LABOR STANDARDS

AVL
First Semester 2019-2020

I. Fundamental Principles and Policies

A. Constitutional Provisions

1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20

2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18 (2)
3. Article XIII, Secs. 1, 2, 3, 13, 14

1. Espina v. Zamora, G.R. No. 143855, September 21, 2010

 This case determines the constitutionality of the Retail Trade Liberalization Act of 2000 (RA 8762).
o This act repeals RA 1180-- which absolutely prohibits foreign nationals from engaging in the
retail trade business.
o RA 8762 allows foreigners to own retail trade business under four categories.
o Also allows natural-born Filipino citizens, who had lost their citizenship and now reside in
the Philippines, to engage in the same business with the same rights as Filipino citizens.
 On Oct 11, 2000 petitioners filed this petition assailing the constitutionality of the law.

Petitioner/Respondent's Contention
 Petitioners aver that:
o The law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution. As well as
Sections 10, 12, and 13 of Article XII of the Constitution.
 Which enjoins the State to place the national economy under the control of Filipinos
to achieve equal distribution of opportunities, promote industrialization and full
employment, and protect Filipino enterprise against unfair competition and trade
policies.
o The implementation of the law would lead to alien control of the retail trade
o Foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-sari store
vendors, destroy self-employment, and bring about more unemployment.
o The WB-IMF had improperly imposed the passage of RA 8762 on the government as a
condition for the release of certain loans.
o There is a clear and present danger that the law would promote monopolies or
combinations in restraint of trade
 Respondents aver that:
o Petitioners have no legal standing to file the petition. They cannot invoke the fact that they
are taxpayers or members of Congress.
o The petition does not involve any justiciable controversy; neither does it allege that the
subject law violates the rights of vendors the members of Congress represents
o Petitioners have failed to overcome the presumption of constitutionality of the law. And
Sections 9, 19, and 20 of Article of the Constitution are not self-executing provisions.
o The constitution mandates the regulation but not the prohibition of foreign investments.
 It only directs Congress to reserve to Filipino citizens certain areas of investments, but
it does not prohibit Congress from enacting laws allowing the entry of foreigners into
certain industries not reserved by the Constitution to Filipinos.
Lower Courts
 None.
Issue
1. Whether or not petitioner lawmakers have the legal standing to challenge the constitutionality of
RA 8762
2. Whether or not RA 8762 is unconstitutional
Ruling
1. They don't have standing, but the Court will still resolve the question raised.
a. There is no showing that the law prejudices petitioners or inflicts damage on them. Still the
Court will address the issue since the rule on standing can be relaxed for nontraditional
plaintiffs in cases when public interest so requires or the matter is of transcendental
importance.
2. Law is constitutional.
a. The provisions of Article II of the Constitution are not self-executing. Legislative failure to
pursue such policies cannot give rise to a cause of action in courts (Tanada v. Angara).
b. While Section 19, Article II of the Constitution require the development of a self-reliant and
independent national economy effectively controlled by Filipino entrepreneurs, it does not
impose a policy of Filipino monopoly of the economic environment.
i. While the Constitution mandates a bias in favor of Filipinos goods, services, labor and
enterprises, it also recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino
enterprises only against foreign competition and trade practices that are unfair.
ii. In other words, the Constitution does not rule out the entry of foreign investment,
goods, and services. While it does not encourage their unlimited entry into the
country, it does not prohibit them either.
c. Section 10, Article XII of the Constitution gives Congress the discretion to reserve to
Filipinos certain areas of investments upon the recommendation of NEDA and when the
national interest requires.
i. Which means Congress can determine what policy to pass and when to pass it
depending on the economic exigencies.
ii. The control and regulation of trade in the interest of the public welfare is of course an
exercise of the police power of the State.
iii. In 1954, Congress enacted RA 1180, restricting the retail trade business to
Filipino citizens. In denying the petition assailing it validity for violation of the
foreigner’s right to substantive due process of law, the Supreme Court held that
the law constituted a valid exercise of police power. The State had an interest in
preventing alien control of the retail trade and RA 1180 was reasonably related
to that purpose.
d. Here to the extent that RA 8762 only lessens the restraint on the foreigners' right to
property or to engage in business, but it does not amount to a denial of the Filipinos' right
to property and due process of law.
e. The Court is also not convinced that the law would eventually lead to alien control of the
retail trade business. The law itself provides strict safeguards on foreign participation:
i. Aliens can only engage in retail trade business subject to the categories enumerated
ii. Only nationals from countries which allow the entry of Filipino retailers shall be
allowed to engage in retail trade business
iii. Qualified foreign retailers shall not be allowed to engage in certain retailing activities
outside their accredited stores.
 2. · Manila Water v. Del Rosario, G.R. No. 188747, January 29, 2014
FACTS: On 22 October 1979, Del Rosario was employed as Instrument Technician by
Metropolitan Waterworks and Sewerage System (MWSS). Due to the reorganization, he was
absorbed and became an employee of Manila Water.

