TIPS

FOR THE 2014 BAR EXAMINATIONS

ON LABOR LAWS AND SOCIAL
LEGISLATION

LABOR STANDARDS
1. What are the three TESTS of EMPLOYMENT RELATIONS?

a) Four-fold test (selection, payment of wages, power to discipline/dismiss and Right to Control)
Note: CONTROL - when the person for whom the services are performed reserves the right to control
not only the end achieved but also the manner and means used to achieve that end.)
b) Economic reality test (economic dependence of worker on employer for continued employment)
c) Two-tiered test or Multi-factor test (combination of a & b)

KINDS OF EMPLOYMENT

2. What is REGULAR EMPLOYMENT?

It is an arrangement whereby the employee has been engaged to perform

activities which are usually necessary or desirable in the usual business or trade
of the employer.

3. What is PROJECT EMPLOYMENT?

It is arrangement whereby the employment has been fixed for a specific

project or undertaking whose completion or termination has been determined
at the time of the engagement of the employee.

4. Give the 2 requirements (in project employment) to remove the

presumption of regularity of employment, namely: 

a) designation of a specific project or undertaking for which the

employee is hired; and

b) clear determination of the completion or termination of the

project at the time of the employee’s engagement.

5. What is the principal test for determining whether a particular

employee is a project employee or a regular employee?

“Whether the project employee was assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the
employee is engaged for the project.”
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Project may refer to a particular job or undertaking that is within the regular or
usual business of the employer, but which is distinct and separate and
identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. (Alcatel
Philippines, Inc. vs. Relos, G.R. No. 164315, July 3, 2009.)

6. What is the effect of continuous rehiring of a project employee?

A project employee becomes a regular employee; otherwise he remains a

project employee. (Alcatel Philippines, Inc. vs. Relos, G.R. No. 164315, July 3, 2009.)

7. What is seasonal employment?

It is an arrangement whereby the employee is merely employed for the

applicable season and whose employment is coterminous with such season.
(ex: Santa Claus copycats during Christmas season).

8. May SEASONAL EMPLOYMENT ripen to REGULAR EMPLOYMENT?

YES. When seasonal workers are continuously and repeatedly hired to

perform the same tasks or activities for several seasons or even after the
cessation of the season. This length of time may likewise serve as badge of
regular employment.

In fact, even though denominated as “seasonal workers,” if these workers are

called to work from time to time and are only temporarily laid off during the
off-season, the law does not consider them separated from the service during
the off-season period. The law simply considers these seasonal workers on
leave until re-employed.  (Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439, January 15, 2014)

9. What is PROBATIONARY EMPLOYMENT?

It is an arrangement whereby the employee is expressly informed of his status

as probationary employee for a period of six months during which he is
observed whether or not he will pass the reasonable standards set by the
employer and known to the employee at the time of his engagement.

10. What are the two modes of dismissing a probationary employee?

(a) If commits acts constituting just causes – Here, the employer must
follow the twin requirements of due process.

(b) If fails to pass reasonable standards – Here, only one notice is required
and that is to formally notify the employee that he is terminated from
employment on the ground that he has failed to pass the standards set
by the employer known to the employee at the time of engagement.
(Davao Contractors Development Coop. vs. Pasawa, G.R. No. 172174, July 9, 2009.)
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Caution: The second mode is available only if the notice is done within the
probationary period of 6 months. Beyond that the proby is deemed a
regular employee by operation of law.

11. Jose was hired as probationary employee. After two months, the
employer observed that he did not pass the reasonable standards set by
the employer and known to the proby at the time of his engagement.
The employer did not lose time in notifying the proby of his termination
for reason that he did not pass the reasonable standards. The proby
protested on the ground that he was still 2 months in probationary
period and that it was too early for the employer to evaluate him. Is the
employee’s protest tenable?

NO. The employer has prerogative to assess the performance of a proby at

anytime within the six month period of his probationary status.

12. Give the limitations on the employer’s right to dismiss a probationary

employee.

The power of the employer to terminate the services of an employee on

probation is not without limitations.

First, this power must be exercised in accordance with the specific

requirements of the contract;

Second, the dissatisfaction on the part of the employer must be real and in
good faith, not feigned so as to circumvent the contract or the law; and 

Third, there must be no unlawful discrimination in the dismissal.

(Davao Contractors Development Coop. vs. Pasawa, G.R. No. 172174, July 9, 2009.)

13. Are Company-issued IDs and uniforms substantial proof of

employment?

YES. It is common practice for companies to provide identification cards to

individuals not only as a security measure, but more importantly to identify the
bearers thereof as bona fide employees of the firm or institution that issued
them. The provision of company-issued identification cards and uniforms to
employees aside from their inclusion in the payroll, indubitably constitutes
substantial evidence sufficient to support only one conclusion: that they were
indeed employees of the ID and Uniform Issuer. (Masonic Contractor, Inc., et al. vs. Madjos, et al., G.R.
No. 185094, November 25, 2009.)

14. Is the “no work no pay” scheme significant in determining employer-

employee relationship?

NO. The fact that an employee was paid under a “no work no pay” scheme is
not significant. The “no work no pay” scheme is merely a method of computing
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compensation, not a basis for determining the existence or absence of
employer-employee relationship.

15. What is CASUAL EMPLOYMENT?

It is an employment arrangement that does not fall under regular employment

or project/seasonal employment.

16. May CASUAL EMPLOYMENT ripen into REGULAR EMPLOYMENT?

Yes. By way of an exception, paragraph 2, Article 280 of the Labor Code also
considers as REGULAR, a casual employment arrangement when the casual
employee’s engagement is made to last for at least one year, whether the
service is continuous or broken.

Why so? Because here the presumption of regularity of employment sets in,
that is, that the “employee’s services are necessary in the overall business
scheme of the employer.”

17. What is a “FIXED TERM EMPLOYMENT”?

It is an arrangement whereby both the ER and the EE have agreed from the
start that the engagement is for a specific and definite period only.

Note:

Actually, the Labor Code does not mention another employment arrangement
– contractual or fixed term employment (or employment for a term) – which,
if not for the fixed term, should fall under the category of regular employment
in view of the nature of the employee’s engagement, which  is  to  perform 
an  activity  usually  necessary  or  desirable in  the employer’s business.

In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the
Court, for the first time, recognized  and  resolved  the  anomaly  created  by 
a  narrow  and  literal interpretation of Article 280 of the Labor Code that
appears to restrict the employee’s right to freely stipulate with his employer
on the duration of his engagement.  In this case, the Court upheld the validity
of the fixed-term employment  agreed  upon  by  the  employer,  Brent 
School,  Inc., and the employee, Dorotio Alegre, declaring that the restrictive
clause in Article 280 “should  be  construed  to  refer  to  the substantive evil
that the Code itself x x x singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances
where the fixed period of  employment  was agreed upon knowingly and
voluntarily by the parties x x x absent any x x x circumstances vitiating the
employee’s consent, or where the facts satisfactorily show that the employer
and the employee dealt  with each other on more or less equal terms.” The
indispensability or desirability of the activity performed by the employee will
not preclude the parties from entering into an otherwise valid fixed term
employment agreement; a definite period of employment does not essentially
contradict the nature of the employee’s duties as necessary and desirable to
the usual business or trade of the employer.
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Nevertheless,  “where  the  circumstances  evidently  show  that  the
employer  imposed  the  period  precisely  to  preclude  the  employee from
acquiring tenurial security, the law and this Court will not hesitate to strike
down or disregard the period as contrary to public policy, morals, etc.” In such
a case, the general restrictive rule under Article 280 of the Labor Code will
apply and the employee shall be deemed regular. (Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014).

EMPLOYMENT OF FOREIGNER IN THE PHILIPPINES

18. What is the requirement for a non-resident alien (NRA) to work in the
Philippines?

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 is required to obtain an EMPLOYMENT PERMIT
from the DOLE (Department of Labor and Employment).

19. What are the requisites before an ALIEN EMPLOYMENT PERMIT (AEP)
may be issued to a NRA?

a) There must be prior 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.

b) For an enterprise registered in preferred areas of investment,

the employment permit may be issued upon recommendation
of the government agency charged with the supervision of said
registered enterprise. (Ex: Mining Foreign (NR) Engineer – (recommendation
from the Bureau of Mines under the DENR).

20. Where does the filing of application for AEP done?

The foreigner applying for AEP may file his application with the DOLE Regional
Office having jurisdiction over the intended place of work. If he will be assigned
in the different parts of the country, then he can file his application with any of
the DOLE Regional Offices having jurisdiction in any of the places of work.

21. What documents the applicant shall prepare for submission upon filing
of his application:

1. Duly accomplished application form (Download AEP Application Form);

2. Photocopy of passport, with Visa or Certificate of Recognition for
refugees;
3. Contract of Employment/Appointment or Board Secretary’s Certificate of
Election;
4. Photocopy of Mayor’s Permit to operate business;
5. Photocopy of current AEP (if for renewal only);
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22. Give the Rule on Prohibition against transfer to another jobs

An alien issued with employment permit may not transfer to another job or
change his employer without prior approval of the Secretary of Labor. Article
41 of the Labor Code provides: “After the issuance of employment permit, the
alien shall not transfer to another job or change his employer without prior
approval of Secretary of Labor and Employment.”

Violation of this prohibition shall be punished in accordance with Art. 289-290

of the Labor Code. In addition, the alien worker shall be subject to deportation
after service of his sentence.

23. Are there ALIENS exempted from securing AEP?

YES. They are:

1. All members of the diplomatic service and foreign government officials

accredited by and with reciprocity arrangement with the Philippine
government;

2. Officers and staff of international organizations of which the Philippine

government is a member, and their legitimate spouses desiring to work in
the Philippines;

3. Foreign nationals elected as members of the Governing Board who do not

occupy any other position, but have only voting rights in the corporation;

4. All foreign nationals granted exemption by law;

5. Owners and representatives of foreign principals whose companies are

accredited by the Philippines for a limited period and solely for the
purpose of interviewing Filipino applicants for employment abroad;

6. Foreign nationals who come to the Philippines to teach, present and/or

conduct research studies in universities and colleges as visiting, exchange
or adjunct professors under formal agreements between the universities
or colleges in the Philippines and foreign universities or colleges; or
between the Philippine government and foreign government; provided
that the exemption is on reciprocal basis; and

7. Resident foreign nationals. (DOLE Department Order No. 75-06, Series of

2006.)

R.A. 8042 AS AMENDED BY R.A. 10022 MIGRANT WORKERS’ ACT

SEAFARERS CASES
24. Are SEAFARERS who died during employment entitled to death
benefits?
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YES. The general rule is that the employer is liable to pay the heirs of the
deceased seafarer for death benefits once it is established that he died during
the effectivity of his employment contract.
25. Is there an EXCEPTION to the preceding rule?

YES, the employer may be exempted from liability if he can successfully prove
that the SEAFARER’s DEATH was caused by an injury directly attributable to his
deliberate or willful act. (Great Southern Maritime Services, Inc., et al. vs. Leonila Surigao, et al., G.R.
No. 183646, September 18, 2009.)

NOTE: Here, the burden of proof rests in the employer to prove that the
SEAFARER’s injury, incapacity, disability or death is directly attributable to the
SEAFARER or is caused by his willful act. (INC Shipmanagement, Inc. vs. Alexander L.
Moradas, January 15, 2014).

26. Under what condition may a SEAFARER claim Disability Benefit under
Section 20 (B) of the 1996 POEA Standard Contract of Employment for
Seafarers?

A seafarer may claim disability benefits under Section 20(B) of the 1996 POEA
Standard Contract of Employment for Seafarers ONLY IF HE SUFFERS A WORK-
RELATED INJURY OR ILLNESS DURING THE TERM OF HIS CONTRACT.

27. Suppose the SEAFARER has suffered or been afflicted with an illness
(e.g. diabetes) four (4) years before he was engaged by the foreign
principal, can the SEAFARER claim disability benefits under the
Standard Contract of Employment for Seafarers?

NO. It is established that he was not afflicted with the said illness only during
the term of his contract but even prior to his employment. He did not even
complain of any complications of the disease at any time during his
employment. Moreover, even assuming he contracted the disease during the
term of his contract, he was precluded from claiming disability benefits for his
failure to comply with Section 20 (B) (3) of the Contract. The provision requires
a claimant to submit himself to a company-designated physician three days
after his arrival in the Philippines for medical examination and failure to do so
bars the filing of a claim for disability benefits. Neither is he entitled to disability
benefits under Section 32-A of the Contract since diabetes is not one of the
compensable occupational diseases listed there. (Bandila Maritime Services, Inc., et al. vs.
Rolando Dubduban, G.R. No. 171984, September 29, 2009.)

28. What is Permanent Disability?

Permanent Disability refers to the inability of a worker to perform his job for
more than 120 days, regardless of whether he loses the use of any part of his
body. (So what determines petitioner’s entitlement to permanent disability
benefits is his inability to work for more than 120 days).

29. What is Total disability?

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Total Disability means the disablement of an employee to earn wages in the

same kind of work of similar nature that he was trained for, or accustomed to
perform, or any kind of work which a person of his mentality and attainments
could do. It does not mean absolute helplessness. In disability compensation, it
is not the injury which is compensated, but rather it is the incapacity to work
resulting in the impairment of one’s earning capacity. (Lloreta vs. Philippine Transmarine
Carriers, Inc. et al., G.R. No. 183908, December 4, 2009).

30. Does the SEAFARER have a right to ask for second-opinion on the finding
of fitness to work?

YES. The provision of POEA Standard Employment Contract does not preclude
the SEAFARER from getting a second opinion as to his condition for purposes
of claiming disability benefits. While it is the company-designated physician
who must declare that the seaman suffers a permanent disability during
employment, it does not deprive the SEAFARER of his right to seek a second
opinion. Thus, the Contract recognizes the prerogative of the SEAFARER to
request a second opinion and, for this purpose, to consult a physician of his
choice. (Abante vs. KJGS Fleet Management Manila, G.R. No. 182430, December 4, 2009.)

31. What is the effect of failure of company designated physician to certify

the SEAFARER’s fitness to work?

The failure of the company-designated physician to pronounce petitioner fit to

work within the 120-day period entitles the SEAFARER to permanent total
disability benefit. (Abante vs. KJGS Fleet Management Manila, G.R. No. 182430, December 4, 2009.)

32. In cases of injury or illness, is the SEAFARER mandated to submit

himself to the company-designated doctor in accordance with the post-
employment medical examination requirement under the POEA
Standard Employment Contract within 3 days from repatriation for
medical reasons, to become entitled to disability benefits?

YES. Under paragraph 3 of Section 20(B) of the POEA Standard Employment

Contract, the SEAFARER is mandated to submit himself to the company-
designated doctor in accordance with the post-employment medical
examination requirement under such POEA Standard Employment Contract
within 3 working days from repatriation or upon his return to the Philippines.
Otherwise, his failure to comply with this requirement which is a sine qua non
bars the filing of claim for disability benefits. (Musnit vs. Sea Star Shipping Corporation, G.R.
No. 182623, December 4, 2009.)

33. Suppose the SEAFARER, upon return to the Philippines, is physically

incapacitated to do so (i.e to submit himself for the required medical
examination within 3 days from repatriation), what is his option to still
be entitled to the DISABAILITY BENEFIT?
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The SEAFARER may serve a written notice to the local manning agency within
the same period of three working days from return which is deemed as
substantial compliance. (Musnit vs. Sea Star Shipping Corporation, G.R. No. 182623, December 4,
2009.)
34. Suppose the company-designated doctor’s medical assessment conflicts
with that of the assessment of the doctor hired by the SEAFARER
himself for such required medical examination, what shall the
SEAFARER do in order to pursue his claim for DISABILITY BENEFIT?
(Musnit vs. Sea Star Shipping Corporation, G.R. No. 182623, December 4, 2009.)

A third doctor may be agreed jointly between the Employer and the SEAFARER.
The finding of this 3rd doctor is final and binding to both parties.

35. What is the doctrine taught in the case of INC Shipmanagement, Inc. v.
Alexander L. Moradas, January 15, 2014?

The entitlement of seamen on overseas work to disability benefits is a matter

governed, not only by medical findings, but by law and by contract.

“With respect to the applicable rules, it is doctrinal that the entitlement of

seamen on overseas work to disability benefits “is a matter governed, not
only by medical findings, but by law and by contract. The material statutory
provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of the
Labor Code, in relation [to] Rule X of the Rules and Regulations Implementing
Book IV of the Labor Code. By contract, the POEA-SEC, as provided under
Department Order No. 4, series of 2000 of the Department of Labor and
Employment, and the parties’ Collective Bargaining Agreement bind the
seaman and his employer to each other.”

In the foregoing light, the Court observes that respondent executed his
contract of employment on July 17, 2000, incorporating therein the terms and
conditions of the 2000 POEA-SEC which took effect on June 25, 2000.
However, since the implementation of the provisions of the foregoing 2000
POEA-SEC was temporarily suspended by the Court on September 11, 2000,
particularly Section 20, paragraphs (A), (B), and (D) thereof, and was lifted
only on June 5, 2002, through POEA Memorandum Circular No. 2, series of
2002, the determination of respondent’s entitlement to the disability benefits
should be resolved under the provisions of the 1996 POEA-SEC as it was,
effectively, the governing circular at the time respondent’s employment
contract was executed. (INC Shipmanagement, Inc. v. Alexander L. Moradas,
January 15, 2014.)

36. What are the two requirements for the legal dismissal of a Filipino
SEAFARER? 

a) Just Cause or Valid Cause

b) Observance of Due Process.

There is just or valid cause if the dismissal is in accordance with the offenses
and penalties enumerated under Section 33 of the Amended POEA Contract;
and/or in accordance with the CBA and/or similar or analogous causes.  

There is due process if the seafarer is given two notices.  The first notice states
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the grounds for charges against the seafarer and the date, time and place for
the investigation and/or hearing.  The second notice, which is issued after a
reasonable time from the first notice, states the notice and reasons for the
dismissal and a copy thereof is furnished the manning agent.

37. The dismissal of a THIRD ENGINEER was held ILLEGAL because the ONLY
EVIDENCE presented by employer is a TELEX TRANSMISSION, G.R. No.
148893, July 12, 2006.

The Court held:

“The rule in labor cases is that the employer has the burden of proving that the dismissal
was for 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.

“The only evidence relied upon by (vessel) in justifying the (Chief Engineer’s)
dismissal is the Chief Engineer’s Report dated September 10, 1997.   The
question that arises, therefore, is whether the Report constitutes substantial
evidence proving that respondent’s dismissal was for cause.

“Substantial evidence is defined as that amount of relevant evidence which is

a reasonable mind might accept as adequate to justify conclusion.   As all
three tribunals (Labor Arbiter, NLRC and the Courts of Appeals) found, the
Report cannot be given any weight or credibility because it is uncorroborated,
based purely on hearsay, and obviously merely an afterthought.   While rules
of evidence are not strictly observed in proceedings before administrative
bodies, (vessel) should have offered additional proof to corroborate the
statements described therein.”

38. The dismissal of a CHIEF OFFICER was held LEGAL and VALID because
the LOGBOOK ENTRY was given PROBATIVE VALUE, G.R. No. 155389,
February 28, 2005.

While the vessel was in Calcutta, India, the gantry crane operators of the vessel
intended to strike as their rate of pay was much lower than that of another
vessel.  The Master asked the Chief Officer (C/O) to talk to the operators to
convince them not to proceed with the intended strike.  However, the C/O
decided to join the strike.  The vessel was forced to pay the higher rate.

At the next port, the C/O was terminated.  The master recorded in the logbook
that the C/O was dismissed from the service for a disciplinary offense.  The
managers of the vessel talked to the C/O about the incident in Calcutta and the
C/O was disembarked from the vessel.

Eight months later, the C/O filed a claim for illegal dismissal.

The Supreme Court ruled in favor of vessel.  The Court held:

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“…the entry by Capt. Graham in the logbook of the vessel on September 1,

1994 must be given credence and probative weight.

“We agree with the (vessel) that the (seafarer) was dismissed for a just
cause.   It is not disputed that the respondent joined the strike of the gantry
crane operators in their demand for an increase of their pay despite the
request of the (vessel) for the (seafarer) to convince the striking crew
members to stop their strike and to air their grievances with management
upon the arrival of the vessel in Singapore.  The (C/O) and the crew members
refused and continued with the strike.  The loading and unloading of cargoes
had to be suspended.”

39. Give the ADDITIONAL PROHIBITED ACTS found in RA 10022 amending

RA 8042 that constitute ILLEGAL RECRUITMENT.

In addition to the acts enumerated in (Art. 34, LC, but adopted in RA 10022), it
shall also be unlawful for any person or entity to commit the following
prohibited acts:

a) Grant a loan to an overseas Filipino worker with interest

exceeding eight percent (8%) per annum, which will be used for
payment of legal and allowable placement fees and make the
migrant worker issue, either personally or through a guarantor
or accommodation party, postdated checks in relation to the
said loan;

b) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to avail of a loan only from
specifically designated institutions, entities or persons;

c) Refuse to condone or renegotiate a loan incurred by an

overseas Filipino worker after the latter's employment contract
has been prematurely terminated through no fault of his or her
own;

d) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to undergo health
examinations only from specifically designated medical clinics,
institutions, entities or persons, except in the case of a seafarer
whose medical examination cost is shouldered by the
principal/shipowner;

e) Impose a compulsory and exclusive arrangement whereby an

overseas Filipino worker is required to undergo training,
seminar, instruction or schooling of any kind only from
specifically designated institutions, entities or persons, except
for recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of
such trainings;
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f) For a suspended recruitment/manning agency to engage in any

kind of recruitment activity including the processing of pending
workers' applications; and

g) For a recruitment/manning agency or a foreign

principal/employer to pass on the overseas Filipino worker or
deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges, as
provided under the compulsory worker's insurance coverage.

OVERTIME PAY
40. Who are covered by the rules on overtime?

Generally, everyone is covered by the law on overtime.  However, the following

have been exempted by the law:

a) managerial and supervisory personnel

b) government employees
c) non agricultural field personnel whose hours of work cannot be
determined
d) family members dependent upon the employer for support
e) househelpers or those in the personal employ of another
f) piece rate workers.
41. What is Overtime Pay?

Overtime pay is the additional compensation payable to employee for services

or work rendered beyond the normal eight hours of work. It is computed by
multiplying the overtime rate with the number of hours in excess of the regular
eight hours of work.
42. What is the basis of overtime pay?

It is found in Article 87 of the Labor Code which provides:

Article 87. Overtime work. Work may be performed beyond eight

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 thereof. Work performed beyond
eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate for the first eight hours on a
holiday or rest day plus at least 30 percent thereof.

43. What is Overtime Work?

Any work performed beyond the normal 8 hours of work in one workday is
considered as overtime work. Every hour worked in excess of 8 hours earns an
additional pay of P25%.  The rate is 30% if done on a rest day or holiday.
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44. May ER set the NHW lower than 8 hours?

Yes, because the law sets the maximum not the minimum. The salary will be
proportion to the reduced hours of work. EXCEPT: Voluntary practice.

45. What is the effect of the work time beyond the reduced hours?

Overtime (1982 Bar)

46. Give the normal Work Hours of Health Personnel.

8 hours or 40 hours workweek.

47. Give the effect of Health Personnel working more than 40 hours
workweek.

Plus 30% of regular wage. (It’s like working on a rest day)

48. What is a Workday?

A workday is the consecutive 24-hour period which commences from the time
the employee starts to work and ends at the same time the following day.

To illustrate, if the employee regularly works from 8AM to 4PM, his

regular workday is the 24-hour period from 8AM to 8AM of the
following day. Workdays do not necessarily correspond to calendar
days.

49. What is the Overtime Pay Rates?

Overtime pay rates depend upon the day the work is performed, whether it is
ordinary working day, special day, holiday or rest day.

a) For ordinary working day, an additional compensation equivalent

to his regular hourly rate plus at least 25% thereof.

b) For holiday, special day and rest day, an additional compensation

equivalent to the rate for the first eight hours on a holiday or rest
day plus at least 30% thereof.

50. Give the Computation of Overtime Pay.

Assuming that the mininum wage rate is P250, how much is the overtime rate
per hour?

On ordinary day

On an ordinary day, the overtime rate per hour is determined as follows:

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First, compute the hourly rate of the employee:
Regular hourly rate = Minimum wage rate ÷ 8 hours
= P250 ÷ 8 hours
= P31.25 per hour

Now to determine overtime rate per hour:

Overtime rate = Regular hourly rate + 25% of Regular hourly rate
Overtime rate = P31.25 + (25% of P31.25)
= P31.25 x 1.25
= P39.06 per hour

On rest day and special day

Compute the hour rate of the employee on a rest day or special day:
Hourly rate = 130% of Regular hourly rate
= P31.25 x 1.30
= P40.625 per hour

(Note: The hourly rate on rest day and special day is 130% of the regular rate.)

To determine overtime rate per hour:

Overtime rate = Hourly rate on rest day + 30% Hourly rate on rest day
= P40.625 + (30% of P40.625)
= P40.625 x 1.30
= P52.81 per hour

On rest day which falls on a special day

Compute the hourly rate of the employee on a rest day which falls on a special day:
Hourly rate = 150% of Regular hourly rate
= P31.25 x 1.50
= P46.875 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate
= P46.875 + (30% of P46.875)
= P46.875 x 1.30
= P60.94 per hour

On a regular holiday

Compute the hourly rate on regular holiday:

Hourly rate = 200% of Regular hourly rate
= P31.25 x 2
= P62.5 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate

= P62.50 + (30% of P62.50)

= P62.50 x 1.30
= P81.25 per hour

On a rest day which falls on a regular holiday

Compute the hourly rate:

 15
Hourly rate = 260% of Regular hourly rate
= P31.25 x 2.60
= P81.25 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate
= P81.25 + (30% of P81.25)
= P81.25 x 1.30
= P105.625 per hour

NOTE: Work need not be Continuous.

