business through their labor union. LA found them liable for illegal closure. NLRC
dismissed the petitions and affirmed the LA. Thus this petition. The court held that the LA’s decision to hold Antonio
Carag as MAC’s stockholder and Chairman has not basis since Complainants did not allege or prove, and Arbiter
Ortiguerra did not make any finding, that Carag approved or assented to any patently unlawful act to which the law
attaches a penalty for its commission. On this score alone, Carag cannot be held personally liable for the separation
pay of complainants. As for his liability as an employer as enumerated under Article 212(e) of the Labor Code
(‘Employer' includes any person acting in the interest of an employer, directly or indirectly. The term shall not include
any labor organization or any of its officers or agents except when acting as employer.)
The court recounted the cases of McLeod v. NLRC and Spouses Santos v. NLRC that Article 212(e) of the Labor Code,
by itself, does not make a corporate officer personally liable for the debts of the corporation. The governing law on
personal liability of directors for debts of the corporation is still Section 31 of the Corporation Code.
Thus in McLeod: Personal liability of corporate directors, trustees or officers attaches only when
(1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence
in directing its affairs,
(2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable with the corporation; or
(4) they are made by specific provision of law personally answerable for their corporate action.
Thus, it was error for Arbiter Ortiguerra, the NLRC, and the Court of Appeals to hold Carag personally liable for the
separation pay owed by MAC to complainants based on Article 212(e) since it does not state that corporate officers
are personally liable for the unpaid salaries or separation pay of employees of the corporation. The liability of
corporate officers for corporate debts remains governed by Section 31 of the Corporation Code. Petition Granted.
V. Retirement
REPUBLIC ACT NO. 7641 (December 9, 1992):RETIREMENT PAY LAW: AN ACT AMENDING ARTICLE 287 OF
PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES,
BY PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF ANY
RETIREMENT PLAN IN THE ESTABLISHMENT
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines, is hereby amended to read as follows:
"Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.

"In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have

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 earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, That an employee's retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.

"In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one
whole year.

"Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.

"Retail, service and agricultural establishments or operations employing not more than (10) employees or
workers are exempted from the coverage of this provision.

"Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under
Article 288 of this Code."
Sec. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under existing laws
or company policies or practices.
Sec. 3. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least
two (2) national newspapers of general circulation, whichever comes earlier.

Pursuant to the provisions of Article 287 of the Labor Code as amended by Republic Act No. 7641, in
relation to Article 5 of the same Code, RULE II of Book VI of the Rules Implementing the Labor Code is
hereby issued, the full text of which shall read as follows:
RULE II Retirement Benefits
SECTION 1. General Statement on Coverage. — This Rule shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their wages are paid,
except to those specifically exempted under Section 2 hereof. As used herein, the term “Act” shall refer to Republic
Act No. 7641 which took effect on January 7, 1993.
SECTION 2. Exemptions. — This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions, including Government-owned
and/or controlled corporations, if they are covered by the Civil Service Law and its regulations.
2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department Order No. 20
issued by Secretary Ma. Nieves R. Confessor on May 31, 1994.)
2.3 Employees of retail, service and agricultural establishment or operations regularly employing not more
than ten (10) employees. As used in this sub-section;
(a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal
or household use. It shall lose its retail character qualified for exemption if it is engaged in
both retail and wholesale sale of goods.
(b) “Service establishment” is one principally engaged in the sale of service to individuals for their
own or household use and is generally recognized as such.
(c) “Agricultural establishment/operations” refers to an employer which is engaged in “agriculture”.
This terms refers to all farming activities in all its branches and includes among others, the
cultivation and tillage of the soil, production, cultivation, growing and harvesting of any
agricultural or horticultural commodities, dairying, raising of livestock or poultry, the culture
of fish and other aquatic products in farms or ponds, and any activities performed by a
farmer or on a farm as incident to or in conjunction with such farming operations, but does
not include the manufacture and/or processing of sugar, coconut, abaca, tobacco,
pineapple, aquatic or other farm products.
SECTION 3. Retirement under CBA/contract.
3.1 Any employee may retire or be retired by his employer upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract or retirement plan subject to
the provisions of Section 5 hereof on the payment of retirement benefits.
3.2 In case of retirement under this Section, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining agreement and other

