2009 PRE-WEEK BAR EXAM NOTES ON LABOR LAW

By: Prof. JOSELITO GUIANAN CHAN

LABOR LAWS OF THE PHILIPPINES PART - I NEW LAWS 1. What are the new laws affecting labor law? There are four laws that have been enacted which significantly impact on labor laws. They are as follows: 1. REPUBLIC ACT NO. 9492 - AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 [Approved on JULY 25, 2007] chanrobles virtual law library 2. REPUBLIC ACT NO. 9481 - AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES (which lapsed into law on May 25, 2007 and became effective on June 14, 2007) 3. REPUBLIC ACT NO. 9422 - AN ACT TO STRENGTHEN THE REGULATORY FUNCTIONS OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), AMENDING FOR THIS PURPOSE [Approved on April 10, 2007] 4. REPUBLIC ACT NO. 9347 - AN ACT RATIONALIZING THE COMPOSITION AND FUNCTIONS OF THE NATIONAL LABOR RELATIONS COMMISSION, AMENDING FOR THIS PURPOSE ARTICLE 213, 214, 215 AND 216 OF P.D. NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES. [Lapsed into law on JULY 27, 2006, without the signature of the President, in accordance with Article VI, Section 27 (1) of the Constitution] 2. Pertinent text of the above-mentioned laws follows: REPUBLIC ACT NO. 9492 - AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987

[APPROVED ON JULY 25, 2007] Regular Holidays and Nationwide Special Days. ³ (1) Unless otherwise modified by law, and or proclamation, the following regular holidays and special days shall be observed in the country: a) Regular Holidays New year¶s Day-January 1 Maundy Thursday-Movable date Good Friday-Movable date Eidul Fitr-Movable date Araw ng Kagitingan-Monday nearest April 9 (Bataaan and Corregidor Day) Labor Day-Monday nearest May 1 Independence Day-Monday nearest June 12 National Heroes Day-Last Monday of August Bonifacio Day-Monday nearest November 30 Christmas Day-December 25 Rizal Day-Monday nearest December 30 b) Nationwide Special Holidays: Ninoy Aquino Day-Monday nearest August 21 All Saints Day-November 1 Last Day of the Year-December 31 c) In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of the week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that follows: Provided, That for movable holidays, the President shall issue a proclamation, at least six (6) months prior to the holiday concerned, the specific date that shall be declared as a nonworking day: Provided, however, The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao. chanrobles virtual law library

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REPUBLIC ACT NO. 9481 - AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES (which lapsed into law on May 25, 2007 and became effective on June 14, 2007) Note: The following provisions of the Labor Code have been amended by R. A. No. 9481: Article 234 - Requirements of Registration Article 238 - Cancellation of Registration Article 239 - Grounds for Cancellation of Union Registration Article 245 - Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees Article 256 - Representation Issue in Organized Establishments Article 257 - Petitions in Unorganized Establishments and INSERTED as new provisions the following: Article 234-A ± Chartering and Creation of a Local Chapter Article 238-A ± Effect of a Petition for Cancellation of Registration Article 239-A ± Voluntary Cancellation of Registration Article 242-A ± Reportorial Requirements Article 245-A ± Effect of Inclusion as Members of Employees Outside the Bargaining Unit Article 258-A ± Employer as Bystander FULL TEXT OF R. A. NO. 9481 ACCOMPANIED BY SHORT COMMENT: ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or an independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; (d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and chanrobles virtual law library (e) Four copies of the constitution and by -laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it. Comment: Labor organizations which are required to register. Prior to its amendment by R. A. No. 9481, Article 234 makes a general reference to the organization that may register as labor organization, viz: ³[a]ny applicant labor organization, association or group of unions or workers.´ As worded now, Article 234 as amended by R. A. No. 9481, makes specific reference to the following organizations which may register as labor organization, to wit: 1. Federation; 2. National Union; 3. Industry Union; 4. Trade Union Center; 5. Independent Union. Acquisition of legal personality as legitimate labor organization. Just like in the old provision, Article 234, as amended by R. A. No. 9481 legal personality is acquired upon the issuance of the certificate of registration. 20% membership requirement applies only to registration of independent union. chanrobles virtual law library Requirements for registration of federation or national union under Article 237: (a) Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; and chanrobles virtual (b) The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved.´ (See Article 237, Labor Code).

ART. 234-A. Chartering and Creation of a Local Chapter. - A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter¶s officers, their addresses, and the principal office of the chapter; and chanrobles virtual law library
(b) The chapter¶s constitution and by-laws: Provided, That where the chapter¶s constitution and by-laws are the same as that of the federation or the national union, this fact shall be indicated accordingly.

The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president. Comment: TRADE UNION CENTER. A ³Trade Union Center´ is any group of registered national unions or federations organized for the mutual aid and protection of its members; for assisting such members in collective bargaining; or for participating in the formulation of social and employment policies, standards, and programs, and is duly registered with the Department of Labor and Employment in accordance with Rule III, Section 2 of the Implementing Rules. (Section 1(p), Rule I, Book V, of the Implementing Rules, as amended by Department Order No. 9; San Miguel Corp. Employees Union-PTGWO vs. San Miguel Packaging Products Employees Union ± PDMP, G.R. No. 171153, Sept. 12, 2007). chanrobles virtual law library Only federation or national union may directly create a local chapter. Under Article 234-A, it is clear that the authority to directly create a local chapter is vested only with a duly registered federation or national union which is empowered to issue a charter certificate indicating the establishment of the local chapter. No other entities are granted the same authority under this provision. TRADE UNION CENTERS ARE NOT ALLOWED TO CHARTER DIRECTLY. Article 234, as amended by R. A. No. 9481, now includes the term Trade Union Center, but interestingly, the provision indicating the procedure for chartering or creating a local or chapter laid down in Article 234-A, still makes no mention of a ³trade union center.´ Thus, applying the Latinmaxim expressio unius est exclusio alterius, it was held in the 2007 case of San Miguel Corp. Employees Union-PTGWO vs. San Miguel Packaging Products Employees Union ± PDMP, [G.R. No. 171153, Sept. 12, 2007],that trade union centers [like

the Pambansang Diwa ng Manggagawang Pilipino (PDMP) ] are not allowed to charter directly a local or a chapter. ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor organization, whether national or local, may be cancelled by the Bureau, after due hearing, only on the grounds specified in Article 239 hereof.

ART. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. chanrobles virtual law library

In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts. ART. 239. Grounds for Cancellation of Union Registration. - The following may constitute grounds for cancellation of union registratio n: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor organization may be cancelled by the organization itself. Provided, That at least two-thirds of its general membership votes, in a meeting duly called for that purpose to dissolve the organization: Provided, further, That an application to cancel registration is thereafter submitted by the board of the organization, attested to by the president thereof. Article 242-A. Reportorial Requirements. - The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratific ation of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-lam or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election; chanrobles virtual law library (c) Its annual financial report within thirty (30) days after the close of every fiscal year; and

(d) Its list of members at least once a year or whenever required by the Bureau.hanrobles virtual law library

Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. (As inserted by Section 7, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). Article 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are NOT eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank-and-file union and the supervisors¶ union operating within the same establishment may join the same federation or national union. Article 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. (Introduced as new provision by Section 9, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). chanrobles virtual law library Article 256. Representation Issue in Organized Establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed by any legitimate labor organization including a national union or federation which has already issued a charter certificate to its local chapter participating in the certification election or a local chapter which has been issued a charter certificate by the national union or federation before the Department of Labor and Employment within the sixty (60)-day period before the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty -five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. In cases where the petition was filed by a national union or federation, it shall not be required to d isclose the names of the local chapter¶s officers and members. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. (As amended by Section 23, Republic Act No. 6715, March 21, 1989 and

Section 10, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). chanrobles virtual law library Article 257. Petitions in Unorganized Establishments. - In any establishment where there is no certified bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by any legitimate labor organization, including a national union or federation which has already issued a charter certificate to its 1ocal/chapter participating in the certification election or a local/chapter which has been issued a charter certificate by the national union or federation. In cases where the petition was filed by a national union or federation, it shall not be required to disclose the names of the local chapter¶s officers and members. (As amended by Section 24, Republic Act No. 6715, March 21, 1989 and Section 11, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007 ). Article 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer¶s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition. (As amended by Section 12, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). chanrobles virtual law library

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REPUBLIC ACT NO. 9422 [S. No. 2501 & H. No. 5498]- AN ACT TO STRENGTHEN THE REGULATORY FUNCTIONS OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), AMENDING FOR THIS PURPOSE Approved: April 10, 2007 Sec. 23, paragraph (b.1) of Republic Act. No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 is hereby amended to read as follows: chanrobles virtual law library
(b.1) Philippine Overseas Employment Administration - The Administration shall regulate private sector participation in the recruitment and overseas placement of workers by setting up a licensing and registration system. It shall also formulate and implement, in coordination with appropriate entities concerned, when necessary, a system for promoting and monitoring the

AMENDING FOR THIS PURPOSE ARTICLE 213. further. 215 AND 216 OF P. economic conditions of the country and emerging circumstances which may affect the welfare of migrant workers. 30 of the same law is also hereby repealed. the administration shall deploy only to countries where the Philippines has concluded bilateral labor agreements or arrangements: Provided. within one (1) year from the effectivity of this Act. NO.Within a period of five (5) years from the effectivity of this Act. In addition to its powers and functions. 29 of the same law is hereby repealed. and: Provided.AN ACT RATIONALIZING THE COMPOSITION AND FUNCTIONS OF THE NATIONAL LABOR RELATIONS COMMISSION. 29. . Gradual Phase-out of Regulatory Functions. is hereby mandated to formulate a five-year comprehensive deregulation plan on recruitment activities taking into account labor market trends. 442. . Sec. That such countries shall observe and/or comply with the international laws and standards for migrant workers. 9347 . 30. the DOLE. . OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES. instruct and guide the workers how to assert their rights and provide the available mechanism to redress violation of their rights. --------------------oOo---------------------- REPUBLIC ACT NO.overseas employment of Filipino workers taking into consideration their welfare and the domestic manpower requirements. the Administration shall inform migrant workers not only of their rights as workers but also of their rights as human beings. That such countries shall guarantee to protect the rights of Filipino migrant workers. The provision of Section 30 is as follows: Sec. In the recruitment and placement of workers to service the requirements for trained and competent Filipino workers of foreign governments and their instrumentalities. the DOLE shall phase -out the regulatory functions of the POEA pursuant to the objectives of deregulation. and such other employers as public interests may require. Comprehensive Deregulation Plan on Recruitment Activities.Pursuant to a progressive policy of deregulation whereby the migration of workers becomes strictly a matter between the worker and his foreign employer.´ Sec. AS AMENDED. 214. The provision of Section 29 is as follows: ³Sec.D.

Of the EIGHT (8) divisions. Whenever the required membership in a division is not complete and the concurrence of two (2) Commissioners to arrive at a judgment or resolution cannot be obtained. and the SEVENTH. allow cases within the jurisdiction of any division to be heard and decided by any other division whose docket allows the additional workload and such transfer will not expose litigants to unnecessary additional expenses. second third. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. seventh and eight divisions. The Chairman shall be the Presiding Commissioner of the first division. each composed of three (3) members. the first. The Chairman and the SEVEN (7) remaining members shall come from the public sector. fifth. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. on temporary or emergency basis. Section 27 (1) of the Constitution) ART. respective ly. composed of a Chairman and TWENTY-THREE (23) Members. A certification to this effect signed by the Presiding Commissioner of the division shall be issued. functions. The Commission shall exercise its adjudicatory and all other powers. FIFTH AND SIXTH divisions shall handle cases coming from the National Capital Region and other parts of Luzon. and duties through its divisions. The Commission may sit en banc or in EIGHT (8) divisions. without the signature of the President. respectively: Provided. National Labor Relations Commission. fourth. with the latter to be chosen PREFERABLY from among the INCUMBENT LABOR ARBITERS. respectively. In case . and the SEVEN (7) other members from the public sector shall be the Presiding Commissioners of the second. the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary.There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment SOLELY for program and policy coordination only. 2006.Lapsed into law on JULY 27. the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong. chanrobles virtual law library The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. sixth. FOURTH. 213. That the Commission sitting en banc may. chanrobles virtual law library Upon assumption into office. The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. Eight (8) members each shall be chosen ONLY from among the nominees of the workers and employers organizations. third. . cases from the Visayas and Mindanao. and a copy thereof attached to the record of the case and served upon the parties. in accordance with Article VI. AND EIGHT divisions.

aided by the Executive Clerk of the Commission. seventh and eight divisions. fourth. The Commission. The Commission Attorneys shall be members of the Philippine Bar with at least one (1) year experience or exposure in the field of labor-management relations. when acting thru its Divisions. Provided. They shall receive annual salaries and shall be entitled to the same allowances and benefits as those falling under Salary Grade twentysix (SG 26). shall have administrative supervision over the Commission and its regional branches and all its personnel. shall be assisted by the same Executive Clerk. and. unless sooner removed for cause as provided by law or become incapacitated to discharge the duties of their office. fourth fifth. There shall be as many Commission Attorneys as may be necessary for the effective and efficient operations of the Commission but in no case more than three (3) assigned to the Office of the Chairman and each Commissioner. respectively. with at least five (5) years experience or exposure in the field of labor-management relations. third. sixth. third. . 214.The Chairmans and other Commissioners shall be members of the Philippine Bar and must have been engaged in the practice of law in the Philippines for at least fifteen (15) years. The Commission shall establish as many regional branches as there are regional offices of the Department of Labor and Employment. however. second. when sitting en banc.The Commission and its first. The Labor Arbiters shall likewise be members of the Philippine Bar and must have been engaged in the practice of law in the Philippines for at least ten (10) years. in the performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals. and shall preferably be residents of the region where they SHALL hold office. 215. ART. by said Executive Clerk for its first division and SEVEN (7) other Deputy Executive Clerks for the second. . chanrobles virtual law library No Labor Arbiter shall be assigned to perform the functions of the Commission Attorney nor detailed to the office of any Commissioner. chanrobles virtual law library The Chairman. The Chairman. and the other Commissioners and the Labor Arbit ers shall hold office during good behavior until they reach the age of sixty -five (65) years. the Presiding Commissioner of the second division shall be the Acting Chairman. Appointment and Qualifications.of the effective absence or incapacity of the Chairman. Branches and Provincial Extension Units. That the President of the R epublic of the Philippines . sub-regional branches or provincial extension units. respectively. and the seventh and eight divisions in the cities of Cebu and Cagayan de Oro. with at least five (5) years experience or exposure in THE FIELD OF labor-management relations. ART. The Commission and its eight (8) divisions shall be assisted by the Commission Attorneys in its Appellate and adjudicatory functions whose term shall be coterminous with the Commissioners with whom they are assigned. including the Labor Arbiters. fifth and sixth divisions shall have their main offices in Metropolitan Manila. There shall be as many Labor Arbiters as may be necessary for the effective and efficient operation of the Commission. Headquarters.