Work performed by the employee need not be continuous as long as it falls

within the same work day. For example, an employee who works in two shifts,
one from 8AM to 12AM (four hours), and another from 4PM to 8PM of the
same work day (another four hours), suffers a total of 8 hours of work. If he is
required to work for another hour within the same work day (from 8AM to
8AM of the following day), then such work is subject to overtime pay.

51. Can Undertime be Offset by Overtime.

NO. Some employers have the practice of offsetting undertime and overtime.
This practice is not allowed by law.

For example, if an employee work for only 7 hours on any given day (one hour
undertime), he will be required to make up for his undertime by requiring him
to render additional one hour work on another day. This practice is prohibited
under Article 87 of the Labor Code, viz:

Article 87. Undertime not offset by overtime. Undertime work on any particular
day shall not be offset by overtime work on any other day. x x x

The rationale for provision is quite obvious. Offsetting undertime against

overtime is improper because the employee would be deprived of the
additional compensation for the overtime work he has rendered. Note that
undertime is covered only by the regular hourly rate whereas overtime is
subject to additional overtime rate. If the two are to be offset, the employee
loses overtime pay to which he is entitled.

52. Give the rule on Emergency Overtime Work.

As a general rule, employees may not be compelled to work in excess of eight

hours or to render overtime work on any given day against his will.

The exception to this rule is found in Article 89 of the Labor Code. Under the
said article, employees may be compelled to perform overtime work in any of
the following cases:

1. When the country is at war or under any national or local emergency;

2. When overtime work is necessary to prevent loss of life or property, or in

case of imminent danger to public safety;
 16

3. When there is urgent work to be performed on machines, etc., in order to

avoid serious loss or damage to the employer;

4. When the work is necessary to prevent loss or damage to perishable

goods;

5. When the completion or continuation of work is necessary to prevent

serious obstruction or prejudice to the business; or

6. When overtime work is necessary to avail of favorable weather or

environmental conditions.

53. Are Managerial and Supervisory Employees entitled to Overtime Pay?

NO. Article 82 of the Labor Code states that the provisions of the Labor Code
on working conditions and rest periods shall not apply to managerial
employees. This includes overtime pay for overtime work. Thus managerial
employees are not entitled to overtime pay for services rendered in excess of
eight hours a day. Also, supervisors are not entitled to OT Pay. Supervisory
employees are considered as officers or members of the managerial staff, and
hence are not entitled to overtime, rest day and holiday pay. (Nat’l Sugar Refineries
Corp. vs. NLRC, G.R. No. 101761. March 24, 1993).

DETERMINING COMPENSABLE HOURS WORKED

54. What is the Scope of Hours worked?

Hours worked refer to all compensable period of work. Hours work include:

a) All the time during which an employee is required to be on duty or to be at a

prescribed workplace; and

b) All the time during which an employee is suffered or permitted to work.

55. What constitutes “COMPENSABLE HOURS WORKED?”

a) Time when required for duty

b) Time when required to be at work premises/prescribed
workplace
c) Time when suffered or permitted to work
d) Rest period of short duration within working hours

56. Is WAITING TIME considered working time?

It depends.

a) If required to wait, that is working time. Otherwise not.

b) If on call at ER’s premises or nearby and no gainful own time, that is
working time. Otherwise, not.
c) If not required to leave word at home or with Company officials, NOT
WORKING TIME.
 17

57. What is the rule “On Call Duty?”

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. The employee must be
required to leave a word where he may be reached. 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.

58. What is the effect of attendance in “Lectures, meetings, training

programs?”

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:

a) Attendance is outside of the employee’s regular working hours;

b) Attendance is in fact voluntary; and
c) The employee does not perform any productive work during such
attendance.

59. What is the Rule on Meal periods?

The employer must give his employees not less than 60 minutes or one hour
time-off for their meals. This period in non-compensable, which means that it is
not to be included in the computation of hours worked.

For example, if an employee’s work is from 8:00am to 5:00 with one hour
meal break from 12:00nn to 1:00pm, the total compensable hours of the
employee is 8 hours, i.e., from 8:00am – 12:00nn and 1:00pm – 5pm. The
period from 12:00nn to 1:00pm is non-compensable.

60. What is the Rule on Shortened Meal Periods?

Under exceptional circumstances, the employer may give the employee a meal
period of not less than 20 minutes, provided that such shorter meal period is
credited as compensable hours worked of the employee. Shortened meal
period may be allowed under the following cases:

1. Where the work is non-manual work in nature or does not involve

strenuous physical exertion;

2. Where the establishment regularly operates not less than 16 hours a day;

3. In case of actual or impending emergencies or there is urgent work to be

performed on machineries, equipment or installations to avoid serious
loss; and

4. Where the work is necessary to prevent serious loss of perishable goods.

 18
61. Give the rule on Rest Periods.

The employer may give their employees rest periods or coffee breaks during
working hours in order to beef them up or to make them more productive.
Unlike meal periods, rest periods running from 5 to 20 minutes is compensable
as hours worked. Rest period running for more that 20 minutes may or may not
be compensable depending on the situation.
NOTE: The giving of rest period, however, is not required under the Labor Code, and
is largely a management prerogative.

62. What is NIGHT SHIFT DIFFERENTIAL?

It is an extra pay for work done between 10:00 p.m. and 6:00 am.

Under the Labor Code, every employee shall be paid a night shift differential of
not less than 10% of his regular wage for each hour of work performed
between 10:00 p.m. and 6:00 am the following day.

63. What is a WEEKLY REST DAY?

It is the required rest period of not less than 24 consecutive hours after every
six normal workdays.

64. How much is the pay for work on a rest day?

The compensation is the regular wage plus 30% thereof.

65. Who chooses the rest day?

The employer shall determine the weekly rest day. However, the employer
shall respect the preference of employees as to their weekly rest day
when such preference is based on religious grounds.

66. How much is work on a Sunday paid?

The compensation is the regular wage unless Sunday happens to be the rest
day of the employee. If Sunday is the rest day, the employee shall be entitled to
the additional 30% pay.

67. What is Holiday Pay?

Holiday Pay refers to pay received by an employee on the occasion of a regular

holiday or special day. 

In the case of regular holiday, the employee is paid even if he did not work.  He
receives double his pay if he works on a regular holiday. 
 19
In the case of a special day, the employee is not paid if she does no report for
work.  But if the employee works on a special holiday, he is entitled to 130% of
his usual pay.

68. What are the Philippine Regular Holidays?

   
We have 12 regular holidays, which are:

1. New Year’s Day (January 1)

2. Maundy Thursday (movable)
3. Good Friday (movable)
4. Araw ng Kagitingan (April 9 - or nearest Monday)
5. Labor Day (May 1 - or nearest Monday)
6. Independence Day (June 12 - or nearest Monday)
7. National Heroes Day (Last Monday of August)
8. Bonifacio Day (November 30 - or nearest Monday)
9. Eid ul-Fitr (movable)
10. Eid-Ul-Adha (movable)
11. Christmas Day (December 25)
12. Rizal Day (December 30 - or nearest Monday)

69. What are these usual Special Holidays?

a) November 1 (All Saints Day) 

b) December 31 (Last Day of the Year) 
c) August 21 (Ninoy Aquino Day)

PREMIUM PAY

70. What is meant by Premium Pay?

Premium pay refers to the additional compensation required by law to be paid

to employees for work performed on non-working days, such as rest days and
special days.

71. What is “No Work, No Pay” Rule

During rest and special days, the principle of “no work, no pay” applies.
Workers who were not required or permitted to work on those days are not by
law entitled to any compensation.

This is consistent with the definition above that premium pay is to be paid for
work performed.

Performance of work is necessary for entitlement to premium pay.

72. What is the Premium Pay For Rest Days?

 20
As a general rule, where an employee is made or permitted to work on his
scheduled rest day, whether it is a regular day or a holiday, he shall be paid an
additional compensation of at least 30% of his regular wage for that day.

The rule is different for work performed on a rest day which is also a special
day, in which case, 50% of the regular daily rate is added, instead of 30% of the
daily rate for special day.

In sum, the premium pay rates for rest days are as follows:

1. For work performed on rest days, an additional 30% of the daily rate
or a total of 130%;

2. For work performed on a rest day which is also a special day, an

additional of 50% of the daily rate or a total of 150%; and

3. For work performed on a regular holiday which is also the

employee’s rest day, an additional 30% of the regular holiday rate of
200% or a total of 260%.

Computation Samples

SAMPLE # 1 For work performed on rest day, using P250.00 as Basic pay, the
rate may be determined as follows:

Rate on Rest day = Basic pay + Premium pay

Where,
Premium pay = 30% of Basic pay

= 30% of P250.00
= 0.3 x P250.00
= P75.00

Thus,
Rate on Rest day = Basic pay + Premium pay

= P250.00 + P75.00
= P325.00

SAMPLE # 1 For work performed on a regular holiday which is also the

employee’s rest day, the rate may be determined as follows:

Rate = Daily rate on holiday + Premium pay

Where,
Premium pay = 30% of Daily rate on holiday, and
Daily rate on holiday = 200% of Basic pay = P500.00

Thus,
Premium pay = 0.3 x Daily rate on holiday
= 0.3 x P500.00
= P150.00

Thus, the rate on rest day falling on a holiday is:

 21
Rate = Daily rate on holiday + Premium pay

= P500.00 + P150.00
= P650.00

Or,
Rate = 260% of Basic pay
= 2.6 x P250.00
= P650.00

73. What is Premium pay for Special Days?

There are two national special days observed in the Philippines:

1. All Saints Day (November 1); and

2. The last day of the year (December 31).

Work performed on special days merits additional compensation of not less

than 30% on top of the basic pay or a total of 130%.

Computation

Using P250.00 as daily rate (Basic pay), the Rate on special day may be
determined as follows:

Rate on special day = Basic pay + Premium

Where,
Premium = 30% of Basic pay
= 30% of P250.00
= P75.00

Thus,
Rate on special day = Basic pay + Premium
= P250.00 + P75.00
= P325.00

Or,
Rate on special day = 130% of Basic pay
= Basic pay x 1.3
= P250.00 x 1.3
= P325.00

74. What is the Premium Pay For Special Day falling on Rest Day?

If the special day falls on employees scheduled rest day, he is entitled to at

least 50% over and above the basic pay or a total of 150%.

Computation

Rate for work on special days which is also the employee’s rest day entitles
him to an additional 50% of the daily rate (Basic pay).

Rate = Basic pay + Premium pay

 22

Where,
Premium pay = 50% of Basic pay
= P250.00 x 0.5
= P125.00

Thus,
Rate = Basic pay + Premium pay
= P250.00 + P125.00
= P375.00

Or,
Rate = 150% of Basic pay
= Basic pay x 1.5
= P250.00 x 1.5
= P375.00

75. What is the Rule on NO regular workdays and NO scheduled regular rest
days?

Where 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 30% of his regular wage for work
performed on Sundays and holidays.

76. Distinguish Premium Pay from Holiday Pay?

Premium pay is paid for services rendered when the EE should not work.
Holiday pay is not a premium pay because it does not require performance of
work by the employee. In case of holiday pay, the employee is entitled
payment even if he does not work.

Thus, unlike in premium pay, the principle “no work, no pay” does not similarly
apply to holiday pay.

NON-DIMINUTION OF BENEFITS

77. What is the principle of non-diminution of benefits?

It provides that “any benefit and supplement being enjoyed by employees

cannot be unilaterally reduced, diminished, discontinued or eliminated by the
employer.” (Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14, 2008)

This principle is founded on the Constitutional mandate to “protect the rights

of workers and promote their welfare,” and “to afford labor full protection.”
Said mandate in turn is the basis of Article 4 of the Labor Code which states
that “all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations shall be rendered in favor of
labor.” (Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14, 2008).

78. Define Benefit and Supplement.

 23

Employee BENEFITS are compensations given to employees in addition to

regular salaries or wages. (Some benefits are legally required, e.g., social security
benefits, medicare, retirement benefits, maternity benefits, service incentive leave, etc .)
Other benefits are offered by the employer as an incentive to attract and retain
employees as well as increase employee morale and improve job performance.

SUPPLEMENTS include those benefits or privileges granted to an employee for

the convenience of the employer, e.g., board and lodging within the company
premises.

Common application

In employment setting, the principle of non-diminution of benefits finds

application when a change initiated by the employer to existing company
policies, specially matters concerning employee benefits, results in reduction,
diminution or withdrawal of some or all of the benefits already enjoyed by the
employees. For example, if the employees of a certain company is traditionally
granted 14th month pay, and the employer subsequently withdrew unilaterally
such benefit, or reduced its amount, the reduction or withdrawal is
objectionable on the ground that it would result to diminution of benefits.

Requirements

The application of the principle presupposes that a company practice, policy

and tradition favorable to the employees has been clearly established; and
that the payments made by the company pursuant to it have ripened into
benefits enjoyed by them. (MERALCO vs Quisumbing, G.R. No. 127598,
January 27, 1999).

79. When do GRANTS ripen into BENEFITS?

a. It should have been VOLUNTARILY practiced over a long

period of time; and
b. It must be shown to have been consistent and deliberate.
(Sevilla Trading Co vs. Semana, G.R. No. 152456, April 28, 2004.)

With regard to the length of time the company practice should have been
exercised to constitute voluntary employer practice which cannot be
unilaterally withdrawn by the employer, the Court has not laid down any rule
requiring a specific minimum number of years. Sevilla Trading Co vs. Semana,
G.R. No. 152456, April 28, 2004.

80. Illustration of JURISPRUDENCE SHOWING the grant of benefits being

held to have ripened into company practice or policy which cannot be
peremptorily withdrawn.

1. In Davao Fruits Corporation vs. Associated Labor Unions, G.R. No. 85073,
August 24, 1993, the company practice lasted for six years.

2. In Davao Integrated Port Stevedoring Services vs. Abarquez, G.R. No.

102132, March 19, 1993, the employer, for three years and nine months,
 24
approved the commutation to cash of the unenjoyed portion of the sick
leave with pay benefits of its Intermittent workers.

3. In Tiangco vs. Leogardo, Jr., G.R. No. L-57636, May 16, 1983, the employer
carried on the practice of giving a fixed monthly emergency allowance
from November 1976 to February 1980, or three years and four months.

4. In Sevilla Trading Co vs. Semana, G.R. No. 152456, April 28, 2004, the
employer kept the practice of including non-basic benefits such as paid
leaves for unused sick leave and vacation in the computation of their 13th-
month pay for at least two (2) years.

81. Give the Rule against diminution of pay as to basic salary?

When the basic salary was not reduced, there is no violation of the rule against
diminution of pay. (Aguanza vs. Asian Terminal Inc., et al., G.R. No. 163505, August 14, 2009.)

82. What is BONUS?

A BONUS is a gratuity or act of liberality of the giver which the recipient cannot
demand as a matter of right. Stated otherwise, it is the amount granted for
employee’s industry and loyalty, which is generally discretional. 

Note: The grant of a bonus is basically a management prerogative which

cannot be forced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses.

83. When does a BONUS become a DAMANDABLE OBLIGATION?

If the additional compensation is granted without any conditions imposed for

its payment in which case, the BONUS is treated as part of the wage, salary or
compensation of the employee. ( Metro Transit Organization, Inc. vs. NLRC, G.R. No. 116008, July
11, 1995). In such case, the Court said:

Whether or not a bonus forms part of wages depends upon the circumstances
and conditions for its payment. If it is additional compensation which the
employer promised and agreed to give without any conditions imposed for its
payment, such as success of business or greater production or output, then it
is part of the wage. But if it is paid only if profits are realized or if a certain
level of productivity is achieved, it cannot be considered part of the wage.
Where it is not payable to all but only to some employees and only when their
labor becomes more efficient or more productive, it is only an inducement for
efficiency, a prize therefor, not a part of the wage.

In this case, there is no dispute that Eastern Telecommunications Phils., Inc.

and Eastern Telecoms Employees Union agreed on the inclusion of a provision
for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side
Agreement, as well as in their 2001-2004 CBA Side Agreement, which
contained no qualification for its payment. There were no conditions specified
in the CBA Side Agreements for the grant of the bonus. There was nothing in
the relevant provisions of the CBA which made the grant of the bonus
dependent on the company’s financial standing or contingent upon the
 25
realization of profits. There was also no statement that if the company derives
no profits, no bonus will be given to the employees.

In fine, the payment of these bonuses was not related to the profitability of
business operations. Consequently, the giving of the subject bonuses cannot
be peremptorily withdrawn by Eastern Telecommunications Phils., Inc.
without violating Article 100 of the Labor Code, which prohibits the unilateral
elimination or diminution of benefits by the employer.

The rule is settled that any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished, discontinued or eliminated by the
employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their
welfare and to afford labor full protection. (citing Eastern
Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union,
G.R. No. 185665, February 8, 2012.

84. What is the general rule on wages?

Wages are remunerations or earnings for services rendered.

Employers and employees may agree on rate but should not fall below the
minimum wages set by the RTWPB which has jurisdiction over the place of
work. 

The pay of employees is intended to be given whole to the employee in

Philippine legal tender.  So while payment by check and through automated
teller machines (ATMs) are allowed, vouchers, promissory notes and gift
certificates are not.  Deductions from employee wages are generally frowned
upon with only a few allowed by law including income tax, contributions to
social welfare agencies such as SSS and Pag-Ibig, and union dues under
appropriate agreements.

85. Are Minimum Wage Earners Exempt from Income Tax?

A new law passed in 2008 exempts minimum wage earners from paying
income taxes.  Because of this, no deductions will be made from their pay on
the basis of income tax.

86. What is 13th month pay?

It is the 1/12 of the basic salary earned by the employee during the year. It is
compulsory and to be given not later than December 24 of the year.

POWERS OF DOLE REGIONAL DIRECTOR

UNDER ART. 128 & 129 OF LABOR CODE

Regional Director; Jurisdiction over monetary claims; Exceptions clause. The

power of the Regional Director to hear and decide the monetary claims of
employees is not absolute. The last sentence of Article 128 (b) of the Labor
 26
Code, otherwise known as the “exception clause,” provides an instance when
the Regional Director or his representatives may be divested of jurisdiction
over a labor standards case.

The so-called “exception clause” has the following elements, all of which must
concur:

1. that the employer contests the findings of the labor regulations

officer and raises issues thereon;

2. that in order to resolve such issues, there is a need to examine

evidentiary matters; and

3. that such matters are not verifiable in the normal course of

inspection.

The issue of whether or not petitioners were independent contractors/project

employees/free lance workers is a question of fact that necessitates the
examination of evidentiary matters not verifiable in the normal course of
inspection. Verily, the Regional Director and the Secretary of Labor are
divested of jurisdiction to decide the case. (Meteoro, et al. vs. Creative
Creatures, Inc., G.R. No. 171275, July 13, 2009.)

MATERNITY LEAVE

87. What is the Basis of Maternity Leave?

Maternity leave benefits is found under the Article 133 of the Labor Code and
Section 14-A of “Social Security Act of 1997″ (Republic Act No. 8282). But for
purposes of benefits and procedure for availment, the SSS Law prevails.

88. Give the Checklist for Availment of Maternity Benefits under Social
Security Act

1. The pregnant woman employee must have paid at least three

monthly contributions within the 12-month period immediately
preceding the semester of her childbirth or miscarriage;

2. She has given the required notification of her pregnancy

through her employer if employed, or to the SSS if separated,
voluntary or self-employed member.

89. What is the rule on Maternity Leave extension?

Maternity leave may be extended on account of illness arising out of the

pregnancy, delivery, abortion or miscarriage, which renders the woman unfit
 27
for work. Extended maternity leave is without pay, but may be charged against
any unused leave credits.

90. What is the rule of Maternity Benefits under SSS Law

A pregnant woman member (whether single or married) of SSS who has paid at
least three monthly contributions in the twelve-month period immediately
preceding the semester of her childbirth or miscarriage shall be paid a daily
maternity benefit.

91. What is the Amount of Benefit?

SSS maternity benefit shall be equivalent to 100% of the pregnant employee’s

average daily salary credit for 60 days for normal delivery or 78 days for
caesarian delivery.

92. What is the Time of Payment?

The full payment of maternity benefits shall be advanced by the employer

within 30 days from the filing of the maternity leave application.

93. Who makes the payment?

The SSS shoulders the payment of maternity benefits. But the procedure is that
the payment is to be initially advanced by the employer, subject to immediate
reimbursement by SSS.

94. What do you mean by “3-monthly Contribution?”

To avail of maternity benefits, the woman employee must have paid at least
three monthly contributions within the 12-month period immediately preceding
the semester of her childbirth or miscarriage.

 A semester refers to two consecutive quarters ending in the

quarter of contingency (i.e. expected delivery);

 A quarter refers to three consecutive months ending March, June,

September or December.

ILLUSTRATION

To illustrate, assume that the projected date of delivery is March

2010.

1. The semester of childbirth would be from October 2009 to March

2010. This is called the semester of contingency.

2. Count 12 months backwards starting from the month immediately

before the semester of contingency, which is September 2009.
 28

3. Hence, the 12-month period immediately preceding the semester of

childbirth or miscarriage is from October 2008 to September 2009.

4. To avail of the benefits, the employee must have paid at least 3

monthly contributions during this period.

(NOTE that this requirement supersedes Article 133 of LC, which

requires that the woman employee must have rendered an
aggregate service of at least six months for the last twelve months).

95. Is Valid Marriage required for availment of MB?

NO. Unlike in paternity leave where valid marriage is a requisite for availment,
the existence of a valid marriage is not required to avail of maternity leave
benefits.

96. What is the Limitation on Availment of MB?

Entitlement to maternity leave under the Labor Code and maternity benefits
under the SSS Law applies only for the first four deliveries or miscarriage.

97. Does availment of MB a bar to recovery of Sickness Benefits?

YES. The payment of daily maternity benefits is a bar to the recovery of SSS
sickness benefits for the same period for which daily maternity benefits have
been received.

98. What is the Effect of failure of the Employer to Remit Contribution?

If the employer fails to remit the required contributions, or to notify SSS 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.

99. What is the Tax Treatment of Maternity Benefit?

Maternity benefits advanced by employer to employee are excluded from

gross income and thus exempt from withholding tax. Under the NIRC, all
“benefits received from or enjoyed under the Social Security System in
accordance with the provisions of Republic Act No. 8282″ shall not be included in
gross income and shall be exempt from taxation. (Section 32 [B][6][e], NIRC.)

PROHIBITED STIPULATIONS IN EMPLOYMENT CONTRACT

100. What is the nature of an EMPLOYMENT CONTRACT?

Employment contract is not an ordinary contract, but a contract imbued with

public interest. Unlike in ordinary contracts, parties to labor contracts do not
 29
have complete freedom to stipulate the terms and condition of their
contractual relations.

Restraints on the parties’ right to freely enter into agreement pertaining to

terms and condition of employment are deemed valid, and not considered
violative of the freedom or liberty of contract clause of the Constitution.

IN LINE WITH ABOVE, the Labor Code prohibits certain terms or conditions of
employment to be stipulated on employment contracts. Any such stipulation,
even if freely and voluntarily agreed upon by the parties, is void.

For example:

The prospective employer and employee may not validly agree that the latter
shall be paid a salary below the minimum wage prescribed by law, or that the
employee shall be required to work more than 8 hours per day without
overtime pay. Such stipulation, even if mutually consented to by the parties is
null and without force and effect.

The underlying rationale for this prohibition is the protection of labor against
discrimination, inhumane condition of work, abuses, slavery, among others.

101. Give instances of stipulations that are deemed void even if voluntarily
agreed upon by the contracting parties in an employment contract.

1. 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. (Article 136, Labor Code.)

2. Stipulation Prohibiting Employee to Join Union.

A yellow dog contract is an employment contract which prohibits an employee

from joining a labor organization or which requires him to withdraw from one to
which he belongs. Yellow dog contract is prohibited under Article 248 (b) of the
Labor Code.

3. Stipulation Discriminating Employee on Account of Age .

No employer shall discriminate against any person in respect to terms and

conditions of employment on account of his age. (Article 140, Labor Code.)

4. Stipulation Discriminating Employee on Account of Gender .

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. (Article 135, Labor Code.)

LEAVES UNDER LAW

 30
102. What are leaves?

These are days when employees may still be paid despite their absence from
work.  The employer may add (not subtract) to these leaves out of the
goodness of his heart or under a negotiated Collective Bargaining Agreement
(CBA).

103. What is Service Incentive Leave Pay?

Service Incentive Leave Pay is the benefit of employees to avail of leave with
pay for 5 days provided he has rendered service for at least one year.

104. What is Maternity Leave Benefit?

It is a benefit whereby a female member of the Social Security System (SSS)

who has paid at least 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 100% of her average daily salary.
The benefit is for 60 days for normal delivery and 78 days for caesarian delivery
for the first four deliveries and miscarriages.

105. What is Battered Woman Leave under RA 9262?

It is that benefit whereby women victims of violence provided under R.A. 9262
of the Anti-Violence against Women and their Children Act are entitled to a paid
leave of absence from work up to 10 days. The purpose of the leave is confined
only to MEDICAL and LEGAL reasons.