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 agreements; provided, however, that an employee’s retirement benefits under any collective bargaining and
other agreements shall not be less than those provided under this Rule, and provided further that if such
benefits are less, the employer shall pay the difference between the amount due the employee under this
Rule and that provided under the collective or individual agreement or retirement plan.
3.3 Where both the employer and the employee contribute to a retirement fund in accordance with an
individual or collective agreement or other applicable employment contract, the employer’s total contribution
thereto shall not be less than the total retirement benefits to which the employee would have been entitled
had there been no such retirement fund. In case the employer’s contribution is less than the retirement
benefits provided under this Rule, the employer shall pay the deficiency.
SECTION 4. Optional; Compulsory Retirement.
4.1 Optional Retirement. — In the absence of a retirement plan or other applicable agreement providing for
retirement benefits of employees in an establishment, an employee may retire upon reaching the age of
sixty (60) years or more if he has served for at least five (5) years in said establishment.
4.2 Compulsory Retirement. — Where there is no such plan or agreement referred to in the immediately
preceding sub-section, an employee shall be retired upon reaching the age of sixty-five (65) years.
4.3 Upon retirement of an employee, whether optional or compulsory, his services may be continued or
extended on a case to case basis upon agreement of the employer and employee.
4.4 Service Requirement. — The minimum length of service in an establishment or with an employer of at
least five (5) years required for entitlement to retirement pay shall include
authorized absences and vacations, regular holidays and mandatory fulfillment of a military or civic duty.
SECTION 5. Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the
Act shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
5.2 Components of One-half (½) Month Salary. — For the purpose of determining the minimum retirement
pay due an employee under this Rule, the term “one-half month salary” shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the
term “salary” includes all remunerations paid by an employer to his employees for services
rendered during normal working days and hours, whether such payments are fixed or
ascertained on a time, task, piece of commission basis, or other method of calculating the
same, and includes the fair and reasonable value, as determined by the Secretary of Labor
and Employment, of food, lodging or other facilities customarily furnished by the employer
to his employees. The term does not include cost of living allowances, profit-sharing
payments and other monetary benefits which are not considered as part of or integrated
into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included in
the computation of the employee’s retirement pay.
5.3 One-half month salary of employees who are paid by results. — For covered workers who are paid by
results and do not have a fixed monthly rate, the basis for determination of the salary for fifteen days shall
be their average daily salary (ADS), subject to the provisions of Rule VII-A, Book III of the Rules
Implementing the Labor Code on the payment of wages of workers who are paid by results. The ADS is the
average salary for the last twelve (12) months reckoned from the date of their retirement, divided by the
number of actual working days in that particular period.
SECTION 6. Exemption from tax. — The retirement pay provided in the Act may be exempted from tax if the
requirements set by the Bureau of Internal Revenue under Sec. 2 (b) item (1) of Revenue Regulations No. 12-86
dated August 1, 1986 are met, to wit:
Pensions, retirement and separation pay. — Pensions, retirement and separation pay constitute compensation subject
to withholding, except the following:
(1) Retirement benefits received by officials and employees of private firms under a reasonable private
benefit plan maintained by the employer, if the following requirements are met:
(i) The benefit plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employee must have been in the service of the same employer for at
least ten (10) years and is not less than fifty (50) years of age at the time of retirement;
and
(iii) The retiring official or employee shall not have previously availed of the privilege under the
retirement benefit plan of the same or another employer.

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SECTION 7. Penal Provision. — It shall be unlawful for any person or entity to circumvent or render ineffective the
provisions of the Act. Violations thereof shall be subject to the penal provisions provided under Article 288 of the
Labor Code of the Philippines.
SECTION 8. Relation to agreements and regulations. — Nothing in this Rule shall justify an employer from
withdrawing or reducing any benefits, supplements or payments as provided in existing laws, individual or collective
agreements or employment practices or policies.
All rules and regulations, policy issuances or orders contrary to or inconsistent with these rules are hereby repealed
or modified accordingly.
SECTION 9. Effectivity. — This Rule took effect on January 7, 1993 when the Act went into force.