and shall be subject to the Civil Service Law. upon recommendation of the Commission en banc to a specific arbitration branch. preperably in the region where they are residents. however. collective bargaining and negotiations. the Division Presiding Commissioners and other Commissioners shall all be appointed by the President. allowances and benefits of the aforementioned officials. benefits and other emoluments. chanrobles virtual law library The Chairman and the Commission." chanrobles virtual law library ART. those of the Presiding Justice and Associate Justices of the Court of Appeals. The Chairman. In no case. and promote full employment and equality of employment opportunities for all. organized and unorganized. receive an annual salary equivalent to. 5. and shall enforce their mutual compliance therewith to foster industrial peace. . subject to the Civil Service Law. and be entitled to the same allowances. They shall be entitled to security of tenure. shall the provision of thi s Article result in the diminution of the existing salaries. The Labor Arbiters shall also be appointed by the President.II LAW ON LABOR STANDARDS 1. 216. Implementation. rules and regulations: Provided.The creation of the additional divisions shall be implemented for a period of not more than three (3) years PART . retirement and benefits as. It shall guarantee the rights of all workers to self-organization. rules and regulations. that the labor arbiters who are presently holding office in th e region where they are residents shall be deemed appointed thereat. local and overseas. humane conditions of work. Labor Arbiters shall have the same rank. Salaries." chanrobles virtual law library Sec. respectively.may extent the services of the Commissioners and Labor Arbiters up to the maximum age of seventy (70) years upon the recommendation of the Commission en banc. The Chairman and members of the Commission shall have the same rank. and its regional branches as the needs of the service may require. retirement and other benefits and privileges as those of the judges of the regional trial courts. chanrobles virtual law library . and a living wage. including the right to strike in accordance with law. Appointment to any vacancy in a specific division shall come only from the nominees of the sector which nominated the predecessor. receive an annual salary equivalent to and be entitled to the same allowances. including conciliation. shall appoint the staff and employees of the Commission. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. chanrobles virtual law library ³The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes. and upgrade their current salaries. and peaceful concerted activities. What is the protection-to-labor clause in the Constitution? ³The State shall afford full protection to labor. benefits and other emoluments in accordance with law.

collective bargaining. Article XIII [Social Justice and Human Rights] of the 1987 Constitution) chanrobles virtual law library 2. recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments. and g. A. 4. e. security of tenure. (SEE PART TWO OF THIS 3-PART PRE-WEEK SERIES FOR MORE EXTENSIVE DISCUSSION OF THIS TOPIC) . b. chanrobles virtual law library b. The State shall assure the rights of workers to selforganization. The State shall afford protection to labor. and to expansion and growth. No. construction contractors. shipping or manning agents or representatives. RECRUITMENT AND PLACEMENT OF WORKERS: 3. private recruitment entities. d. Philippine Overseas Employment Administration (POEA). race or creed and regulate the relations between workers and employers. whether agricultural or non-agricultural. Applicability of Labor Code to government-owned or controlled corporations: ‡ When created with original or special charter . What is the relevant law on recruitment for overseas employment? Migrant Workers and Overseas Filipinos Act of 1995 (R.³The State shall regulate the relations between workers and employers. Labor contracts are not ordinary contracts as the relation between capital and labor is impressed with public interest. What are the basic principles enunciated in the Labor Code on protection to labor? a. public employment offices.Civil Service laws. ensure equal work opportunities regardless of sex. d. Labor Code applies to all workers. 5. promote full employment. f. What are the entities authorized to engage in recruitment and placement? chanrobles virtual law library a. In case of doubt. chanrobles virtual law library c. and just and humane conditions of work. c. rules and regulations. private employment agencies. such other persons or entities as may be authorized by the Secretary of Labor and Employment. labor laws and rules shall be interpreted in favor of labor. 8042). ‡ When created under the Corporation Code .´ (Section 3 (Labor). e. Money claims of OFWs.Labor Code applies.

10.6. Is direct-hiring of OFWs allowed? Why? No. offers or promises for a fee employment abroad to two or more persons shall be deemed as engaged in such act. Illegal recruitment may be committed by any person whether licensees or non-licensees or holders or non-holders of authority. chanrobles virtual law library . Illegal recruitment under Article 38 applies to both local and overseas employment. 9. Employers cannot directly hire workers for overseas employment except through authorized entities (see enumeration above). or procuring workers and includes referring. What is the basis of compensation for death benefits of OFWs? Basis of compensation for death generally is whichever is greater between Philippine law or foreign law. The reason for the ban is to ensure full regulation of employment in order to avoid exploitation. hiring. in any manner. utilizing. Elements of illegal recruitment: a. when undertaken by a non-licensee or non-holder of authority: Provided. whether for profit or not. 2. That any such non-licensee or non-holder who. chanrobles virtual law library (Note: Any non-resident foreign corporation directly hiring Filipino workers is doing business in the Philippines and may be sued in the Philippines). Severance of relations between local agent and foreign principal does not affect liability of local recruiter. Which has jurisdiction over disciplinary action cases of OFWs? The POEA retains jurisdiction over disciplinary action cases. transporting. 7. promising or advertising for employment abroad. enlisting. disability and other benefits arising from employment of OFWs. 11. 8. First element: Recruitment and placement activities. Work-connection is required. Who has jurisdiction over claims for death and other benefits of OFWs? Labor Arbiters have jurisdiction over claims for death. contract services. What is the nature of the liability of local recruitment agency and foreign principal? chanrobles virtual law library 1. 2. Local Agency is solidarily liable with foreign principal. 3. contracting. Any act of canvassing. What is illegal recruitment? 1.

By a syndicate . When is illegal recruitment considered economic sabotage? Illegal recruitment is considered economic sabotage .b. able and willing at the time of application to perform the services for which the alien is desired. What are the requirements before a non-resident alien may be employed 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 shall obtain an employment permit from the Department of Labor. Some relevant principles: y y y y y y Mere impression that recruiter is capable of providing work abroad is sufficient. 12. b.if carried out by a group of 3 or more persons conspiring and confederating with one another. chanrobles virtual law library "Referral" of recruits also constitutes recruitment activity. or whose license or authority has been suspended. Second element: Non-licensee or non-holder of authority . revoked or canceled by the POEA or the Secretary of Labor and Employment.means any person. Only one (1) person recruited is sufficient to constitute recruitment. In large scale . Absence of receipt to prove payment is not essential to prove recruitment. corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor and Employment. What is the prescriptive period of illegal recruitment cases? Under R. 8042. A. A person convicted for illegal recruitment may still be convicted for estafa.when the commission thereof is attended by the qualifying circumstances as follows: a. . chanrobles virtual law library 14. For an enterprise registered in preferred areas of investments. said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent. 13.if committed against 3 or more persons individually or as a group. Non-prosecution of another suspect is not material. the prescriptive period of illegal recruitment cases is five (5) years except illegal recruitment involving economic sabotage which prescribes in twenty (20) years.

c. provided those who are at least fifteen (15) years of age but less than eighteen (18) may be eligible for apprenticeship only in non-hazardous occupation. the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. c. Who is an apprentice? An ³apprentice´ is a worker who is covered by a written apprenticeship agreement with an employer.75% of the statutory minimum wage. Apprentices become regular employees if program is not approved by DOLE. 19. be at least fifteen (15) years of age. May an alien employee transfer his employment after issuance of permit? After the issuance of an employment permit. b. What is an apprenticeship? Who is an apprentice? ³Apprenticeship´ means any training on the job supplemented by related theoretical instruction involving apprenticeable occupations and trades as may be approved by the Secretary of Labor and Employment. be physically fit for the occupation in which he desires to be trained. Wage rate of apprentices . TRAINING AND EMPLOYMENT OF SPECIAL WORKERS APPRENTICE: 16. Who is a learner? A ³learner´ is a person hired as a trainee in industrial occupations which are nonapprenticeable and which may be learned through practical training on the job for a period not exceeding three (3) months. LEARNERS: 20. whether or not such practical training is supplemented by theoretical instructions. What are the important principles related to apprenticeship? a.100 hours of theoretical instructions for every 2. possess the ability to comprehend and follow oral and written instructions. 18. possess vocational aptitude and capacity for the particular occupation as established through appropriate tests.15. and chanrobles virtual law library d.000 hours of practical training on-the-job. Ratio of theoretical instructions and on-the-job training . 17. . What are the qualifications of an apprentice? a. b.

21. ‡ If disability is not related to the work for which he was hired. What are the pre-requisites before learners may be hired? Pre-requisites before learners may be validly employed: a. physical deficiency. or c. Who is a handicapped worker? A ³handicapped worker´ is one whose earning capacity is impaired: a. he should not be so considered as handicapped worker. Article 90 .Meal periods. by age.When employer may require work on a rest day. Article 93 .Overtime work. WORKING CONDITIONS: chanrobles virtual law library 23. injury. He may have a disability but since the same is not related to his work. b.Computation of additional compensation. or d.Hours worked. What are the provisions of the Labor Code on working conditions? The following provisions are covered under Book III of the Labor Code: Article 83 .Undertime not offset by overtime.Normal hours of work.Right to holiday pay. he cannot be considered a handicapped worker insofar as that particular work is concerned. Article 94 . Sunday or holiday work. or b. Article 85 .75% of the statutory minimum wage. chanrobles virtual law library Article 88 .Wage rate of learners is 75% of the statutory minimum wage. and c. chanrobles virtual law library Article 92 .Compensation for rest day.Right to weekly rest period.Night shift differential. HANDICAPPED WORKERS: 22. when no experienced workers are available. the employment of learners is necessary to prevent curtailment of employment opportunities. mental deficiency. Article 87 . Article 84 . Article 86 .Emergency overtime work. Article 89 . . the employment does not create unfair competition in terms of labor costs or impair or lower working standards. ‡ Wage rate . Article 91 .

card. and (d) Power of control (the most important test). Employees covered . and g. Members of the family of the employer. It does not necessarily mean the ordinary calendar day from 12:00 midnight to 12:00 midnight unless the employee starts to work at this unusual hour. (c) Power of dismissal.g. Who are covered (and not covered) by the said provisions on working conditions? 1. What is the test of employment relationship? There is no uniform test of employment relationship but the four (4) elements of an employer-employee relationship are as follows: (a) Selection and engagement of employee. Domestic servants and persons in the personal service of another. I. 24. What is meant by ³normal hours of work´? 1.Service charges. b. "Normal" hours of work of employees -eight (8) hours per day. (b) Payment of wages. 25. "Work day" means 24 consecutive-hour period which commences from the time the employee regularly starts to work. . Government employees. NORMAL HOURS OF WORK: 28. Cash Vouchers for salaries. 2. c.Article 95 . the Labor Code does not apply.applicable to all employees in all establishments whether operated for profit or not. inclusion in payroll. 26. Managerial employees. Employees not covered: a. 27. Other officers or members of a managerial staff. What is the most important requirement in order for the Labor Code provisions on working conditions to apply? The existence of employer-employee relationship is necessary. reporting to SSS). e. Without this relationship.Right to service incentive leave. Non-agricultural field personnel. and Article 96 . What is the quantum of evidence required to prove employment relationship? The quantum of evidence required to prove employment relationship is mere substantial evidence (e. chanrobles virtual law library f. D.. 2. d. Workers paid by results.

119205. the parties to the CBA stipulated: ³Section 1.3.´ (Article VI of the CBA).allowed provided employees voluntarily agree thereto. Prerogative to change working hours. at the discretion of the company. should such change be necessary for its operations. 289 SCRA 86). 2001]. Hours of work of part-time workers . Sept. 6. work assignments.R. NLRC (G. [G. lay-off of workers and the discipline. vs. et al. No. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours. Hours of work of hospital and clinic personnel . should such change be necessary in the operations of the Company. (Consolidated Food Corporation. Inc. 54 in San Juan de Dios Hospital Employees Association vs. place and manner of work. however the company may change the prevailing work time at its discretion. tools to be used. No. "Work week" is a week consisting of 168 consecutive hours or 7 consecutive 24-hour work days beginning at the same hour and on the same calendar day each calendar week.A normal workday shall consist of not more than eight (8) hours. and only on temporary duration.payment of wage should be in proportion only to the hours worked. 23. work supervision. working regulations. Reduction of eight-hour working day . chanrobles virtual law library 4. In the instant case. to change the working hours of its employees. G. 28. chanrobles virtual law library According to the Supreme Court. working methods. processes to be followed. 126383. 1997). there is no diminution in pay. Well-settled is the rule that management retains the prerogative. vs. R. dismissal and recall of workers. R. the rule that hospital employees who worked for only 40 hours/5 days in any given workweek should be compensated for full weekly wage for 7 days is no longer applicable. 1999). Interphil Laboratories. 118647. (Sime Darby Pilipinas. Inc.not prohibited by law provided there is no reduction in pay of workers. No. to 4:30 P. et al. the Labor Arbiter found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. Consequently.The Supreme Court has voided Policy Instructions No. The employees are deemed to have waived the eight-hour schedule . The regular working hours for the Company shall be from 7:30 A. 15 April 1998. The schedule of shift work shall be maintained. Nov.M. NLRC. whenever exigencies of the service so require.M. December 19. In the 2001 case of Interphil Laboratories Employees Union-FFW vs. The employer has the prerogative to control all aspects of employment in his business organization such as hiring. R.. Regular Working Hours . NLRC.. chanrobles virtual law library 7. No. time. Shortening of work week . G. it is evident from the foregoing provision that the working hours may be changed. 142824. 5. supervision of workers. and that the employees shall observe such rules as have been laid down by the company. transfer of employees. It was established that the employees adhered to the said work schedule since 1988.