106. What is Solo Parents' Leave?

It is that whereby persons who fall under the definition of solo parents and
who have rendered service of at least one year are entitled to 7 working days
of leave to attend to their parental duties. (Solo parents refer to both male or
female parents)

107. What is Paternity Leave?

The law provides for paternity leave of 7 days with full pay to all married male
employees in the private and public sectors. It is only available for the first four
(4) deliveries of the legitimate spouse with whom the employee is cohabiting.
(Hence, if not cohabiting with his legitimate spouse he cannot avail thereof).

108. What is the Leave under RA 9710?

It is also called “OB-Gynecological Leave”. The Magna Carta of Women

introduced a 2 month leave for women with full pay based on gross monthly
compensation, for women employees who undergo surgery caused
by gynecological disorders, provided that they have rendered continuous
 31
aggregate employment service of at least six (6) months for the last twelve (12)
months.
(Please note of the minimum service of continuous or intermittent service of at least 6
months within the last 12 months from the contingency)

SEXUAL HARRASSMENT

RA 7877 Anti-Sexual Harassment Law (approved February 14, 1995) declares SH

unlawful in EMPLOYMENT, EDUCATION or TRAINING ENVIRONMENT.
109. Who may be probable victim?

Man or Woman

110. Who may be liable for SEXUAL HARRASSMENT? (Sec 3 RA 7877)

(EEMSA)

1. Employer
2. Employee
3. Manager
4. Supervisor
5. Agent of the Employer

(TIPCTA)

6. Teacher
7. Instructor
8. Professor
9. Coach
10. Trainor
11. Any Other Person

A. WHO having (AIMA) AUTHORITY, INFLUENCE or MORAL ASCENDANCY over ANOTHER

IN a WORK, TRAINING or EDUCATION ENVIRONMENT

DEMANDS, REQUESTS or REQUIRES any SEXUAL FAVOR from ANOTHER,

even if the Demand or Request is accepted by the object person.
---------------------------------------------

B. ANY PERSON who

1. DIRECTS or INDUCES another TO COMMIT any act of SH; or

2. COOPERATES in the COMMISSION thereof, without such COOPERATION the SH
would not have happened

Is LIABLE for SH.

111. How is SEXUAL HARRASSMENT in a WORK-RELATED or EMPLOYMENT

ENVIRONMENT committed? WHEN:

1. Sexual Favor made a condition in

 32

Hiring,
Re-employment, or
Continued employment

2. Sexual Favor made a condition in granting

Favorable Compensation
Terms,
Conditions
Promotions
Privileges

3. Refusal to grant SEXUAL FAVOR results in

Limiting, segregating, or classifying an EE which
Discriminates, deprives or diminishes employment opportunities or adversely affects the EE.

4. The above acts IMPAIR EE rights or privileges under Labor Laws, or

5. The above acts RESULT in INTIMIDATING, HOSTILE, or OFFENSIVE ENVIRONMENT for the
EE.

112. Who may be Victims of SEXUAL HARRASSMENT in EDUCATION or

TRAINING ENVIRONMENT?

1. ONE who is under CARE, CUSTODY or SUPERVISION of the OFFENDER.

2. ONE whose EDUCATION, TRAINING, APPRENTICESHIP or TUTORSHIP is
ENTRUSTED to the OFFENDER.

113. How is SEXUAL HARRASSMENT in EDUCATION or TRAINING

ENVIRONMENT committed? WHEN:

1. Sexual Favor is made a condition in

Giving Passing Grade, Honors & Scholarships,

Payment of Stipend or Allowance, or
Other benefits, privileges or considerations

2. Sexual Advances result in INTIMIDATING, HOSTILE, or OFFENSIVE

ENVIRONMENT for the STUDENT, TRAINEE or APPRENTICE.

114. What is the DUTY OF EMPLOYER or HEAD OF OFFICE IN CASE OF SH?

1. To PREVENT or DETER the commission of SH Acts

2. To PROVIDE PROCEDURES for the RESOLUTION or PROSECUTION of SH Acts.
3. Promulgate R&R in consultation and jointly approved by EEs, Students or Trainees,
prescribing the INVESTIGATION PROCEDURES & ADMINISTRATIVE SANCTIONS for SH
Cases, including GUIDELINES ON PROPER DECORUM in WORKPLACE, EDUCATION or
TRAINING INSTITUTION.
4. Create COMMITTEE ON DECORUM and INVESTIGATION of SH Cases
5. Conduct ACTUAL INVESTIGATION of SH Cases.

JURISPRUDENCE ON SEXUAL HARRASSMENT

 33
Sexual abuse by manager ground for termination. As a manager, petitioner
enjoyed the full trust and confidence of respondent and his subordinates. By
committing sexual abuse against his subordinate, he clearly demonstrated his
lack of fitness to continue working as a managerial employee and deserves
the punishment of dismissal from the service.

EMPLOYMENT OF MINORS

115. What is the MINIMUM EMPLOYABLE AGE?

1. 15 years old and above EXCEPT:

(a) Under direct responsibility of his PARENTS/GUARDIAN and

(b) Employment does not interfere with SCHOOLING

2. Between 15 & 18 years old for certain hours of the day (as determined by
SOLE)

3. Prohibition: Below 18 not employable in UNDERTAKING which is

HAZARDOUS or DELETERIOUS in nature (as determined by SOLE)

116. Give examples of CHILD ABUSE AND CHILD LABOR laws

a) RA 7610 – Law against Child Abuse (June 17, 1992)

b) RA 7658 as amended by RA 9231 Law Eliminating Worst Forms of Child
Labor

117. What is the meaning of Child UNDER RA 9231?

All persons below 18.

118. Are children below 15 years old employable?

NO, generally. However, there are exceptions.

119. What are these EXCEPTIONS?

A. When the child is under sole responsibility of Parents/Legal Guardians

and with fellow family members workers only;

1. Provided, not ENDANGER life safety heath & morals and not IMPAIR
normal development
2. Provided, Parents/Legal Guardians accords child BASIC EDUCATION
(Primary & HS)

B. When the Child’s Work Contract concluded by Parents/Legal Guardians

approved by DOLE & with EXPRESS AGREEMENT of child if possible, AND
there are:

a) Protection Clause (health, safety & moral & normal dev)

 34
b) Non Exploitation & Non-Discrimination Clause
c) Skills and Training Development Clause

120. What does an EMPLOYER do if he WISHES to hire a CHILD WORKER?

He must secure WORK PERMIT from DOLE

121. Give the general WORKING HOURS of a WORKING CHILD (Sec 12-A RA
9231)

1. Below 15 = Max 4 hrs/day and Max 20 hrs/week

A “No-no” between 8pm & 6am.

2. Over 15 Below 18 = Max 8 hrs/day and Max 40 hrs/week

A “No-no” between 10pm & 6am.

122. What are considered “WORST FORMS OF CHILD LABOR?” (Sec 12-D RA
9231)

1. All forms of Slavery (as in Anti Trafficking in Persons Act of 2003),

Practices akin Slavery like

- Sale & Trafficking of children

- Debt bondage & serfdom
- Forced/Compulsory Labor
- Recruitment of C for armed conflict

2. For prostitution or pornographic purpose

3. For illegal activities including drug business purposes
4. For hazardous work, EXAMPLES:

- Undignified activities
- Abuse Exposure, Psychologically / Morally Stressful
- Underwater, underground or dangerous heights
- Power driven tools
- Physical Danger including dangerous feats of balancing, strength, heavy loads
- Unhealthy environment (obnoxious substances, radiation etc.)
- Under difficult conditions
- Exposure to Biological Agents
- Explosives/pyrotechnic products

123. Does the Secretary of Labor and Employment have power to issue
CLOSURE ORDER to violating ESTABLISHMENTS caught 3x?

Yes. Sec 16 [g] RA 9231

124. When does the Secretary of Labor and Employment have power to
impose IMMEDIATE CLOSURE?

a) If the Violation results in DEATH, INSANITY or SERIOUS PHYSICAL INJURY; or

b) If the Establishment is engaged in PROSTITUTION, OBSCENE OR LEWD SHOWS.
 35
125. What is the effect to EES if there is CLOSURE due to violations?
The employer shall pay its employees their SEPARATION & OTHER MONETARY
BENEFITS provided by law.
126. State the REPORTORIAL DUTY of ESTABLISHMENT hiring children?

The EMPLOYER must submit report to DOLE re CHILDREN EMPLOYED and a SEPARATE
REPORT re handicapped children. (PD 603. Art 108)

127. Do Children Workers have also the Right to Self Organization?

YES. Art 111, PD 603
128. Do Children Workers have Right to Educational Assistance Program?

YES. Art. 113, PD 603.

129. What is meant by “POOR BUT DESERVING STUDENTS?”

Children of parents whose combined incomes together with children’s income,
if any, do not exceed P36,000 per annum.
130. What is the Incentive to ERs who hire PBDS?
60% only of the minimum wage CASH and the 40% is thru Education Voucher
from Government.
131. What is the consequence of a HOUSEHOLD HELPER being required to do
not only household chores but also activities related to the commercial
or industrial business of the employer?
The HOUSEHOLD HELPER is no longer treated as mere household helper but an
INDUSTRIAL WORKER who shall enjoy all the benefits granted by law as such
industrial worker. (Apex Mining Co. Inc vs. NLRC GR 94951, April 22, 1991).

Here, the HH is doubling herself as HH and catering to needs of guests. SC

declared her regular EE for the business & not household.

132. What is a Homeworker?

A Homeworker is one whose work is done at home or thereabout for the

benefit of ER who may be natural or juridical person.

LABOR RELATIONS

133. What are the policy objectives of our Labor Relations Law?

1. Free CB/N inc VAMC for DS (dispute settlement)

2. Free Trade Unionism
3. Free Voluntary Union Organization
4. Workers’ Education of Rights/Obligations
 36
5. Machinery for Dispute settlement
6. Industrial Peace
7. W’s participation in policy and decision making
8. Democratic Regulations of ER-EE Relations

134. Do all CBAs have Grievance Machinery?

Yes, the grievance mechanism is one mandatory feature in a CBA without

which the CBA is invalid.

 Mandatory provisions of CBA

(i) Grievance procedure

(ii) Voluntary arbitration
(iii) No strike-no lockout clause
(iv) Labor management council

135. What is the effect of a labor organization that is not registered with
DOLE?

It does not acquire the status of a Legitimate Labor Organization and thus has
no power for collective bargaining.

136. Distinguish Inter-Union and Intra-Union disputes

Inter-Union re conflicts between or among LLO on Representation or any

conflict between/among LLO

Intra-Union re conflicts between or among Union Members/Officers including

ISSUES on (1) Union Membership, (2) By-laws, (3) Chartering/Affiliation

137. When does NLRC sit en banc?

1. When its shall Promulgate NLRC Rules

2. When it shall Formulate Policies re administration & operations
3. When Case under Division’s jurisdiction is to be transferred to another
Division.

138. State the Original Jurisdiction of the Labor Arbiters

1. ULP
2. Termination D
3. Money claims regardless of amt if with REINSTATEMENT
4. Damages arising from ER-EE
5. Cases from viol of Art 264 (Prohibited Acts) also legality of strikes/lockouts
6. Other money claims exceeding P5,000 w/n with reinstatement except those under
EC, SSS, Medicare, Maternity.
7. Grievable Cases referred to LA by the GM per CBA.
8. OFW cases arising from ER-EE relations
 37
9. Wage Distortion in unorganized Establishment if not voluntarily settled by parties
pursuant to RA 6727
10. Enforcement of Compromise Agreement per Art 227 of LC

139. State the Original Jurisdiction of the NLRC Division

1. Certified Cases (Here, the SOLE when assuming jurisdiction in labor dispute due to imminent strike
or actual strike in industry indispensable to national interest, it has power either to assume J himself over
the case or CERTIFY the case to the NLRC Division)
2. Petitions for Injunctions

140. What is the procedure after the LA has rendered his decision?

The aggrieved party may appeal the Decision or Order of the LA to the NLRC
Division within 10 days from receipt of the Decision.

If the employer is the one to appeal and there is a monetary award against it,
the ER’s appeal must be accompanied by a Cash or Surety BOND equivalent to
the value of the monetary award except the amount of damages and
attorney’s fees. (Filing fees must also be paid). In the absence of appeal, the
Decision or Order becomes final. The ten day period is NON-EXTENDIBLE.

141. Is LA’s JUDGMENT on Compromise Agreement appealable?

No, immediately executory.

Exceptions:

 Fraud, Mistake, Duress [Ceniza vs. CA GR 95296 Feb 6, 1993]

 If in the implementation a Modification or Supplement not originally
agreed is included (Litton vs. CA GR 102713, Oct 9, 1996)

142. What is the present jurisdiction of the Bureau of Labor Relations?

1. Union Matters

(a) Registration of Unions, including Denial, Cancellation & Revocation of Permit; &
(b) Supervision of Union Activities; (c) Inter-Union/Intra-Union Conflicts

2. CBA Registration

(a) CBA; (b) Examination of Unions’ Financial Records

3. Labor Education

(Proper Orientation of Workers)

143. Where is the seat of the BLR? Who is the head?

Manila. BLR Director

144. Where is the seat of the Labor Relations Division? Who is the head?
 38
DOLE Regional Offices. Regional Director or Med-Arbiter.

145. What is D.O. No. 40-03?

It amended D.O. No, 9, Series of 1997, which comprises the Omnibus Rules Implementing
Book V of the LC. It covers the subject on Labor Relations except NLRC. The NLRC has its
own separate NLRC Rules of Procedure. Thus, the present rules now that implement Book
V of the Labor Code is no longer the Omnibus Rules but D.O. 40-03.

146. Give the OBJECTIVES of D.O. No. 40-03

1. Simplify Union Registration

2. Simplify Certification Election
3. Promote Responsible Unionism esp administration of Union Funds
4. Authorize Union Merger, Consolidation & Change of Name
5. Authorize Deregistration of CBAs.

147. What is the effect of filing/pendency of any petition arising from

inter/intra union dispute?
Status quo of relationship. No plus … no minus. Changes will take effect only
after the decision is Final & Executory.
148. Where to appeal the decision of the BLR?
Secretary of DOLE.

149. Where to appeal the decision of the LRD?

BLR. (Note BLR exercises appellate jurisdiction over LRD Decision on Inter Union Dispute)
150. What is the reglementary period to appeal?
10 days from receipt of D.
151. Does BLR have authority to hold a REFERENDUM ELECTION W/N
UNION MEMBERS want to be affiliated with FEDERATION?
YES. (Litex EEs Assn vs. Eduvala, 79 SCRA 88 [1977]. (Wisdom: Industrial
Peace, Constitutional principles on Social Justice and Protection of
Workers).
152. Does BLR have authority to hold a REFERENDUM ELECTION W/N TO
EXPEL A UNION OFFICER?

No. KMP vs. Trajano 134 SCRA 236 [1985]. The BLR itself has authority to
rule the expulsion of the Union Officer by DIRECT ORDER if there is
substantial ground not via REFERENDUM ELECTION. In Dayag vs.
Inciong, 98 SCRA 522 “If guilty of acts complained of mete them with
proper penalty i.e. EXPULSION.

153. Does BLR have authority to forward REPRESENTATION CASE to the

FEDERATION?
 39
No. (Plum Federation vs. Noriel, 119 SCRA 299 [1982]). Certification
Election is the “fairest and most effective way” to determine which LLO
can truly represent the workers.

154. Does the Barangay Captain/Chairman or Lupon have authority to

conduct CONCILIATION or MEDIATION in Labor Disputes?
No. (Montoya vs. Escayo, G.R. Nos. 82211-12 Mar 31, 1989) It is the Labor
Courts (NLRC, RAB or NCMB, BLR) not the Barangay Courts. PD 1508
applies only to Courts of Justice. (Wisdom: Needless Delay and
Duplication)
155. Are waivers or quitclaims in labor INVALID or AGAINST public policy?

No. (Mindoro Lumber & Hardware vs. Baay, G.R 158753, June 8, 2005).
Not all waivers or quitclaims esp if represent VOLUNTARY &
REASONABLE settlement of W’s claim are INVALID or AGAINST public
policy.
EXCEPTIONS:
1. Proof that W or Q wangled from UNSUSPECTING/GULLIBLE person.
2. Facially Unconscionable

156. What is the effect of a valid Compromise Agreement?

Final & Executory. And NO COURT can DISTURB it EXCEPT:

1. Compromise Agreement not complied;

2. With PF (prima facie) evidence that CA was obtained through FMC
(fraud, misrepresentation & coercion)

157. Is Quitclaim a form of CA?

Yes, because in QC rights are waived in favor of another; after waiving

party received some consideration.

158. Is there a FORMALITY needed in CA re Labor Standards Cases?

Yes, the CA must be in writing and in the presence of the Regional

Director or his Duly Authorized Representative. ( Union of Filipro Workers vs.
NLRC, GR 90519 Mar 23, 1992).

159. Can “DIRE NECESSITY” constitute a ground for annulling a QC or CA?

This was answered “NO” in the case of (Veloso vs. DOLE, GR 87297, Aug 5,
1991). Ratio Decidendi: (a) Absence of FORCE in EXECUTION, i.e. voluntary and
(b) Absence of PROOF of UNCONSCIONABLE CONSIDERATION, i.e. terms of
settlement not UNREASONABLY LOW.
 40
160. Can the UNION OFFICERS waive the REINSTATEMENT or MONEY
CLAIMS of the dissenting minority Union Members?

No, for they are regarded as personal rights which must be exercised
personally by the workers themselves. (Jag & Haggar Jeans & Sportswear Corp vs. NLRC, GR
105710, Feb 23, 1995 citing General Rubber & Footwear Corp vs. Drilon, 169 SCRA 808 [1989]).

161. A & B are both complainants against their employer. They won the
case before the NLRC which granted them a monetary award of P50K
and P40K respectively. During pre-execution conference, A executed a
Quitclaim on his own and in behalf of B, in favor of their employer,
discharging their employer from future liabilities. Is the CA or QC valid
as to B?

No, Article 1878 of Civil Code on SPA is needed. (Loyola Security & Detective Agency vs.
NLRC, GR 113287 May 9 1995).

Note: In sum, the doctrine here is that COMPROMISE SHOULD BE DULY

AUTHORIZED.

162. Does a CA approved by the LA have the effect of res judicata upon
persons not party to such CA?

No. (Golden Donuts vs. NLRC, GR 113666-68, Jan 19 2000). While such CA may ordinarily apply
even to another case as res judicata, it is conclusive only upon the parties
thereto and their privies.

163. When to effect compromise agreement?

Generally, at any stage of the proceeding, even after Final Judgment. But in
one case (Alba Patio de Makati vs. NLRC GR 85393, Sep 5, 1991), the SC
annulled a CA even though approved by the LA because the FJ was with
Reinstatement and Backwages but winning EEs accepted BW lesser than the
award. (Ratio Decidendi: FJ cannot be altered nor negotiated. Such act of
approval by the LA is contemptuous and if upheld would render the very SC
Decision meaningless. It manifested willful disregard of the SC as the final
arbiter of cases brought to It).

164. What are the OPTIONS of aggrieved party when CA is violated?

Under Article 2041 of the CC, the party has 2 options:

1. Enforce the CA via Writ of E; or

2. Regard the CA as Rescinded and insist on ORIGINAL DEMAND.

In one case Morales vs. SMC, GR 100133, Feb 6, 1995, the SC upheld the NLRC for applying
and awarding the original demand of REINSTATEMENT to the EEs after SMC breached the
CA.
UNION REGISTRATION
 41
Under PD 442 of the Labor Code of the Philippines, as amended, the DOLE is
mandated to process the application for registration of labor organizations in
order for them to acquire legal personality and to enjoy the rights given to
legitimate labor organization. Union registration refers to the process of
determining whether the application for registration of a labor union
organized for collective bargaining, complies with the documentary
requirements prescribed under Rules 3 and 4 of DOLE Department Order No.
40-03 and the rules implementing Book V of the Labor Code, as amended.

Who may apply for Union Registration?

Private Sector Unions

All labor unions whose members are employed in commercial, industrial and
agricultural enterprises, and employees of government-owned or controlled
corporations without original charters established under the Corporation
Code, including religious, charitable, medical or educational institutions
whether operating for profit or not which exist in whole and in part for
collective bargaining. Supervisory employees shall not be eligible for
membership in a rank-and-file employee labor union but may form their
separate labor unions. Alien employees with valid working permits issued by
DOLE may exercise their right to self-organization and join or assist labor
unions for purposes of collective bargaining if they are nationals of a country
which grants the same or similar rights to Filipino workers, as certified by the
Department of Foreign Affairs. Managerial employees shall not be eligible to
form, join or assist any labor union for purposes of collective bargaining.

Worker’s Association Registration

Under PD 442 of the Labor Code of the Philippines, as amended, the DOLE is
mandated to process the application for registration of workers’ association
organized for the mutual aid and protection of its members or for other
legitimate purposes except collective bargaining in order for them to acquire
legal personality. Worker’s Association registration refers to the process of
determining whether the application for registration of such organization
complies with the documentary requirements prescribed under Rule 3 and 4
of DOLE Department Order No. 40-03, as amended.

Who may apply for Union Registration?

Working Youth, Overseas Filipino Workers, Persons with Disabilities, Displaced

Workers and all other workers, including ambulant, intermittent workers, the
self-employed, rural workers and those without definite employers.

WORKER’S ASSOCIATION REGISTRATION

Under PD 442 of the Labor Code of the Philippines, as amended, the DOLE is
mandated to process the application for registration of workers’ association
organized for the mutual aid and protection of its members or for other
legitimate purposes except collective bargaining in order for them to acquire
legal personality.

Worker’s Association registration refers to the process of determining

whether the application for registration of such organization complies with
the documentary requirements prescribed under Rule 3 and 4 of DOLE
Department Order No. 40-03, as amended.
 42
Who may apply for Workers Association registration?

12. Working Youth

13. Overseas Filipino Workers
14. Persons With Disabilities
15. Displaced Workers; and
16. All Other Workers, (including Ambulant, Intermittent Workers, Self-employed
Workers, Rural Workers and Workers without definite employers)

Requirements

1. Duly accomplished and notarized Application Form

2. Name of the association officers and their addresses
3. Minutes of Organizational Meeting and Attendance Sheet
4. List of Members
5. Financial Report if in existence for at least one (1) year
6. If less than 1 year, and has not collected any amount, a certification to this
effect.
7. Constitution and by-laws accompanied by the names and signatures of
ratifying members
8. Minutes of adoption or ratification of the constitution and by-laws, date/s
when ratification was made and list of ratifying members
9. Minutes of adoption or ratification is not required if it is done simultaneously
with the organizational meeting and the same is reflected in the minutes of
the organizational meeting including the date/s when ratification was made
and list of ratifying members

Validity Period of the Registration

Indefinite

Registration fee

P70.00

Where to apply

Regional Office/Field Office

Total Process Cycle Time

One (1) Working Day upon receipt of complete documents and payment of
registration fee

UNION REGISTRATION

Under PD 442 of the Labor Code of the Philippines, as amended, the DOLE is
mandated to process the application for registration of labor organizations in
order for them to acquire legal personality and to enjoy the rights given to
legitimate labor organization.

Union registration refers to the process of determining whether the

application for registration of a labor union organized for collective
bargaining, complies with the documentary requirements prescribed under
Rule 3 and 4 of DOLE Department Order No. 40-03 and the rules implementing
Book V of the Labor Code, as amended.
 43

All labor unions whose members are employed in commercial, industrial and
agricultural enterprises, and employees of government-owned or controlled
corporations without original charters established under the Corporation
Code, including religious, charitable, medical or educational institutions
whether operating for profit or not which exist in whole and in part for
collective bargaining.

Supervisory employees shall not be eligible for membership in a rank-and-file

employee labor union but may form their separate labor unions.

Alien employees with valid working permits issued by DOLE may exercise their
right to self-organization and join or assist labor unions for purposes of
collective bargaining if they are nationals of a country which grants the same
or similar rights to Filipino workers, as certified by the Department of Foreign
Affairs.

Managerial employees shall not be eligible to form, join or assist any labor
union for purposes of collective bargaining.

Requirements:

For Local Chapters

1. Duly accomplished and notarized Application Form

2. Charter certificate issued by the federation or national union indicating the
creation or establishment of the local/chapter
3. The names of the local/chapter’s officers, their addresses and principal office
of the local chapter
4. The local/chapter’s constitution and by-laws, provided that where the
local/chapter’s constitution and by-laws is the same as that of the federation
or national union, this fact shall be indicated accordingly.

For Independent Labor Union:

1. Duly accomplished and notarized Application Form

2. Minutes of Organizational Meeting and Attendance Sheet

3. List of Members

4. Financial Report if in existence for at least one (1) year

5. If less than 1 year, and has not collected any amount, a certification to this
effect.

6. Constitution and by-laws accompanied by the names and signatures of

ratifying members.

7. Minutes of adoption or ratification of the constitution and by-laws, date/s

when ratification was made and list of ratifying members.

8. Minutes of adoption or ratification is not required if it is done simultaneously

with the organizational meeting and the same is reflected in the minutes of
the organizational meeting including the date/s when ratification was made
and list of ratifying members.
 44
9. Statement that it is not reported as a chartered local or any federation.
10. List of members comprising at least 20% of the employees of the bargaining
unit

Validity Period of the Registration

Indefinite

Registration Fee

P70.00

Where to apply

Field Office

Total Process Cycle Time

One (1) Working Day upon receipt of complete documents and payment of
registration fee.

164. Who keeps records of LLO and CBAs?

BLR or DOLE-RO.