Labor Advisory on Retirement Pay:

GUIDELINES FOR THE EFFECTIVE IMPLEMENTATION OF R.A. 7641, THE RETIREMENT PAY LAW
A. Coverage
Republic Act No. 7641 or the Retirement Pay Law shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their
wages are paid. They shall include part-time employees, employees of service and other job
contractors and domestic helpers or persons in the Personal service of another.
The law does not cover employees of retail, service and agricultural establishments or operations
employing not more than ten (10) employees or workers and employees of the National
Government and its political subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its regulations.
B. Computation of Retirement Pay
A covered employee who retires pursuant to RA 7641 shall be entitled to retirement pay equivalent
to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
The law is explicit that “one-half month salary shall mean fifteen (15) days plus one-twelfth (1/12)
of the 13th month pay and the cash equivalent of not more than five (5) days service incentive
leaves” unless the parties provide for broader inclusions. Evidently, the law expanded the concept
of “one-half month salary” from the usual one-month salary divided by two.
In reckoning the length of service, the period of employment with the same employer before the
effectivity date of the law on January 7, 1993 should be included.
C. Substitute Retirement Plan
Qualified workers shall be entitled to the retirement benefit under RA 7641 in the absence of any
individual or collective agreement, company policy or practice. In case there is such an agreement,
policy or practice providing retirement benefit which is equal or superior to that which is provided
in the Act, said agreement, policy or practice will prevail.
As provided in RA 7742, a private employer shall have the option to treat the coverage of the PAG-
IBIG Fund as a substitute retirement benefit for the employee concerned within the purview of the
Labor Code as amended; provided, such option does not in any way contravene an existing
collective bargaining agreement or other employment agreement. Thus, the PAG-IBIG Fund can be
considered as a substitute retirement plan of the company for its employees provided that such
scheme offers benefits which are more than or at least equal to the benefits under RA 7641. If said
scheme provides less than what the employee is entitled to under RA 7641, the employer is liable
to pay the difference.
If both the employee and the employer contribute to a retirement plan, only the employer’s
contribution and its increments shall be considered for full or partial compliance with the benefit
under RA 7641. On the other hand, where the employee is the lone contributor to the PAG-IBIG
Fund, the employer being exempted from its coverage, the employer is under obligation to give his
employee retirement benefits under the Act. Adopted: 24 October 1996
 Enriquez Security Services Inc. v. Cabotaje
Victor A. Cabotaje was employed as a security guard by Enriquez Security and Investigation Agency (ESIA).
Petitioner acknowledged that respondent was entitled to retirement benefits but opposed his claim that the
computation of such benefits must be reckoned from January 1979 when he started working for ESIA. We find no
merit in the petition.
First. Petitioner’s contention that RA 7641 cannot be applied retroactively has long been settled in the Guidelines for
Effective Implementation of RA 7641 issued on October 24, 1996 by the Department of Labor and Employment.
Paragraph B of the guidelines provides:
In reckoning the length of service, the period of employment with the same employer before the effectivity date of
the law on January 7, 1993 should be included.

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 - Rufina Patis Factory v. Lucas, Sr: RA 7641 is undoubtedly a social legislation. The law has been enacted as
a labor protection measure and as a curative statute that – absent a retirement plan devised by, an
agreement with, or a voluntary grant from, an employer – can respond, in part at least, to the financial well-
being of workers during their twilight years soon following their life of labor. There should be little doubt
about the fact that the law can apply to labor contracts still existing at the time the statute has
taken effect, and that its benefits can be reckoned not only from the date of the law’s
enactment but retroactively to the time said employment contracts have started.
Petitioner was thus correctly ordered to pay respondent’s retirement under RA 7641, computed from January 1979
up to the time he applied for retirement in July 1997. Petition is hereby DENIED
 Jaculbe v. Siliman University
IN 1958 ALPHA C. JACULBE began working for respondent’s university medical center as a nurse. In a letter
dated December 3, 1992, respondent, through its Human Resources Development Office, informed petitioner that
she was approaching her 35th year of service with the university and was due for automatic retirement. Petitioner
emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal.
From the language of the school’s retirement plan rules, the compulsory nature of both membership in and
contribution to the plan debunked the CA’s theory that petitioner’s “voluntary contributions” were evidence of her
willing participation therein. It was through no voluntary act of her own that petitioner became a member of the
plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent
altogether. According to the assailed decision, respondent’s retirement plan “ha(d) been in effect for more than 30
years.” What was not pointed out, however, was that the retirement plan came into being in 1970 or 12 years after
petitioner started working for respondent. In short, it was not part of the terms of employment to which petitioner
agreed when she started working for respondent.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former.
- Pantranco North Express, Inc. v. NLRC, to which both the CA and respondent refer, the imposition of a
retirement age below the compulsory age of 65 was deemed acceptable because this was part of the CBA
between the employer and the employees. The consent of the employees, as represented by their
bargaining unit, to be retired even before the statutory retirement age of 65 was laid out clearly in black
and white and was therefore in accord with Article 287.
Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully
capable of discharging her duties as shown by the fact that respondent’s board of trustees seriously considered
rehiring her after the effectivity of her “compulsory retirement.” Thus, having terminated petitioner solely on the
basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal
dismissal. Petition is hereby GRANTED
 Reyes v. NLRC
Petitioner was employed as a salesman at respondent’s Grocery Division in Davao. He was eventually appointed as
unit manager of Sales Department., a position he held until his retirement on November 30, 1997. Thereafter, he
received a letter regarding the computation of his separation pay. Insisting that his retirement benefits and 13 th
month pay must be based on the average monthly salary petitioner refused to accept the check issued by private
respondent; instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits.
The petition lacks merit. Any seeming inconsistencies between Philippine Duplicators and Boie-Takeda had been
clarified by the Court.
- Philippine Duplicators, the salesmen’s commissions, comprising a pre-determined percentage of the selling
price of the goods sold by each salesman, were properly included in the term basic salary for purposes of
computing the 13th month pay.
- The salesmen’s commission are not overtime payments, nor profit-sharing payments nor any other fringe
benefit, but a portion of the salary structure which represents an automatic increment to the monetary
value initially assigned to each unit of work rendered by a salesman.

- Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-Takeda

Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic
salary because these were paid to the medical representatives and rank-and-file employees as productivity
bonuses, which are generally tied to the productivity, or capacity for revenue production, of a corporation
and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary relation
to the amount of work actually done by each individual employee.
- Further, commissions paid by the Boie-Takeda Company to its medical representatives could not have been
sales commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions.
Medical representatives are not salesmen; they do not effect any sale of any article at all.

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In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for
its payment. Nevertheless, should petitioner’s commissions be considered in the computation of his retirement
benefits and 13th month pay? We rule in the negative.

Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law,
provides:Art. 287. Retirement. —
- Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
- In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one
whole year.
- Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen
(15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.

Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides: Section 5. Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the
Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
5.2 Components of One-half (1/2) Month Salary. – For the purpose of determining the minimum retirement
pay due an employee under this Rule, the term “one-half-month salary” shall include all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term
“salary” includes all remunerations paid by an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or ascertained on a time, task, piece or commission basis,
or other method of calculating the same, and includes the fair and reasonable value, as determined by the Secretary
of Labor and Employment, of food, lodging, or other facilities customarily furnished by the employer to his
employees. The term does not include cost of living allowance, profit-sharing payments and other monetary benefits
which are not considered as part of or integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave.
(c) One-twelfth of the 13 month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employee’s retirement pay. (Emphasis supplied)

The article provides for two types of retirement:

(a) compulsory and
(b) optional.
The first takes place at age 65,
while the second is primarily determined by the collective bargaining agreement or other employment
contract or employer’s retirement plan.
In the absence of any provision on optional retirement in a collective bargaining agreement, other
employment contract, or employer’s retirement plan, an employee may optionally retire upon reaching the
age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the
establishment concerned.

For the purpose of computing retirement pay, “one-half month salary” shall include all of the following:
1) 15 days salary based on the latest salary rate;
2) cash equivalent of 5 days of service incentive leave (or vacation leave);
3) 1/12 of the 13th month pay;
4) other benefits as may be agreed upon by employer and employee for inclusion.

But, it shall not include the following:

1) cost of living allowance;
2) profit-sharing payments; and
3) other monetary benefits which are not considered as part of or integrated into the regular
salary of the employees