to 6:00 A. demanded that the company make a recomputation of the overtime records of the employees from 1987 xxx. May workdays be reduced on account of losses? Yes. What is the effect of reduction of workdays on wages/living allowances? In situations where there is valid reduction of workdays. to 6:00 A.M. This is more humane and in keeping with sound business operations than the outright termination of the services or the total closure of the enterprise. his name appeared but without his signatures. As the Labor Arbiter elucidated in his report: ³Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A.M. which were passed around daily for the employees to sign. This view is consistent with the principle of ³no-work-no-pay. 9 to 12. Gonzales.. 8. in situations where the reduction in the number of regular working days is resorted to by the employer to prevent serious losses due to causes beyond his control. 1985). testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company.M. such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials.M. to 10:00 P.M. Likewise. and 6:00 A.M. while in the overtime permits.M. and when on the 6 to 6 shifts. the union Vice-President Carmelo C.since they followed.M. union Director Enrico C. Santos. to 6:00 P... 1985). he. the two-shift schedule while their CBA was still in force and even prior thereto. had rendered overtime during those dates and was paid because unlike in other departments. 1993. 6. As the employees assented by practice to this arrangement.M.M. it has become a habit to them to sign the overtime schedule weekly xxx.M. shift.M. it would be unfair to require the employer to pay the wages and living allowances even on unworked days that were taken off from the regular workweek. to 6:00 A.M. dated March 1. however. at 2:00 P.M. the employer may deduct the wages and living allowances corresponding to the days taken off from the workweek. and 6:00 P. (Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23.M. to 2:00 P.´ Furthermore. his schedule was sometime at 6:00 A. 31. wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A. What is meant by ³hours worked´? . Proof of this is the case undisputedly filed by the union for and in behalf of its members. to 6:00 P. of the 6:00 P. he received the commensurate pay xxx. they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours.M. in the absence of an agreement specifically providing that a reduction in the number of workdays will not adversely affect the remuneration of the employees.´ 29. The two-shift schedule effectively changed the working hours stipulated in the CBA. xxx In fact. and sometime at 6:00 P. sometime at 6:00 A. 30. Even their own witness. without any question or complaint. (Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23. since the reduction of workdays is resorted to as a costsaving measure. of the following day that has been going on since 1988.

But the same may not be done by the driver. Participation in strikes . Attendance in lectures. The employees can use the time effectively for their own interest. meetings. All time during which an employee is required to be on duty or to be at the employer¶s premises or to be at a prescribed workplace.compensable hours worked. 7. Coffee breaks and rest period of short duration . For example. The following are the compensable hours worked: a. 11.compensable hours worked. Power interruptions or brown-outs. or b. and training periods sanctioned by employer . Attendance in hearings in cases filed by employee . a truck helper may sleep after performing his task and while his truck is traveling on its way to its assignment.compensable if employee 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.compensable hours worked.not compensable working time. chanrobles virtual law library Brown-outs running for more than twenty (20) minutes may not be treated as hours worked provided any of the following conditions are present: a. Travel time: a. 5.considered hours worked. The employees can leave their workplace or go elsewhere whether within or without the work premises. 2. chanrobles virtual law library 8. Travel that is all in the day¶s work . basic rules: y y Brown-outs of short duration not exceeding twenty (20) minutes .1. 4. c. Travel from home to work -not compensable working time b. 6. chanrobles virtual law library 3.considered compensable if waiting is an integral part of the employee's work or he is required or engaged by the employer to wait.considered compensable hours worked. Attendance in CBA negotiations or grievance meeting . Sleeping while on duty is compensable if the nature of the employee¶s work allows sleeping without interrupting or prejudicing work or when there is an agreement between the employee and his employer to that effect.compensable hours worked. 9. All time during which an employee is suffered or permitted to work. 10. Travel away from home . . Working while on call .not compensable hours worked. Waiting time . and b.

m. compensable. On a rest day.m. 2. For overtime work in the night shift. What is ³meal period´? 1.MEAL PERIOD: 32. 2. c. 1. chanrobles virtual law library 2. If he is required to work while eating. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the overtime hourly rate on an ordinary day. If meal time is shortened to not less than twenty (20) minutes .m.m. If shortened to less than 20 minutes. it is considered coffee break or rest period of short duration and. Being time-off.m. Since overtime work is not usually eight (8) hours. chanrobles virtual law library 2. the payment of the night differential pay is for the work done during the night. Computation of Night Shift Differential Pay: a. Every employee is entitled to not less than one (1) hour (or 60 minutes) time-off for regular meals. except to work.m. to 6 a.) work is regular work. special day or regular holiday: Plus 10% of the regular hourly rate on a rest day. therefore. NIGHT-SHIFT DIFFERENTIAL: 33. Night shift differential and overtime pay. 1. Where night shift (10 p. The reason is. Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed between 10:00 p. to 6 a.compensable hours worked. and 6:00 a. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or special day or regular holiday. it is not compensable hours worked and employee is free to do anything he wants. of the following day. the compensation for overtime night shift . What is ³night-shift differential´? 1. while the payment of the overtime pay is for work in excess of the regular eight (8) working hours. special day or regular holiday or a total of 110% of the regular hourly rate. Where night shift (10 p. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate.When the work of an employee falls at nighttime. 3. the receipt of overtime pay shall not preclude the right to receive night differential pay. distinguished .) work is overtime work. he should be compensated therefor. chanrobles virtual law library b.

chanrobles virtual law library 2. Illustrations on how overtime is computed: a. What is ³overtime work´? 1. . OVERTIME WORK: 34. On a rest day or special day or regular holiday. the overtime pay is plus 25% of the basic hourly rate. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic hourly rate. the overtime pay is plus 30% of the basic hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code. the overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in Artic le 93 [c] of the Labor Code. such as rest days and special days. "regular wage" or "basic salary" means "cash" wage only without deduction for facilities provided by the employer.work is also computed on the basis of the hourly rate. For overtime work performed on a rest day or on a special day. On an ordinary day. 2. b. For overtime work performed on an ordinary day. c. 4. 3. Work rendered after normal eight (8) hours of work is called overtime work. Every employee entitled to premium pay is also entitled to the benefit of overtime pay. "Premium pay" means the additional compensation required by law for work performed within 8 hours on non-working days. chanrobles virtual law library 5. In computing overtime work. Plus 10% of 130% of regular hourly rate on said days or a total of 110% of 130% of the applicable regular hourly rate. "Overtime pay" means the additional compensation for work performed beyond 8 hours. d. the overtime pay is plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the Labor Code. For overtime work performed on a regular holiday. library chanrobles virtual law 1. For overtime work performed on a rest day which falls on a special day.

In the 2000 case of Damasco vs. no further evidence being required to prove the same. [G. 212 SCRA 194. IV. the employer claims that the employee¶s basic sala ry of P140. 2. (Citing Philippine American General Insurance Inc. What is meant by ³undertime not offset by overtime´? 1. vs. No.. and cannot be contradicted unless previously shown to have been made through palpable mistake or that no such admission was made. the latter is entitled to overtime compensation. Judicial admissions made by parties in the pleadings. chanrobles virtual law library Premium and overtime pay.00 a day is more than enough to cover the ³one hour excess work´ which is the compensation they allegedly agreed upon. 115755. the employer admitted in his pleadings that the employee¶s work starts at 8:30 in the morning and ends up at 6:30 in the evening daily. The employer already admitted she worked an extra hour daily. However. or in the course of the trial or other proceedings in the same case are conclusive. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required by law such as overtime pay or night shift differential pay. effect. Ibid. the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation. distinguished. R. The Supreme Court ruled that in view of the employer¶s formal admission that the employee worked beyond eight hours daily. III. Judicial admission by employer of overtime work. such as rest days and special days. ³Premium pay´ refers to the additional compensation required by law for work performed within eight (8) hours on non-working days. ³Overtime pay´ refers to the additional compensation for work performed beyond eight (8) hours a day. (No. 2000]. December 4. For overtime work performed on a rest day which falls on a regular holiday. EMERGENCY OVERTIME WORK: . (No. No further proof is required. Every employee who is entitled to premium pay is likewise entitled to the benefit of overtime pay. DOLE Handbook on Workers Statutory Monetary Benefits).). Undertime work on any particular day shall not be offset by overtime on any other day.e. 204 [1992]). NLRC. Sweet Lines Inc. except holidays and Sundays. UNDERTIME NOT OFFSET BY OVERTIME: 35.

When there is urgent work to be performed on machines. floods. When may an employee be compelled to perform overtime work? 1. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident. When the work is necessary to prevent loss or damage to perishable goods. b.36. e. fire. When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. WEEKLY REST PERIOD: 38. typhoons. c. 37. What is ³weekly rest period´? . earthquake. epidemic or other disasters or calamities. Exceptions when employee may be compelled to render overtime work: a. When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. When an employee refuses to render emergency overtime work under any of the foregoing conditions. The general rule remains that no employee may be compelled to render overtime work against his will. May an employee validly refuse to render overtime work under any of the afore-said circumstances? chanrobles virtual law library An employee cannot validly refuse to render overtime work if any of the afore-mentioned circumstances is present. installations or equipment. 2. he may be dismissed on the ground of insubor dination or willful disobedience of the lawful order of the employer. When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive. and f. or in order to avoid serious loss or damage to the employer or some other causes of similar nature. chanrobles virtual law library d.

If business is open on Sundays/holidays. or in case of force majeure or imminent danger to public safety. earthquake. In case of urgent work to be performed on machineries. SUNDAY OR HOLIDAY: 40. e. where the employer cannot ordinarily be expected to resort to other measures. fire. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more. 3. 39.1. rest day may be scheduled on another day. and chanrobles virtual law library f. d. c. flood. How is premium computed for work rendered on a rest day. Every employer shall give his employees a rest period of not less than 24 consecutive hours after every 6 consecutive normal w ork days. Sunday or holiday? a. Waiver of compensation for work on rest days and holidays is not valid. epidemic or oth er disaster or calamity. 2. In case of actual or impending emergencies caused by serious accident. to prevent loss of life and property. chanrobles virtual law library b. typhoon. When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. When may an employer compel his employees to render work on a rest day? Under any of the following circumstances: a. or installations. to avoid serious loss which the employer would otherwise suffer. Preference of employee as to his rest day should be respected if based on religious grounds. Premium pay for work on scheduled rest day. COMPENSATION FOR WORK ON REST DAY. as in the case of the crew members of a vessel to complete a voyage and in other similar cases. . To prevent serious loss of perishable goods. In the event of abnormal pressure of work due to special circumstances. equipment. 4.

chanrobles virtual law library HOLIDAY PAY: 41. Entitlement of monthly-paid employees to regular holiday pay. he is entitled to 200% thereof . Higher rate provided in agreements. y y If worker did not work on regular holiday. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of higher premium pay tha n that prescribed by law. Where such holiday work falls on the employee¶s scheduled rest day. What is holiday pay? Holiday pay is a premium given to employees pursuant to law even if he is not suffered to work on a regular holiday. he shall be enti tled to additional compensation of at least fifty percent (50%) of his regular wage. e. the employer shall pay such higher rate. Premium pay for work performed on special holidays (now special days) which fall on employee¶s scheduled rest day. Premium pay for work on Sunday when it is employee¶s rest day. chanrobles virtual law library b. 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. Premium pay for work performed on Sundays and holidays when employee has no regular workdays and no scheduled regular rest days. chanrobles virtual law library If he worked. A covered employee shall be entitled to such additional compensation of thirty percent (30%) of his regular wage for work performed on a Sunday only when it is his established rest day. chanrobles virtual law library c.A covered employee who is made or permitted to work on his scheduled rest day shall be paid with an additional compensation of at least thirty percent (30%) of his regular wage. . he is entitled to 100% of his basic pay. he shall be paid an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and holidays. chanrobles virtual law library Work performed on any special holiday (now special day) shall be paid with an additional compensation of at least thirty percent (30%) of the regular wage of the employee. d.

. [G. whether worked or not. Inciong. This controversy should have ended long ago had either counsel first checked the validity of the implementing rule on which they based their contentions. Indeed. G. This case is cited prominently in basic commentaries. However. Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. that both parties (the petitioners and the respondent employer) premised their arguments on an implementing rule that the Court had declared void twenty years ago in Insular Bank of Asia vs. No. No.The Labor Code does not exclude monthly -paid employees from the benefits of holiday pay. it is deplorable. we ruled as follows: µSection 2. 217 Phil. Book III of the Implementing Rules and Policy Instructions No. . No. The High Court declared: chanrobles virtual law library ³We have long ago declared void Section 2. October 23. Inciong. R. L-52415. both the petitioners and respondent firm anchored their respective arguments on the validity of Section 2. shall be resolved in favor of labor. This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code which states that doubts in the implementation and interpretation of the Code. 2004). (G. the Secretary of Labor categorically declared that the benefit is intended primarily for daily-paid employees when the law clearly states that every worker should be paid their regular holiday pay. R. Inciong. NLRC. June 10. et al. Rule IV. (Insular Bank of Asia and America Employees Union [IBAAEU] vs. they in effect amended them by enlarging the scope of their exclusion. L 44717. chanrobles virtual law library An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires. 1984. R. And yet. In Insular Bank of Asia v. it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits. 629 (1984)]. 9. (The Chartered Bank Employees Association vs. No. 1984). 28. et al. 1985). 23. counsel for both parties failed to consider this. Oct. Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. R.. [supra]. Book III of the said rules. 147420. L-52415. said the Supreme Court. Ople. In Policy Instructions No. the implementing rules on holiday pay excluded monthly-paid employees from the said benefits by inserting under Rule IV. But in the 2004 case of Odango vs. G. Section 2 which provides that monthly-paid employees are presumed to be paid for all days in the month. Aug. Moreover. 9 issued by the Secretary (then Minister) of Labor are null and void since in the guise of clarifying the Labor Code¶s provisions on holiday pay. This does not speak well of the quality of representation they rendered to their clients. including its implementing rules.