Sometime in May 2000, Manila Water discovered that 24 water meters were missing in its
stockroom. Upon initial investigation, it appeared that Del Rosario and his co-employee were
involved in the pilferage and the sale of water meters to the company’s contractor. In his letter-
explanation, Del Rosario confessed his involvement in the act charged and pleaded for
forgiveness, promising not to commit similar acts in the future.

On 29 June 2000, Manila Water conducted a hearing to afford Del Rosario the opportunity to
personally defend himself. During the formal investigation Del Rosario was found responsible
for the loss of the water meters and therefore liable for violating Section 11.1 of the Company’s
Code of Conduct. Manila Water proceeded to dismiss Del Rosario from employment on 3 July
2000.

This prompted Del Rosario to file an action for illegal dismissal claiming that his severance
from employment is without just cause and that his admission to the misconduct charged was
not voluntary but was coerced by the company. Such admission therefore, made without the
assistance of a counsel, could not be made basis in terminating his employment. However,
Manila Water pointed out that the act of stealing the company’s property is punishable by
dismissal.

The Labor Arbiter dismissed the complaint filed by Del Rosario for lack of merit, however, he
was awarded separation pay. According to the Labor Arbiter, Del Rosario’s length of service for
21 years, without previous derogatory record, warrants the award of separation pay.
The NLRC dismissed the appeal interposed by Manila Water for its failure to append a
certification against forum shopping in its Memorandum of Appeal and denied the Motion for
Reconsideration filed by Manila Water.

The Court of Appeals affirmed the decision of the Labor Arbiter awarding separation pay to Del
Rosario. Considering that Del Rosario rendered 21 years of service to the company without
previous derogatory record, the appellate court considered the granting of separation pay by
the labor officer justified.

HELD: As a general rule, an employee who has been dismissed for any of the just causes enumerated under
Article 282 of the Labor Code is not entitled to a separation pay. Section 7, Rule I, Book VI of the Omnibus
Rules implementing the Labor Code provides:

Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an
employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a
just cause does not entitle him to the termination pay provided in the Code, without prejudice, however, to
whatever rights, benefits and privileges he may have under the applicable individual or collective agreement
with the employer or voluntary employer policy or practice.

In exceptional cases, however, the Court has granted separation pay to a legally dismissed employee as an
act of "social justice" or on "equitable grounds."In both instances, it is required that the dismissal (1) was not
for serious misconduct; and (2) did not reflect on the moral character of the employee.2

In the leading case of Philippine Long Distance Telephone Company v. NLRC, we laid down the rule that
separation pay shall be allowed as a measure of social justice only in the instances where the employee is
validly dismissed for causes other than serious misconduct reflecting his moral character. We clarified that:

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. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.

of Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,2we
expanded the exclusions and elucidated that separation pay shall be allowed as a measure of social justice
only in instances where the employee is validly dismissed for causes other than serious misconduct, willful
disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime
against the employer or his family, or those reflecting on his moral character. In the same case, we instructed
the labor officials that they must be most judicious and circumspect in awarding separation pay or financial
assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to
oppress the employers. The commitment of the court to the cause of the labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding
financial assistance to the undeserving and those who are unworthy of liberality of the law.

3. · Philippine Telegraph v. NLRC, G.R. No. 118978, May 23, 1997

FACTS: petitioner Philippine Telegraph and Telephone Company (hereafter, PT & T) invokes the alleged
concealment of civil status and defalcation of company funds as grounds to terminate the services of an
employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really
motivated PT & T to terminate her services was her having contracted marriage during her employment,
which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against
in gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code.