165. Is it part of the duty of the BLR or DOLE-RO to keep records of

unregistered LO?
No, the Answer is in the question. Art 231 says LLO.
166. When shall the CBA be registered?
Within 30 days from execution and signing.
167. Does failure to register a CBA within the 30 day prescribed period
affect its validity?
No. (Liberty Flour Mills Employees vs. LFMI, 180 SCRA 668, Dec 29, 1989). The certification (or
registration) by the BLR or DOLE is not prerequisite to its validity. The CBA
becomes valid and effective once executed and signed by the parties.
168. In addition to the required CBA copies, what else shall the parties
submit to the BLR or DOLE?
The parties must submit Verified Proofs of the FF:
a) Posting of CBA in 2 Conspicuous Places in the work premises;
b) Ratification Document by Majority of Workers in the BU.

169. If CBA DOLE or BLR Registration has nothing to do with the CBA’s
validity, why bother to have the CBA registered with DOLE or BLR?

In order for the interested party to enjoy the benefit of the CONTRACT BAR
RULE under Article 232.
 45

170. What is meant by the CONTRACT BAR RULE?

Long: It means that while a valid and registered CBA is subsisting, the BLR or
DOLE-RO is not allowed to hold a CERTIFICATION ELECTION (CE) contesting
the majority status of the INCUMBENT UNION.
Short: It means prohibition on Certification Election

171. What is the extent of the phrase “the BLR is not allowed to hold a
CERTIFICATION ELECTION (CE)?”

It means the BLR should not entertain even a petition for CE. In sum, any
petition for CE filed within the period of prohibition is DISMISSIBLE motu
proprio.

172. What is the excepted situation under Articles 253, 253-A & 256 referred
to by Art 232.

Freedom Period. It means the CONTRACT BAR RULE does not apply anymore
during the FP.

173. What is the OBJECTIVE of allowing the CE only within the FP?

To minimize “politicking” and promote stability of harmonious relationship

between Labor & Management.

174. When does FREEDOM PERIOD happen?

Within 60 days before expiration of the representation aspect of the CBA.

Another phrase would be 60 days to the CBA’s expiration.

175. If only the economic aspect expires can the challenger Union call for
CE?

No, unless the expiration of the economic aspect of the CBA jibes with the
expiration of the political aspect.

176. Who has exclusive jurisdiction over petitions for Certification Election
(CE)?

Med-Arbiters in the DOLE-RO. (Arts. 256-257, LC)

178. Privileged Communication under Art 233 of the LC means 2 things?

a) Info & Statements made during CONCILIATION PROCESS

not admissible in evidence in the NLRC; and
 46

b) Conciliators or Similar Officials cannot be WITNESSES on

matters taken up during CONCILIATION PROCEEDINGS
conducted by them.

179. Give the meaning of the following terms under DO 40-03.

Labor Union – any union or assn of ees in private sector existing wholly or
partly for CB, mutual aid, interest, cooperation, protection or
other lawful purposes.

LLO – any LO in private sector registered/reported with DOLE

according to Rule III & IV.

Exclusive BR/A – a LLU duly certified as the SEBA of all ees in the BU.

Workers Assn – an assn of W organized for mutual aid and protection or for any
legitimate purpose other than CB.

Legitimate WA - … plus registered with DOLE.

180. Distinguish between “CB” collective bargaining and “Dealing with

ER.”

CB – right acquired after LO becomes LLO & recognized or certified as

SEBA/EBR

DWER – generic interaction bet ER & EE re grievances & terms &

conditions of employment.

181. Give the CLASSIFICATION of LABOR ORGANIZATIONS?

National Union/Federation – any LO with 10 locals/chapters/affiliates w/c are SEBA. (ex.

Federation of Free Workers).

Industry Union – any group of LLO operating w/in an identified industry organized for CB
for DWER re terms & conditions of employment, or for participating in the formulation of S
& E PSP, w/c is duly registered with DOLE.

Trade Union Center - any group of registered NUs/Fs organized for MAP, for assisting its
members in CB, or organized for participating in the formulation of S & E PSP, w/c is duly
registered with DOLE. (ex. TUCP)

Alliance – aggregation of unions existing in one line of industry, or existing in a

conglomerate or in a group of franchisees, in a geographical area or in an industrial center.
In Alliance all the member unions retain their respective independence but cannot
represent members in CBA nego.

Company Union – LO which is wholly or partly ER-dominated or ER-controlled. (Prohibited

under Art. 248 [d] for being ULP).

182. What is the concept of Unions at Enterprise Level?

 47
This refers to local unions that are created either by independent registration
or by chartering.
183. What is the legal effect of a Union registered via independent
registration?
It is an independent union and has its own separate legal personality.
184. What is the legal effect of a Union registered by chartering?

It has no legal personality of its own, meaning it has no legal personality

independent of the NU/F that issued it a charter. Its legal personality is derived
from the chartering NU/F. But it may register itself independently. This Union is
called a “chapter” or “local” or “chartered local.” NOTE: but now under DO 40-
B-03 dated 2-16-04) a “chartered local” must now be registered with the RO in
order to acquire LP.

185. Can an independent union at enterprise level affiliate with a NU/F?

What is the legal effect of the Local Union’s legal personality?

Yes, it can affiliate in which case it is called an “affiliate.” But it still retains its
independent legal personality.
186. What is the LEGAL PHILOSOPHY/RATIONALE of registering LO?
To acquire legal personality to demand representational and collective
bargaining rights.

187. Does this requirement of Registration of LO have the effect of

abridging the right of assembly or associating?

No. (PAFLU vs. Secretary of Labor, L-2222, Feb 27, 69). It is a valid exercise of police power
because activities of LOUA affect public interest which must be protected.

188. May a LO register with SEC as a non-stock corporation?

Yes. (PLASLU, Inc. vs. CIR, 93 Phil. 747 [1953]; Cebu Seamen’s Assn vs. Ferrer-Calleja, 212 SCRA 50 [1992] ).
But such registration has the effect of giving it JURIDICAL PERSONALITY only
before regular courts. It does not grant the LO the rights and privileges of a
LLO.

189. Where to file the Registration of ILUs, Chartered Locals or WAs?

RO where it operates. Processed by LRD. If denied, appeal to the BLR.

Decision of BLR is appealable to the CA (not Secretary of Labor).

190. Where to file the Registration of NUs/Fs, WAs operating in more than 1
region?
 48
BLR or RO where it operates. Processed by BLR. If denied, appeal to the
Secretary of Labor. D of SOLE appealable to the CA.
191. State the Requirements for Registration of ILU.
a) Name of LU, its principal address, Names/Addresses of Officers, Approximate no. of
ees in the BU; plus a statement that such LU is not reported as Chartered Local of
any NU/F;
b) Minutes of Organizational Mtgs (OM) and List of participating ees;
c) Names of Members comprising at least 20% of all Members in the BU;
d) Annual Financial Report, if LU in existence for one year or over. Except no collection
subject to an accompanying statement in the application.
e) CBL, Minutes of its adoption/ratification, List of participating members. (Q – Can
this List of Ratifying Members be dispensed with? A – Yes, if such
ado/rati was conducted during the Org Meeting in which case this fact
must be recorded in the Minutes of OM.)
192. State the Requirements for Registration of NU/F.
a) Name of LU, its principal address, Names/Addresses of Officers
b) Minutes of Organizational Mtgs and List of participating ees;
c) Annual Financial Report, if LU in existence for one year or over. Except .. no
collection subject to an accompanying statement in the application.
d) CBL, Minutes of its adoption/ratification, List of participating members. (Q – Can
this List of Ratifying Members be dispensed with? A – Yes, if such
ado/rati was conducted during the Org Meeting in which case this fact
must be recorded in the Minutes of OM.)
e) Resolution of at leas 10 LLO (whether ILU, CL each be SEBA).
f) Names/Addresses of Companies where Affiliates operate. List of All Members in BU
of each Company)

193. State the ADDITIONAL Requirements exacted from NU/F for its CL
(Chartered Local) to acquire LP.

a) Charter Certificate indicating creation of CL;

b) Names/Addresses of CL’s officers, & principal address of CL
c) CBL of the CL. If same CBL with NU/F, such fact be indicated
d) All 3 be certified under oath by Sec. or Treas of the CL.

194. State the Requirements for WA.

a) Name of WA, its principal address, Names/Addresses of Officers;

b) Minutes of Organizational Mtgs and List of participants;
c) Annual Financial Report, if WA in existence for one year or over. Except .. no
collection subject to an accompanying statement in the application.
d) CBL with attached List of ratifying members; Minutes and Dates of its
ado/ratification. (Q – Can this CBL attachments be dispensed with? A –
Yes, if such ado/rati was conducted during the Org Meeting in which
case this fact must be reflected in the Minutes of OM.)
e) (Additional) Resolution of Membership of Each Member Association duly approved
by BOD, if WA operates in more than one region.
 49
195. Please note the Importance in Registration between ILU and CL.
 ILU requires initial membership of 20% of EEs in BU.
 CL does not have this requirement.
196. Is the CL or Local Union required to submit “Book of Accounts?”
No more, applying D.O. No. 9, S 1997 and DO 40-03. (Pagpalain Haulers, Inc. vs. Trajano,
GR 133215, July 15, 1999). (Before, it is required. Progressive Dev. Corp vs. Sec of Labor, GR 96425,
Feb 4 1992; Protection Technology, Inc. vs. Secretary of Labor, GR 117211, March 1, 1995)

197. When does a CHAPTER, LOCAL or CHARTERED LOCAL acquire LP?

Upon issuance of Certificate of Registration or Certificate of Creation of Chartered Local.
(DO 40-03 Sec 8 Rule IV)

198. Does the requirement of registration violate the constitutional right of

assembly or association?

No. (PAFLU vs. Secretary of Labor; L-2222, Feb. 27, 1969). Valid exercise of police power,
because the activities of LOUAG affect public interest that must be protected.
This right of assembly or association may still be exercised even w/o such
registration because the registration is just to have LEGAL PERSONALITY.

199. When shall the BLR or RO act on such APPLICATION for

REGISTRATION?

In original DO 40-03, within 10 days, but in 2005 (Supplemental provisions DO.

40-D-05) mandates the RO or BLR to APPROVE or DENY “within 1 day from
receipt thereof.”

200. Does recognition of a LU ministerial on the BLR or RO?

No. (Progressive Dev. Corp – Pizza Hut vs. Laguesma, GR 115077, April 18, 1997.) BLR or RO has
right to look into the propriety of the documents whether the requirements
under Art 234 are duly complied with.

201. Can union’s legitimacy be subjected to collateral attack?

No. Sec 8, Rule IV of DO 40-03 provides INDEPENDENT PETITION FOR CANCELLATION

OF UNION REGISTRATION as the only way to QUESTION its legitimacy. Not
collaterally during the proceedings for CE Petition.

202. What is a BARGAINING UNIT?

A group of ees sharing mutual interests within a given ER unit, comprised of

all or less than all of the entire body of ees in the ER unit or any specific
occupational or geographical grouping within such ER unit.

Ex: All R&F or All Supervisors. In Mfg, all R&F bottling crew; or in School, all
teaching staff comprise one CBU and another CBU for Non-Academic Staff.
 50

Bargaining unit; Concept. The concepts of a union and of a legitimate labor

organization are different from, but related to, the concept of a bargaining
unit. A bargaining unit is a “group of employees of a given employer,
comprised of all or less than all of the entire body of employees, consistent
with equity to the employer, indicated to be the best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.” Sta. Lucia East Commercial Corporation, vs. Hon.
Secretary of Labor and Employment, G.R. No. 162355, August 14, 2009 .

Representation of inappropriate bargaining unit not a ground for cancellation

of registration as LLO. The inclusion in the union of disqualified employees is
not among the grounds for cancellation of registration, unless such inclusion
is due to misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) to (c) of Article 239 of the Labor Code. (Sta. Lucia
East Commercial Corporation, vs. Hon. Secretary of Labor and Employment,
G.R. No. 162355, August 14, 2009.

The employer is a mere bystander in petitions for certification election. In

petitions for certification election, the employer is a mere bystander and
cannot oppose the petition or appeal the Med-Arbiter’s decision. The
exception to this rule, which happens when the employer is requested to
bargain collectively. (Sta. Lucia East Commercial Corporation, vs. Hon.
Secretary of Labor and Employment, G.R. No. 162355, August 14, 2009.)

203. What is the relevance of the constitution & by-laws of Union?

It governs the relationship among the union members or between the Union
and its members.

204. Suppose the LRD –RO denies the application, what is the remedy of
the Applicant LUOAG?

Appeal to the BLR within 10 days from receipt of Denial Notice or Order. Then
from BLR to CA.

205. Suppose the BLR-DOLE denies the application, what is the remedy of
the Applicant LUOAG?

Appeal to the Secretary of DOLE within 10 days from receipt of Denial Notice or
Order. Then from DOLE Secretary to CA.

206. What is an “AFFILIATE?”

An independently registered union which enters into an affiliation agreement

with NU/F.

Also defined as any chartered local granted an independent registration. It will

remain a CL even if it has independent registration if its does not disaffiliate
from the NU/F.

207. What happens if the NU/F loses its affiliates or CLs?

 51

It ceases as such NU/F.

208. Is an independently registered union required to report to the RO its

affiliation with a NU/F?

Yes. (Sec. 16, Rule 111, DO 40-03)

209. What are the documents that should accompany such report?

1. Resolution of ILU’s BOD approving affiliation

2. Minutes of gen. membership mtg (gmm) approving affiliation
3. Total Members of ILU and names of members approving
affiliation
4. Certificate of Affiliation issued by NU/F
5. Written Notice to ER if the Affiliating ILU is the incumbent BA.

210. RULE ON DISAFFILIATION? BY MAJORITY?

 A matter of right on the part of the CL or LU, unless the CBL provides
process or specific grounds for disaffiliation or CBL imposes certain
conditions for disaffiliation.

 By majority

211. CASES WHERE RIGHT TO DISAFFILIATE UPHELD BY SC

(Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., GR
No. L-33987, September 4, 1975)

 CBA was still alive

 32 of 36 ees disaffiliated from PAFLU
 CBA was with Union Security Clause
 Disaffiliating EEs dismissed by ER upon request of PAFLU
 SC awarded reinstatement
 SC slapped PAFLU with duty to pay BACKWAGES

(Tropical Hut Ees Union-CGW vs. Tropical Hut Food Market, Inc., GR No.
L-43495-99, January 20, 1999)

 CBA was still alive

 THEU disaffiliated from NATU
 NATU objected… THEU did not observe 3 mo prior notice of intent
 SC upheld Disaffiliation because of:
- CBL no provision preventing disaffiliation
- NATU not LLO
 52

- Mere technicality.

(Elisco-Elirol Labor Union [NAFLU] vs. Noriel, GR L-41955, December 29,

1977)

 Local Union is the principal; Federation is the agent.

 Local Union is free to D from the Mother Union.

212. When to disaffiliate?

 60 day freedom period

 Other time as agreed in the AFFILIATION AGREEMENT

213. Distinguish between Disaffiliation of Member from Union and

Disaffiliation of Local Union from Mother Union?

 Be done within 60 day freedom period

 If done by minority only even during 60 FP, DISLOYALTY. May be
expelled from the union if there is closed shop clause. (Villar vs. Intong, GR
50283-84, April 20, 1984)

214. What is the Effect if the DISAFFILIATING UNION is not LLO?

No rights of LLO. (Villar vs. Intong, 121 SCRA 444; GR 50283-84, April 20, 1984)

215. What is the Effect of union dues on DISAFFILIATION

Union dues stop at disaffiliation regardless of check-off authorization.

UNFAIR LABOR PRACTICE

216. Give the Concept of ULP.
 Violate the constitutional right of ees to self-organization
 Are inimical to the legitimate interests of both labor and mgt INCLUDING:
 Right to bargain collectively and deal with each other in an atmosphere of
freedom and mutual respect
 Disrupt industrial peace
 Hinder promotion of healthy and stable labor-mgt relations.

217. Is ULP a violation of both CIVIL and CRIMINAL rights?

Yes. Art 247 par.2

218. Who has jurisdiction over ULP Civil Aspect?

Labor Arbiter. Art 247 par.2

219. Who has jurisdiction over ULP Criminal Aspect?

 53

MTCC/MCTC/MTC concurrently with RTC. Art 288.

220. When can criminal prosecution for ULP be instituted?

Only when FJ in ULP case is obtained administratively.

221. Can a J for ULP in admin proc stand as evidence in the criminal
prosecution for ULP?

Generally NO because the crime of ULP must be proved independently. But

YES as proof for compliance.

222. Give the Elements of ULP?

1. ER-EE relationship
2. ULP done either by ER or by EES expressly defined in the LCP.

223. What is the Prescriptive period of ULP?

One year from Accrual
224. Who may be guilty of ULP?

ER (248 & 261). LO (249).

Violation of CBA becomes ULP only if GROSS IN CHARACTER (261 to
248[i].

225. Is any unfair act a ULP?

No.

226. Give the test of ULP.

Check if the ACTS are opposed to W’s right to self- organization or have
UNION connection.

227. Enumerate the ULP under Art. 248 (By ER)

a) Interference in RTSO
b) YDC
c) Contracting out Services (if impair RTSO)
d) ER Domination over Unionizing acts (Formation or Administration)
e) Discriminatory Manner re Labor Standards (Except Closed Shop Condition, Agency
Fees w/o need of Ind. Authorization.
f) Punitive Action due to Testimony
g) Violation of Collective Bargaining Duties
h) Payment of Negotiation/Atty’s Fees to Union or its Agents to settle CB issues or
labor disputes
i) Violation of CBA
 54
228. Who are criminally liable?

ER, Officers/Agents with ACTUAL PARTICIPATION in the ULP.

229. Enumerate the ULP under Art. 249 (By LO)

a) Coercion of ees re RTSO (except to pass rules re acquisition/retention of

membership
b) Instigating ER to discriminate ee including termination w/o just cause/dp
c) Violation of Collective Bargaining Duties
d) Forcing ER to shell out money (EXACTION) for unperformed services or DEMAND
for NEGOTIATION FEES
e) Demand for or Accept Negotiation/Atty’s Fees
f) Violation of CBA

230. Who are criminally liable?

Officers/Board Directors/Agents with ACTUAL PARTICIPATION (e.g.

ratification) in the ULP.

COLLECTIVE BARGANING
AND ADMINISTRATION OF CBA
Interpretation of school CBA. 

A school CBA must be read in conjunction with statutory and administrative

regulations governing faculty qualifications. Such regulations form part of a
valid CBA without need for the parties to make express reference to the same.

In the case at bar, the University of the East (UE) repeatedly extended only
semester-to-semester faculty appointments to the respondents Pepanio and
Bueno, since they had not completed postgraduate degrees.  The
respondents, however, claimed that the 1994 CBA between UE and the faculty
union did not yet require a master’s degree for a teacher to acquire regular
status.  Having rendered more than three consecutive years of full-time
service to the school, the respondents insisted that UE should have given
them permanent appointments.

The Supreme Court observed that the policy requiring college teachers to
have postgraduate degrees was provided in the Manual of Regulations issued
as early as 1992 by the Department of Education, Culture and Sports (DECS),
now the Department of Education.  In promulgating the Manual of
Regulations, DECS exercised its power of regulation over educational
institutions, which includes prescribing the minimum academic qualifications
for teaching personnel.  The legislature subsequently transferred the power
to prescribe such qualifications for teachers in institutions of higher learning
to the Commission on Higher Education (CHED).  However, the 1992 Manual of
Regulations issued by DECS continued to apply to colleges and universities
until 2010, when CHED issued a Revised Manual of Regulations.

Thus, the requirement of a master’s degree for college teachers, as originally

provided in the 1992 Manual of Regulations, was deemed incorporated in the
1994 CBA between UE and the faculty union.  Furthermore, the subsequent
CBA in 2001, which provided for the extension of conditional probationary
 55
status to the respondents, subject to their obtaining a master’s degree within
the probationary period, clearly showed that UE intended to subject the
respondents’ appointments to the standards set by the law.

The requirement of a master’s degree for tertiary education teachers is not

unreasonable, considering that the operation of educational institutions
involves public interest.  The government has a right to ensure that only
qualified persons, in possession of sufficient academic knowledge and
teaching skills, are allowed to teach in such institutions.

The Supreme Court also overruled the respondents’ contention that UE filed
its appeal to the NLRC beyond the required ten (10)-day period.  For
completeness of service by registered mail, the reckoning period starts either
from the date of actual receipt of the mail by the addressee or after five (5)
days from the date he or she received the first notice from the postmaster.  In
this case, the respondents averred that, on March 17, 2005, the postmaster
gave UE’s counsel a notice to claim the mail containing the Labor Arbiter’s
decision.  The respondents claimed that UE’s counsel was deemed in receipt
of the decision 5 days after the giving of the notice, or on March 22, 2005. 
Thus, according to the respondents, when UE filed its appeal to the NLRC on
April 14, 2005, the 10-day reglementary period had already lapsed.  The
Supreme Court, however, ruled that there must be conclusive proof that the
registry notice was received by or at least served on the addressee.  In this
case, the records did not show that UE’s counsel in fact received the alleged
registry notice requiring him to claim the mail.  On the other hand, UE was
able to present a registry return receipt showing that its counsel actually
received a copy of the Labor Arbiter’s decision on April 4, 2005.  Reckoned
from this date, the 10-day reglementary period had not yet lapsed when UE
filed its appeal to the NLRC on April 14, 2005.

Anent UE’s failure to comply with the general rule that the Board of Directors
or Board of Trustees of a corporation must authorize the person who shall
sign the verification and certification of non-forum shopping accompanying a
petition, the Supreme Court held that such authorization is not necessary
when it is self-evident that the signatory is in a position to verify the
truthfulness and correctness of the allegations in the petition.  The Supreme
Court declared that Dean Eleanor Javier, who signed UE’s verification and
certification, was in such a position, since she knew the factual antecedents of
the case and she actually communicated with the respondents regarding the
required postgraduate qualification.  University of the East, et al. vs. Analiza
F. Pepanio and Mariti D. Bueno.  G.R. No. 193897. January 23, 2013.

1.  What is Collective Bargaining?

It is a process where the parties agree to fix and administer terms and
conditions of employment which must not be below the minimum standards
fixed by law, and set a mechanism for resolving their grievances.

2. What is Collective Bargaining Agreement (CBA)?

It is a contract executed upon request of either the employer or the exclusive

bargaining representative of the employees incorporating the agreement
reached after negotiations with respect to wages, hours of work and all other
terms and conditions of employment, including proposals for adjusting any
grievances or questions under such agreement.
 56
3. Is the ratification of the CBA by the majority of all the workers in the
bargaining unit mandatory?

Yes. The agreement negotiated by the employees’ bargaining agent should be

ratified or approved by the majority of all the workers in the bargaining unit.

4. Is there any exception to the requirement of mandatory ratification

by the majority of all the workers in the bargaining unit?

Yes. Ratification of the CBA by the employees in the bargaining unit is not
needed when the CBA is a product of an arbitral award by appropriate
government authority or by a voluntary arbitrator.

5. What constitutes CBA registration?

It is a process of determining whether the application for registration of a

Collective Bargaining Agreement complies with the Rules on CBA registration
specifically Rule XVII of the Department Order No. 40-03 or the Rules
amending the Implementing Rules of Book V of the Labor Code of the
Philippines.

6. What is the effect of the CBA registration?

The registration of the CBA will bar a certification election except within the
last sixty days (freedom period) before the expiration of the five-year CBA.

7. What is the lifetime of a CBA?

With respect to representation aspect, the CBA lasts for 5 years. However, not
later than 3 years after the execution of the CBA, the economic provisions
shall be renegotiated.

8. What is the freedom period?

It refers to the last sixty days immediately preceding the expiration of the five-
year CBA. A petition for certification election may be filed during the freedom
period.

9. Where to file the application for CBA registration?

The application for CBA registration shall be filed at the Regional Office that
issued the certificate of registration or certificate of creation of chartered
local of the labor union-party to the agreement.

10. When to file the application for CBA registration?

The application for registration of the CBA shall be filed within thirty (30) days
from the execution of such CBA.

11. What are the requirements for CBA registration?

The following are the requirements for CBA registration (original and two (2)
duplicate copies which must be certified under oath by the representative of
the employer and labor union concerned):

a) The Collective Bargaining Agreement;

 57
b) A statement that the Collective Bargaining Agreement was posted in at
least two (2) conspicuous places in the establishment concerned for at
least five (5) days before its ratification; and

c) A statement that the Collective Bargaining Agreement was ratified by

the majority of the employees in the bargaining unit of the employer
concerned.

12. Is registration fee required?

Yes. The certificate of CBA registration shall be issued by the DOLE Regional
Office only upon payment of the prescribed registration fee.

13. How long will it take to process the CBA registration?

The application for CBA registration shall be processed within one day from
receipt thereof.

14. What is the ground for denial of the CBA registration?

Failure of the applicant to complete the requirements for CBA registration but
such denial is without prejudice for the filing of another application for
registration.

15. What is the CBA Registration?

The registration of Collective Bargaining Agreement refers to the process of

determining whether the application for registration complies with the
requirements provided under DOLE Department Order No. 40-03, as amended

16. Who may apply for CBA registration?

Parties to the CBA

231. STATE THE PROCESS OF CBA NEGOTIATION

 Art. 250 lays down the process.

1. Proposal by EBA
2. 10 days for ER to reply
3. After joining Proposal & Reply, if there is no AGREEMENT, request for
CONFERENCE to start within 10 days from request.
4. If no settlement, NCMB intervenes upon request
5. NCMB calls both parties to CONCILIATION MEETING/PREVENTIVE
MEDIATION .
6. Power of NCMB = Subpoena
7. No acts that Disrupt or Impede early settlement are allowed.
8. Efforts to settle amicably or go to VA.