Petitioners have misread this case. Rule IV of Book III is valid. less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). 138 SCRA 273]. Any divisor below 287 days means that ANTECO¶s workers are deprived of their holiday pay for some or all of the ten legal holidays. the minimum allowable divisor is 287. Book III of the implementing rules. Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. which is the result of 365 days. the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes mon thly-paid employees from the said benefits by inserting. No. no pay´ principle. The circumstances are also markedly different. However.µThe Labor Code is clear that monthly -paid employees are not excluded from the benefits of holiday pay. petitioners¶ claim for wage differentials must fail. chanrobles virtual law library ³In Chartered Bank. petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void implementing rule. there was a collective . petitioners cite Chartered Bank Employees Association v. 223). Petitioners¶ claim is based on a mistaken notion that Section 2. Thus. petitioners demand that ANTECO should pay them on Sundays. In effect. chanrobles virtual law library ³The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. as an analogous situation. The basic rule in this jurisdicti on is ³no work. under Rule IV.R. In this case. In Chartered Bank. ³Even assuming that Section 2. petitioners¶ claim will still fail. L-44717.´ The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Ople. 28 August 1985. ³Finally. Absent any other legal basis. The facts show that petitioners are required to work only from Monday to Friday and half of Saturday. Section 2 which provides that monthly -paid employees are presumed to be paid for all days in the month whether worked or not. Section 2 cannot serve as basis of any right or claim. no pay. (See Article 94 of the Labor Code and Executive Order No.¶ ³Thus. the workers sought payment for un-worked legal holidays as a right guaranteed by a valid law. Sustaining petitioners¶ argument will make monthly-paid employees a privileged class who are paid even if they do not work. [G. The 304 days divisor used by ANTECO is clearly above the minimum of 287 days. the un-worked half of Saturdays and other days that they do not work at all. it also gives rise to an invidious classification. Petitioners¶ line of reasoning is not only a violation of the ³no work. a violation of the equal protection clause.

a figure that clearly fails to account for the ten legal holidays the law requires to be paid. the employer was liable for underpayment because the divisor it used was 251 days. 2007] Regular Holidays and Nationwide Special Days. R. June 10. No CBA exists in this case. BOOK I OF EXECUTIVE ORDER NO. 2004). 292. 147420. NLRC.. 42. What are the regular holidays and special days? REPUBLIC ACT NO. This figure does not deprive petitioners of their right to be paid on legal holidays.AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26. the following regular holidays and special days shall be observed in the country: a) Regular Holidays New year¶s Day-January 1 Maundy Thursday-Movable date Good Friday-Movable date Eidul Fitr-Movable date Araw ng Kagitingan-Monday nearest April 9 (Bataaan and Corregidor Day) Labor Day-Monday nearest May 1 Independence Day-Monday nearest June 12 National Heroes Day-Last Monday of August Bonifacio Day-Monday nearest November 30 Christmas Day-December 25 Rizal Day-Monday nearest December 30 .bargaining agreement that prescribed the divisor. G. AS AMENDED. et al. Here. the divisor ANTECO uses is 304 days. and or proclamation. OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 [APPROVED ON JULY 25. 9492 . CHAPTER 7. No.´ (Odango vs. In Chartered Bank. ³ (1) Unless otherwise modified by law.

however. A covered employee who does not work during regular holidays is paid 100% of his regular daily wage.b) Nationwide Special Holidays: Ninoy Aquino Day-Monday nearest August 21 All Saints Day-November 1 Last Day of the Year-December 31 c) In the event the holiday falls on a Wednesday. What are the distinctions between ³regular holidays´ and ³special days´? The following are the distinctions between ³regular holidays´ and ³special days´: a. 203 [June 30. no pay´ to entitlement to holiday pay? . while a covered employee who does not work during a special day does not receive any compensation under the principle of ³no work. 45. while a covered employee who works during special days is only paid an additional compensation of not less than 30% of the basic pay or a total of 130% and at least 50% over and above the basic pay or a total of 150%. 1987]).´ b. the holiday will be observed on the Monday of the week. chanrobles virtual law library 44. A covered employee who works during regular holidays is paid 200% of his regular daily wage. at least six (6) months prior to the holiday concerned. the specific date that shall be declared as a nonworking day: Provided. A. the President shall issue a proclamation. What is the distinction between ³special holidays´ and ³special days´? There is none. What is the application of the principle of ³no work. ³Special holidays´ are now known as ³special days. 9177 uses ³Special Holidays´ instead of ³Special Days´ in describing All Saints Day and Last Day of the Year which were described as such under Executive Order No. the holiday will be observed on the Monday that follows: Provided. That for movable holidays.´ (NOTE: R. if the worker is permitted or suffered to work on special days which fall on his scheduled rest day. If the holiday falls on a Sunday. The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao. chanrobles virtual law library 43. no pay.

Premium pay for work performed during special days . whichever is higher.30% on top of basic pay. What are the effects of absences on entitlement to regular holiday pay? The following are the effect of absences on entitlement to regular holiday pay: a. in which case. Premium pay for work performed during special days falling on scheduled rest day . he is entitled to his holiday pay on the second holiday. Employees on leave while on SSS or employee's compensation benefits.The principle of ³no work. chanrobles virtual law library c. unless he works on the first holiday. chanrobles virtual law library b.entitled to regular holiday pay. if they are not reporting for work while on such benefits. When the day preceding regular holiday is a non -working day or scheduled rest day . What are the premium pay for working on holidays? 1. . 48. What is the rule in case of absence during successive regular holidays? The rule in case of successive regular holidays is as follows: An employee may not be paid for both holidays if he absents himself from work on the day immediately preceding the first holiday.may not be paid the required holiday pay if he has not worked on such regular holiday. no pay´ applies to special days but not to unworked regular holidays where the employees are always paid the equivalent of 100% of their basic pay. Employees on leave of absence with pay . 47. chanrobles virtual law library 2.50% over and above the basic pay. he shall be entitled to the regular holiday pay if he worked on the day immediately preceding the non-working day or rest day. in which case. chanrobles virtual law library 46. Employees on leave of absence without pay on the day immediately preceding a regular holiday .Employee shall not be deemed to be on leave of absence on that day. chanrobles virtual law library d.Employers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee¶s compensation or social security payment.

R. regardless of whether an employee is paid on a monthly or daily basis. there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the same day. 2002]. Since a worker is entitled to the enjoyment of ten paid regular holidays. CA. 673). In the 2004 case of Asian Transmission Corporation vs. March 15. chanrobles virtual law library 50. was reproduced on January 23. the law must be taken to mean exactly what it says. The Hon. (Insular Bank of Asia and America Employees Union (IBAAEU) vs. 2. that when the language of the law is clear and unequivocal. Filomena. R. [ G. Iligan City revealed that there was underpayment by SMC of regular Muslim holiday pay to its employees. Oct. Said bulletin dated March 11. Araw ng Kagitingan and Good Friday falling on April 9. when April 9. 1998 was both Maundy Thursday and Araw ng Kagitingan. which is a management prerogative. a routine inspection conducted by the Department of Labor and Employment in the premises of San Miguel Corporation (SMC) in Sta.g. If employee worked: 300% of basic pay. CA. L-52415. under the rules of statutory construction. ruled that Article 94 of the Labor Code. 1993. 2004].. What is the rule in case two regular holidays falling on the same day? DOLE Explanatory Bulletin on Workers¶ Entitlement to Holiday Pay on 9 April 1993. January 30. 144664. In the case at bar. 1993): 1. the fact that two holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive. No. It is elementary. Araw ng Kagitingan and Good Friday enunciated the following rule in case of two regular holidays falling on the same day (e. the petitioner sought the nullification of the said March 11. holiday pay is a statutory benefit demandable under the law. in affirming the validity thereof. The provision is mandatory. The Supreme Court. If employee did not work: 200% of basic pay. affords a worker the enjoyment of ten paid regular holidays. 1984. Unlike a bonus. 1993 Explanatory Bulletin. Petitioner SMC asserts that Article 3(3) of Presidential Decree No. 1083 . including the manner of computing the holiday pay. 146775. Inciong.49. 1998. G. R. No. No. 132 SCRA 663. [G. What is the rule in case of regular Muslim holidays? In the 2002 case of San Miguel Corporation vs. 23. as amended.

in which case.provides that ³(t)he provisions of this Code shall be applicable only to Muslims x x x. 5.´ At any rate. Every covered employee who has rendered at least one (1) year of service shall be entitled to a yearly service incentive leave of five (5) days with pay. including authorized absences and paid regular holidays. unless the number of working days in the establishment as a matter of practice or policy. ruled that there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. however. . whether continuous or broken.´ The Supreme Court. 1083 also declares that ³x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim. 2. We must remind the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker¶s faith or religion. 3. then by the same token.service within twelve (12) months. The Court of Appeals did not err in sustaining Undersecretary Español who stated: chanrobles virtual law library ³Assuming arguendo that the respondent¶s position is correct. said period shall be considered as one (1) year for the purpose of determining entitlement to the service incentive leave. Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law as regular holidays. or that provided in the employment contract. reckoned from the date the employee started working. (Note: there is no provision in the Labor Code granting vacation or sick leave). What are the basic principles governing the grant of service incentive leave? 1. Service incentive leave is commutable to cash if unused at the end of the year. The basis of computation of service incentive leave is the salary rate at the date of commutation. Article 3(3) of Presidential Decree No. Meaning of "one year of service" .´ SERVICE INCENTIVE LEAVE: 51. is less than twelve (12) months. Grant of vacation leave or sick leave may be considered substitute for service incentive leave. chanrobles virtual l aw library 4.

it was held that private respondent¶s service incentive leave credits of five (5) days for every year of service. computed from 1989 until the date of her actual reinstatement. This is because the entitlement to said benefit accrues only from the time he has rendered at least one year of service to his employer. 2005]. it was held that having already worked for more than three (3) years at the time of her unwarranted dismissal. to lure employees to stay with the company. CA. 151966. for it is only then that the employee is entitled to said benefit. vs. petitioner is undoubtedly entitled to service incentive leave benefits. 152427. No. R. should be computed up to the date of reinstatement pursuant to Article 279. March 31.or its equivalent period. No. [G. Moreover. Accordingly. it is granted as a motivation for the employee to stay longer with the employer. where one of the issues pertained to the entitlement of an illegally dismissed employee to service incentive leave pay. JPL Marketing Promotions vs. R. As ruled in Fernandez vs. based on the actual service rendered to the petitioner in accordance with each contract of employment. There is no cause for gra nting said incentive to one who has already terminated his relationship with the employer. the computation thereof should only be up to the date of termination of employment. 176 (1998)] ³[s]ince a service incentive leave is clearly demandable after one year of service . as amended. No. 2005] which involves a project employee who later on became a regular employee after a series of re-hiring. NLRC. it was held that the same should be computed not from the start of employment but a year after commencement of service.´ chanrobles virtual law library This Imbuido ruling was cited in the 2005 case of Integrated Contractor and Plumbing Works. such as the conversion of the accumulated leave credits into their cash equivalent. Inc. as provided in the Collective Bargaining Agreement. Rationale for leave credit accumulation and cash conversion. and in the particular case of the service incentive leave. R. [G. July 8.whether continuous or broken . Companies offer incentives. it is fair and legal that its computation should be up to the date of reinstatement as prov ided under Section [Article] 279 of the Labor Code. and it is one of the µbenefits¶ which would have accrued if an employee was not otherwise illegally dismissed.In the 2000 case of Imbuido vs. where an employee was never paid his service incentive leave during all the time he was employed. [285 SCRA 149. NLRC. It must be noted that this benefit is given by law on the basis of the service actually rendered by the employee. [G. the Supreme Court observed that the conversion of leave credits into their cash equivalent is aimed primarily to encourage workers to work continuously and with dedication for the company. NLRC. 2000]. But in another 2005 case. In a case involving the accumulation of leave credits and their conversion into cash. August 9. 114734. Leave credits are normally converted into their cash equivalent based on the last .

prevailing salary received by the employee. Rule V. vs. (Repu blic Planters Bank. In the case of service incentive leave. an employee who has served for one year is entitled to it. and irrespective of the method by which their wages are paid. he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. R. 2005]. To limit the award to three years. 1997). 156367. He may use it as leave days or he may collect its monetary value. is to unduly restrict such right. G. designations or employment status.´ It is also ³commutable to its money equivalent if not used or exhausted at the end of the year. Book III of the Implementing Rules and Regulations provides that ³[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. the clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments. It applies to all employees of covered employers. January 28. subject to a few exceptions . including those entities operating primarily as private subsidiaries of the government. No. chanrobles virtual l aw library As enunciated by the Supreme Court in Fernandez vs. Furthermore. the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. May 16. What are service charges? The rule on service charges applies only to establishments collecting service charges. 53. is less than 12 months. the Supreme Court observed that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. Section 2. Jan. In the 2005 case of Auto Bus Transport System. 349 Phil 65].´ In other words.´ Service incentive leave is a right which accrues to every employee who has served ³within 12 months. night clubs. No. as the solicitor general recommends. casinos and gambling ho uses.. such as hotels. NLRC.R. lodging houses. Inc. et al. 117460. and similar enterprises. or that provided in the employment contracts. Bautista. restaurants. [G. [G. bars. regardless of their positions. vs. No. including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy. if the employee entitled to service incentive leave does not use or commute the same. 1998. How is service charge distributed? . SERVICE CHARGES: 52. 105892. cocktail lounges. 6. whether continuous or broken reckoned from the date the employee started working. NLRC. now known as PNB-Republic Bank. in which case said period shall be considered as one year. massage clinics. R.