HELD:
4. · Wesleyan University v. Faculty, G.R. No. 181806, March 12, 2014
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate labor
organization concerning the terms and conditions of employment. Like any other contract, it has the force of
law between the parties and, thus, should be complied with in good faith.Unilateral changes or suspensions
in the implementation of the provisions of the CBA, therefore, cannot be allowed without the consent of
both parties.
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the September 25, 2007
Decision and the February 5, 2008 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 97053.

Factual Antecedents

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized

and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Staff
Association, on the other hand, is a duly registered labor organization acting as the sole and exclusive
bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.10

On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya), issued a
Memorandum11 providing guidelines on the implementation of vacation and sick leave credits as well as
vacation leave commutation. The pertinent portions of the Memorandum read:

5. · Serrano v. Gallant Maritime, G.R. No. 167614, March 24, 2009

6. · Rosario v. Victory Ricemill, G.R. No. 147572, February 19, 2003
7. · Sameer Overseas v. Cabiles, G.R. No. 170139, August 5, 2014
8. · Tongko v. Manulife, G.R. No. 167622, November 7, 2008
9. · Serrano v. NLRC, G.R. No. 117040, January 27, 2000
10. · Agabon v. NLRC, G.R. No. 158693, November 17, 2004
11. · De Jesus v. Hon. Aquino, G.R. No. 164662, February 18, 2013
12. · Abbott v. Alcaraz, G.R. No. 192571, July 23, 2013
13. · Duncan v. Glaxo, G.R. No. 162994, September 17, 2004
14. · Yrasuegui v. PAL, G.R. No. 168081, October 17, 2008
15. · Opinaldo v. Ravina, G.R. No. 196573, October 16, 2013
16. · Phimco Industries v. PILA, G.R. No. 170830, August 11, 2010
17. · BPI v. BPI Employees, G.R. No. 164301, August 10, 2010

BANK OF THE PHILIPPINE ISLANDS, Petitioner,

vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK,
Respondent.

FACTS: On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger
executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC. This Article and
Plan of Merger was approved by the Securities and Exchange Commission on April 7, 2000.
Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred to
and absorbed by BPI as the surviving corporation. FEBTC employees, including those in its different
branches across the country, were hired by petitioner as its own employees, with their status and
tenure recognized and salaries and benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank
(hereinafter the "Union," for brevity) is the exclusive bargaining agent of BPI’s rank and file
employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not belong
to any labor union at the time of the merger. Prior to the effectivity of the merger, or on March 31,
2000, respondent Union invited said FEBTC employees to a meeting regarding the Union Shop
Clause (Article II, Section 2) of the existing CBA between petitioner BPI and respondent Union.
The parties both advert to certain provisions of the existing CBA, which are quoted below:
ARTICLE I
Section 1. Recognition and Bargaining Unit – The BANK recognizes the UNION as the sole and
exclusive collective bargaining representative of all the regular rank and file employees of the Bank
offices in Davao City.
Section 2. Exclusions
Section 3. Additional Exclusions
Section 4. Copy of Contract
ARTICLE II
Section 1. Maintenance of Membership – All employees within the bargaining unit who are members
of the Union on the date of the effectivity of this Agreement as well as employees within the
bargaining unit who subsequently join or become members of the Union during the lifetime of this
Agreement shall as a condition of their continued employment with the Bank, maintain their
membership in the Union in good standing.
Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of
this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30)
days after they become regular employees, join the Union as a condition of their continued
employment. It is understood that membership in good standing in the Union is a condition of their
continued employment with the Bank. (Emphases supplied.)
After the meeting called by the Union, some of the former FEBTC employees joined the Union, while
others refused. Later, however, some of those who initially joined retracted their membership.
Respondent Union then sent notices to the former FEBTC employees who refused to join, as well as
those who retracted their membership, and called them to a hearing regarding the matter. When
these former FEBTC employees refused to attend the hearing, the president of the Union requested
BPI to implement the Union Shop Clause of the CBA and to terminate their employment pursuant
thereto.
After two months of management inaction on the request, respondent Union informed petitioner BPI
of its decision to refer the issue of the implementation of the Union Shop Clause of the CBA to the
Grievance Committee. However, the issue remained unresolved at this level and so it was
subsequently submitted for voluntary arbitration by the parties.

Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision dated November 23, 2001, ruled in
favor of petitioner BPI’s interpretation that the former FEBTC employees were not covered by the
Union Security Clause of the CBA between the Union and the Bank on the ground that the said
employees were not new employees who were hired and subsequently regularized, but were
absorbed employees "by operation of law" because the "former employees of FEBTC can be
considered assets and liabilities of the absorbed corporation." The Voluntary Arbitrator
concluded that the former FEBTC employees could not be compelled to join the Union, as it was
their constitutional right to join or not to join any organization.

Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator denied the same
in an Order dated March 25, 2002.
Dissatisfied, respondent then appealed the Voluntary Arbitrator’s decision to the Court of Appeals. In
the herein assailed Decision dated September 30, 2003, the Court of Appeals reversed and set
aside the Decision of the Voluntary Arbitrator. Likewise, the Court of Appeals denied herein
petitioner’s Motion for Reconsideration in a Resolution dated June 9, 2004.
CA: Decision
The Court of Appeals pertinently ruled in its Decision:

A union-shop clause has been defined as a form of union security provision wherein non-
members may be hired, but to retain employment must become union members after a
certain period.
There is no question as to the existence of the union-shop clause in the CBA between the petitioner-
union and the company. The controversy lies in its application to the "absorbed" employees.
This Court agrees with the voluntary arbitrator that the ABSORBED employees are distinct and
different from NEW employees BUT only in so far as their employment service is concerned. The
distinction ends there. In the case at bar, the absorbed employees’ length of service from its former
employer is tacked with their employment with BPI. Otherwise stated, the absorbed employees
service is continuous and there is no gap in their service record.
This Court is persuaded that the similarities of "new" and "absorbed" employees far
outweighs the distinction between them. The similarities lies on the following, to wit: (a) they
have a new employer; (b) new working conditions; (c) new terms of employment and; (d) new
company policy to follow. As such, they should be considered as "new" employees for
purposes of applying the provisions of the CBA regarding the "union-shop" clause.
To rule otherwise would definitely result to a very awkward and unfair situation wherein the
"absorbed" employees shall be in a different if not, better situation than the existing BPI employees.
The existing BPI employees by virtue of the "union-shop" clause are required to pay the monthly
union dues, remain as members in good standing of the union otherwise, they shall be terminated
from the company, and other union-related obligations. On the other hand, the "absorbed"
employees shall enjoy the "fruits of labor" of the petitioner-union and its members for nothing in
exchange. Certainly, this would disturb industrial peace in the company which is the paramount
reason for the existence of the CBA and the union.
The voluntary arbitrator’s interpretation of the provisions of the CBA concerning the coverage of the
"union-shop" clause is at war with the spirit and the rationale why the Labor Code itself allows the
existence of such provision.
The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC (G.R. No. 76989,
September 29, 1987) rule, to quote:
"This Court has held that a valid form of union security, and such a provision in a collective
bargaining agreement is not a restriction of the right of freedom of association guaranteed by the
Constitution.
A closed-shop agreement is an agreement whereby an employer binds himself to hire only members
of the contracting union who must continue to remain members in good standing to keep their jobs. It
is "THE MOST PRIZED ACHIEVEMENT OF UNIONISM." IT ADDS MEMBERSHIP AND
COMPULSORY DUES. By holding out to loyal members a promise of employment in the closed-
shop, it wields group solidarity." (Emphasis supplied)
Hence, the voluntary arbitrator erred in construing the CBA literally at the expense of industrial
peace in the company.

Petitioner’s CONTENTION: Petitioner is of the position that the former FEBTC employees are not
new employees of BPI for purposes of applying the Union Shop Clause of the CBA, on this note,
petitioner points to Section 2, Article II of the CBA, which provides:

New employees falling within the bargaining unit as defined in Article I of this Agreement,
who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they
become regular employees, join the Union as a condition of their continued employment. It is
understood that membership in good standing in the Union is a condition of their continued
employment with the Bank. (Emphases supplied.)

Petitioner argues that the term "new employees" in the Union Shop Clause of the CBA is qualified by
the phrases "who may hereafter be regularly employed" and "after they become regular employees"
which led petitioner to conclude that the "new employees" referred to in, and contemplated by, the
Union Shop Clause of the CBA were only those employees who were "new" to BPI, on account of
having been hired initially on a temporary or probationary status for possible regular employment at
some future date. BPI argues that the FEBTC employees absorbed by BPI cannot be considered as
"new employees" of BPI for purposes of applying the Union Shop Clause of the CBA.
According to petitioner, the contrary interpretation made by the Court of Appeals of this particular
CBA provision ignores, or even defies, what petitioner assumes as its clear meaning and scope
which allegedly contradicts the Court’s strict and restrictive enforcement of union security
agreements.