232. What does Art. 251 provide?

It lays down the rules for both ER and EE Reps to Bargain Collectively in case
no CBA
 58

233. What is meant by Duty to Bargain Collectively (BC)

1. Performance of mutual obligations:

2. Prompt Meeting
3. Expeditious
4. Good Faith
5. For CBA Negotiations including grievance handling
6. No compulsion to AGREE to the proposal or to MAKE any CONCESSION

234. What does Art. 253 provide?

It provides the Duty of parties to BC when there is CBA

1. Let CBA finish its term/ no pre-termination

2. Pre-termination allowed at least 60 days before expiring
3. Keep status quo during the 60 days until a new CBA is reached

235. What is the terms of the CBA; Rules?

a) The representation aspect of the CBA has lifetime of 5 years.

b) 60 days to its expiration is FP
c) No CE outside Freedom P
d) The Economic or Non Political Aspect may be renegotiated after 3 years
e) If ECONOMIC: (a) Any CBA CONCLUDED within 6 months from exp,
RETROACTIVE to next day after exp is AUTOMATIC; (b) Any CBA
CONCLUDED after 6 months from exp, RETROACTIVITY to be agreed by
parties.
f) Any deadlock in the RENEGOTIATION: option is NOS

JURISPRUDENCE ON CBA

Acceptance of award or benefit by individual members not a waiver of the

union’s claim. Union members’ individual acceptance of the award and the
resulting payments made by company does not operate as a ratification of the
DOLE Secretary’s award; nor a waiver of their right to receive further benefits,
or what they may be entitled to under the law. Necessitous men are not, truly
speaking, free men; but to answer a present emergency, will submit to any
terms that the crafty may impose upon them.

CBA signing bonus presupposes successful negotiation. A signing bonus is a

grant motivated by the goodwill generated when a CBA is successfully
negotiated and signed between the employer and the union. When no CBA
was successfully negotiated by the parties, there shall be no basis to allow an
award of signing bonus.

N.B. In this case, the court awarded signing bonus because the petitioner
failed to question the original award of signing bonus despite unsuccessful
negotiation. The court held thus: “A bonus is a gratuity or act of liberality of
the giver; when petitioner filed the instant petition seeking the affirmance of
the DOLE Secretary’s Order in its entirety, assailing only the increased amount
 59
of the signing bonus awarded, it is considered to have unqualifiedly agreed to
grant the original award to the respondent union’s members.” (University of
Santo Tomas vs. Samahang Manggagawa ng UST (SM-UST), G.R. No. 169940,
September 14, 2009.)

236. What is the RULE ON Injunction in Labor Dispute?

No injunction in Labor Dispute is allowed. Except 218 (Commission of

prohibited or unlawful acts). Except 264 (Prohibited activities during any labor
controversy)

237. Is the EBA guaranteed Exclusive Representation during the life of the
CBA

YES, except during the freedom period where any LLO may challenge the
majority status of the incumbent EBA.

238. Is Labor Management Council allowed to be created in the industry

despite the existence of the CBA?

YES, both parties may agree to create a Labor Management Council as tool to
resolve conflicts and maintain industrial peace.

239. State the procedure of Representation in Organized

Establishment

a) Verified Petition by LLO for CE within 60 day freedom

period
b) 25% support signatures in the BU

To have Valid Election:

c) Majority of Eligible Voters must have cast their votes
d) Union getting the majority of valid votes cast wins
e) If 3 or more contenders, no one gets majority of valid
votes cast RUN-OFF between 2 who got highest number of votes.
PROVIDED that the TOTAL NUMBER OF VOTES for all contending
unions is at least 50% of the number of votes cast.

240. What is the Effect of expiration of freedom period and no CE has been
filed?

The ER must respect continuity of the incumbent EBA.

241. State the procedure of Representation in UNorganized Establishment

Upon verified petition by LLO a CE shall be held.

GRIEVANCVE MACHINERY
 60

AND VOLUNTARY ARBITRATION

242. What is Grievance Machinery?

It is a provision in the CBA which provides for the adjustment and resolution
of conflicts between M & U arising from INTERPRETATION and
IMPLEMENTATION of the CBA and INTERPRETATION and ENFORCEMENT of
Company Personnel Policies.

243. What is the effect of unsettled grievance?

Automatic referral to VA.

244. Who will choose the VA?

a) CBA. (Check if the CBA has identified one)

b) If not, then the parties can agree.
c) If do not know any VA, Go to NCMB and see VA Profiles then
agree which VA to choose.

245. What is the exclusive jurisdiction of the VA?

a) Unresolved grievance arising from the INTERPRETATION and

IMPLEMENTATION of the CBA and INTERPRETATION and
ENFORCEMENT of Company Personnel Policies;

b) ULP or BD if agreed upon by parties; and

c) All cases referred to it by the contending parties.

Jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a

special law governing overseas Filipino workers. However, there is no specific
provision thereunder which provides for jurisdiction over disputes or
unresolved grievances regarding the interpretation or implementation of a
CBA.  Section 10 of R.A. 8042 simply speaks, in general, of “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.” On the other hand, Articles
217(c) and 261 of the Labor Code are very specific in stating that voluntary
arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements.

In the present case, the basic issue raised by Merridy Jane in her complaint
filed with the NLRC is: which provision of the subject CBA applies insofar as
death benefits due to the heirs of Nelson are concerned.  This issue clearly
involves the interpretation or implementation of the said CBA. Thus, the
specific or special provisions of the Labor Code govern.

CBA is the law or contract between the parties. Article 13.1 of the CBA entered
into by and between respondent GCI and AMOSUP provides that the
Company and the Union agree that in case of dispute or conflict in the
 61
interpretation or application of any of the provisions of this Agreement, or
enforcement of Company policies, the same shall be settled through
negotiation, conciliation or voluntary arbitration. The provisions of the CBA
are in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as amended by Republic Act No. 10022, which states that for OFWs with
collective bargaining agreements, the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and 262 of the Labor Code. With
respect to disputes involving claims of Filipino seafarers wherein the parties
are covered by a collective bargaining agreement, the dispute or claim should
be submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining agreement that
parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. Estate of Nelson R. Dulay, represented by his wife Meddiry Jane
P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc.  G.R.
No. 172642, June 13, 2012.

246. Are violations of CBA considered ULP.

NO. Only those that gross in character. Minor violations are treated as
grievances.
247. What is meant by “GROSS VIOLATION OF THE CBA?”
Flagrant and/or malicious refusal to comply with the economic provisions of
the CBA.
248. What should DOLE do if it received Case under VA jurisidiction?
Refer the same to GM or VA.
249. Can the VA exercise quasi-judicial function?

Yes. Like the Labor Arbiter. VA decision is appealable to the CA.

250. Is the VA entitled to VA fees?

Yes. CBA sharing scheme. If none, agreement by parties.

Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary

arbitrator; Concept and exercise of management prerogative; Limitations on
the exercise of management prerogative; Nature of collective bargaining
agreements (CBA). 

Goya, Inc.’s contention that the Voluntary Arbitrator (VA) exceeded his power
in ruling on a matter not covered by the sole issue submitted for voluntary
arbitration is untenable.  In a prior case, the Supreme Court has ruled that, in
general, the arbitrator is expected to decide those questions expressly stated
and limited in the submission agreement.  However, since arbitration is the
final resort for the adjudication of disputes, the arbitrator can assume that he
has the power to make a final settlement.  The VA has plenary jurisdiction and
authority to interpret the CBA and to determine the scope of his or her own
authority.  Subject to judicial review, this leeway of authority and adequate
prerogative is aimed at accomplishing the rationale of the law on voluntary
arbitration – speedy labor justice.

In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union)
submitted for voluntary arbitration the sole issue of whether or not the
 62
company is guilty of an unfair labor practice in engaging the services of PESO,
a third party service provider, under existing CBA, laws, and jurisprudence. 
The Union claimed that the hiring of contractual workers from PESO violated
the CBA provision that prescribes only three categories of workers in the
company, namely: the probationary, the regular, and the casual employees. 
Instead of hiring contractual workers, Goya, Inc. should have hired
probationary or casual employees, who could have become additional Union
members, pursuant to the union security clause in the CBA.  The VA ruled that
while Goya, Inc. was not guilty of any unfair labor practice, it still committed a
violation of the CBA, though such violation was not gross in character.  The
Supreme Court held that the VA’s ruling is interrelated and intertwined with
the sole issue submitted for arbitration.  The ruling was necessary to make a
complete and final adjudication of the dispute between the parties.

Furthermore, Goya, Inc.’s assertion that its hiring of contractual workers was a
valid exercise of management prerogative is erroneous.  Declaring that a
particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise
thereof.  While the VA and the Court of Appeals ruled that the act of
contracting out or outsourcing work is within the purview of management
prerogative, they did not declare such act to be a valid exercise thereof.  As
repeatedly held, the exercise of management prerogative is not unlimited; it is
subject to the limitations found in the law, CBA, or general principles of fair
play and justice.

In this case, the CBA provision prescribing the categories of employees in the
company and the union security clause are interconnected and must be given
full force and effect.  The parties in a CBA are free to establish such
stipulations they may deem convenient, provided that the same are not
contrary to law, morals, good customs, public order, or public policy.  Where
the CBA is clear and unambiguous, the literal meaning of its stipulations shall
control.  The CBA becomes the law between the parties, and compliance
therewith is mandated by the express policy of the law.  Goya, Inc. vs. Goya,
Inc. Employees Union-FFW.  G.R. No. 170054. January 21, 2013.

STRIKES AND LOCK-OUTS

251. What is “strike?”

Temporary stoppage of work by the concerted action of employees as a

result of an industrial or labor dispute. [Art 212 (o)]

252. What is “lock-out?”

Temporary refusal of an ER to furnish work as a result of an industrial or labor

dispute. [Art 212 (p)]

253. Give the concept of concerted activity.

Generally, it is an activity conducted by two or more ees. But even if done by

one only it may be deemed a concerted activity if it is pursuant to a group
sentiments.
 63
254. What are the grounds for “Strike” or “Lock-out?”

ULP and Collective Bargaining Deadlock

255. Who can declare “Strike?” “Lock-out?”

EBR. If no EBR, LLO but only on ground of ULP.

256. State the Requisites to have Valid Strike/ Lock-out

a. ULP or CBD existence.

b. Notice of Strike/Lock-out Filed with NCMB cc ER/EE 30
BD/15ULP.
c. Strike Voting Results reported to NCMB at least 7 days prior
to strike.
d. No assumption by DOLE SEC or No Certification to NLRC or
VA
e. No Preventive Mediation on same grounds subject of Strike

257. What is Purpose of Period of Notice?

Cooling-off period. But if the ULP pertains to dismissal of union officer – union
busting IMMEDIATELY following submission (at least 7 days prior to strike) of
Strike Vote Results.

258. When can the DOLE SEC exercise his power of ASSUMPTION OF J?

When in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an INDUSTRY INDISPENSABLE TO NATIONAL INTEREST.

259. What are the effects of ASSUMPTION ORDER DOE SEC?

a) Strike must stop

b) Striking Workers must RTW
c) ER must readmit the W back to Work
d) Status Quo prior to Strike.
e) DOLE SEC may handle case himself or CERTIFY it to NLRC Division concerned.

260. What is the effect of those employees who do not return to work?

Deemed to have lost their employment.

261. What is the consequence of an illegal strike?

The officers who voted for the strike (subsequently declared illegal) may be
dismissed from service;

As to the members who participated in the illegal strike, the situation is

DIFFERENT:
 64

a) The members who commit ILLEGAL ACTS during the strike may suffer the
same fate as the officers.

b) The members who DID NOT COMMIT ILLEGAL ACTS during the strike may be
spared.

JURISPRUDENCE ON STRIKES

Illegal strike and illegal acts during the strike; distinction between union
members and union officers in determining when they lose their employment
status. The Supreme Court stressed that the law makes a distinction between
union members and union officers. A union member who merely participates
in an illegal strike may not be terminated from employment. It is only when he
commits illegal acts during a strike that he may be declared to have lost
employment status. In contrast, a union officer may be terminated from
employment for knowingly participating in an illegal strike or participates in
the commission of illegal acts during a strike. The law grants the employer the
option of declaring a union officer who participated in an illegal strike as
having lost his employment. It possesses the right and prerogative to
terminate the union officers from service. Visayas Community Medical Center
(VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma
Yballe, et al.,G.R. No. 196156, January 15, 2014

NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike

staged by its leaders and members was declared illegal.  The union leaders
who conducted the illegal strike despite knowledge that NAMA-MCCH-NFL is
not a duly registered labor union were declared to have been validly
terminated by petitioner. However, as to the respondents who were mere
union members, it was not shown that they committed any illegal act during
the strike. The Labor Arbiter and the NLRC were one in finding that
respondents actively supported the concerted protest activities, signed the
collective reply of union members manifesting that they launched the mass
actions to protest management’s refusal to negotiate a new CBA, refused to
appear in the investigations scheduled by petitioner because it was the
union’s stand that they would only attend these investigations as a group, and
failed to heed petitioner’s final directive for them to desist from further taking
part in the illegal strike. The CA, on the other hand, found that respondents’
participation in the strike was limited to the wearing of armbands.  Since an
ordinary striking worker cannot be dismissed for such mere participation in
the illegal strike, the CA correctly ruled that respondents were illegally
dismissed. However, the CA erred in awarding respondents full back wages
and ordering their reinstatement despite the prevailing
circumstances. Visayas Community Medical Center (VCMC) formerly known as
Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al., G.R. No. 196156,
January 15, 2014.

When valid strike may subsequently be held illegal. Even if the purpose of a

strike is valid, the strike may still be held illegal where the means employed
are illegal. Thus, the employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which are injurious to the right to
property renders a strike illegal. And so is picketing or the obstruction to the
free use of property or the comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence, and coercion as to constitute
nuisance.
The Union members’ repeated name-calling, harassment and threats of bodily
 65
harm directed against company officers and non-striking employees and, more
significantly, the putting up of placards, banners and streamers with vulgar
statements imputing criminal negligence to the company, which put to doubt
reliability of its operations, come within the purview of illegal acts under Art.
264 and jurisprudence. (A. Soriano Aviation vs. Employees Association of A.
Soriano Aviation, et al., G.R. No. 166879, August 14, 2009.)

Ibid.; Violence need not be continuous or for the entire duration of the
strike. That the alleged acts of violence were committed in nine non-
consecutive days during the almost eight months that the strike was on-going
does not render the violence less pervasive or widespread to be excusable.
Nowhere in Art. 264 does it require that violence must be continuous or that it
should be for the entire duration of the strike. (A. Soriano Aviation vs.
Employees Association of A. Soriano Aviation, et al., G.R. No. 166879, August
14, 2009.)

Notice of strikes; When failure to attach counter-proposal does not render

strike illegal. Failure to attach counter-proposal in the notice to strike as
required under the Omnibus Rules Implementing the Labor Code does not
render the strike illegal if attaching the counter-proposal was, in the first
place, not practicable. It was absurd to expect the union to produce the
company’s counter-proposal which it did not have. One cannot give what one
does not have. Indeed, compliance with the requirement was impossible
because no counter-proposal existed at the time the union filed a notice of
strike. The law does not exact compliance with the impossible. Nemo tenetur
ad impossibile. (Club Filipino, Inc. vs. Bautista, G.R. No. 168406, July 13, 2009.)

No backwages for striking employees because the strike was declared illegal.
The Court, citing G&S Transport Corporation v. Infante, G. R. No.     160303,
September 13, 2007, stated that the principle of a “fair day’s wage for a fair
day’s labor” remains as the basic factor in determining the award thereof.  An
exception to the rule would be if the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed or otherwise
illegally prevented from working.  It is, however, required, for this exception
to apply, that the strike be legal, a situation which does not obtain in the case
at bar. Visayas Community Medical Center (VCMC) formerly known as Metro
Cebu Community Hospital (MCCH) v. Erma Yballe, et al., G.R. No. 196156,
January 15, 2014

Executory character of assumption and certification order. Assumption and

certification orders are executory in character and are to be strictly complied
with by the parties, even during the pendency of any petition questioning
their validity. Regardless therefore of its motives, or of the validity of its
claims, the employer must readmit all striking employees and give them back
their respective jobs. Accepting back the workers is not a matter of option,
but of obligation mandated by law for the employer to faithfully comply with.
Its compulsory character is mandated, not to cater to a narrow segment of
society, or to favor labor at the expense of management, but to serve the
greater interest of society by maintaining the economic equilibrium.

Implementation of return to work order cannot be made to depend upon the

discretion of the employer. Certainly, the determination of who among the strikers
could be admitted back to work cannot be made to depend upon the discretion of
employer, lest we strip the certification or assumption-of-jurisdiction orders of the
coercive power that is necessary for attaining their laudable objective. The return-
to-work order does not interfere with the management’s prerogative, but merely
regulates it when, in the exercise of such right, national interests will be affected.
 66
The rights granted by the Constitution are not absolute. They are still subject to
control and limitation to ensure that they are not exercised arbitrarily. The interests
of both the employers and employees are intended to be protected and not one of
them is given undue preference. (YSS Employees Union vs. YSS Laboratories, Inc.,
G.R. No. 155125, December 4, 2009)

262. State the Prohibited Activities

a. commission of illegal acts during strike
b. No strike Breaker
c. No employment of Strike Breaker
d. No military or police escort (EE as Replacement)
e. No Picketers shall commit VICO ingress/igress

263. What is the penalty for violating 264?

Fine P1,000 – 10,000 and/or imprisonment 3 mos – 3 years or both. No

more separate case under the RPC due to Exlusionary clause.

264. RULE ON IMPROVED OFFER / REDUCED OFFER

Must be done Before 30th day of strike.

The REFERENDUM must be done BY SECRET BALLOTING

265. RULE ON ARREST AND DETENTION

No arrest/detention w/o Consultation with SOLE

EXCEPT: WHEN involving National Security, Public Peace or Crime
266. Can aliens exercise right to self-organization here?
Generally NO. EXCEPT Those with Valid Work Permits here and their country
also grant the same rights to OFW.

267. Can foreign individual or organization donate to LO or ER for trade

union activities?

Yes. With prior permission by the SOLE.

268. Extent of Visitorial Power of SOLE in Labor Relations Matters

Examine Financial Books of LLO upon complaint with consent of 20% its
members.

MANAGEMENT PREROGATIVES
AND EMPLOYEE RIGHTS
269. ENUMERATE CERTAIN MANAGEMENT PREROGATIVES

1. to lay down policies / formulate rules /establish standards

 67
2. to hire
3. to transfer
4. to promote / demote
5. to discipline
6. to dismiss
7. to restructure
8. to retrench
9. to declare redundant
10. to measure performance
11. to reward
12. to punish
13. ROI & Expansion & Growth

TRANSFER

When transfer of employee is tantamount to constructive dismissal. The

employer must demonstrate that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee and that the transfer does not
involve a demotion in rank or a diminution of salary and other benefits. If the
employer fails to overcome this burden of proof, the employee’s transfer is
tantamount to unlawful constructive dismissal. (Merck Sharp and Dohme
(Philippines), et al. vs. Robles, et al., G.R. No. 176506, November 25, 2009.)

Transfer of employees; As management prerogative. The transfer of

employees has been traditionally among the acts identified as a management
prerogative subject only to limitations found in law, collective bargaining
agreement, and general principles of fair play and justice. Even as the law is
solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will
of management to conduct its own business affairs to achieve its purpose
cannot be denied. (Aguanza vs. Asian Terminal Inc., et al., G.R. No. 163505,
August 14, 2009.)

270. Enumerate the constitutional rights of labor?

Art. XIII, (3) 1987 Constitution

1. Security of Tenure
2. Just and Humane Conditions of Work
3. Living Wage
4. Self-Organization (Except Managerial, Confidential, Etc)
5. Collective Bargaining (Same Exceptions)
6. Strike (Same Exceptions)
7. Participate In Policy And Decision-Making
8. Just Share in Production
9. Equal Employment Opportunity
10. Basic Human Rights to Human Dignity, Privacy, Decency, Intellectual
Property
11. Due Process
 68

THE LAW ON JUST CAUSE AND DUE PROCESS

JUST CAUSES

Dismissal; burden of proof on employer. The burden is on the employer to

prove that the termination was for valid cause. Unsubstantiated accusations or
baseless conclusions of the employer are insufficient legal justifications to
dismiss an employee. “The unflinching rule in illegal dismissal cases is that the
employer bears the burden of proof.” Jonas Michael R. Garza v. Coca-Cola
Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.

271. What are the JUST CAUSES

a) Serious Misconduct OR Willful Disobedience

b) Gross & Habitual Neglect of Duty
c) Fraud and Breach of Trust
d) Crime against ER his family/representative
e) Analogous causes

(NOTE: These are generic terms. The technique is to read the facts seriously
and identify if the particular actions of the employee fall on any of the above
enumeration)

DUE PROCESS

Due process. To meet the requirements of due process in the dismissal of an employee, an
employer must furnish the worker with two written notices: (1) a written notice specifying
the grounds for termination and giving to said employee a reasonable opportunity to
explain his side and (2) another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer’s decision to dismiss
the employee. The law does not require that an intention to terminate one’s employment
should be included in the first notice. It is enough that employees are properly apprised of
the charges brought against them so they can properly prepare their defenses. It is only
during the second notice that the intention to terminate one’s employment should be
explicitly stated.

The guiding principles in connection with the hearing requirement in dismissal cases are the
following:

“Ample opportunity to be heard” means any meaningful opportunity (verbal

or written) given to the employee to answer the charges against him and
submit evidence in support of his defense, whether in a hearing, conference
or some other fair, just and reasonable way.

A formal hearing or conference becomes mandatory only when requested by

the employee in writing or substantial evidentiary disputes exist or a company
rule or practice requires it, or when similar circumstances justify it.

The “ample opportunity to be heard” standard in the Labor Code prevails over
the “hearing or conference” requirement in the implementing rules and
regulations.
 69
The existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely
necessary to satisfy the employee’s right to be heard. Esguerra was able to present her
defenses; and only upon proper consideration of it did Valle Verde send the second
memorandum terminating her employment. Since Valle Verde complied with the two-notice
requirement, no procedural defect exists in Esguerra’s termination. Dolores T. Esguerra vs.
Valle Verde Country Club, Inc. and Ernesto Villaluna.  G.R. No. 173012, June 13, 2012.

NOTES:

SERIOUS MISCONDUCT

Misconduct has been defined as improper or wrong conduct. It 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. Surigao del Norte Electric Cooperative v. NLRC,
citing Cosep v. NLRC, 290 SCRA 704 (1998). The misconduct to be serious must
be of such grave and aggravated character and not merely trivial and
unimportant. Such misconduct, however serious, must nevertheless be in
connection with the employee’s work to constitute just cause for his
separation. Samson v. NLRC, 330 SCRA 460, 471 (2000), citing Cosep v. NLRC,
290 SCRA 704 (1998).

Thus, for misconduct or improper behavior to be a just cause for dismissal, (a)
it must be serious; (b) must relate to the performance of the employee’s
duties; and (c) must show that the employee has become unfit to continue
working for the employer. Philippine Aeolus Automotive United Corporation
v. NLRC, 331 SCRA 237 (2000), citing Molato v. NLRC, 266 SCRA 42 (1997) and
Aris Philippines, Inc. v. NLRC, 238 SCRA 59 (1994).

Indeed, an employer may not be compelled to continue to employ such

person whose continuance in the service would be patently inimical to his
employer’s interest. GT Printers v. NLRC, 208 SCRA 321 (1992), citing Colgate
Palmolive Phils., Inc. v. Ople, 163 SCRA 323 (1988).

ILLEGAL DRUGS IN WORKPLACE

Drug use in employer’s premises constitutes serious misconduct. Article 282(a)

of the Labor Code states that the employer may terminate an employment for
serious misconduct. Drug use in the premises of the employer constitutes
serious misconduct.
Lack of written notices entitles employee to award of nominal damages. The
propriety of [employee's] dismissal is not affected by the lack of written
notices. When the dismissal is for just cause, the lack of due process does not
render the dismissal ineffectual but merely gives rise to the payment of
P30,000 in nominal damages. (Bernardo B. Jose, Jr. vs. Michaelmar Phils.,
Inc., G.R. No. 169606, November 27, 2009.)

Drug-Free Workplace Policy; Importance of confirmatory test after drug test.

The importance of the confirmatory test is underscored in Plantation Bay’s
own “Policy and Procedures,” in compliance with Republic Act No. 9165,
requiring that a confirmatory test must be conducted if an employee is found
positive for drugs in the Employee’s Prior Screening Test, and that both tests
must arrive at the same positive result.
 70

But where the confirmatory test results were released earlier than those of
the drug test, the veracity of the confirmatory results is put to doubt.
(Plantation Bay Resort and Spa vs. Dubrico, et al., G.R. No. 182216, December
4, 2009.)

Use of illegal drugs is a form of serious misconduct but before an

employee can be validly dismissed due to this cause the ER must
have the following requirements.

a) AN initial Finding of POSITIVE RESULT in the SCREENING TEST

b) A second Finding of CONFIRMATORY POSITIVE RESULT in the
CONFIRMATORY TEST.
c) Both tests must be conducted by a DOH-accredited diagnostic
entity/clinic
d) Due process.