This is more explained by [respondents] when they testified that what they received are not fixed amounts and the same are paid not on a monthly basis (pp. ‡ The shares shall be distributed to employees not less often than once every 2 weeks or twice a month at intervals not exceeding 16 days. It quoted with approval the Labor Arbiter on this matter. No. to wit: ³While complainants. 93. how can the amounts receive[d] by [respondents] be considered as profit share when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross receipt of an enterprise. R. Although called profit share[. Also. 103. 55. Adana. In the 2005 case of Mayon Hotel & Restaurant vs. Service charge is not profit share and may thus not be deducted from wage.000. 94.Service charges are distributed in accordance with the following percentage of sharing: a. fifteen percent (15%) for the management to answer for losses and breakages and distribution to managerial employees. II. 104. eighty-five percent (85%) for the employees to be distributed equally among them. Further. the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. 2005]. 157634. ‡ The P2. who were employed in the hotel. the employer alleged that the five (5) percent of the gross income of the establishment being given to the respondent employees can be considered as part of their wages.00 salary ceiling for entitlement thereto is no longer applicable. receive[d] various amounts as profit share. May 16. Attributes of wage: . What are the attributes of wage? 1. Profits are realized after expenses are deducted from the gross income. [G. The Supreme Court was not persuaded.] such is in the nature of share from service charges charged by the hotel. [petitioners] failed to submit evidence that the amounts received by [respondents] as profit share are to be considered part of their wages and had been agreed by them prior to their employment. rollo).´ WAGES: 54. vol. and b.

they are synonymous in meaning and usage. ³Fair and reasonable value´ shall not include any profit to the employer. or other facilities customarily furnished by the employer to the employee. lodging and other facilities customarily furnished by an employer to his employees both in agricultural and non-agricultural enterprises. for work done or to be done or for services rendered or to be rendered. it is the remuneration or earnings. Value of facilities . piece. it is capable of being expressed in terms of money. or for services rendered or to be rendered. and d. In the same 2005 case of Mayon Hotel & Restaurant vs. task. lodging.a. What are ³supplements´? 1. chanrobles virtual law library 4. 2. Actual work is the basis of claim for wages ("No work. ³Facilities´ shall include articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer¶s business. Adana.the fair and reasonable value of board. FACILITIES AND SUPPLEMENTS: 55.may or may not be treated as part of wage depending on the circumstances. Commission . 2005] it was noted by the Supreme Court the uncontroverted testimony of respondents on record that they were required to eat in the hotel and restaurant so that they will not go home . no pay"). May 16. or other method of calculating the same. ³salary´ and ³pay´. or to any person affiliated with the employer. distinction . however designated. whether fixed or ascertained on a time. 3. ³Supplements´ means extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. What are ³facilities´? 1. as determined by the Secretary of Labor and Employment. it is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. R. No. it includes the fair and reasonable value. 56. [G. b. ³Wage´. 157634. of board. 2. or commission basis. chanrobles virtual law library c.

such as petitioners¶ business. The records are clear that petitioners failed to comply w ith these requirements. [G. The criterion in making a distinction between a supplement and a facility does not so much lie in the kind (food. such facilities could not be deducted without compliance with certain legal requirements. 1997 (271 SCRA 670)]. Voluntary acceptance of facilities required. In order that the cost of facilities furnished by the employer may be charged against an employee. As stated in Mabeza vs. NLRC. Book III. on the ground that respondents have availed themselves of the food given by petitioners. No. The law is clear that mere availment is not sufficient to allow deductions from employees¶ wages. as held in Mayon Hotel & Restaurant [supra]. . the employer simply cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade.and there is no interruption in the services of Mayon Hotel & Restaurant. and (c) the facilities are charged at fair and reasonable value. that hotel workers are required to work different shifts and are expected to be available at various odd hours. (Section 7. chanrobles virtual law library Consequently. There was no proof of respondents¶ written authorization. therefore. their ready availability is a necessary matter in the operations of a small hotel. food or snacks or other convenience provided by the employers are deemed as supplements if they are granted for the convenience of the employer. the quality of food served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this supposed Facility Evaluation Orders. even granting that meals and snacks were provided by the hotel to its employees and indeed constituted facilities. Considering. his acceptance of such facilities must be voluntary.R. therefore. Indeed. Considering the failure to comply with the above-mentioned legal requirements. The deduction of the cost of meals from respondents¶ wages. Rule VII. April 18. the Labor Arbiter therefore erred when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries. Rules to Implement the Labor Code). the Labor Arbiter found that while the respondents admitted that they were given meals and merienda. should be removed. 118506. (b) the provision of deductible facilities is voluntarily accepted in writing by the employee. Legal requirements must be complied with before deducting facilities from wages. lodging) but the purpose. As ruled in Mabeza [infra].

a certain percentage of their daily wage.. R. out of necessity. G. In another case where the company used to pay to its drivers and conductors. GRATUITY AND ALLOWANCES: 59. it is not intended as compensation for actual work. 1963). L-9742. 28. What is a gratuity? ³Gratuity´ is a gift freely given by the employer in appreciation of certain favors or services rendered. (State Marine Cooperation and Royal Line. Inc. as allowance for food. it was ruled that the company should continue granting the s aid privilege. when meals are freely given to crew members of a vessel while they were on the high seas. not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage. bonus or sick leave) given but its purpose. G. What is the rule on deductibility of ³facilities´ or ³supplements´ from wages? Facilities may be charged to or deducted from wages. Oct. 1955). It is further not demandable as a matter of right. chanrobles virtual law library 58. the deductions made therefrom for the meals should be returned to them. free meals supplied by the ship operator to crew members. vs. aside from their regular salary. Feb. (Cebu Autobus Company vs. strictly speaking. Thus.57. cannot be considered as facilities but supplements which could not be reduced having been given not as part of wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage. No. R. It is not part of wages since. The criterion is not so much with the kind of the benefit or item (food. Thus. L-12444. No. may not be so charged. 60. What is the distinction between ³facilities´ and ³supplements´? ³Facilities" and "supplements´. Cebu Seamen¶s Association. and the operator of the coastwise vessels affected should continue giving the same benefit. it is a facility. on the other hand. is supplement. United Cebu Autobus Employees Association. 27. distinction: The benefit or privilege given to the employee which constitutes an extra remuneration over and above his basic or ordinary earning or wage. Inc. who were assigned outside of the city limits. Supplements. Are allowances part of wage? . and when said benefit or privilege is part of the laborer¶s basic wage. lodging.

G. If there is no profit. 220 SCRA 452). No. Unlike 13th month pay. there should be no bonus. If profit is reduced. it is deemed part of wage or salary.g. NLRC. (Globe Mackay Cable and Radio Corporation vs. in a n amount equivalent to two (2) months gross pay for mid-year bonus and three (3) months gross pay for the year-end bonus. When is bonus demandable and enforceable? On the basis of equitable considerations. and two-months for year-end bonus..R. in the computation of the amount of retirement and other benefits. (National Sugar Refineries Corporation v. long practice. holiday pay and leave benefits. Therefore. NLRC. when considered a company practice. cost-of-living allowances. without violating the non-diminution clause in the law since bonuses are not part of labor standards in the same class as salaries. the giving of the bonus should have been done over a long period of time. demandable. bonus may become demandable and enforceable. absent any agreement making such bonus part of the compensation of the employees. Thus. hence. 62. 101761. bonus should likewise be reduced. allowances shall not be included therein. even if the bonus has been given for quite some time or since ³time-immemorial´ as asserted by the union. the employer may validly reduce it to two (2) months basic pay for mid-year bonus.R."Allowances" are not part of wages. generally not demandable or enforceable. bonus may be forfeited in case employee is found guilty of an administrative charge. Consequently. L-74156. CBA) and other peculiar circumstances. if bonus is given as an additional compensation which the employer agreed to give without any condition such as success of business or more efficient or more productive operation. agreement (e. No. 163 SCRA 71). provided under . G. chanrobles virtual law library The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. BONUS: 61.´. Bonus. and must be shown to have been consistent and deliberate. To be considered a ³regular practice. What is bonus? Is it demandable? ³Bonus´ is an amount granted and paid ex gratia to the employee for his industry or loyalty. hence.

NLRC. night differentials. 13th MONTH PAY: 63. it was ruled that for employees receiving regular wage. What is 13th month pay? ³Thirteenth-month pay´ shall mean one-twelfth (1/12) of the basic salary of an employee within a calendar year. company practice or policy. 751 (1999)] and similar cases. premium. the 13th . In the 2005 case of Honda Phils. No. Its fiscal condition having declined. (Davao Fruits Corporation vs.. G. St. vacation and maternity leaves. (No. No. be penalized for its past generosity to its employees. 145561. R. 30. et al. but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. G. Inciong. DOLE Handbook on Workers Statutory Monetary Benefits). not the amount actually received by an employee. However. the same are treated as part of the basic salary of the employees. Inc. night differ ential and holiday pay and cost-of-living allowances. No. 491 (1998)]. the bank may not be forced to distribute bonuses which it can no long er afford to pay and. Revised Guidelines on the Implementation of the 13th-Month Pay Law. Consolidated Food Corporation vs. (Traders Royal Bank vs. 189 SCRA 274). R. Thus. these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if by individual or collective agreement. No. et al.. June 15. NLRC. Premium pay is not included in the computation of the 13th -month pay. [G. in effect. 88168. Samahan ng Malayang Manggagawa sa Honda. [349 Phil. 1990. [354 Phil. such as the cash equivalent of unused vacation and sick leave credits. 24. 2005]. NLRC. overtime. 4 [a]. 220 (1998)]. [103 SCRA 139 (1981)]. X [C]. NLRC. Associated Labor Union. chanrobles virtual law library The ³basic salary´ of an employee for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by the employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary. Aug. ³basic salary´ has been interpreted to mean. Michael Academy vs.the Labor Code. In Hagonoy Rural Bank vs. R. 1993. excluded from the computation of ³basic salary´ are payments for sick. vs. [373 Phil. The contention of the union that the granting of said bonuses had ripened into a company practice that may no longer be adjusted to the prevailing condition of the bank has no legal and moral bases.. Aug. 225 SCRA 562). regular holiday pay and premiums for work done on rest days and special holidays as held p reviously in San Miguel Corporation [Cagayan Coca-Cola Plant] vs. 85073.

in its computation of the 13th-month pay of its employees. Inc. (Honda Phils. night premium. No. Associated Labor Unions. and cash conversion of unused company vacation and sick leave. reduced. from 1975 to 1981. voluntarily and continuously included in the computation of its employees¶ thirteenth month pay. added to the base figure.month pay due an employee was computed based on the employee¶s basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged . 225 SCRA 562). legal and special holidays. 1993. however. discontinued or eliminated. being favorable to the employees. had ripened into a practice and. No. it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. union leave pay. Samahan ng Malayang Manggagawa sa Honda. G. This implies that in previous years it does not know its cost of labor and operations. Also. for two to three years prior to 1999. they can no longer be withdrawn. it was ruled that such act of the employer. paternity leave pay. including the computation and payment of the 13th-month pay and other benefits. was unconvinced. V. company vacation and sick leave pay. It is quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. 2005). A. April 28. G. petitione r failed to adduce any other relevant evidence to support its contention. et al. regular holiday pay and premiums for work done on rest days and special holidays.. 2004]. vs. R. A. 152456. maternity leave pay. R. despite the fact that the law and the government issuances expressly excluded the same. therefore. These benefits included overtime premium for regular overtime. 24. payments for sick. 145561. Semana. G. diminished. Aug. (Davao Fruits Corporation vs. where the employer. the amount of other benefits received by the employees which are beyond the basic pay.. freely. 85073. And the same holding was made in the 2004 case of Sevilla Trading Company vs. R. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay. legal holiday pay. Petitioner-employer claimed that it entrusted the preparation of the payroll to its office staff. This is merely basic cost accounting. June 15. It affirmed the ruling of the Voluntary Arbitrator that petitioner¶s stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. and after audit was conducted. But in a case where the employer. bereavement leave pay. No. chanrobles virtual law library The Supreme Court. When it changed its person in charge of the payroll in the process of computerizing its payroll. vacation and maternity leaves. Petitioner¶s submission of financial statements every year requires the services of a certified public accountant to audit its finances. premium pay for special holidays.

64. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability. NLRC. 2004). R. G. A. 13th-month pay of resigned or separated employee. chanrobles virtual law library In the 2005 case of Clarion Printing House. No. 106341. International School of Speech vs.00 The payment of the 13th-month pay may be demanded by the employee upon the cessation of employer-employee relationship. Thus.00 in monthly salary and who had worked for at least six (6) months at the time of her retrenchment.. provided that they have worked for at least one (1) month during a calendar year. R. 152456. NLRC. 2. X [G].00 x 6) / 12 = P3. et al. 236 SCRA 280). was held to be entitled to her proportionate 13th month pay computed as follows: chanrobles virtual law library (Monthly Salary x 6 ) / 12 = Proportionate 13th month pay (P6. 148372. No. No. 2005]. DOLE Handbook on Workers Statutory Monetary Benefits. Who are entitled to 13th month pay? All rank-and-file employees are entitled to a 13th-month pay regardless of the amount of basic salary that they receive in a month and regardless of their designation or employment status. There was no explanation whatsoever why its inclusion of non -basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake. so can the employee demand the payment of all benefits due him upon the . an employee who was receiving P6. June 27. R.250. 1994. Villarama vs. G. (No. 1995.³corrected´ computation of the thirteenth month pay. reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. 6. R. A. An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th-month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year. et al. Semana. V. Revised Guidelines on the Implementation of the 13th-Month Pay Law. vs. No. Sept. despite the clarity of statute and jurisprudence at that time. his proportionate 13th-month pay should be the equivalent of 1/12 of his total basic salary which he earned during that period. and irrespective of the method by which their wages are paid.. G.500. et al. NLRC. [G. 112658. April 28. Inc.500. March 18. (Sevilla Trading Company vs. No.. if he worked only from January up to September.