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Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his
retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of
profit-sharing payments specifically excluded by the foregoing rules. Petition is DENIED
 Intercontinental Broadcasting Corporation v. Amarilla
On various dates, petitioner employed the following persons at its Cebu station. And eventually, the four (4)
employees retired from the company. The complainants averred that their retirement benefits are exempt from
income tax under Article 32 of the NIRC. Sections 28 and 72 of the NIRC, which petitioner relied upon in withholding
their differentials, do not apply to them since these provisions deal with the applicable income tax rates on foreign
corporations and suits to recover taxes based on false or fraudulent returns. They pointed out that, under Article VIII
of the CBA, only those employees who reached the age of 60 were considered retired.
While petitioner admits that its “previous directors” had paid the withholding taxes on the retirement benefits of
respondents, it explains that this practice was stopped when the new management took over. The new management
could not be expected to enforce and follow through the illegal policy of the old management which is adverse to the
interests of the petitioner; hence, the decisions of the NLRC and the CA affirming such undertaking should be
reversed.
We agree with petitioner’s contention that, under the CBA, it is not obliged to pay for the taxes on the respondents’
retirement benefits. We have carefully reviewed the CBA and find no provision where petitioner obliged itself to pay
the taxes on the retirement benefits of its employees.
We also agree with petitioner’s contention that, under the NIRC, the retirement benefits of respondents are part of
their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 provides:
Sec. 28. Gross Income. –
(b) Exclusions from gross income. - The following items shall not be included in gross income and shall be
exempt from taxation under this Title:
(7) Retirement benefits, pensions, gratuities, etc. - (A) Retirement benefits received by officials and employees
of private firms whether individuals or corporate, in accordance with a reasonable private benefit plan maintained by
the employer: Provided, That the retiring official or employee has been in the service of the same employer for at
least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further, That the
benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of
this subsection, the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit-sharing
plan maintained by an employer for the benefit of some or all of his officials or employees, where contributions are
made by such employer for officials or employees, or both, for the purpose of distributing to such officials and
employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no
time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the
exclusive benefit of the said official and employees.

Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides:
(b) Pensions, retirements and separation pay. – Pensions, retirement and separation pay constitute compensation
subject to withholding tax, except the following:
(1) Retirement benefit received by official and employees of private firms under a reasonable private benefit
plan maintained by the employer, if the following requirements are met:
(i) The retirement plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employees must have been in the service of the same employer for at least ten (10)
years and is not less than fifty (50) years of age at the time of retirement; and
(iii) The retiring official or employee shall not have previously availed of the privilege under the retirement
benefit plan of the same or another employer.

Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements:
(1) a reasonable private benefit plan is maintained by the employer;
(2) the retiring official or employee has been in the service of the same employer for at least 10 years;
(3) the retiring official or employee is not less than 50 years of age at the time of his retirement; and
(4) the benefit had been availed of only once.
Respondents received their retirement benefits from the petitioner in three staggered installments without any tax
deduction for the simple reason that petitioner had remitted the same to the BIR with the use of its own funds. It
was only when respondents demanded the payment of their salary differentials that petitioner alleged, for the first
time, that it had failed to present the 1993 CBA to the BIR for approval, rendering such retirement benefits not
exempt from taxes.

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An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and for them to
avail of the optional retirement scheme is not contrary to law or to public morals. Petitioner had agreed to shoulder
such taxes to entice them to voluntarily retire early, on its belief that this would prove advantageous to it.
Respondents agreed and relied on the commitment of petitioner.
For petitioner to renege on its contract with respondents simply because its new management had found the same
disadvantageous would amount to a breach of contract. Petition is DENIED
1. 3 kinds of retirement plans
 Gerlach v. Reuters
Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide, hired Marilyn
Odchimar Gerlach, petitioner, as its local correspondent. On January 23, 1984, respondent assigned petitioner as a
journalist to Reuters Singapore. Before leaving, Rachel Addison, Reuters’ Eastern Region Staff Manager, apprised
her of the details of her forthcoming assignment, specifically that her home base will always be the Philippines. She
soon retired.
Article 287 of the Labor Code reads: "Article 287. Retirement. – Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements." (Emphasis supplied)
The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a
collective bargaining agreement or (b) other applicable employment contract.
The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have
earned under (a) an existing law, (b) a collective bargaining or (c) other agreements.
- Llora Motors, Inc. vs. Drilon,[29] we held that Article 287, does not in itself purport to impose any obligation
upon employers to set up a retirement scheme for their employees over and above that already established
under existing laws, like the Social Security Act.
- Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code,
provides: "Sec. 14. Retirement benefits. – (a) An employee who is retired pursuant to a bona fide retirement
plan or in accordance with the applicable individual or collective agreement or established employer policy
shall be entitled to all the retirement benefits provided therein . . ."
Respondent based petitioner’s retirement benefits on its Plan and established policy, which is in accord with the
above provision. Consequently, petitioner’s theory that the computation of her retirement benefits should be based
on her basic annual salary while stationed abroad is untenable. We agree with the Court of Appeals that petitioner’s
retirement benefits must be based on her notional Philippine salary. It is very clear that from the very start of her
first assignment overseas, respondent apprised her that the company’s contribution to the Plan is based on her
notional Philippine salary. In fact, under the Plan, the company’s contribution to the fund is 10% of the basic monthly
salary of each participant. Respondent also informed petitioner of the amount of her notional Philippine salary
whenever she was transferred to her next overseas assignment or when there were increases in her salary, both
actual and notional. Significantly, respondent was able to prove that it has been its practice worldwide that the
notional salary of an employee is its basis in computing its contribution to the retirement plan for a
local employee detailed abroad. It follows that the amount of retirement benefits of a retiring employee
assigned abroad is based on his notional salary. Besides, it is a basic rule in evidence that the burden of proof is on
the part of the party who makes the allegations – ei incumbit probatio, qui dicit, non qui negat. Petition is hereby
DENIED.
 PAL v. Airline Pilots Association
Issue is between PAL and respondent Airline Pilots Association of the Philippines (ALPAP), the exclusive
bargaining representative of all commercial airline pilots of petitioner, stemmed from petitioner's act of unilaterally
retiring airline pilot Captain Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan.
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot for PAL or
has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement date is the date on
which he completes twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for PAL. The
member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100,000.00 or
(b) to such termination pay benefits to which he may be entitled to under existing laws, whichever is the greater
amount.
SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal retirement
date may retire either at his option or at the option of the Company and when so retired he shall be entitled either
(a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such
termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount.
A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his life and