Dismissal Due To Use of Illegal Drugs

The importance of the confirmatory test is underscored in Plantation Bay's

own "Policy and Procedures," in compliance with Republic Act No. 9165,
requiring that a confirmatory test must be conducted if an employee is found
positive for drugs in the Employee's Prior Screening Test, and that both tests
must arrive at the same positive result. Plantation Bay vs. Romel S. Dubrico,
G.R. No. 182216, December 4, 2009

The law is clear that drug tests shall be performed only by authorized drug
testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic
is an accredited drug testing center nor did it deny the complainant’s
allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test
was conducted to determine if the complainant was guilty of using illegal
drugs. Sulpicio Lines did not confirm the positive result of the screening test
with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed
to indubitably prove that Nacague was guilty of using illegal drugs and failed
to clearly show that it had a valid and legal cause for terminating Nacague’s
employment. When the alleged valid cause for the termination of
employment is not clearly proven, as in this case, the law considers the matter
a case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc.,  G.R. No.
172589, August 8, 2010.

Simple misconduct does not merit employee’s dismissal from service. Simple
misconduct which does not merit employee’s termination from his
employment. Although, an employer has the right to discipline its erring
employees, exercise of such right should be tempered with compassion and
understanding. The magnitude of the infraction committed by an employee
must be weighed and equated with the penalty prescribed and must be
commensurate thereto, in view of the gravity of the penalty of dismissal or
termination from the service. The employer should bear in mind that in
termination cases, what is at stake is not simply the employee’s job or position
but his very livelihood. (PLDT vs. Berbano, G.R. No. 165199, November 27,
2009.)

Understating company’s financial position in order to reduce municipal license

constitutes  serious misconduct. The employee’s declaration that “I believe
that I did something good for our office when our declaration of gross income
 71
submitted to City Hall for the renewal of our municipal license was lower than
our actual gross income for which the office had paid a lower amount,” shows
act of dishonesty and partakes serious misconduct. (Llamas vs. Ocean
Gateway Maritime and Management Inc., G.R. No. 179293, August 14, 2009.)

WILLFUL DISOBEDIENCE

Bascon v. Court of Appeals G.R. No. 144899, February 5, 2004, 422 SCRA 122,
outlines the elements of gross insubordination as follows:
 
          As regards the appellate court’s finding that petitioners were justly
terminated for gross insubordination or willful disobedience, Article 282 of the
Labor Code provides in part:
 
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.
 
However, wilful disobedience of the employer’s lawful orders, as a just cause
for dismissal of an employee, envisages the concurrence of at least two
requisites:  (1) the employee’s assailed conduct must have been wilful, 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. 

GROSS AND HABITUAL NEGLIGENCE

Badge of Gross Negligence under Article 282 (b) of the Labor Code

Gross negligence connotes want of care in the performance of one’s

duties. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito
Nazario, G.R. No. 152166, October 20, 2010.

Badge of Habitual Neglect under Article 282 (b) of the Labor Code

Habitual neglect implies repeated failure to perform one’s duties for a period
of time, depending upon the circumstances. St. Luke’s Medical Center, Inc.
and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

A single or isolated act of negligence that cannot be categorized as habitual

does not constitute a just cause for the dismissal of the employee. St. Luke’s
Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario,  G.R. No. 152166,
October 20, 2010.

Ground for termination of employment; Gross negligence. Gross negligence

connotes want or absence of or failure to exercise even slight care or
diligence, or the total absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. To warrant removal
from service, the negligence should not merely be gross, but also habitual. A
single or isolated act of negligence does not constitute a just cause for the
dismissal of the employee. (Estacio and Manliclic vs. Pampanga I Electric
Cooperative Inc., et al., G.R. No. 183196, August 19, 2009.
 72

Ibid.  Gross negligence connotes want of care in the performance of one’s

duties. Habitual neglect implies repeated failure to perform one’s duties for a
period of time, depending upon the circumstances. Fraud and willful neglect
of duties imply bad faith of the employee in failing to perform his job, to the
detriment of the employer and the latter’s business. (Estacio and Manliclic vs.
Pampanga I Electric Cooperative Inc., et al., G.R. No. 183196, August 19, 2009.

Abandonment. Abandonment cannot be inferred from the actuations of

respondent. When he discovered that his time card was off the rack, he
immediately inquired from his supervisor.  He later sought the assistance of
his counsel, who wrote a letter addressed to Polyfoam requesting that he be
re-admitted to work.  When said request was not acted upon, he filed the
instant illegal dismissal case.  These circumstances clearly negate the intention
to abandon his work. Polyfoam-RGC International, Corporation and Precilla
A. Gramaje vs. Edgardo Concepcion . G.R. No. 172349, June 13, 2012.

LOSS OF TRUST AND CONFIDENCE or BREACH OF TRUST

BPI vs. RAMON A. UY, G.R. No. 156994, August 31, 2005

KIND OF EMPLOYEE WHO MAY BE GUILTY OF LOSS OF TRUST

Loss of confidence as a just cause of termination of employment is premised

on the fact that the employee concerned holds a position of responsibility or
trust and confidence.
He must be invested with confidence on delicate matters, such as custody,
handling or care and protection of the property and assets of the employer.

Petitioner as Loan’s Clerk was not invested with the custody, handling, or care
and protection of the private respondent’s monies.

The allegation that he was responsible for the procurement and release of the
back-to-back loan to Evangeline Sy, the acceptance of the said check and the
issuance of the receipt to favor her despite knowing that the same amounts
to gross violation of bank procedures and loss to the bank was negated by the
fact that as a mere Loan’s Clerk and considering that the accounts involved
were considerably large, a careful evaluation, assessment and appraisals by
the bank officers such as the bank’s Branch Managers, Assistant Managers,
and Cashier was necessary. The decision to grant loans, which credit line to
use, to whom loans should be granted and how much should be granted
especially millions of pesos is a management decision and prerogative, which
the bank officers are equally responsible. In support of his defense, petitioner
has presented pieces of evidence, which to the mind of this court the
Honorable National Labor Relations Commission (NLRC) might have
overlooked. In particular is the signature of bank officer Ronaldo J. Fernando
who approved the loan of Evangeline Ong-Sy. It was also this bank officer who
accepted the checks as payment when he confirmed the same as funded from
the Manager of RCBC, Allan Marbella. These pieces of evidence were indeed
enough to overturn the argument of private respondent that as Loan’s Clerk
petitioner was responsible only for the loss incurred by it.

As enunciated in the recent case of Vitarich Corporation, et al. vs. NLRC, the
guidelines for the application of the doctrine of loss of confidence, are:

a) loss of confidence should not be simulated;

 73
b) it should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
c) it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
d) it must be genuine, not a mere afterthought to justify earlier action taken in
bad faith.

 ELEMENTS OF WILLFUL BREACH OF TRUST

(Adelino Felix vs. NLRC, G.R. No. 148256, Nov 17, 2004)

1. It must be done intentionally, knowingly and purposely, without

justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.

2. It must rest on substantial grounds and not on the employer’s

arbitrariness, whims, caprice or suspicion; otherwise, the employee would
eternally remain at the mercy of the employer.

3. It must be genuine and not simulated; nor should it appear as a mere

afterthought to justify earlier action taken in bad faith or a subterfuge for
causes which are improper, illegal of unjustified.

4. It has never been intended to afford an occasion for abuse because of

its subjective nature.

5. The actual breach of duty committed by the employee must be

established by substantial evidence.

Loss of confidence  must be based on a willful breach of trust to justify

dismissal. The loss of confidence must be based not on an ordinary breach by
the employee of the trust reposed in him by the employer, but on a willful
breach. (St. Luke’s Medical Center, Inc. vs. Fadrigo, G.R. No. 185933,
November 25, 2009.)

Willful breach of trust; Definition. A breach is willful if it is done intentionally,

knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly, or inadvertently. It must rest on
substantial grounds and not on the employer’s arbitrariness, whims, caprices
or suspicion; otherwise, the employee would eternally remain at the mercy of
the employer. It should be genuine and not simulated; nor should it appear as
a mere afterthought to justify an earlier action taken in bad faith or as a
subterfuge for causes that are improper, illegal or unjustified. (St. Luke’s
Medical Center, Inc. vs. Fadrigo, G.R. No. 185933, November 25, 2009.)

Breach of Trust; Misappropriation; Amount irrelevant.  In misappropriation of

company funds against employee, the amount misappropriated is irrelevant.
More than the resulting material damage or prejudice, it is the very act of
misappropriation that is offensive to the company. (Estacio and Manliclic vs.
Pampanga I Electric Cooperative Inc., et al., G.R. No. 183196, August 19, 2009.)

Termination by employer; Grounds; Lost of confidence. Loss of

confidence applies only to cases involving employees who occupy positions of
trust and confidence, or to those situations where theemployee is routinely
charged with the care and custody of the employer’s money or property. To
be a valid ground for an employee’s dismissal, loss of trust and confidence
must be based on a willful breach. A breach is willful if it is done intentionally,
 74
knowingly and purposely, without justifiable excuse. (Del Rosario vs. Makati
Cinema Square Corp., G.R. No. 170014, July 3, 2009.)

In dismissing an employee on the ground of loss of confidence, it is sufficient

that the employer has a reasonable ground to believe, based on clearly
established facts, that the employee is responsible for the misconduct and the
nature of his participation renders him unworthy of the trust and confidence
demanded by his position. If the employer has ample reason to distrust the
employee, the labor tribunal cannot justly deny the former the authority to
dismiss the latter. (Del Rosario vs. Makati Cinema Square Corp., G.R. No.
170014, July 3, 2009

Embezzlement; failure to remit collections. The irregularity attributed to

petitioner with regard to the Asanza account should fail as well. To be sure,
Asanza herself confirmed that she did not make any payment in cash or check
of P8,160.00 covering the October 15, 2003 delivery for which petitioner is
being held to account. This being the case, petitioner could not be charged
with embezzlement for failure to remit funds which he has not collected.
There was nothing to embezzle or remit because the customer made no
payment yet. It may appear from Official Receipt No. 303203 issued to Asanza
that the October 15 delivery of products to her has been paid; but as admitted
by her, she has not paid for the said delivered products. The reason for
petitioner’s issuance of said official receipt to Asanza is the latter’s concurrent
promise that she would immediately issue the check covering the said
amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers
Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.

Wider discretion in terminating managerial employees. An employer has a

much wider discretion in terminating the employment of managerial
personnel as compared to rank and file employees. The reason is that officers
in such key positions perform not only functions which by nature require the
employer’s full trust and confidence but also functions that spell the success
or failure of a business. (Lowe, Inc., et al., vs. Court of Appeals, G.R. Nos.
164813 and 174590, August 14, 2009.)

Loss of trust and confidence. There are two (2) classes of positions of trust.
The first class consists of managerial employees, or those vested with the
power to lay down management policies; and the second class consists of
cashiers, auditors, property custodians or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of
money or property. Esguerra held the position of Cost Control Supervisor and
had the duty to remit to the accounting department the cash sales proceeds
from every transaction she was assigned to. This is not a routine task that a
regular employee may perform; it is related to the handling of business
expenditures or finances. For this reason, Esguerra occupies a position of trust
and confidence – a position enumerated in the second class of positions of
trust. Any breach of the trust imposed upon her can be a valid cause for
dismissal.

Loss of confidence as a just cause for termination of employment can be

invoked when an employee holds a position of responsibility, trust and
confidence. In order to constitute a just cause for dismissal, the act
complained of must be related to the performance of the duties of the
dismissed employee and must show that he or she is unfit to continue
working for the employer for violation of the trust reposed in him or her. It
was Esguerra’s responsibility to account for the cash proceeds; in case of
 75
problems, she should have promptly reported it, regardless of who was at
fault. Instead, she settled the unaccounted amount only after the accounting
department informed her about the discrepancy, almost one month following
the incident. Esguerra’s failure to make the proper report reflects her
irresponsibility in the custody of cash for which she was accountable. (Dolores
T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna.  G.R. No.
173012, June 13, 2012).

Serious misconduct and loss of trust and confidence. Dejan is liable for
violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee
Discipline, constituting serious misconduct, fraud and willful breach of trust of
the employer, which are just causes for termination of employment under the
law. There is no dispute about the release of the meter sockets. Also, the
persons involved were clearly identified – Dejan; Gozarin, a private electrician
who received the meter sockets; Reyes, the owner of the jeep where the
meter sockets were loaded by Gozarin; Duenas, a Meralco field
representative; and Depante, another private electrician who purportedly
owned the meter sockets. The release by Dejan of the meter sockets to
Gozarin without the written authority or SPA from the customer or customers
who applied for electric connection (as a matter of company policy) served as
a key element in proving the private contracting activity for electric service
connection being undertaken by Dejan and Duenas.

Moreover, it was bad enough that Dejan failed to ask for a written
authorization from the customers for the release of the meter sockets as
required by company policy, but the elaborate scheme pursued by Dejan  in
concert with Duenas, were all undertaken to defraud Meralco. Hence, Meralco
had valid reasons for losing its trust and confidence in Dejan.  He is no ordinary
employee.  As branch representative, he was principally charged with the
function and responsibility to accept payment of fees required for the
installation of electric service and facilitate issuance of meter sockets. The
duties of his position require him to always act with the highest degree of
honesty, integrity and sincerity, as the company puts it.  In light of his
fraudulent act, Meralco, an enterprise imbued with public interest, cannot be
compelled to continue Dejan’s employment, as it would be inimical to its
interest. Manila Electric Company (Meralco) vs. Herminigildo H. Dejan.  G.R.
No. 194106, June 18, 2012.

loss of trust and confidence. The Labor Code recognizes that an employer, for
just cause, may validly terminate the services of an employee for serious
misconduct or willful disobedience of the lawful orders of the employer or
representative in connection with the employee’s work. Fraud or willful
breach by the employee of the trust reposed by the employer in the former,
or simply loss of confidence, also justifies an employee’s dismissal from
employment. Willful breach of trust or loss of confidence requires that the
employee (1) occupied a position of trust or (2) was routinely charged with the
care of the employer’s property. To warrant dismissal based on loss of
confidence, there must be some basis for the loss of trust or the employer
must have reasonable grounds to believe that the employee is responsible for
the misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. For more than a month, the petitioners did
not even inform PLDT of the whereabouts of the plant materials. Instead, he
stocked these materials at his residence even if they were needed in the daily
operations of the company. In keeping with the honesty and integrity
demanded by his position, he should have turned over these materials to the
plant’s warehouse. Thus, PLDT reasonably suspected petitioner of stealing the
 76
company’s property. At that juncture, the employer may already dismiss the
employee since it had reasonable grounds to believe or to entertain the moral
conviction that the latter was responsible for the misconduct, and the nature
of his participation therein rendered him absolutely unworthy of the trust and
confidence demanded by his position. Romeo E. Paulino vs. NLRC, Philippine
Long Distance Co., Inc. G.R. No. 176184, June 13, 2012.

loss of trust and confidence. Loss of confidence as a just cause for dismissal
was never intended to provide employers with a blank check for terminating
their employees. It should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the
employee is routinely charged with the care and custody of the employer’s
money or property. To the first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions; and to the
second class belong cashiers, auditors, property custodians, etc., or those
who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property.

The first requisite for dismissal on the ground of loss of trust and confidence is
that the employee concerned must be one holding a position of trust and
confidence. The second requisite is that there must be an act that would
justify the loss of trust and confidence. Vallota’s position as Junior
Programmer is analogous to the second class of positions of trust and
confidence. Though he did not physically handle money or property, he
became privy to confidential data or information by the nature of his
functions. At a time when the most sensitive of information is found not
printed on paper but stored on hard drives and servers, an employee who
handles or has access to data in electronic form naturally becomes the
unwilling recipient of confidential information. There was no other evidence
presented to prove fraud in the manner of securing or obtaining the files
found in Vallota’s computer. The presence of the files would merely merit the
development of some suspicion on the part of the employer, but should not
amount to a loss of trust and confidence such as to justify the termination of
his employment. Such act is not of the same class, degree or gravity as the
acts that have been held to be of such character. Prudential Guarantee and
Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential
Guarantee and Assurance Inc., and/or Jocelyn Retizos.  G.R. No. 185335, June
13, 2012.

loss of trust and confidence. To validly dismiss an employee on the ground of

loss of trust and confidence under Article 282 (c) of the Labor Code of the
Philippines, the following guidelines must be observed: 1) loss of confidence
should not be simulated; 2) it should not be used as subterfuge for causes
which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted
in the face of overwhelming evidence to the contrary; and 4) it must be
genuine, not a mere afterthought to justify earlier action taken in bad faith.
More importantly, it must be based on a willful breach of trust and founded
on clearly established facts. The testimony of Lobitaña constitutes substantial
evidence to prove that respondent, as the then Power Plant Manager,
accepted commissions and/or “kickbacks” from suppliers, which is a clear
violation of Section 2.04 of petitioner’s Company Rules and Regulations.
Jurisprudence consistently holds that for managerial employees, the mere
existence of a basis for believing that such employee has breached the trust
of his employer would suffice for his dismissal. Respondent’s termination was
 77
for a just and valid cause. Apo Cement Corporation Vs. Zaldy E. Baptisma.  G.R.
No. 176671. June 20, 2012.

Willful breach of trust. The loss of trust and confidence must be based on
willful breach of the trust reposed in the employee by his employer.  Such
breach is willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.  Moreover, it must be based on substantial
evidence and not on the employer’s whims or caprices or suspicions
otherwise, the employee would eternally remain at the mercy of the
employer.  The Supreme Court has laid down the guidelines for the application
of the loss of trust and confidence doctrine: (1) loss of confidence should not
be simulated; (2) it should not be used as a subterfuge for causes which are
improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary; and (4) it must be genuine, not a
mere afterthought, to justify an earlier action taken in bad faith. Villanueva
worked for Meralco as a Branch Representative whose tasks included the
issuance of Contracts for Electric Service after receipt of the amount due for
service connection from customers.  Obviously, he was entrusted not only
with the responsibility of handling company funds but also to cater to
customers who intended to avail of Meralco’s services.  This is nothing but an
indication that trust and confidence were reposed in him by the company,
although his position was not strictly managerial by nature.  Meralco’s loss of
trust and confidence arising out of Villanueva’s act of misappropriation of
company funds in the course of processing customer applications has been
proven by substantial evidence, thus, justified.  Verily, the issuance of
additional receipts for excessive payments exacted from customers is a willful
breach of the trust reposed in him by the company. Vicente Villanueva, Jr. vs..
The National Labor Relations Commission, Third Division, Manila Electric
Company, Manuel Lopez, Chairman and CEO, and Francisco Collantes,
Manager. G.R. No. 176893, June 13, 2012.

ANALOGOUS CAUSES

Union Security. In terminating the employment of an employee by enforcing

the union security clause, the employer needs to determine and prove that: (1)
the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the decision of the union to expel the employee
from the union. These requisites constitute just cause for terminating an
employee based on the union security provision of the CBA.

The petitioner failed to satisfy the third requirement since nothing in the
records would show that respondents failed to maintain their membership in
good standing in the union. Significantly, petitioner’s act of dismissing
respondents stemmed from the latter’s act of signing an authorization letter
to file a petition for certification election as they signed it outside the freedom
period. The mere signing of an authorization letter before the freedom period
is not sufficient ground to terminate the employment of respondents
inasmuch as the petition itself was actually filed during the freedom period.
The court emphasizes anew that the employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining
Agreement. Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et
al., G.R. No. 160828, August 9, 2010.
 78
ANALOGOUS CAUSE. Article 282(e) of the Labor Code talks of other
analogous causes or those which are susceptible of comparison to another in
general or in specific detail as a cause for termination of employment. A cause
analogous to serious misconduct is a voluntary and/or willful act or omission
attesting to an employee’s moral depravity. Theft committed by an employee
against a person other than his employer, if proven by substantial evidence, is
a cause analogous to serious misconduct. Previous infractions may be cited as
justification for dismissing an employee only if they are related to the
subsequent offense. However, it must be noted that such a discussion was
unnecessary since the theft, taken in isolation from Fermin’s other violations,
was in itself a valid cause for the termination of his employment. Cosmos
Bottling Corp. vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp.
and Cecilia Bautista. G.R. No. 193676 & G.R. No. 194303. June 20, 2012.

272. What are the Authorized Causes

a) Retrenchment (e.g. Reduction of Personnel)

b) Redundancy
c) Closure of Business
d) Disease.

Notes:

RETRENCHMENT

In retrenchment to be valid aside from the 30 day notice requirements to

DOLE and to individual employee affected and payment of separation pay, the
ER must prove its financial losses through audited financial statements from
independent public auditors. (Asian Alcohol Case)

Retrenchment is subject to faithful compliance with the substantive and

procedural requirements laid down by law and jurisprudence. For a valid
retrenchment, the following elements must be present:

a) That retrenchment is reasonably necessary and likely to prevent

business losses which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in
good faith by the employer;

b) That the employer served written notice both to the employees

and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment;

c) That the employer pays the retrenched employees separation pay

equivalent to one (1) month pay or at least ½ month pay for every
year of service, whichever is higher;

d) That the employer exercises its prerogative to retrench employees

in good faith for the advancement of its interest and not to defeat
or circumvent the employees’ right to security of tenure; and

e) That the employer used fair and reasonable criteria in ascertaining

who would be dismissed and who would be retained among the
 79
employees, such as status, efficiency, seniority, physical fitness,
age, and financial hardship for certain workers.

All these elements were successfully proven by petitioner. First, the huge
losses suffered by the Club for the past two years had forced petitioner to
close it down to avert further losses which would eventually affect the
operations of petitioner. Second, all 45 employees working in the Club were
served with notice of termination. The corresponding notice was likewise
served to the DOLE one month prior to retrenchment. Third, the employees
were offered separation pay, most of whom have accepted and opted not to
join in this complaint. Fourth, the cessation of or withdrawal from business
operations was bona fide in character and not impelled by a motive to defeat
or circumvent the tenurial rights of employees. Waterfront Cebu City Hotel
vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.

Retrenchment. Retrenchment is the termination of employment initiated by

the employer through no fault of and without prejudice to the employees. It is
resorted to during periods of business recession, industrial depression, or
seasonal fluctuations or during lulls occasioned by lack of orders, shortage of
materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery or of automation. 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. In this case, the closure of a department or division of
a company constitutes retrenchment by, and not closure of, the company
itself. Petitioner has not totally ceased its business operations.  It merely
ceased operations of a department. Waterfront Cebu City Hotel vs. Ma.
Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.

REDUNDANCY

In Redundancy, from the 30 day notice requirements to DOLE and to

individual employee affected and payment of separation pay, the employer
must abolish the redundant positions in good faith; and the employer must
set fair and reasonable criteria in ascertaining which positions are redundant
and may be abolished. (Viajar Case, G.R. 181738, January 30, 2013)

In Closure of Business, in a July 2013 case, the SC slapped the ER to pay

complainants INDEMNITY of P30,000.00 each for failure of the ER to notify
the individual employees of the closure of the business. Although the ER
called all the EEs and inform them in general about the CLOSURE plus a
posting of the notices of closure in the Bulletin Boards of the ER. Still the SC
did not consider the Notice as substantial compliance as required in Article
283 now 297 of the LC. The notice required, according to the SC, is the NOTICE
to each individual EE, about the closure of the business

Redundancy as an authorized cause for termination; Difference between

retirement and termination due to redundancy; General rule regarding the
factual findings of the NLRC and the exceptions thereto. 

Under the Labor Code, redundancy is one of the authorized causes for
termination of employment.  The following are the requisites for the valid
implementation of a redundancy program: 
 80
(a) the employer must serve a written notice to the affected employees and
to the Department of Labor and Employment (DOLE) at least one month
before the intended date of termination;

(b) the employer must pay the employees separation pay equivalent to at
least one month pay or at least one month pay for every year of service,
whichever is higher;

(c) the employer must abolish the redundant positions in good faith; and

(d) the employer must set fair and reasonable criteria in ascertaining which
positions are redundant and may be abolished. 
The Supreme Court has also held that a company cannot simply declare
redundancy without basis.  To exhibit its good faith and to show that there
were fair and reasonable criteria in ascertaining redundant positions, a
company claiming to be over manned must produce adequate proof of the
same.

In the case at bar, the General Milling Corporation (GMC) furnished

respondent Viajar a written notice informing her of the termination of her
services on the ground of redundancy.  GMC also submitted to the DOLE an
Establishment Termination Report, regarding the employees, including Viajar,
whose positions were deemed redundant.  Viajar and the DOLE received the
respective notices one month before the effective date of the employees’
termination.  Furthermore, GMC issued to Viajar two checks amounting to
P440,253.02 and P21,211.35, representing her separation pay. 

However, the Supreme Court held that, notwithstanding compliance with the
requirements on notice and the payment of separation pay, GMC is still
considered to have illegally dismissed Viajar because the company failed to
present substantial proof to support its general allegations of redundancy. 
GMC could have presented evidence to substantiate redundancy, such as a
new staffing pattern or feasibility studies or proposals on the viability of newly
created positions, job descriptions and the approval by management of the
restructuring program, or the company’s audited financial reports.  However,
no such evidence was submitted by GMC.