. (Section 6 thereof). R. a full month basic pay computation was the ³present practice´ intended to be maintained in the CBA.termination of the relationship. 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the company¶s financial standing. As the rules state. June 15. This enabled them to devise a formula usi ng 11/12 of the total annual salary as base amount for computation instead of the entire amount for a 12-month period. [G. As held by the Voluntary Arbitrator: ³The Company (Honda) explicitly accepted that it was the strike held that prompt[ed] them to adopt a pro-rata computation. the computation of the 13th month pay should not be pro-rated but should be given in full. 114M in 1998 and 215M lost of sales in 1999 due to strike. vs. In the present case. an employee is entitled to a pay in proportion to the length of time he worked during the year.´ (Emphasis supplied) chanrobles virtual law library More importantly. and after they have exhausted all their leave credits and were no longer receiving their monthly salary from . there being no gap in the service of the workers during the calendar year in question. The Court of Appeals thus held that: ³Considering the foregoing. the Supreme Court in Honda Phils. (No. Revised Guidelines on the Implementation of the 13th-Month Pay Law). took cognizance of the fact that the said Revised Guidelines on the Implementation of the 13th Month Pay Law provided for a pro-ration of this benefit only in cases of resignation or separation from work. Regarding pro-ration of the 13th month pay. That a full month payment of the 13th month pay is the established practice at Honda is further bolstered by the affidavits executed by F eliteo Bautista and Edgardo Cruzada. 145561. Honda did not adduce evidence to show that the 13th month. Both attested that when they were absent from work due to motorcycle accidents.´ The memorandum dated November 22. It was a convenient coincidence for the company that the work stoppage held by the employees lasted for thirty -one (31) days or exactly one month. This is an implicit acceptance that prior to the strike. the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. No. Inc. under these circumstances. it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. reckoned from the time he started working during the calendar year. 6. Samahan ng Malayang Manggagawa sa Honda. 2005]. aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997. 1999 which Honda issued shows that it was the first time a pro-rating scheme was to be implemented in the company.

discontinued or eliminated. this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. can no longer be withdrawn. the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion. 381. While in Tiangco vs. Semana.R. 100 of the Labor Code. What is more.Honda. reduced.R. 390-391 [2003]). Associated Labor Unions. they still received the full amount of their 13th month. if not a . we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the case at bar. No. the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. 85073.´ (Emphasis supplied) Lastly. In the above quoted case of Davao Fruits Corporation vs. therefore. [G. has ripened into a practice and. [Citing Santos vs. Jr. approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. the employer. Velarde. Abarquez. 225 SCRA 562] presented an example of a voluntary act of the employer that has ripened into a company practice. It was held that this act. it was stated: ³With 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. or three (3) years and four (4) months. To allow the pro -ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingman¶s welfare should be the primordial and paramount consideration. 1993. In that case. from 1975 to 1981. which was favorable to the employees though not conforming to law. freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law. 14th month and financial assistance pay. et al. the employer. Associated Labor Unions. This. The case of Davao Fruits Corporation vs. No. 450 Phil. in Sevilla Trading Company vs. Leogardo. the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980. In another case. 152456. we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. the company practice lasted for six (6) years. 28 April 2004. for three (3) years and nine (9) months. Davao Integrated Port Stevedoring Services vs. diminished. [G. 428 SCRA 239]. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. In all these cases. August 24. petitioner Sevilla Trading kept the practice of including non -basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. Furthermore.

except where the workers are paid on piecerate basis in which case. in such a case. No. Article XIII-Social Justice and Human Rights. boundary. 66. 2005]. 2005). Where an employer pays less than 1/12th of the employee¶s basic salary. What is meant by the phrase ³its equivalent´ in the 13th month pay law? The term ³its equivalent´ shall include Christmas bonus. for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law. June 15. b. Honda Phils. Employers of those who are paid on purely commission. R.. G. July 8. including government-owned and controlled corporations. the computation for the 13th month pay should properly begin from the first day of employment up to the last day of work of the employee. or task basis.deterrent. Who are exempted employers from the coverage of 13th month pay? The following are exempted employers: a. (Section 3. Inc. Philippine Constitution. irrespective of the time consumed in the performance thereof. and those who are paid a fixed amount for performing a specific work. where the Supreme Court ruled that. The government and any of its political subdivisions. No. as well as non -monetary benefits. This benefit is given by law on the basis of the service actually rendered by the employee. 145561. profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends. mid -year bonus. [G. vs. cost of living allowances and all other allowances regularly enjoyed by the employee. Samahan ng Malayang Manggagawa sa Honda. except those corporations operating essentially as private subsidiaries of the government. 151966. . R. 65. chanrobles virtual law library But the rule is different if an employee was never paid his 13th month pay during his employment. the employer shall pay the difference. A case in point is JPL Marketing Promotions vs. CA. the employer shall be covered by the 13th month pay law insofar as such workers are concerned. Employers of household helpers and persons in the personal service of another in relation to such workers. Employers already paying their employees 13th -month pay or more in a calendar year or its equivalent at the time of this issuance. chanrobles virtual law library d. c.

as well as employees working in two or more private firms. case .No f. Ovejera. et al. case .Yes d. 151966. The 13th month pay is tax exempt (R. private respondent -employees were not given their 13th month pay and service incentive leave pay while they were under the employ of JPL. DOLE Philippines vs. 68. case . et al.Yes c. CA. et al. private respondents are entitled to the 13th month pay and service incentive leave pay. vs. Inc. Thus. are entitled to the required 13th-month pay from all their private employers regardless of their total earnings from each or all their employers. NLRC. et al. Leogardo. 2005]. May payment of bonus be credited as payment of 13th month pay? a. July 8. 70. No. Brokenshire Memorial Hospital.No b. NFSW vs. The Supreme Court ruled that the difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. as properly held by the Court of Appeals and by the NLRC. whether on full or part-time basis. case . NLRC. Admittedly. including private educational institutions. vs. the petitioner-employer contends that the employees are no longer entitled to the payment of 13th month pay as well as service incentive leave pay because they were provided salaries which were over and above the minimum wage. What is the rule in case an employee has multiple employers? Government employees working part-time in a private enterprise. R. Valenzuela. 69. Is 13th month pay tax-exempt? Yes.In the 2005 case of JPL Marketing Promotions vs. 7833).Yes . et al. case . case . Ople. [G. Universal Corn Products vs. et al. United CMC Textile Workers Union vs.A.Yes e. 67. Marcopper Mining Corp. When should the 13th month pay be paid? The required 13th month pay shall be paid not later than December 24 of each year.

(Kamaya Point Hotel vs. It is a gratuity to which the recipient has no right to make a demand. individual agreements or collective bargaining agreements between workers and employers or voluntary employer practice or policy. 1989. is not allowed. case . MINIMUM WAGE: 72.g. FEU Employees Labor Union vs. case . 75289. G. UST Faculty Union vs. Minister of Labor. What is meant by ³statutory minimum wage´? The term ³statutory minimum wages´ refers simply to the lowest basic wage rate fixed by law that an employer can pay his workers.Yes j. What is the basis of the computation of the ³statutory minimum wage´? The basis of the minimum wage rates prescribed by law shall be the normal working hours which shall not be more than eight (8) hours a day. August 31. case . et al. et al. Inc. et al.No i. 75. 177 SCRA 160). What is a 14th month pay? There is no law mandating the payment of 14th-month pay. Kamaya Point Hotel vs. therefore. What is the principle of non-elimination or non-diminution of benefits? This principle mandates that the reduction or diminution or withdrawal by employers of any benefits. chanrobles virtual law library 74. How is the minimum wage fixed? The minimum wage rates for agricultural and non-agricultural workers and employees in every region shall be those prescribed by the Regional Tripartite Wages and Productivity Boards (RTWPB) which shall in no case be lower than the statutory minimum wage rates. FEU case (involving transportation allowance which was treated as compliance with 13th month pay) h. R. NLRC. Framanlis Farms. It is. et al.No 14th MONTH PAY: 71. No. in the nature of a bonus which may not be imposed upon the employer. NLRC. vs. 73. NLRC.. . supplements or payments as provided in existing laws.

What are the standards/criteria for minimum wage fixing? In the determination of regional minimum wages. consider the following: (a) The demand for living wages. (e) The need to induce industries to invest in the countryside. among other relevant factors. When does a ³Wage Order´ become effective? Any Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region.76. 79. (b) Wage adjustment vis-à-vis the consumer price index. When is a ³Wage Order´ necessary? Whenever conditions in a particular region so warrant. (f) Improvements in standards of living. the RTWPB shall investigate and study all pertinent facts and based on the standards and criteria herein prescribed. 80. an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase. (d) The needs of workers and their families. . (c) The cost of living and changes or increases therein. What is a ³Wage Order´? ³Wage order´ refers to the Order promulgated by the Regional Tripartite Wages and Productivity Board (RTWPB) pursuant to its wage fixing authority. 77. chanrobles virtual law library 78. shall proceed to determine whether a Wage Order should be issued. in the event such order is affirmed. What is the mode of appeal from a ³Wage Order´ issued by the RTWPB? Any party aggrieved by the Wage Order issued by the RTWPB may appeal such order to the National Wages and Productivity Commission within ten (10) calendar days from the publication of such order. the Regional Board shall. The filing of the appeal does not stay the order or suspend the effectivity thereof unless the person appealing such order shall file with the Commission.

Under the Labor Code and its imple menting rules. The employees are given reasonable time to withdraw their wag es from the bank facility which time.(g) The prevailing wage levels. coupons or any other form alleged to represent legal tender is prohibited even when expressly requested by the employee. promissory notes. it is mandated that the laborer¶s wages shall be paid in legal currency. (i) Effects on employment generation and family income. vouchers. as a general rule. wages shall be paid in legal tender and the use of tokens. (h) Fair return of the capital invested and capacity to pay of employers. or other logical bases of differentiation. as amended. 81. shall be considered compensable hours worked. PAYMENT OF WAGES: 82. What is ³wage distortion´? "Wage distortion" is a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effecti vely obliterate the distinctions embodied in such wage structure based on skills. the ATM system of payment is with the written consent of the employees concerned. if done during working hours. Under the Civil Code. 2. 2. chanrobles virtual law library . What are the forms of payment of wages? 1. 3. length of service. Payment through automated teller machine (ATM) of banks provided the following conditions are met: 1. and (j) The equitable distribution of income and wealth along the imperatives of economic and social development. Exceptions : A. chanrobles virtual law library The issue of whether or not a wage distortion exists is a question of fact that is within the jurisdiction of the quasi-judicial tribunals. The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code.

4. Payment by check or money order. et al. However. 6. The payslip becomes a substantial proof of actual payment. More so in a case where it appears that the payslips for the same period bear the signatures of the employees plus a certification that they received the full compensation for the services rendered. R. the absence of such signatures does not ne cessarily lead to the conclusion that the amount due the employees was not received. In the present case. Payslips as evidence of payment. 1996). benefits and deductions for a particular period. in signing the payslips with their acknowledgement of full compensation. B. 2004). Ideally. Cruz. Inc. 140495. (Explanatory Bulletin issued by DOLE Secretary Leonardo Quisumbing dated November 25. the Supreme Court affirmed the finding of both the Labor Arbiter and the NLRC on the admissibility as evidence of the pay slips. 24. The . There shall be n additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment. vs. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. (the foregoing conditions on existence of bank facility and other fa ctors should also concur). Article 221 of the Labor Code provides that proceedings before the NLRC are not covered by the technical rules of evidence and p rocedure. there is no hard-and-fast rule requiring that the employee¶s signature in the payroll is the only acceptable proof of payment. Aug. the employer shall issue a record of payment of wages. 2005). chanrobles virtual law library In the 2005 case of G & M [Phils. April 15. 154985. petitioner failed to demonstrate any arbitrariness or lack of rational basis on the part of the NLRC. There is a bank or ATM facility within a radius of one (1) kilometer to the place of work. his signature therein coupled by an acknowledgement of full compensation alter the legal complexion of the document. (G. No. Inc. Upon request of the concerned employee/s. the signatures of the employees should appear in the payroll as evidence of actual payment. 7. the employees. By implication. 5. R. No. As a general rule. vs. unqualifiedly admitted the receipt thereof. according to the Supreme Court in Kar Asia. the Court is not duty-bound to delve into the accuracy of the NLRC¶s factual findings in the absence of a clear showing that these were arbitrary and bereft of any rational basis. While ordinarily a payslip is only a statement of the gross monthly income of the employee. Corona. (G.. Moreover.].

The general rule is. deductions made. 17. including an itemization of earnings (basic pay. Salim Al Yami Est. number. the employer shall pay the wages immediately after such force majeure or circumstances have ceased. G. and the burden has shifted to the respondent to prove that complainant was totally compensated for actual services rendered. and the amount actually paid to the employee..D. the em ployee¶s rate of pay.probative value of the copy of the pay slips is aptly justified by the NLRC. Jan. Time of payment. (Chavez vs. the place of payment shall be at or near the place of undertaking. Exceptions: a. exception. overtime pay. considering that in presenting the payslips. The payroll should show. 146530. 2. every employer is required to pay his employees by means of payroll. or by . among other things. R. No. Book III of the Rules Implementing the Labor Code. as follows: ³« the payslips are original duplicates of computerized payslips issued by the employer. 2005 citing Tan vs. What is the place of payment of wages? 1. Rule X. raises speculation whether this omission proves that its presentation would be adverse to his case. 84. complainant has established the fact of underpayment.. When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions. No employer shall make payment with less frequency than once a month. employee name. to its workers which contain entries such as pay date. the failure of the employer to present the payroll to support his claim that the petitioner was not his employee. The exception to above rule is when payment cannot be made with such regularity due to force majeure or circumstances beyond the employer¶s control. et al. NLRC. in which case. Lagrama. employee¶s I. The fact that the payslips are not authenticated will not militate against complainant¶s claim. 83. meal allowance for the period covered) and deductions. wages shall be paid not less often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. overtime hours and other relevant information. Under Section 6[a]. As a general rule. basic rate.´ Payroll. Interestingly. What is the time of payment of wages? 1. 387 SCRA 393 [2002]). . category.

NLRC. To whom should wages be paid? 1. Payment of wages and other monetary claims. Since petitioner asserts that respondent has already been fully paid of his stipulated salary. epidemic or other calamity rendering payment thereat impossible. burden of proof. In case of death of the employee. separation pay and damages against an employer. the Supreme Court ruled that where a person is sued for a debt admits that the debt was originally owed. April 2. b. massage clinics or nightclubs is prohibited except in the case of employees thereof. in which case. a. General rule: payment of wages shall be made directly to the employee entitled thereto and to nobody else. Payment through banks . savings or rural bank. Under any other analogous circumstances. No. Where the employer is authorized in writing by the employee to pay his wages to a member of his family. 3.allowed in businesses and other entities with twenty five (25) or more employees and located within one (1) kilometer radius to a commercial. When the employer provides free transportation to the employees back and forth. 116960. including payments for the insurance premiums of the employee and union dues where the right to check-off has been recognized by the employer in accordance with a collective agreement or authorized in writing by the individual employees concerned. Where payment to another person of any part of the employee¶s wages is authorized by existing law. the burden . and pleads payment in whole or in part. [G. b. 4.reason of actual or impending emergencies caused by fire. provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. flood. Payment of wages in bars. 1996.R. This is based on the principle of evidence that each party must prove his affirmative allegations. In Jimenez vs. 85. 256 SCRA 84] which involves a claim for unpaid wages/commissions. 2. Exceptions. the same shall be paid to his heirs without necessity of intestate proceedings. it is incumbent upon him to prove such payment. and chanrobles virtual law library c. or chanrobles virtual law library c.