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at the peak of his career, compared to one who retires at the age of 60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties provided for a special scheme of retirement different from that
contemplated in the Labor Code.
Provisions of Article 287 of the Labor Code could not have contemplated the situation of PAL’s pilots. Rather, it was
intended for those who have no more plans of employment after retirement, and are thus in need of financial
assistance and reward for the years that they have rendered service. In any event, petitioner contends that its pilots
who retire below the retirement age of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement
Plan but also an equity of the retirement fund under the PAL Pilots’ Retirement Benefit Plan, entered into between
petitioner and respondent on May 30, 1972.
The PAL Pilots’ Retirement Benefit Plan is a retirement fund raised from contributions exclusively from petitioner of
amounts equivalent to 20% of each pilot’s gross monthly pay. Upon retirement, each pilot stands to receive the full
amount of the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his gross monthly
income for every year of service he rendered to petitioner. This is in addition to the amount of not less than
P100,000.00 that he shall receive under the 1967 Retirement Plan.
On the other hand, Article 287 of the Labor Code:
Art. 287. Retirement. – Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: provided, however, That an
employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves. xxx xxx xxx.

In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the
Labor Code are less than those that he would get under the applicable retirement plans of petitioner.

Bulletin Publishing Corp. v. Sanchez, this Court held: The aforestated sections explicitly declare, in no uncertain
terms, that retirement of an employee may be done upon initiative and option of the management. And where there
are cases of voluntary retirement, the same is effective only upon the approval of management. The requirement to
consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said
employees. Petition is GRANTED

 Naguit v. NLRC
Aniceto W. Naguit, Jr., an employee of respondent Manila Electric Company (MERALCO) since August 11, 1959,
was dismissed after 32 years of service. In fine, this Court credits the petitioner with good faith when he did not
correct the entry in the Notice of Overtime and Timesheet reflecting that he worked up to 5:00 p.m. on June 6,
1987. The charge of falsification against him does not thus lie. As clearly established by his own account, petitioner,
despite his knowledge that Cabuhat did not hire any jeep nor conduct field verification on June 6, 1987, released the
petty cash representing Cabuhat’s meal allowance and rental fee for a jeep. At best, petitioner wants to convey that
it was mere oversight on his part not to have “reviewed” the voucher, it having already borne the signature of the
approving officer and, therefore, he should not be held culpable.
Petitioner’s attempt at exoneration deserves scant consideration. As custodian of the petty cash fund, he had the
duty to ascertain that the circumstances which brought about any claim therefrom were in order. He cannot now
shirk from this responsibility by indirectly pinning the blame on the approving officer and asserting that the
transgression was the result of mere inadvertence, given his admission that he very well knew that Cabuhat did not
conduct any field work on June 6, 1987, he (Cabuhat) having merely driven for him to Pagbilao.
Petitioner thus committed dishonesty and breached MERALCO’s trust, which dishonesty calls for reprimand to
dismissal under MERALCO’s rules.