On the other hand, Viajar presented proof negating GMC’s claim of

redundancy and clearly showing GMC’s bad faith in implementing the
redundancy program: (1) GMC had hired new employees before it terminated
Viajar’s employment; (2) Viajar was barred from entering the company
premises even before the effectivity of her separation; and (3) Viajar was also
forced to sign an “Application for Retirement and Benefits” so that she could
avail of her separation pay.  The last circumstance is significant, considering
that there is a difference between voluntary retirement and forced
termination of an employee. 
Retirement from service is contractual or based on a bilateral agreement of
the employer and the employee, while termination of employment is
statutory or governed by the Labor Code and other related laws.  Voluntary
retirement cuts employment ties, leaving no residual employer liability;
involuntary retirement amounts to a discharge, rendering the employer liable
for termination without cause.  GMC’s demand that Viajar sign an Application
for Retirement and Benefits, when she had already been informed of the
termination of her services due to redundancy, shows that this case involves
not a voluntary retirement, but an illegal termination.
 81
While the Labor Arbiter and the NLRC both found that Viajar was validly
dismissed, the general rule that the factual findings of the NLRC must be
accorded respect and finality is not applicable in this case.  One of the
exceptions to the said rule covers instances when the findings of fact of the
trial court, or of the quasi-judicial agencies concerned, are conflicting or
contradictory with those of the Court of Appeals, as in the present case. 
Another exception to the general rule is when the said findings are not
supported by substantial evidence or the inference or conclusion arrived at is
manifestly erroneous.  In the case at bar, the Supreme Court agreed with the
Court of Appeals that the NLRC’s conclusion that Viajar was legally dismissed
is manifestly erroneous.  General Milling Corporation vs. Violeta L. Viajar.
G.R. No. 181738. January 30, 2013.

Management prerogative to determine continuing necessity of position and

qualification and fitness of employee. The determination of the continuing
necessity of a particular officer or position in a business corporation is a
management prerogative, and the courts will not interfere unless arbitrary or
malicious action on the part of management is shown. It is also within the
exclusive prerogative of management to determine the qualification and
fitness of an employee for hiring and firing, promotion or reassignment.
Indeed, an employer has no legal obligation to keep more employees than are
necessary for the operation of its business. (Lowe, Inc., et al., vs. Court of
Appeals, G.R. Nos. 164813 and 174590, August 14, 2009.)

Redundancy. Redundancy exists when the service of an employee is in excess

of what is reasonably demanded by the actual requirements of the business. A
redundant position is one rendered superfluous by any number of factors,
such as overhiring of workers, decreased volume of business, dropping of a
particular product line previously manufactured by the company or phasing
out of a service activity formerly undertaken by the enterprise. (Lowe, Inc., et
al., vs. Court of Appeals, G.R. Nos. 164813 and 174590, August 14, 2009.)

Requisites for valid implementation of redundancy programs. For a valid

implementation of a redundancy program, the employer must comply with
the following requisites: (1) written notice served on both the employee and
the DOLE at least one month prior to the intended date of termination; (2)
payment of separation pay equivalent to at least one month pay or at least
one month pay for every year of service, whichever is higher; (3) good faith in
abolishing the redundant position; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant. (Lowe, Inc., et al.,
vs. Court of Appeals, G.R. Nos. 164813 and 174590, August 14, 2009.)

DISEASE

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 the health of his co-
employees. (Art. 284, LC)

Requisites for termination on the ground of disease.

a) The employee suffers from a disease;

b) His continued employment is prohibited by law or prejudicial to his health
or to the health of his co-employees; and
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c) The disease is of such nature and at such a stage that it cannot be cured
within a period of six months even with proper medical treatment. (Sec. 8,
Title I, Bk. VI, IRR)

Certification from public health authority required

Certification by competent public health authority that the disease is of such

nature and of at such a stage that it cannot be cured within a period of six
months even with proper medical treatment.

Right to reinstatement if disease is curable with six months

If the disease or ailment can be cured within six months, the employer shall
not terminate the employee but shall ask the employee to take a leave of
absence.

The employee is entitled to be reinstated to his former position immediately

upon the restoration of his normal health. (ibid.)

Disability distinguished from Disease

Disability should not be confused with disease. Disability itself, even if

permanent, is not a ground for termination. The Magna Carta for Disabled
Persons prohibits the termination of a disabled employee based on disability
alone. This constitutes act of discrimination, a criminal offense for which fine
and/or imprisonment may be imposed. (Magna Carta for Disabled Persons)

Cases

1. The requirement for a medical certificate under Article 284 of the

Labor Code cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent
of the employee’s illness and thus defeat the public policy in the protection of
labor. (Sy vs. Court of Appeals, G.R. No. 142293 February 27, 2003)

Disease as a ground for termination; Retirement under the Labor Code; Age
and tenure requirements for retirement; Financial assistance. 

Under the Labor Code provision on disease as a ground for termination

(formerly, Article 284, but now renumbered pursuant to Republic Act No.
10151), it must be the employer who initiates the termination of the
employee’s services.  The aforementioned provision cannot be applied in this
case, considering that it was the late petitioner Padillo, and not the Rural Bank
of Nabunturan, Inc. (Bank), who severed the employment relations.  With his
memory impaired after suffering a mild stroke due to hypertension, Padillo
wrote a letter to the Bank, expressing his intention to avail of an early
retirement package.  The clear import of Padillo’s letter and the fact that he
had stopped reporting for work even before sending the said letter shows
that he voluntarily retired.  Given the inapplicability of the Labor Code
provision on disease as a ground for termination, it necessarily follows that
Padillo’s claim for separation pay must be denied.

As regards Padillo’s claim for retirement benefits, the provision of the Labor
Code on retirement (formerly, Art. 287, but now renumbered pursuant to R.A.
No. 10151) states that, in the absence of any applicable agreement, an
employee who has served at least five (5) years in the company may retire
 83
upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years,
to be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, with a fraction of at least six (6) months being
considered as one whole year.  Notably, the aforementioned age and tenure
requirements are cumulative, and non-compliance with either negates the
employee’s entitlement to the retirement pay under the Labor Code.  In this
case, the Bank did not have a retirement plan or any other contract with its
employees, setting the terms and conditions for retirement.  Padillo also
served the Bank for twenty-nine (29) years, far more than the 5-year tenure
requirement.  Padillo, however, did not meet the age requirement,
considering that he was only fifty-five (55) years old, or less than 60 years of
age, when he retired.  Thus, Padillo’s claim for retirement pay must also be
denied.

Nevertheless, the Supreme Court awarded Padillo financial assistance in the

amount of P75,000, considering the length of time which had supervened
before the disposition of this case and Padillo’s unblemished record of 29
years of service to the Bank.  The award was in addition to the P100,000
benefit receivable under the Philam Life Plan that the Bank had procured in
favor of Padillo.  Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al.
G.R. No. 199338. January 21, 2013.

Occupational diseases; Pulmonary tuberculosis. While pulmonary tuberculosis

appears in the list of occupational diseases in the contract of employment, the
inclusion is conditional; a claimant has to show actual work-relatedness if the
condition does not apply. (Montoya vs. Transmed Manila Corporation, et al.,
G.R. No. 183329, August 27, 2009.)

CONSEQUENCES OF ILLEGAL DISMISSAL

273. What are the main consequences of ILLEGAL DISMISSAL

An illegally dismissed employee is entitled to:

a) REINSTATEMENT without loss of seniority rights; and

b) FULL BACKWAGES (inclusive of allowances and other benefits
or their monetary equivalent) 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.

“Art. 279. Security of Tenure. - 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 is withheld from him up to the time of his actual
reinstatement."

Reinstatement; Backwages.  

It is basic in jurisprudence that illegally dismissed workers are entitled to

reinstatement with backwages plus interest at the legal rate.

This labor controversy started when the employer Automotive Engine

Rebuilders, Inc. (AER) and the Progresibong Unyon ng mga Manggagawa sa
 84
AER (Union) filed charges against each other for violating labor laws.  AER
filed a complaint against the Union and eighteen (18) of its members for
conducting an illegal strike.  On the other hand, thirty-two (32) employees
filed a complaint against AER for unfair labor practices, illegal dismissal, illegal
suspension, and run-away shop.  In a previous decision (G.R. No. 160138, July
13, 2011), the Supreme Court had held that both parties were at fault or in pari
delicto; hence, the complaining employees should be reinstated but without
backwages.  The Motion for Partial Reconsideration filed by the Union is
resolved in the present case.

The Supreme Court found that, of the 32 employees who filed the complaint
against AER, only 18 had been charged by AER with illegal strike, leaving 14
excluded from the employer’s complaint.  As no charges had been filed
against the 14 workers, they cannot be found guilty of illegal strike.  Neither
can they be considered in pari delicto.  However, of the 14 employees, five
failed to write their names and affix their signatures in the Membership
Resolution attached to their petition before the Court of Appeals, authorizing
the union president to represent them.  Thus, while these five employees will
also be reinstated, they cannot be granted backwages.  On the other hand,
the nine workers who signed their names in the aforementioned Membership
Resolution will be reinstated with backwages plus interest at the legal
rate.  Automotive Engine Rebuilders, Inc. (AER), et al. vs. Progresibong
Unyon ng mga Manggagawa sa AER, et al. / Progresibong Unyon ng mga
Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders, Inc., et al.  G.R.
Nos. 160138 and 160192. January 16, 2013.

Order of reinstatement. Article 223 of the Labor Code provides that in case
there is an order of reinstatement, the employer must admit the dismissed
employee under the same terms and conditions, or merely reinstate the
employee in the payroll. The order shall be immediately executory. Thus, 3rd
Alert cannot escape liability by simply invoking that Navia did not report for
work. The law states that the employer must still reinstate the employee in
the payroll. Where reinstatement is no longer viable as an option, separation
pay equivalent to one (1) month salary for every year of service could be
awarded as an alternative. 3rd Alert Security and Detective Services, Inc. vs.
Romualdo Navia. G.R. No. 200653, June 13, 2012.

274. Is the award of backwages limited only to the Decision of the LA

awarding such backwages?

NO. Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiter's decision until the dismissed
employee is actually reinstated.

275. What is the effect of the award of reinstatement that is no longer

feasible?

A separation pay equal to one-month salary shall be granted to EE from the

time of his illegal termination up to the time of finality of the Decision. [Itogon-
Suyoc Mines, Inc. v. Sañgilo-Itogon Workers' Union [No. L-24189 30 August 1968, 26 SCRA 873, 887]; Labor v.
NLRC, [G.R. No. 110388, 14 September 1995, 248 SCRA 183]; Gaco vs. NLRC, [G.R. No. 104690, 23 February 1994,
230 SCRA 260]; Oscar Ledesma and Company v. NLRC, [G.R. No. 110930, 13 July 1995, 246 SCRA 47]; Rasonable
v. NLRC, et al., [G.R. No. 117195, 20 February 1996].
 85
“Doctrine of strained relations”; Requirements for application of the doctrine.
In order for the doctrine of strained relations to apply, it should be proved
that the employee concerned occupies a position where he enjoys the trust
and confidence of his employer and that it is likely that if reinstated, an
atmosphere of antipathy and antagonism may be generated as to adversely
affect the efficiency and productivity of the employee concerned. (Cabigting
vs. San Migual Foods, Inc., G.R. No. 167706, November 5, 2009.)

276. What is this concept of BACKWAGES?

Backwages is a remedy affording the employee a way to recover what he has

lost by reason of the unlawful dismissal.

277. What is the primordial consideration in awarding BACKWAGES?

The primordial consideration is the income that should have accrued to the
employee from the time that he was dismissed up to his reinstatement and the
length of service prior to his dismissal is definitely inconsequential.

278. What is the remedy of a permanent employee who is illegally

dismissed? How much is he entitled to due to illegal dismissal?

An illegally dismissed employee is entitled to two reliefs: backwages and

reinstatement. The two reliefs provided are separate and distinct. In instances
where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are

reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in
addition to payment of backwages.

Employees who are illegally dismissed are entitled to full backwages, inclusive
of allowances and other benefits or their monetary equivalent, computed from
the time their actual compensation was withheld from them up to the time of
their actual reinstatement. But if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to
the finality of the decision. Thus, when there is an order of reinstatement, the
computation of backwages shall be reckoned from the time of illegal
dismissal up to the time that the employee is actually reinstated to his former
position.

SEPARATION PAY
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279. What is meant by Separation Pay?

Separation pay, as generally understood, refers to the amount due to the

employee who has been terminated from service for causes authorized by law
(not due to employees fault or wrong-doing) such as installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking.

Separation pay is intended to provide the employee with the wherewithal (e.g.
fund) during the period he is looking for another employment. (Gabuay vs.
Oversea Paper Supply, G.R. No. 148837, August 13, 2004.)

280. State the Five Instances when Separation Pay is due to Employee

There are at least five instances in which an employee is entitled to payment of

separation pay upon severance of employment:

1. When the termination of employment is due to causes authorized by law, such as

installation of labor-saving devices, redundancy, retrenchment to prevent losses or
the closing or cessation of operation of the establishment or undertaking. This is
provided under Art. 283, Labor Code of the Philippines. The provision states, viz.:

Article 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 Department 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 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.

2. When the severance of employment is caused by a disease, particularly when the

employee is found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as the health of
his co-employees. This is found in Art. 284, ibid., the full text states, viz.:

Article 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 the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one month salary or to one-half month
salary for every year of service, whichever is greater, a fraction of at least six
months being considered as one whole year.

3. When the termination from service of the employee has been declared illegal, but his
reinstatement to his former position is no longer feasible for some valid reason, e.g.,
 87
when reinstatement is rendered impossible due to subsequent closure of business, or
when the relationship between employer and employee has become strained
(doctrine of strained relations). (Gabuay v. Oversea Paper Supply, G.R. No. 148837,
August 13, 2004.)

4. In case of pre-termination of employment contract in job-contracting arrangement.

(DO No. 18-02, Rules Implementing Article 106 to 109 of the Labor Code.)

5. In exceptional cases, where separation pay is awarded as a measure of social or

compassionate justice. Here, payment of separation pay may be ordered by the court
even if the dismissal from service is found to have been for valid or just cause, i.e.,
even if the employee is found to have been at fault. (PLDT vs. NLRC, No. L-80609,
August 23, 1988.)

281. Distinguish Separation Pay from Retirement Pay

Separation pay should not be confused with retirement pay.

SEPARATION PAY is the amount due to the employee where the cessation of
employment is due to causes authorized by law (or for any of the other causes
stated above).

RETIREMENT PAY, on the other hand, is the amount to be paid to the

employee who has reached the compulsory retirement age or who availed of
voluntary retirement.

282. How Separation Pay is computed?

Separation pay may be computed based on the terms provided in the

employment contract, company policy, or collective bargaining agreement.
Company practice may likewise be used as basis for computation, if such
practice has been established for years and has already ripened into a
demandable right.

In the absence of contract or agreement, or when the existing agreement or

policy provides for a lower benefit, separation pay shall be computed based on
the provision of the Labor Code.

The amount of separation pay under the Labor Code depends on the following
factors:

1. The employee’s last salary;

2. The employee’s length of service;
3. The reason for employee’s separation from service.

A. Employee’s last salary

The employee’s last salary refers to the salary rate of the employee at the
time of his termination from service. It determines the base to be used in the
computation of separation pay.
 88
When there is a reduction of the employee’s salary prior to his termination,
e.g., the employee has been demoted resulting to a reduction of salary, such
reduced salary rate, which is his ‘last salary’ shall be the basis of the
computation. But, if the reduction of salary was made to circumvent the
provision of the Labor Code, that is, to avoid payment of higher separation
pay, the salary rate before the reduction shall be used in the computation of
separation pay.

For employee’s receiving salary below the minimum wage, the separation pay
shall be computed based on the minimum wage in effect at the time of
separation from service. In addition, the employee affected is also entitled to
payment of salary differential equivalent to the difference between the
employees actual salary and applicable minimum wage.

B. Employee’s length of service

Employee’s length of service refers to the duration of time that the employee
has been under the employ of the same employer or company. It is computed
beginning from the time of his engagement up to the date of his termination.
A fraction of at least 6 months shall be considered as one whole year.

However, only the employee’s last continuous years of service should be

considered in the computation (See Carandang vs. Dulay; Sta. Catalina
College vs. NLRC; Phil. Tobacco Flue-Curing vs. NLRC.)

C. The reason for the employee’s separation from service

The reason for the employee’s separation from service is an important factor
in the computation of separation pay. The amount of separation pay may vary
depending on the specific ground relied upon for the termination.

An employee terminated based on installation of labor-saving devices or

redundancy is entitled to at least one-month salary or to at least one-month
salary for every year of service, whichever is higher. (See Article 283, Labor
Code).

For termination based on retrenchment to prevent losses and closure of

business, the employee affected is entitled to at least one month salary or 1/2
month salary for every year of service, whichever is higher. (Ibid.)

An employee terminated for health reasons (disease) under Article 284 should
be paid separation pay equivalent to at least one-month salary or to at least
one-month salary for every year of service, whichever is higher.

In case of illegal termination, separation pay in lieu of reinstatement has been

consistently computed at one month salary for every year of service.

“AT LEAST ONE MONTH” or “1/2 MONTH FOR EVERY YEAR OF SERVICE?”;
MEANING

The phrase “at least one month salary or 1/2 month salary for every year of
service, whichever is higher”, can be quite confusing. The phrase though is
not really complicated. It simply means that the employee is entitled
whichever is higher of the employee’s: “one month salary; or 1/2 month salary
for every year of service.”
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ILLUSTRATIONS:

Example # 1 : If the retrenched employee’s salary is P8,000, and he has been

working for 3 years, he is entitled to separation pay equivalent to whichever is
higher of his:

i. one month salary = P8,000; or

ii. 1/2 month salary for every year of service = (1/2) x P8,000
x 3 years = P12,000.

In the above example, the employee is entitled to P12,000, the higher amount.

Example # 2 : Following the same rule, if the length of service is only one year,
his separation would be whichever is higher of the following:

one month salary = P8,000; or

1/2 month salary for every year of service = (1/2) x P8,000 x 1 year = P4,000.

Here, separation pay is P8,000 or one month salary, the higher amount.
Actually, we will arrive at the same result even if the length of service is only
10 months or 7 1/2 months, etc., as long as it is 6 months or more. This is
because a fraction of at least 6-months is considered as 1 whole year.

Example # 3 : Now, what if the employee has served for less than 6 months,
how much separation pay will he get? Let’s see.

one month salary = P8,000; or

1/2 month salary for every year of service = (1/2) x P8,000 x 0 year = 0.

So, it’s still P8,000 or one month salary.

283. What is the Minimum Separation Pay

Take a quick look at the examples given above. You will notice that the
minimum separation pay that may be given to an employee is one month
salary. This is actually consistent with the phrase “at least one month salary”,
which simply means that the separation pay must not be less than the
employee’s one month salary.

284. May separation pay in lieu of reinstatement be paid as alternative relief

for union members who were dismissed for having participated in an
illegal strike?

YES. Under the following circumstances:

(a) when reinstatement can no longer be effected in view of the passage

of a long  period of time or because of the realities of the situation;
(b) reinstatement is inimical to the employer’s interest;
(c) reinstatement is no longer feasible;
(d) reinstatement does not serve the best interests of the parties involved;
(e) the employer is prejudiced by the workers’ continued employment;
(f) facts that make execution unjust or inequitable have supervened; or
(g) strained relations between the employer and employee.
 90
The Court ruled that the grant of separation pay to the EES is the
appropriate relief under the circumstances considering that 15
years had lapsed from the onset of this labor dispute, and in view
of strained relations that ensued, in addition to the reality of
replacements already hired by the hospital which had apparently
recovered from its huge losses, and with many of the petitioners
either employed elsewhere, already old and sickly, or otherwise
incapacitated. Visayas Community Medical Center (VCMC)
formerly known as Metro Cebu Commnunity Hospital (MCCH) v.
Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

VOLUNTARY RESIGNATION
285. What is Voluntary Resignation?

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. (Virgen Shipping Corp. vs.
Barraquio, G.R. No. 178127, April 16, 2009 citing Valdez vs. NLRC.)

The key is that resignation must be a “voluntary act”, and that the employee
must have knowingly and voluntarily dissociated himself from his employment
for his own personal reasons. It does not cover cases where the employee is
forced to resign with the use of threats, intimidation, coercion or manipulation,
or where resignation is imposed as a penalty for an offense.

The common practice of allowing an employee to resign, instead of

terminating him for just cause so as not to smear his employment record, also
fall under the category of voluntary resignation. (J Marketing Corp. vs. Taran,
G.R. No. 163924, June 28, 2009).

286. State the Rule on Resignation Notice.

The Labor Code requires the employee to give an advance notice to the
employer of his intention to resign. The notice of resignation must be in writing
and must be served to the employer at least one month prior to the effective
date of his resignation.

286. Why is it important to state the date when the resignation is to take
effect?

Because of the 30-day notice requirement under the law.

Resignation in relation to the subsequent filing of an illegal dismissal case. 

Petitioner Cervantes’s claim that he did not resign but was terminated from
employment is untenable.  Resignation is the voluntary act of an employee
who finds himself in a situation where he believes that personal reasons
 91
cannot be sacrificed in favor of the exigency of the service, such that he has
no other choice but to disassociate himself from his employment.

In the present case, Cervantes’s employer merely informed him of the

numerous complaints against him.  It was Cervantes himself who opted to be
relieved from his post and who initiated his repatriation to Manila.  This is
clear from the tenor of his telex message, which reads in part:  “ANYHOW TO
AVOID REPETITION [ON] MORE HARSH REPORTS TO COME.  BETTER
ARRANGE MY RELIEVER [AND] C/O BUSTILLO RELIEVER ALSO.  UPON ARR
NEXT USA LOADING PORT FOR THEIR SATISFACTION.”  Cervantes’s message
contains an unmistakable demand to be relieved of his assignment.  His
employer merely accepted his resignation.  Thus, the rule that the filing of a
complaint for illegal dismissal is inconsistent with resignation does not hold
true in this case.  The clear tenor of Cervantes’s resignation letter and the
filing of this case one year after his alleged termination shows that the
complaint for illegal dismissal was a mere afterthought.  Rolando L. Cervantes
vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd.
G.R. No. 175209. January 16, 2013.

287. What is the effect of lack of explicit words stating the employee’s
intention to resign?

Lack of explicit words stating the employee’s intention to resign is deemed not
crucial, as long as the employees intention to resign can be deduced from
letter itself.

In one case, the Supreme Court held that a memorandum written by the
employee containing his deep resentment towards his superior juridically
constituted a letter of resignation. Even if the employee did not expressly
indicate his intention to resign (neither of the words “resign” or “resignation”
was mentioned), the resentful and sarcastic tone of the memorandum was
held to be sufficiently indicative of such intention.

288. What is the Effect of Failure to Tender Resignation Notice

If the employee fails to give the employer one month advance notice of his
intention to resign, he may be held liable for damages.

289. Cite the Instances when Notice of Resignation is Not Required.

The employee may resign even without serving any notice on the employer for
any of the following reasons:

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. Article 285 (now 299, LC)
 92
Resignation under any of the instance enumerated above is also called
“termination by employee with just cause.”

290. Is the Employee who voluntarily resigns entitled to Separation Pay?

NO. An employee who voluntarily resigns from his work is not entitled to
separation pay. There is no provision in the Labor Code which grants
separation pay to voluntarily resigning employees.

Separation pay as a rule is paid only in those instances where the severance of
employment is due to factors beyond the control of the employee. Thus, in
case of retrenchment to prevent losses where the employee is forced to
depart from the company due to no fault on his part, separation pay is required
by law to be paid to the dismissed employee.

The case is totally different in case of voluntary resignation where severance of

employment is due to employee’s own initiative. The law does not oblige the
employer to give separation pay if the initiative to terminate employment
comes from employee himself.

291. Are there EXCEPTIONS to the above rule?

YES. By way of exceptions, there are at least two instances where an employee
who voluntarily resigns is entitled to receive separation pay, as follows:

1. When payment of separation pay is stipulated in the employment

contract or Collective Bargaining Agreement (CBA, for companies with
existing bargaining agent or union);

2. When it is sanctioned by established employer practice or policy.

In Hinatuan Mining Corporation, et al. vs. NLRC, et al., G.R. No.

117394, February 21, 1997, the court ruled viz.:

“It is well to note that there is no provision in the Labor Code

which grants separation pay to voluntarily resigning employees.
Separation pay may be awarded only in cases when the
termination of employment is due to: (a) installation of labor
saving devices, (b) redundancy, (c) retrenchment, (d) closing or
cessation of business operations, (e) disease of an employee
and his continued employment is prejudicial to himself or his co-
employees, or (f) when an employee is illegally dismissed but
reinstatement is no longer feasible. In fact, the rule is that an
employee who voluntarily resigns from employment is not
entitled to separation pay, except when it is stipulated in the
employment contract or CBA, or it is sanctioned by established
employer practice or policy.”

In Lilia Pascua, et al. vs. NLRC, et al., G.R. No. 123518, March 13, 1998, the
Supreme Court, reiterated that:
 93
“The grant of separation pay, however, is inconsistent with
existing employment or voluntary resignation, for it
presupposes illegal dismissal.”

292. Special cases where Separation Pay was still awarded to Resigning
Employees

In Alfaro vs. CA, G.R. No. 140812, August 28, 2001, the Court ordered the payment of
separation pay despite holding that the employee voluntarily resigned from service, and
although such payment was not mandated under the CBA or employment contract.

Same conclusion was arrived at in J Marketing Corp. vs. Taran, G.R. No. 163924, June 28,
2009.

In both of the above cases, the employer agreed to give separation pay to the employee as
an incident of the latter’s resignation, but later on renege in the performance of such
commitment. The Court held that such practice should not be countenanced.

In the Alfaro case, the Court ruled as follows:

“Generally, separation pay need not be paid to an employee who voluntarily

resigns. However, an employer who agrees to expend such benefit as an
incident of the resignation should not be allowed to renege in the
performance of such commitment.”

JURISPRUDENCE ON RESIGNATIONS

Termination of employment; Burden to prove fact of resignation. In

termination cases, it is incumbent upon the employer to prove either the non-
existence or the validity of dismissal. Inasmuch as the employer alleged the
employee’s resignation as the cause of his separation from work, the
employer had the burden to prove the same. The case of the employer must
stand or fall on its own merits and not on the weakness of the employee’s
defense.