140495. (See also National Semiconductor [HK] vs. Even where the plaintiff must allege non-payment. the findings of the Labor Arbiter. chanrobles virtual law library . the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. et al. R. NLRC. the issue may be determined against the debtor since he has the burden of proof. (G & M [Phils. according to the 2000 case of Villar vs.]. the burden of going forward with the evidence . payrolls. petitioners defaulted in their defense and in effect admitted the allegations of private respondents. vs. where his testimony is contradicted by the other party or by a disinterested witness. [G. No. but. Hence.´ In the 2005 case of G & M [Phils. who is then under a duty of producing some evidence to show non-payment. it was stated in the Jimenez case that : ³As a general rule. Cruz. It did not present any controverting evidence to prove full payment. No. the testimony of the debtor may also be sufficient to show payment. 1998).]. G. No.as distinct from the general burden of proof .. 123520. is that the pertinent personnel files.R. 2005]. G. June 26. Inc. The reason for the rule. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. remittances and other similar documents ± which will show that overtime. differentials. Inc. 140495. vs. Thus. the general rule is that the burden rests on the defendant to prove payment. R. the NLRC and the Court of Appeals that respondent was not fully paid of his wages stand. April 15. records. R. rather than on the plaintiff to prove non-payment. Hence. one who pleads payment has the burden of proving it. even when met by indefinite testimony of the debtor. for failure to present evidence to prove payment. NLRC. chanrobles virtual law library The positive testimony of a creditor may be sufficien t of itself to show non-payment. [G. Similarly.shifts to the creditor. 130935. ³When the existence of a debt is fully established by the evidence contained in the record. service incentive leave and other claims of workers have been paid ± are not in the possession of the worker but in the custody and absolute control of the employer. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue. Where the debtor introduces some evidence of payment.is upon petitioner to prove such fact of full payment. 11 May 2000]. 2005). No. April 15. petitioner merely denied respondent¶s claim of underpayment. Cruz.

Compared to an employee. the µcontrol test¶ is the most important. R. As earlier opined. What is contracting or subcontracting? Contracting or subcontracting . January 17. the Supreme Court ruled: ³Fourth. Hence. an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job. 2005]. 146530. work. Their right of control was manifested by the following attendant circumstances: 1. an employee is subject to the employer¶s power to control the means and methods by which the employee¶s work is to be performed and accomplished. ³Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work. 2.RULE ON CONTRACTING OR SUBCONTRACTING: 86. work or service within a definite or predetermined period. In debunking the contention of the employer that the truck driver is an independent contractor and not an employee. distinguished. The truck driven by the petitioner belonged to respondent company. is instructive as far as the distinction between employment and independent contracting is concerned. No. [G. work or service is to be performed or completed within or outside the premises of the principal. while an independent contractor enjoys independence and freedom from the control and supervision of his principal. NLRC. regardless of whether such job. or service on its own account and under its own responsibility according to its own manner and method. The 2005 case of Chavez vs. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent company¶s goods. of the four elements of the employeremployee relationship. . a careful review of the records shows that the latter performed his work as truck driver under the respondents¶ supervision and control.It refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job. Employment and independent contracting. 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.

Respondents directed the petitioner. the Court is hard put to believe the respondents¶ allegation that the petitioner was an independent contractor engaged in providing delivery or hauling services when he did not even own the truck used for such services. for example. NLRC. the facts clearly show otherwise. as in this case. where and when the petitioner would perform his task by issuing to him gate passes and routing slips. the factual circumstances earlier discussed indubitably establish the existence of an employer-employee relationship between the respondent company and the petitioner. On the other hand.´ (Chavez vs. 3rd drop. ³The contract of service to the contrary notwithstanding. machinery and work premises. he did not possess substantial capitaliza tion or investment in the form of tools. R. No. and chanrobles virtual law library 4. the words µtomorrow morning¶ was written on slip no.. et al. to wit: at its office in Metro Manila at 2320 Osmeña Street. showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon. . likewise. after completion of each delivery. Evidently. G. a. the employment status of a person is defined and prescribed by law and not by what the parties say it should be. Respondents determined how. 2nd drop. 2005). Makati City or at BEPZ. The routing slips indicated on the col umn REMARKS. etc. ³These circumstances. to park the truck in either of two specific places only. to the Court¶s mind. the petitioner performed the delivery services exclusively for the respondent company for a continuous and uninterrupted period of ten years. prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. b. c. the chronological order and priority of delivery such as 1st drop. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as. 2776. Indeed. 17. Mariveles. Moreover. The routing slips. Jan. This meant that the petitioner had to deliver the same according to the order of priority indicated therein. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when. 146530.3. Bataan.

³Second. but supplied as well the materials used for the paintings. G. 2001). Supreme. Lagrama worked in a designated work area inside the Crown Theater of petitioner. 121327. and Crown Theaters for more than 10 years. the pertinent portions of which stated: . it would appear that petitioner not only provided the workplace. Lagrama. the evidence shows that the latter performed his work as a painter. the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner. work. The Supreme Court further ruled: ³Moreover. for the use of which petitioner prescribed rules. from 8 o¶clock in the morning to 5 o¶clock in the afternoon. [G. an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job.R. making ad billboards and murals for the motion pictures shown at the Empress. but also to the result of Lagrama¶s work. Dec. 2002]. Even assuming this to be true. an employee is subject to the employer¶s power to control the means and methods by which the employee¶s work is to be performed and accomplished. Lagrama [supra] that albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee. R. NLRC. compared to an employee. (Citing De los Santos v. or service on its own account and under its own responsibility according to its own manner and method.475. ³Private respondent Lagrama claimed that he worked daily.In the 2002 case of Tan vs. the Supreme Court distinguished employment from independent contracting. 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. 151228. Hence. and the manner and means by which the work was to be accomplished. August 15. According to the Court. because he admitted that he paid Lagrama only for the latter¶s services. Following the control test. under the supervision and control of petitioner. No. 20. No.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week. while an independent contractor enjoys independence and freedom from the control and supervision of his principal. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms. Petitioner¶s control over Lagrama¶s work extended not only to the use of the work area. Petitioner disputed this allegation and maintained that he paid Lagrama P1. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC. the High Court held in Tan vs.

he was not fired. to go to the comfort rooms. The payroll should show among other things. however designated. not a basis for determining the existence or absence of employer-employee relationship. (Book III. and may or may not acquire an employment status. Nonetheless. Sec. nay all the compelling reason.. ³The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll. or for services rendered or to be rendered. 6[a]). piece. to the consternation of respondents and everyone who could smell the malodor. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. the employee¶s rate of pay. Wages are defined as µremuneration or earnings. the complainant had to make a virtual urinal out of his work place! The place then stunk to high heavens. chanrobles virtual law library ³By stating that he had the right to fire Lagrama. For only an employee can nurture such an expectancy.µComplainant did not know how to use the available comfort rooms or toilets in and about his work premises. can bring about some disciplinary action on the part of the employer. task. It is a method of computing compensation. to fire him from his painting job upon discovery and his admission of such acts. though thoroughly scolded. and the amount actually paid to the . But no.¶ That Lagrama worked for Tan on a fixed piece-work basis is of no moment. deductions made. µGiven such circumstances. Rule X. the respondents had every right. as petitioner himself said. It was he who stopped to paint for respondents. depending on whether the elements of an employer-employee relationship are present or not.. or other method of calculating the same. capable of being expressed in terms of money. the frustration of which. he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. He was urinating right at the place where he was working when it was so easy for him. One may be paid on the basis of results or time expended on the work. petitioner in effect acknowledged Lagrama to be his employee. Payment by result is a method of compensation and does not define the essence of the relation. the fact that. whether fixed or ascertained on a time. . For the right to hire and fire is another important element of the employer-employee relationship. ³Third. Indeed. or commission basis. as everybody else did and had he only wanted to. unless satisfactorily explained. naturally. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done.

(See Santos vs. G. there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. June 8.. (Citing Revised Rules on Evidence. In this case. (Citing Lambo vs. vs. The 2004 case of Sonza vs. ABS-CBN case]. admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner. Aug. Although Philippine labor laws and jurisprudence define clearly the element s of an employeremployee relationship. for whom Lagrama had rendered service. On the other hand. and (4) the power to control the employee¶s conduct. 2002). R. 15. Petitioner in fact admits that the billboards are important to his business. See (Tan vs. raising speculations whether his failure to do so proves that its presentation would be adverse to his case. Case of independent contractor [Sonza vs. 15. 124055. this is the first time that the Supreme Court has resolved the nature of the relationship between a television and radio . [G. R. 317 SCRA 420 [1999]). R. in Escario.´ (Tan vs. Otherwise. et al. (2) the payment of wages. Aug. an employer would be rewarded for his failure or even neglect to perform his obligation. chanrobles virtual law library ³The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. G. the Supreme Court also used the so-called ³four-fold test´ in determining employer-employee relationship. That he did so only during weekends has not been denied by petitioner. 2000]. et al. Rule 131. et al. No. No. No. 151228. 2004] is one of first impression. Lagrama. ³The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner. ABS-CBN Broadcasting Corporation. 2002. 293 SCRA 113 [1998]). [G. NLRC. Lagrama. 284 SCRA 399 [1998]).employee. NLRC. 151228. June 10. No. Moreover. The elements of this test are (1) the selection and engagement of employee. ³Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner.. Samuel Villalba. In the case at bar. NLRC. Section 3(e). (3) the power of dismissal. NLRC. Villaruel vs. to establish that the legitimate independent contractor is the true employer of petitioners. 138051. petitioner did not present the payroll to support his claim that Lagrama was not his employee. To let the people know what movie was to be shown in a movie theater requires billboards. R.

as EVP and Treasurer. ABS-CBN continued to remit Sonza¶s monthly talent fees through his account at PCIBank. signing bonus. 13th month pay. as President and General Manager. On certiorari. affirmed the Labor Arbiter¶s ruling. The Agreement listed the services Sonza would render to ABS-CBN. and Carmela Tiangco (³TIANGCO´). on appeal. Quezon City. Sonza filed a complaint against ABS-CBN before the Department of Labor and Employment. ABS-CBN opened a new account with the same bank where ABS-CBN deposited Sonza¶s talent fees and other payment s due him under the Agreement. travel allowance and amounts due under the Employees Stock Option Plan (³ESOP´). Mondays to Fridays.. In May 1994. .´ MJMDC agreed to provide SONZA¶s services exclusively to ABSCBN as talent for radio and television. the Court of Appeals affirmed the NLRC¶s finding that no employer-employee relationship existed between Sonza and ABS-CBN. b. as follows: a. service incentive leave pay. ABS-CBN would pay the talent fees on the 10th and 25th days of the month. chanrobles virtual law library The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction. Sonza complained that ABS-CBN did not pay his salaries. In July 1996. Sonza filed an Opposition to the motion on 19 July 1996. Co-host for Mel & Jay radio program. Quezon Avenue Branch. respondent ABS-CBN Broadcasting Corporation (³ABSCBN´) signed an Agreement (³Agreement´) with the Mel and Jay Management and Development Corporation (³MJMDC´).´ There is no case law stating that a radio and television program host is an employee of the broadcast station.. On 10 July 1996. ABS-CBN agreed to pay for Sonza¶s services a monthly talent fee of P310.000 for the first year and P317. 8:00 to 10:00 a. National Capital Region in Quezon City.station and one of its ³talents.m. Co-host for Mel & Jay television program. Meanwhile. On 30 April 1996. Referred to in the Agreement as ³AGENT. ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties.000 for the second and third year of the Agreement. ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza.m. The NLRC. separation pay. 5:30 to 7:00 p. Sundays.

talent and celebrity status not possessed by ordinary employees. the control test. talent and celebrity status not possessed by ordinary employees. In affirming the said decision of the Court of Appeals and holding that Sonza was not an employee but an independent contractor. Payment of Wages All the talent fees and benefits paid to Sonza were the result of negotiations that led to the Agreement. the Supreme Court used the four-fold test of determining the existence of an employer employee relationship.000 monthly in the second and third year. amounting to P317. Sonza¶s talent fees. are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer -employee relationship. x x x and 13th month pay´ which the law automatically incorporates into every employer -employee contract. of an independent contractual relationship. ABS-CBN could not retrench Sonza because ABS-CBN remained obligated to pay Sonza¶s talent fees during the life of the Agreement.´ Even if it suffered severe business losses. Power of Dismissal For violation of any provision of the Agreement. talent and celebrity status. The specific selection and hiring of Sonza. Whatever benefits Sonza enjoyed arose from contract and not b ecause of an employer-employee relationship. ABS-CBN would not have entered into the Agreement with Sonza but would have hired him through its personnel department just like any other employee. A. Selection and Engagement of Employee Independent contractors often present themselves to possess unique skills. because of his unique skills. ABS-CBN agreed to pay Sonza¶s talent fees as long as ³AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement. If Sonza were ABS-CBN¶s employee. such as retrenchment to prevent losses as provided under labor laws. more particularly. Medicare. either party may terminate their relationship. chanrobles virtual law library C. B. Sonza failed to show that ABS-CBN could terminate his services on grounds other than breach of contract. but not conclusive. expertise or talent to distinguish them from ordinary employees.The basic issue presented here is whether Sonza is an employee or an independent contractor. If Sonza did not possess such unique skills. is a circumstance indicative. ABS-CBN agreed to pay Sonza such huge talent fees precisely because of Sonza¶s unique skills. there would be no need for the parties to stipulate on benefits such as ³SSS. During the life of the Agreement. This .