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At the time petitioner was dismissed, he was still below the retirement age of employees of MERALCO at 60. To date,
however, he is now about 65. Imposing a penalty less harsh than dismissal and ordering his reinstatement are thus
functus oficio, the Labor Arbiter’s order for his reinstatement not having been executed.
To this Court, a denial of the award of backwages to petitioner from the time of his dismissal up to his age of
retirement suffices as punishment for his dishonesty. He should not, however, be deprived of his retirement benefits.
NLRC are hereby SET ASIDE.
 Sta. Catalina v. NLRC
In June 1955, Hilaria was hired as an elementary school teacher at the Sta. Catalina College In 1970, she applied
for and was granted a one year leave of absence without pay on account of the illness of her mother. After the
expiration in 1971 of her leave of absence, she had not been heard from by petitioner school. She went back to the
school and on May 31, 1997, Hilaria reached the compulsory retirement age of 65.
Retiring pursuant to Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school pegged her
retirement benefits at P59,038.35, computed on the basis of fifteen years of service from 1982 to 1997.
Hilaria insisted, however, that her retirement benefits should be computed on the basis of her thirty years of service,
inclusive of the period from 1955 to 1970; and that the gratuity pay earlier given to her should not be deducted
therefrom.
Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. For, after
her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not
been heard from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching
position as in fact she was employed elsewhere.
As Hilaria was considered a new employee when she rejoined petitioner school upon re-applying in 1982, her
retirement benefits should thus be computed only on the basis of her years of service from 1982 to 1997.
- JAM Transportation Co., Inc. v. Flores teaches:Private respondent’s re-employment as a new employee x x x
would mean a demotion in rank and privileges, retirement benefits, for example, as his entire previous
eighteen (18) years of service with petitioner, would simply be considered as non-existent.
Article 287 of the Labor Code as amended by Republic Act 7641 or the New Retirement Law
provides: ART. 287. Retirement. – Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement the employee shall be entitled to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other agreements: Provided however That an
employee’s retirement benefits under any collective bargaining and other agreements shall not be less
than those provided herein.

Likewise Section 3.3 Rule II of the Rules Implementing R.A. 7641 provides:
3.3 Where both the employer and the employee contribute to a retirement fund in accordance with an individual or
collective agreement or other applicable employment contract
the employer’s total contribution thereto shall not be less than the total retirement benefits to which the employee
would have been entitled had there been no such retirement fund. In case the employer’s contribution is less than
the retirement benefits provided under this Rule
the employer shall pay the difference.

Hence, Hilaria is entitled to receive P98,706.45 computed as follows:

One-half month salary = (15 days x latest salary per day) + (5 days leave x latest salary per day) + ( 1/12 of 13th
month pay)