Resignation; Intent to relinquish must concur with overt act of

relinquishment. Resignation is the voluntary act of an employee who is in a
situation where one believes that personal reasons cannot be sacrificed in
favor of the exigency of the service, and one who has no other choice but to
dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of the employee before
and after the alleged resignation must be considered in determining whether,
in fact, he intended to sever his employment.

Ibid.; Inconsistent with filing of complaint for illegal dismissal. Resignation is

inconsistent with the filing of the complaint for illegal dismissal. It would be
illogical for an employee to resign and then file a complaint for illegal dismissal
later on. (Payno vs. Orizon Trading Corp., et al., G.R. No. 175345, August 19,
2009.)

RETIREMENT PAY LAW IN THE PHILIPPINES

293. What is the Retirement Age?

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By retirement, the employment is terminated when the employee has reached

a certain age, or after he has completed a certain number of years of service.

Under the Labor Code (Art. 287, now 301), an employee may be retired upon
reaching the retirement age established in the collective bargaining agreement
(CBA) or other applicable employment contract. In the absence of such
agreement, the employee may retire upon reaching the age of 60 or more, but
not more than 65, provided he has served at least 5 years or more in the same
establishment. The age 60 or more, but below 65, is considered as the
voluntary retirement age. Sixty-five is considered as the compulsory retirement
age.

A company may have CBA or employment contract setting a retirement age

different (higher or lower) from that fixed by law. For example, the CBA may fix
the retirement age at 50.

The CBA or employment contract may also establish a retirement age based on
years of service of the employee. For example, it may provide that “the
employee may be retired after 20 years of service.”

The retirement age may also be established based on the combination of the
age and tenure of the employee. For example, the contract may provide that
“the employee may retire upon reaching the age of 50, or after 20 years of
service, whichever comes earlier”

UNDERGROUND MINING EMPLOYEES

For UNDERGROUND MINING EMPLOYEES, the voluntary retirement age under the Labor
Code is 50 years or more, but not beyond 60. The compulsory retirement age is set 60.

It is important to note that the company cannot unilaterally fix the retirement age of
employee.

Retirement age may be established only by a valid CBA or employment contract, or in the
absence of both, by the law.

294. When does retirement age fixed by law apply?

The retirement age fixed by law applies only when no CBA or employment
contract setting the retirement age exists. If there is such agreement or
contract, the retirement age fixed by law won’t apply.

295. How much is the Retirement Pay

If the establishment has a CBA or employment contract providing for a

retirement plan or benefits to employees, the employee shall be entitled to
receive the benefits as provided in the said CBA or contract.
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However, such benefits must not be less than that provided under the Labor
Code.

Under the Labor Code, the retirement pay is equivalent to “at least one-half
month salary for every year of service,” a fraction of at least six months being
considered as one whole year.

296. What does “one-half month salary” mean?

The term “one-half month salary” means 15 days plus 1/12 of the 13th month
pay and the cash equivalent of not more than 5 days of service incentive leaves.

297. Does ACCELERATION of RETIREMENT constitute illegal dismissal?

NO. 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.
Retirement is provided for under Article 287 of the Labor Code, as amended by
Republic Act No. 7641, or is determined by an existing agreement between the
employer and the employee.

But where the setting of retirement date is clearly under the discretion and
prerogative of the management, the exercise thereof by accelerating the
retirement date will not amount to illegal dismissal. The exercise of
management prerogative is valid provided it is not performed in a malicious,
harsh, oppressive, vindictive or wanton manner or out of malice or spite.
(Magdadaro vs. PNB, G.R. No. 166198, July 17, 2009.)

JURISPRUDENCE

Employee benefit; retirement pay. Banco Filipino maintains that the seven-

year period when it was under liquidation should not be credited in computing
Lazaro’s retirement pay because, during that period, the bank was considered
closed. The Supreme Court held that banks under liquidation retain their legal
personality. In fact, even if they are prohibited from conducting regular
banking business, it is necessary that debts owed to them be collected. Lazaro
performed the duty of foreclosing debts in favor of Banco Filipino. It cannot
rightfully disclaim Lazaro’s work that benefitted it.

As found in the Implementing Rules of the Retirement Pay Law and in

jurisprudence, only in the absence of an applicable retirement agreement shall
Article 287 of the Labor Code apply. There is a proviso however, that an
employee’s retirement benefits under any agreement shall not be less than
those provided in the said article. The Rules of the Banco Filipino Retirement
Fund do not provide for benefits lower than those in the Labor Code. In fact,
the bank offers a retirement pay equivalent to one andone-half month salary
for every year of service, a rate over and above the one-half month salary
threshold provided by the law. Although the Rules of the Banco Filipino
Retirement Fund do not grant a rounding off scheme, they nonetheless
provide that prorated credit shall be given for incomplete years, regardless of
the fraction of months in the retiree’s length of service. Notwithstanding the
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lack of a rounding-up provision, still, the higher retirement pay, together with
the prorated crediting, cannot be deemed to be less favorable than that
provided for by the law. Ultimately, the more important threshold to be
considered in construing whether the retirement agreement provides less
benefits, compared to those provided by the Retirement Pay Law, is that the
retirement benefits in the said agreement should at least amount to one-half
of the employee’s monthly salary. Banco Filipino Savings and Mortgage Bank
vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012

PRESCRIPTION OF MONEY CLAIMS

298. State the Rule on Prescription of labor money claims

Article 291. Money Claims. – All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three
(3) years from the time the cause of action accrued; otherwise they shall be
barred forever. (Emphasis supplied)

Accrual of money claims. The Labor Code has no specific provision on when a
monetary claim accrues. Thus, again the general law on prescription applies.
Article 1150 of the Civil Code provides that –

Article 1150. The time for prescription for all kinds of actions,
when there is no special provision which ordains otherwise,
shall be counted from the day they may be brought. (Emphasis
supplied)

The day the action may be brought is the day a claim started as a legal
possibility. In the present case, the day came when petitioner learned of
Asiakonstrukt’s deduction from his salary of the amount of advances he had
received but had, by his claim, been settled, the same having been reflected in
his payslips, hence, it is assumed that he learned of it at the time he received
his monthly paychecks. (Anabe vs. Asian Construction, et al., G.R. No. 183233,
December 23, 2009).

ATTORNEY’S FEES & DAMAGES IN LABOR CASES

299. Doctrine on Attorney’s Fees in labor cases.

Proof that employer acted maliciously or in bad faith not necessary for award of attorney’s
fees. In actions for recovery of wages or where an employee was forced to litigate and thus
incur expenses to protect his rights and interests, a maximum of 10% of the total monetary
award by way of attorney’s fees is justifiable under Article 111 of the Labor Code; Section 8,
Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code; and paragraph 7,
Article 2208 of the Civil Code. The award of attorney’s fees is proper and 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. (PLDT vs.
Berbano, G.R. No. 165199, November 27, 2009.)

Employee benefit; attorney’s fees. Lazaro must establish a legal basis – either by law,
contract or other sources of obligations – to merit the receipt of the additional 10%
attorney’s fees collected in the various foreclosure procedures he settled as the bank’s legal
officer. Lazaro has not produced any contract or provision of law that would warrant the
 97
payment of the additional attorney’s fees. He is only entitled to his salaries as the bank’s
legal officer, because the services he rendered in the foreclosure proceedings were part of
his official tasks. Banco Filipino Savings and Mortgage Bank vs. Miguelito M.
Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al.  G.R. No.
185346 & G.R. No. 185442. June 27, 2012.

Damages in labor suit. To obtain moral damages, the claimant must prove the existence of
bad faith by clear and convincing evidence, for the law always presumes good faith. It is not
even enough that one merely suffered sleepless nights, mental anguish and serious anxiety
as the result of the actuations of the other party. In this case, Lazaro did not state any moral
anguish that he suffered. Neither did he substantiate his imputations of malice to Banco
Filipino. He only made a sweeping declaration, without concrete proof, that the bank in
refusing his claim maliciously damaged his property rights and interest. Accordingly, neither
moral damages nor exemplary damage can be awarded to him.

With respect to attorney’s fees, an award is proper only if that person was forced to litigate
and incur expenses to protect one’s rights and interest by reason of an unjustified act or
omission of the party for whom it is sought. Banco Filipino had a prima facie legitimate
defense that, because it underwent liquidation proceedings, it cannot be compelled to
credit that period in the computation of the employee’s the retirement pay and profit
shares. Considering that Banco Filipino’s refusal cannot be accurately characterized as
unjustified, Lazaro cannot claim an award of attorney’s fees. Banco Filipino Savings and
Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012.

JURISPRUDENCE ON NOMINAL DAMAGES

Nominal damages for failure to observe procedural due process for termination entitles
employee. Nominal damages are adjudicated in order that a right of the plaintiff that has
been violated or invaded by the defendant may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him. Thus, for respondent’s
violation of petitioner’s statutory rights, respondent is sanctioned to pay petitioner nominal
damages in the amount of P30,000.00. (Formantes vs. Duncan Pharmaceuticals, G.R. No.
170661, December 4, 2009

Suspension of labor-claims during corporate rehabilitation. Labor claims are included

among the actions suspended upon the placing under rehabilitation of employer-
corporations. The law is clear: upon the creation of a management committee or the
appointment of a rehabilitation receiver, all claims for actions “shall be suspended
accordingly.” No exception in favor of labor claims is mentioned in the law. (Tiangco vs.
Uniwide Sales Warehouse Club, Inc., et al., G.R. No. 168697, December 14, 2009.)

Ibid.; Period or duration of the stay order. Petitioners seek to have the suspension of
proceedings lifted on the ground that the SEC already approved respondent USWCI’s SARP.
However, there is no legal ground to do so because the suspensive effect of the stay order is
not time-bound. The stay order continues to be in effect as long as reasonably necessary to
accomplish its purpose. (Tiangco vs. Uniwide, G.R. No. 168697, December 14, 2009)

EXTRAS
RECENT SUPREME COURT RULINGS ON LABOR LAW AND PROCEDURE
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Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of
appeal; Joint declaration under oath accompanying the surety bond; Substantial compliance
with procedural rules.  

There was substantial compliance with the NLRC Rules of Procedure when the respondents
PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly,
the Joint Declaration Under Oath, which is required when an employer appeals from the
Labor Arbiter’s decision granting a monetary award and posts a surety bond.  Under the
NLRC rules, the following requisites are required to perfect the employer’s appeal: (1) it
must be filed within the reglementary period; (2) it must be under oath, with proof of
payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must
be accompanied by typewritten or printed copies of the memorandum of appeal, stating the
grounds relied upon, the supporting arguments, the reliefs prayed for, and a statement of
the date of receipt of the appealed decision, with proof of service on the other party of said
appeal.  If the employer posts a surety bond, the NLRC rules further require the submission
by the employer, his or her counsel, and the bonding company of a joint declaration under
oath attesting that the surety bond posted is genuine and that it shall be in effect until the
final disposition of the case.

In the case at bar, the respondents posted a surety bond equivalent to the monetary award
and filed the notice of appeal and the appeal memorandum within the reglementary period. 
When the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the
respondents immediately complied with the said order.  There was only a late submission of
the Joint Declaration.  Considering that there was substantial compliance with the rules, the
same may be liberally construed.  The application of technical rules may be relaxed in labor
cases to serve the demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime
Corporation and/or Western Shipping Agencies, Pte., Ltd.  G.R. No. 175209. January 16, 2013.

MONEY CLAIMS OF OFW

Money claims; Application to claims of overseas contract workers. Article 291 covers all
money claims from employer-employee relationship and is broader in scope than claims
arising from a specific law. It is not limited to money claims recoverable under the Labor
Code, but applies also to claims of overseas contract workers. (LWV Construction
Corporation vs. Marcelo B. Dupo, G.R. No. 172342, July 13, 2009.)

CORPORATE OFFICERS NOT EMPLOYEES

Dismissal of corporate officer falls under the jurisdiction of regular courts not NLRC . A
corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy
which arises between a stockholder and a corporation. The question of remuneration
involving a stockholder and officer, not a mere employee, is not a simple labor problem but a
matter that comes within the area of corporate affairs and management and is a corporate
controversy in contemplation of the Corporation Code.

The determination of the rights of a director and corporate officer dismissed from his
employment as well as the corresponding liability of a corporation, if any, is an intra-
corporate dispute subject to the jurisdiction of the regular courts. (Okol vs. Slimmers World
International, et al., G.R. No. 160146, December 11, 2009.)

When corporate officer may be deemed employee of the company. The relationship of a

person to a corporation, whether as officer or agent or employee, is not determined by the
nature of the services he performs but by the incidents of his relationship with the
corporation as they actually exist.
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That the employee served concurrently as corporate secretary for a time is immaterial. A
corporation is not prohibited from hiring a corporate officer to perform services under
circumstances which will make him an employee. Indeed, it is possible for one to have a dual
role of officer and employee.

Jurisdiction over money claims. NLRC has jurisdiction over a complaint filed by one who
served both as corporate officer and employee, when the money claims were made as an
employee and not as a corporate officer. (Gomez vs. PDMC, G.R. No. 174044, November 27,
2009.)

Corporate officers not personally liable for corporate liabilities . In the absence of malice, bad
faith, or specific provision of law, a director or an officer of a corporation cannot be made
personally liable for corporate liabilities. (Lowe, Inc., et al., vs. Court of Appeals, G.R. Nos.
164813 and 174590, August 14, 2009.

LABOR-ONLY CONTRACTING

Labor-only contracting. Pure supply of manpower to assist in sales and distribution of

products is prohibited as labor-only contracting. In plainer terms, the contracted personnel
(acting as sales route helpers) were only engaged in the marginal work of helping in the sale
and distribution of company products; they only provided the muscle work that sale and
distribution required and were thus necessarily under the company’s control and supervision
in doing these tasks.

Still another way of putting it is that the contractors were not independently selling and
distributing company products, using their own equipment, means and methods of selling
and distribution; they only supplied the manpower that helped the company in the handing
of products for sale and distribution. In the context of D.O. 18-02, the contracting for sale
and distribution as an independent and self-contained operation is a legitimate contract, but
the pure supply of manpower with the task of assisting in sales and distribution controlled
by a principal falls within prohibited labor-only contracting. (Coca-cola Bottlers Philippines
vs. Dela Cruz, G.R. No. 184977, December 7, 2009 .)

Independent contractor; tests. Permissible job contracting or subcontracting refers to an

arrangement whereby a principal agrees to put out or farm out to a contractor or
subcontractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal.  A person is
considered engaged in legitimate job contracting or subcontracting if the following
conditions concur:

a. The contractor or subcontractor carries on a distinct and independent

business and undertakes to perform the job, work or service on its own
account and under its own responsibility according to its own manner and
method, and free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof;

b. The contractor or subcontractor has substantial capital or investment;

and

c. The agreement between the principal and contractor or subcontractor

assures the contractual employees entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization,
security of tenure, and social welfare benefits.
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In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor
or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal.  In labor-only contracting, the following elements are present:

a. The contractor or subcontractor does not have substantial capital or

investment to actually perform the job, work or service under its own account
and responsibility; and

b. The employees recruited, supplied or placed by such contractor or

subcontractor, are performing activities which are directly related to the main
business of the principal.

The test of independent contractorship is whether one claiming to be an independent

contractor has contracted to do the work according to his own methods and without being
subject to the control of the employer, except only as to the results of the work.

Gramaje is not an independent job contractor, but a “labor-only” contractor. First, Gramaje
has no substantial capital or investment.  The presumption is that a contractor is a labor-only
contractor unless he overcomes the burden of proving that it has substantial capital,
investment, tools, and the like. Neither Gramaje nor Polyfoam presented evidence showing
Gramaje’s ownership of the equipment and machineries used in the performance of the
alleged contracted job.

Second, Gramaje did not carry on an independent business or undertake the performance of
its service contract according to its own manner and method, free from the control and
supervision of its principal, Polyfoam, its apparent role having been merely to recruit
persons to work for Polyfoam. It is undisputed that respondent had performed his task of
packing Polyfoam’s foam products in Polyfoam’s premises. As to the recruitment of
respondent, petitioners were able to establish only that respondent’s application was
referred to Gramaje, but that is all.  Prior to his termination, respondent had been
performing the same job in Polyfoam’s business for almost six (6) years.  He was even
furnished a copy of Polyfoam’s “Mga Alituntunin at Karampatang Parusa,”which embodied
Polyfoam’s rules on attendance, the manner of performing the employee’s duties, ethical
standards, cleanliness, health, safety, peace and order.  These rules carried with them the
corresponding penalties in case of violation. While it is true that petitioners submitted the
Affidavit of Polyfoam’s supervisor, claiming that the latter did not exercise supervision over
respondent because the latter was not Polyfoam’s but Gramaje’s employee, said Affidavit is
insufficient to prove such claim.  Petitioners should have presented the person who they
claim to have exercised supervision over respondent and their alleged other employees
assigned to Polyfoam.  It was never established that Gramaje took entire charge, control and
supervision of the work and service agreed upon. Polyfoam-RGC International, Corporation
and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012.

RULES AND DOCTRINES ON APPEALS IN LABOR CASES

Appeal from NLRC to Court of Appeals; Who may sign pleading. The rule (Section 3, Rule 7 of
the Rules of Civil Procedure) allows the pleading to be signed by either the party to the case
or the counsel representing that party. A petition and motion for reconsideration (filed
before the Court of Appeals) signed by the company in its own behalf, through its corporate
president, who was duly authorized by the company’s Board of Directors to represent the
company, cannot be considered unsigned and without legal effect. (Sameer Overseas
Placement Agency, Inc. vs. Santos, et al., G.R. No. 152579, August 4, 2009.)

Grave abuse of discretion; concept of. Having established through substantial evidence that
respondent’s injury was self-inflicted and, hence, not compensable pursuant to Section 20
(D) of the 1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in
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upholding LA’s decision to dismiss respondent’s complaint for disability benefits. It is well-
settled that an act of a court or tribunal can only be considered to be tainted with grave
abuse of discretion when such act is done in a capricious or whimsical exercise of judgment
as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E.
Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No.,
January 15, 2014.

Grave abuse of discretion by labor officials. Grave abuse of discretion arises when a court or
tribunal exercises powers granted by law capriciously, whimsically, or arbitrarily. Indeed, the
law grants the NLRC the power to review decisions of labor arbiters. However, the fact that
the law grants the NLRC the power to review decisions of labor arbiters does not
automatically rule out the possibility of grave abuse of discretion. Grave abuse of discretion
may arise if the NLRC exercises such power in a capricious, whimsical, arbitrary, or despotic
manner. Labor officials commit grave abuse of discretion when their factual findings are
arrived at arbitrarily or in disregard of the evidence. (Maralit vs. Philippine National Bank,
G.R. No. 163788, August 24, 2009.)

Special civil actions for certiorari; Authority of the Court of Appeals to receive new
evidence. In a special civil action for certiorari, the Court of Appeals has ample authority to
receive new evidence and perform any act necessary to resolve factual issues. The Court of
Appeals can grant a petition for certiorari when it finds that the NLRC committed grave
abuse of discretion by disregarding evidence material to the controversy. To make this
finding, the Court of Appeals necessarily has to look at the evidence and make its own
factual determination. (Maralit vs. Philippine National Bank, G.R. No. 163788, August 24,
2009.)

Rules of procedure; Relaxation of the rules in the interest of substantial justice. Strict rules of
procedure may be set aside to serve the demands of substantial justice. Labor cases must be
decided according to justice, equity, and the substantial merits of the controversy. (In this
case, the appeal from the decision of the Labor Arbiter was filed 12 days from receipt of the
decision, or two days late.) (Maralit vs. Philippine National Bank, G.R. No. 163788, August
24, 2009.)

Perfection of Appeal; Compliance with procedure – Mandatory and jurisdictional. Appeal is

not a constitutional right, but a mere statutory privilege. Thus, parties who seek to avail
themselves of it must comply with the statutes or rules allowing it. Perfection of an appeal
in the manner and within the period permitted by law is mandatory and jurisdictional. The
requirements for perfecting an appeal must, as a rule, be strictly followed. (Philippine Long
Distance Telephone Company vs. Raut, et al., G.R. No. 174209, August 25, 2009.)

Effect of failure to attach Certificate of Non-forum Shopping. The perfection of an appeal

necessarily includes the filing of a complete (not a defective) memorandum of appeal within
the ten (10) day reglementary period. The filing of a memorandum of appeal without the
requisite certificate does not stop the running of the period to perfect an appeal. In short,
the order assailed in the defective memorandum of appeal becomes final and executory.
(Philippine Long Distance Telephone Company vs. Raut, et al., G.R. No. 174209, August 25,
2009.)

Rules of procedure; One day delay in filing of appeal. One day delay in the filing of the appeal
does not justify the appeal’s denial. More importantly that the appeal, on its face, appears to
be impressed with merit. (Republic Cement Corp., vs. Guinmapang, G.R. No. 168910, August
24, 2009.)

Rule 45; only questions of law are allowed in a petition for review on  certiorari. It is a
settled rule in this jurisdiction that only questions of law are allowed in a petition for review
on certiorari. The Court’s power of review in a Rule 45 petition is limited to resolving matters
pertaining to any perceived legal errors, which the CA may have committed in issuing the
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assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor
case, the Court examines the CA decision in the context that it determined whether or not
there is grave abuse of discretion in the NLRC decision subject of its review and not on the
basis of whether the NLRC decision on the merits of the case was correct. Universal Robina
Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.

Rule 45; the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions
of law; exceptions. The Court’s jurisdiction in cases brought before it from the CA via Rule 45
of the Rules of Court is generally limited to reviewing errors of law. The Court is not the
proper venue to consider a factual issue as it is not a trier of facts. This rule, however, is not
ironclad and a departure therefrom may be warranted where the findings of fact of the CA
are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this
regard, there is therefore a need to review the records to determine which of them should
be preferred as more conformable to evidentiary facts. INC Shipmanagement, Inc. Captain
Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas, G.R.
No., January 15, 2014.

Appeal; issue of employer-employee relationship raised for the first time on appeal . It is a
fundamental rule of procedure that higher courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during the proceedings below, but ventilated for
the first time only in a motion for reconsideration or on appeal. The alleged absence of
employer-employee relationship cannot be raised for the first time on appeal. The resolution
of this issue requires the admission and calibration of evidence and the LA and the NLRC did
not pass upon it in their decisions. Petitioner is bound by its submissions that respondent is
its employee and it should not be permitted to change its theory. Such change of theory
cannot be tolerated on appeal, not on account of the strict application of procedural rules,
but as a matter of fairness. Duty Free Philippines Services, Inc. vs. Manolito Q. Tria.  G.R. No.
174809. June 27, 2012.

Burden of proof in employee dismissal;. Under the law, the burden of proving that the
termination of employment was for a valid or authorized cause rests on the employer.
Failure to discharge this burden would result in an unjust or illegal dismissal. The company’s
evidence on the respondents’ alleged infractions do not substantially show that they
violated company rules and regulations to warrant their dismissal. It is obvious that the
company overstepped the bounds of its management prerogative in the dismissal of
Mauricio and Camacho. It lost sight of the principle that management prerogative must be
exercised in good faith and with due regard to the rights of the workers in the spirit of
fairness and with justice in mind. Philbag Industrial Manufacturing Corp. vs. Philbag
Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa.  G.R. No. 182486, June 20,
2012.

Service; proof of service. Petitioners allege that no affidavit of service was attached to the
CA Petition. However, the Supreme Court noted that in the CA Resolution, the appellate
court stated that their records revealed that Atty. Espinas, petitioners’ counsel of record at
the time, was duly served a copy of the following: CA Resolution granting respondent’s
Motion for Extension of Time to file the CA Petition; CA Resolution requiring petitioners to
file their Comment on the CA Petition; and CA Resolution, submitting the case for resolution,
as no comment was filed. Such service to Atty. Espinas was valid despite the fact he was
already deceased at the time. If a party to a case has appeared by counsel, service of
pleadings and judgments shall be made upon his counsel or one of them, unless service
upon the party is specifically ordered by the court. It is not the duty of the courts to inquire,
during the progress of a case, whether the law firm or partnership representing one of the
litigants continues to exist lawfully, whether the partners are still alive, or whether its
associates are still connected with the firm. Salvador O. Mojar, et al. vs. Agro Commercial
Security Service Agency, et al. G.R. No. 187188, June 27, 2012.

FLOATING STATUS OF SECURITY GUARDS

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Floating Status. When the floating status of employees lasts for more than six (6) months,
they may be considered to have been illegally dismissed from the service. “Floating status”
means an indefinite period of time when one does not receive any salary or financial benefit
provided by law. In this case, petitioners were actually reassigned to new posts, albeit in a
different location from where they resided. Thus, there can be no floating status or
indefinite period to speak of. Instead, petitioners were the ones who refused to report for
work in their new assignment.

In cases involving security guards, a relief and transfer order in itself does not sever the
employment relationship between the security guards and their agency. Employees have the
right to security of tenure, but this does not give them such a vested right to their positions
as would deprive the company of its prerogative to change their assignment or transfer
them where their services, as security guards, will be most beneficial to the client. An
employer has the right to transfer or assign its employees from one office or area of
operation to another in pursuit of its legitimate business interest, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the transfer is
not motivated by discrimination or bad faith, or effected as a form of punishment or
demotion without sufficient cause. While petitioners may claim that their transfer to Manila
will cause added expenses and inconvenience, absent any showing of bad faith or ill motive
on the part of the employer, the transfer remains valid. Salvador O. Mojar, et al. vs. Agro
Commercial Security Service Agency, et al. G.R. No. 187188, June 27, 2012.