ISSUE: issue in this case is whether or not the former FEBTC employees that were absorbed
by petitioner upon the merger between FEBTC and BPI should be covered by the Union Shop
Clause found in the existing CBA between petitioner and respondent Union.

HELD: Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the
thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to
become union members but who qualify for retirement shall receive their retirement benefits in
accordance with law, the applicable retirement plan, or the CBA, as the case may be.

In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., we ruled that:

It is the policy of the State to promote unionism to enable the workers to negotiate with
management on the same level and with more persuasiveness than if they were to
individually and independently bargain for the improvement of their respective conditions. To
this end, the Constitution guarantees to them the rights "to self-organization, collective
bargaining and negotiations and peaceful concerted actions including the right to strike in
accordance with law." There is no question that these purposes could be thwarted if every
worker were to choose to go his own separate way instead of joining his co-employees in
planning collective action and presenting a united front when they sit down to bargain with
their employers. It is for this reason that the law has sanctioned stipulations for the union
shop and the closed shop as a means of encouraging the workers to join and support the
labor union of their own choice as their representative in the negotiation of their demands
and the protection of their interest vis-à-vis the employer. (Emphasis ours.)

In other words, the purpose of a union shop or other union security arrangement is to guarantee the
continued existence of the union through enforced membership for the benefit of the workers.
All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management
are subject to its terms. However, under law and jurisprudence, the following kinds of
employees are exempted from its coverage, namely, employees who at the time the union shop
agreement takes effect are bona fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds; employees already in the service and
already members of a union other than the majority at the time the union shop agreement
took effect; confidential employees who are excluded from the rank and file bargaining unit; and
employees excluded from the union shop by express terms of the agreement.
When certain employees are obliged to join a particular union as a requisite for continued
employment, as in the case of Union Security Clauses, this condition is a valid restriction of the
freedom or right not to join any labor organization because it is in favor of unionism. This Court, on
occasion, has even held that a union security clause in a CBA is not a restriction of the right of
freedom of association guaranteed by the Constitution.
Moreover, a closed shop agreement is an agreement whereby an employer binds himself to hire
only members of the contracting union who must continue to remain members in good standing to
keep their jobs. It is "the most prized achievement of unionism." It adds membership and
compulsory dues. By holding out to loyal members a promise of employment in the closed shop, it
wields group solidarity.
Indeed, the situation of the former FEBTC employees in this case clearly does not fall within the first
three exceptions to the application of the Union Shop Clause discussed earlier. No allegation or
evidence of religious exemption or prior membership in another union or engagement as a
confidential employee was presented by both parties. The sole category therefore in which petitioner
may prove its claim is the fourth recognized exception or whether the former FEBTC employees are
excluded by the express terms of the existing CBA between petitioner and respondent.

18. · Pryce Corp. v. Chinabank, G.R. No. 172302, February 18, 2014
19. · Abella v. NLRC, G.R. No. 71813, July 20, 1987
20. · Goya v. Goya Employees, G.R. No. 170054, January 21, 2013
21. · Imbong v. Ochoa, G.R. No. 204819, April 8, 2014
22. · International School v. Quisumbing, G.R. No. 128845, June 1, 2000
23. · See: Serrano v. Gallant Maritime, G.R. No. 167614, March 24, 2009
24. · Canuel v. Magsaysay Maritime, G.R. No. 190161, October 13, 2014
25. · Asia Brewery v. TPMA, G.R. Nos. 171594-96, September 18, 2013

B. Civil Code

1. Article 19
2. Article 1700
3. Article 1702

· Dongon v. Rapid Movers, G.R. No. 163431, August 28, 2013

· Cirtex Employees v. Cirtex, G.R. No. 190515, November 15, 2010
· PNCC Traffic v. PNCC, G.R. No. 171231, February 17, 2010
· Magis Center v. Manalo, G.R. No. 178835, February 13, 2009

C. Labor Code

1. Article 3
2. Article 4
3. Article 166
4. Article 211
5. Article 212
6. Article 255
7. Article 277

· Moresco v. Cagalawan, G.R. No. 175170, September 5, 2012

· PAL v. PALEA, G.R. No. 85985, August 13, 1993