= P4,512.30 + P1,504.10 + P547.33

= P6,563.73

Retirement Pay = number of years in service x one-half month salary

= 15 years x P6,580.43

= P98,455.95

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Petition is GRANTED in part.
2. Voluntary Retirement
 Ariola v. Philex Mining Corp
Roberto Ariola, Franco Mallare, Benjamin Biete and Hermogenes Mamayson (“petitioners”) are former supervisors of
respondent Philex Mining Corporation. On 14 May 1993, Philex informed the Department of Labor and
Employment (“DOLE”), Cordillera Administrative Region, Baguio City, of its plan to retrench 241 employees. On 1
June 1993, petitioners, with six[9] other supervisors and 49 rank-and-file employees, received from Philex
termination notices informing them of their retrenchment.
This Office holds that the separation of the other complainants namely, Messrs. Banayat, Mallare, Martin, Ariola,
Ferraro, Mamayson, Candol, Brian and Biente (sic) may not be questioned because complainants opted to avail of the
early voluntary retirement program offered by the Company. Thus, from the evidences presented, it clearly appears
that complainants voluntarily retired from the company for a valuable consideration. The quitclaim[s] executed in
favor of the company [amount] to a valid and binding agreement.
As basis for their findings that petitioners retired from service, the Court of Appeals and Arbitrator Advincula cited the
vouchers petitioners signed showing their receipt of “retirement gratuity.” Although there is no dispute that
petitioners received varied amounts denominated in the vouchers in question as “retirement gratuity,” the records
show that Philex paid these amounts because of petitioners’ retrenchment.
Clearly, under Philex’s Retirement Gratuity Plan, “retirement gratuity” is paid not only to retiring employees but also
to those who, like petitioners, are dismissed for cause “beyond their control” such as retrenchment. Indeed, Philex
treated the “retirement gratuity” as petitioners’ basic separation pay, which, with transportation allowance.
Significantly, Philex paid petitioners such separation pay after notifying them of their retrenchment. Furthermore,
Philex’s failure to submit other documents proving petitioners’ claimed retirement, such as their applications for
retirement under Philex’s early voluntary retirement program and their clearance slips, undermines its claim. The
submission of these documents, which should indicate the reason for petitioners’ separation from service, would have
put to rest any doubt on the cause of such separation.
In sum, we hold that by themselves, the vouchers in question do not suffice to prove petitioners’ retirement from
Philex. Retirement results from a voluntary agreement between the employer and the employee where the latter,
after reaching a certain age, agrees to sever his employment with the former. The intent to retire is not clearly
established or if the retirement is involuntary, it is to be treated as a discharge. We GRANT the petition. If
reinstatement is no longer possible Philex Mining Corporation shall pay backwages as computed above plus, in lieu
of reinstatement, separation pay equal to one-half month pay for every year of service.
3. Forfeiture of Benefits
 Equitable PCI Bank v. Caguoia
Generosa Caguioa was a senior manager of Equitable PCI Bank and had been serving the bank for 35 years when
she was discharged for alleged connection with accounting activities specifically discounting checks which caused
Antonio Jarina (the customer who instituted the complaint against her) considerable damage. She denied any
connection with the said activities and filed a case of illegal dismissal. The LA upheld the dismissal of the private
respondent ruling that the dismissal was a valid exercise of management prerogative for having violated the code of
conduct on loyalty and honesty. Upon appeal, the same was denied and thus it was raised to the CA who held that
the testimonies of the people who were in on her with the scheme were insufficient to prove her involvement and
justify her dismissal. CA held that she has been illegally dismissed. Hence this petition. The court held that it was the
petitioner bank who had the burden of proving the legality of the dismissal through substantial evidence. The court
found that there was more than substantial evidence supporting the decision of the labor arbiter in Caguioa’s
participation in the check-discounting scheme when the LA used bank records of Jarina and Caguioa which showed
21 matches of deposits and withdrawals, the letter of Jarina to the bank as well as the testimonies of the audit
examiner. Caguioa only had denials and imputation of lack of probative value of the evidence to counter the bank’s
evidence. Despite her 35 years of service, the court held that since banks thrive on honesty and loyalty of its
employees, the valid dismissal of Caguioa from service deprives her of retirement benefits. The court said that even
government employees who are validly terminated are also deprived of these benefits. Being a managerial employee,
Caguioa may be validly terminated for breach of trust. Petition granted.
 Sy v. Metropolitan Bank and Trust Company
Dennis D. Sy, herein substituted by his heirs Soledad Y. Sy, Ronald Allan Y. Sy, and Melinda S. Pompenada, was the
branch manager in Bajada, Davao City, of respondent Metropolitan Bank and Trust Company.
Under the bank's Retirement Plan, an employee must retire upon reaching the age of 55 years or after rendering 30
years of service, whichever comes first. We hold that petitioner Sy was validly dismissed on the ground of fraud and
willful breach of trust under Article 282 of the Labor Code. Records show that as bank manager, he authorized
"kiting" or drawing of checks against uncollected funds in wanton violation of the bank's policies. It was sufficient
basis for the bank to lose trust in him.

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Petitioner, however, theorizes that having been compulsorily retired, he could no longer be dismissed by the bank.
His premise is absurd. Indeed, he would have qualified for compulsory retirement under the bank's Retirement Plan.
However, he opted to accept the bank's offer of extending his employment for another year with a corresponding
salary increase. Thus, in effect, he had never retired. Unfortunately for him, while serving such extended term, the
bank discovered his unauthorized grant of accommodation to accounts engaged in "kiting" activity.
Such act is a clear breach of the trust reposed in him by the bank. He cannot now elude dismissal for a just cause by
claiming he was already retired compulsorily.
Is petitioner nevertheless entitled to retirement benefits?
Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other privileges
including reinstatement and backwages. Since petitioner's dismissal was for a just cause, he is not entitled to any
retirement benefit. To hold otherwise would be to reward acts of willful breach of trust by the employee. It would
also open the floodgate to potential anomalous banking transactions by bank employees
Notably, the Court has also disallowed claims for retirement benefits in valid dismissal cases because the retirement
plan itself precluded employees dismissed for cause from availing it. Although no such prohibition in the retirement
plan was alleged or proved in this case, we nevertheless deny petitioner's claims because his offenses, vis-á-vis his
long years of service with the bank, reflect a regrettable lack of loyalty which he should have strengthened instead of
betrayed.Petition is hereby DENIED.
VI. The end. Bow.

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