Power of Control Since there is no local precedent on whether a rad io and television program host is an employee or an independent contractor. Second. a television actress is a skilled position requiring talent and training not available on-the-job. D. WIPR could not assign the actress work in addition to filming ³Desde Mi Pueblo. How Sonza delivered his lines. The United States Court of Appeals. ABS-CBN engaged Sonza¶s services specifically to co-host the ³Mel & Jay´ programs. ABS-CBN did not instruct Sonza how to . Sonza did not have to render eight hours of work per day.circumstance indicates an independent contractual relationship between Sonza and ABS-CBN. Sonza¶s argument is misplaced. First. Sonza only needed his skills and talent. 2 March 2004] that a television program host is an independent contractor. To perform his work. and sounded on radio were outside ABS-CBN¶s control. chanrobles virtual law library Third. Sonza is not an employee bu t an independent contractor. thus: First. Moreover. ABS-CBN was not involved in the actual performance that produced the finished product of Sonza¶s work. the more likely the worker is considered an independent contractor. The Agreement required Sonza to attend only rehearsals and tapings of the shows. However. appeared on television. as well as preand post-production staff meetings. ABS-CBN could not dictate the contents of Sonza¶s script. This test is based on the extent of control the hirer exercises over a worker. reference to foreign case law in analyzing the present case is necessary. The greater the supervision and control the hirer exercises. the actress provided the ³tools and instrumentalities´ necessary for her to perform. The clear implication is that Sonza had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.3d 1. First Circuit. The control test is the most important test the courts apply in distinguishing an employee from an independent contractor. the Agreement prohibited Sonza from criticizing in his shows ABS-CBN or its interests.´ Applying the control test. The converse holds true as well . [361 F. recently held in Alberty -Vélez vs.the less control the hirer exercises. Sonza contends that ABS-CBN exercised control over the means and methods of his work. ABS-CBN did not assign any other work to Sonza. Corporación De Puerto Rico Para La Difusión Pública (³WIPR´). the more likely the worker is deemed an employee.

ABS-CBN supplied the equipment. did not amount to control over the means and methods of the performance of Sonza¶s work. .how he delivered his lines and appeared on television . Warner. burdened as it was by the obligation to continue paying in full Sonza¶s talent fees. crew and airtime are not the ³tools and instrumentalities´ Sonza needed to perform his job.did not meet ABS-CBN¶s approval. ABS-CBN could not terminate or discipline Sonza even if the means and methods of performance of his work .perform his job. In either case. et al. However. This proves that ABS-CBN¶s control was limited only to the result of Sonza¶s work. Thus. All that ABS-CBN could do is not to broadcast Sonza¶s show but ABS-CBN must still pay his talent fees in full. ABSCBN¶s sole concern was for Sonza to display his talent during the airing of the programs. What Sonza principally needed were his talent or skills and the costumes necessary for his appearance. ABS-CBN¶s right not to broadcast Sonza¶s show. ABS-CBN must still pay Sonza¶s talent fees in full until the expiry of the Agreement. In Vaughan. the equipment. chanrobles virtual law library Sonza further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. ABS-CBN merely reserved the right to modify the program format and airtime schedule ³for more effective programming. Even though ABS-CBN provided Sonza with the place of work and the necessary equipment. [157 F. chanrobles virtual law library Clearly. ABS-CBN was still obligated to pay Sonza¶s talent fees.´ ABS-CBN¶s sole concern was the quality of the shows and their standing in the ratings. even if ABS-CBN was completely dissatisfied with the means and methods of Sonza¶s performance of his work. Since the management did not have control over the manner of performance of the skills of the artists.. the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. crew and airtime needed to broadcast the ³Mel & Jay´ programs. ABS-CBN did not exercise control over the means and methods of performance of Sonza¶s work. et al. or even with the quality or product of his work. ABS-CBN could not dismiss or even discipline Sonza. it could only control the result of the work by deleting objectionable features.2d 26. Although ABS-CBN did have the option not to broadcast Sonza¶s show. vs. Clearly. whether to broadcast the final product or not. Sonza was still an independent contractor since ABS-CBN did not supervise and control his work. Sonza claims that ABS-CBN¶s power not to broadcast his shows proves ABS-CBN¶s power over the means and methods of the performance of his work. No doubt. 8 August 1946].

A radio broadcast specialist who works under minimal supervision is an independent contractor. Sonza¶s work as television and radio program host required special skills and talent, which Sonza admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how Sonza utilized his skills and talent in his shows. Second, Sonza urges the Court to rule that he was ABS-CBN¶s employee because ABS-CBN subjected him to its rules and standards of performance. Sonza claims that this indicates ABS-CBN¶s control ³not only [over] his manner of work but also the quality of his work.´ chanrobles virtual law
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The Agreement stipulates that Sonza shall abide with the rules and standards of performance ³covering talents´ of ABS-CBN. The Agreement does not require Sonza to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on Sonza under the Agreement refers to the ³Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.´ The KBP code applies to broadcaster s, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. (AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, 28 Jan. 1997, 267 SCRA 47). In this case, Sonza failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top rating television and radio programs that comply with standards of the industry. The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according to his own initiative. Lastly, Sonza insists that the ³exclusivity clause´ in the Agreement is the most extreme form of control which ABS-CBN exercised over him. chanrobles
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This argument is futile. Being an exclusive talent does not by itself mean that Sonza is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.

The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadca st station normally spends substantial amounts of money, time and effort ³in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time.´ Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the present case. (Sonza vs. ABS-CBN Broadcasting Corporation, G. R. No. 138051, June 10, 2004). chanrobles virtual law library Individuals as independent contractors. The law does not preclude individuals from engaging as independent contractors. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skill s, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. The Supreme Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees. If radio and television program hosts can render their services only as employees, the station owners and managers ca n dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press. (Sonza vs. ABS -CBN Broadcasting Corporation, G. R. No. 138051, June 10, 2004). Consequently, a television program host is deemed an in dependent contractor. (Alberty-Vélez vs. Corporación De Puerto Rico Para La Difusión Pública [361 F.3d 1, 2 March 2004] United States Court of Appeals, First Circuit). In another case, it was ruled by the United States Circuit Court of Appeals that vaudeville performers are independent contractors. (Vaughan, et al. vs. Warner, et al., [157 F.2d 26, 8 Aug. 1946]). chanrobles virtual law library In Zhengxing vs. Nathanson, [215 F.Supp.2d 114, 5 August 2002], the plaintiff Zhengxing, a Chinese language broad caster and translator was deemed an independent contractor because she worked under minimal supervision. In the insurance industry, an insurance adjuster or a commission agent of insurance firms is not considered an employee thereof but an independent

contractor in the light of the absence of control by the latter over the work of the former except as to the results of such work. (AFP Mutual Benefit Association, Inc. vs. NLRC, et al., G. R. No. 102199, Jan. 28, 1997; Insular Life Assurance Co., Ltd. vs. NL RC, et al., G. R. No. 84484, Nov. 15, 1989). In case of doubt, one must be classified as employee, not as independent contractor. In the 2000 case of SSS vs. CA, [G. R. No. 100388, December 14, 2000], the Supreme Court reiterated its ruling in the case of Dy Keh Beng vs. International Labor, [90 SCRA 161 (1979)], where the long-standing ruling in Sunripe Coconut Products Co. vs. Court of Industrial Relations, [83 Phil. 518, 523, L-2009, April 30, 1949], was cited, to wit: chanrobles virtual
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³When a worker possesses some attributes of an employee and others of an independent contractor, which make him fall within an intermediate area, he may be classified under the category of an employee when the economic facts of the relations make it more nearly one of employment than one of independent business enterprise with respect to the ends sought to be accomplished.´ Employment of security guards in the security service industry. The Supreme Court had occasion to discuss once again the issue of employment status of security guards in the 2005 case of Manila Electric Company vs. Benamira, [G. R. No. 145271, July 14, 2005]. In emphasizing the fact that there was no employer -employee relationship between petitioner Meralco and the security guards assign ed to it by the security agency employing them, it cited the case of Social Security System vs. Court of Appeals, [No. L-28134, June 30, 1971, 39 SCRA 629] that: ³...The guards or watchmen render their services to private respondent by allowing themselves to be assigned by said respondent, which furnishes them arms and ammunition, to guard and protect the properties and interests of private respondent's clients, thus enabling that respondent to fulfill its contractual obligations. Who the clients will be, and under what terms and conditions the services will be rendered, are matters determined not by the guards or watchmen, but by private respondent. On the other hand, the client companies have no hand in selecting who among the guards or watchmen shall be assigned to them. It is private respondent that issues assignment orders and instructions and exercises control and supervision over the guards or watchmen, so much so that if, for one reason or another, the client is dissatisfied with the services of a particular guard, the client cannot himself

terminate the services of such guard, but has to notify private respondent, which either substitutes him with another or metes out to him disciplinary measures. That in the course of a watchman's assignment the client conceivably issues instructions to him, does not in the least detract from the fact that private respondent is the employer of said watchman, for in legal contemplation such instructions carry no more weight than mere requests, the privity of contract being between the client and private respondent, not between the client and the guard or watchman. Corollarily, such giving out of instructions inevitably spring from the client's right predicated on the contract for services entered into by it with privat e respondent. ³In the matter of compensation, there can be no question at all that the guards or watchmen receive compensation from private respondent and not from the companies or establishments whose premises they are guarding. The fee contracted for to be paid by the client is admittedly not equal to the salary of a guard or watchman; such fee is arrived at independently of the salary to which the guard or watchman is entitled under his arrangements with private respondent. Said ruling in SSS was reiterated in American President Lines vs. Clave, [No. L-51641, June 29, 1982, 114 SCRA 826], thus: ³In the light of the foregoing standards, We fail to see how the complaining watchmen of the Marine Security Agency can be considered as employees of the petitioner. It is the agency that recruits, hires, and assigns the work of its watchmen. Hence, a watchman can not perform any security service for the petitioner's vessels unless the agency first accepts him as its watchman. With respect to his wages, the amount to be paid to a security guard is beyond the power of the petitioner to determine. Certainly, the lump sum amount paid by the petitioner to the agency in consideration of the latter's service is much more than the wages of any one watchman. In point of fact, it is the agency that quantifies and pays the wages to which a watchman is entitled. ³Neither does the petitioner have any power to dismiss the security guards. In fact, We fail to see any evidence in the record that it wielded such a power. It is true that it may request the agency to change a particular guard. But this, precisely, is proof that the power lies in the hands of the agency. ³Since the petitioner has to deal with the agency, and not the individual watchmen, on matters pertaining to the contracted task, it stands to reason that the petitioner does not exercise any power over the watchmen's conduct. Always, the agency stands between

the petitioner and the watchmen; and it is the agency that is answerable to the petitioner for the conduct of its guards.´ And as held in said Meralco case: ³Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that ³[n]othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone.´ Clearly, the individual respondents are the employees of ASDAI. chanrobles virtual law library ³As to the provision in the agreement that MERALCO reserved the right to seek replacement of any guard whose behavior, conduct or appearance is not satisfactory, such merely confirms that the power to discipline lies with the agency. It is a standard stipulation in security service agreements that the client may request the replacement of the guards to it. Service-oriented enterprises, such as the business of providing security services, generally adhere to the business adage that ³the customer or client is always right´ and, thus, must satisfy the interests, conform to the needs, and cater to the reasonable impositions of its clients. ³Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCO¶s premises to the latter¶s detriment. ³The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. The agreement provides that the agency is principally mandated to conduct inspections, without prejudice to MERALCO¶s right to conduct its own inspections. ³Needless to stress, for the power of control to be present, the person for whom the services are rendered must reserve the right to direct not only the end to be achieved but also the means for reaching such end.[26] Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the

former.[27] Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.[28] ³Verily, the security service agreements in the present case provided that all specific instructions by MERALCO relating to the discharge by the security guards of their duties shall be directed to the agency and not directly to the individual respondents. The individual respondents failed to show that the rules of MERALCO controlled their performance. xxx ³The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCO¶s principal business, which is the distribution of electricity.´ 87. Who are the parties to a contracting or subcontracting arrangement? Parties. - There are 3 parties: principal, the contractor or subcontractor, and the workers engaged by the latter. The principal and the contractor or subcontractor may be a natural or juridical person.
y

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³Principal´ refers to any employer who puts out or farms out a job, service, or work to a contractor or subcontractor, whether or not the arrangement is covered by a written contract. chanrobles virtual law library ³Contractor" or "subcontractor´ refers to any person or entity engaged in a legitimate contracting or subcontracting arrangement. "Contractual employee´ includes one employed by a contractor or subcontractor to perform or complete a job, work or service pursuant to an arrangement between the latter and a principal called ³contracting´ or ³subcontracting´. chanrobles virtual law library

88. When is contracting or subcontracting legitimate? Contracting or subcontracting shall be legitimate if the following circumstances concur: chanrobles virtual law library (i) 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 directions of the principal in all matters connected with the performance of the work except as to the results thereof;

(ii) The contractor or subcontractor has substantial capital or investment; and chanrobles virtual law library (iii) The agreement between the principal and the 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 and welfare benefits. 89. What is permissible contracting or subcontracting arrangement? The principal may engage the services of a contractor or subcontractor for the performance of any of the following: (a) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services, provided that the normal production capacity or regular workforce of the principal cannot reasonably cope with such demands; chanrobles virtual law
library

(b) Works or services temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to improve the management or operations of an enterprise; (c) Services temporarily needed for the introduction or promotion of new products, only for the duration of the introductory or promotional period; (d) Works or services not directly related or not integral to the main business or operation of the principal, including casual work, janitorial, security, landscaping, and messengeri al services and work not related to manufacturing processes in manufacturing establishments; (e) Services involving the public display of manufacturers¶ products which do not involve the act of selling or issuance of receipts or invoices; (f) Specialized works involving the use of some particular, unusual or peculiar skills, expertise, tools or equipment the performance of which is beyond the competence of the regular workforce or production capacity of the principal; and (g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees provided that the period of service shall be coextensive with the period of absence and

the same is made clear to the substitute employee at the time of engagement. The phrase ³absent regular employees´ includes those who are serving suspensions or other disciplinary measures not amounting to termination of employment meted out by the principal but excludes those on strike where all the formal requisites fo r the legality of the strike have been prima facie complied with based on the records filed with the National Conciliation and Mediation Board. (Section 6, Rule VIII-A, Book III, Rules to Implement the Labor Code, as amended by Department Order No. 10, Series of 1997). 90. What are the prohibited acts in the law on contracting and subcontracting? The following are hereby declared prohibited for being contrary to law or public policy: (a) Labor-only contracting; (b) Contracting out of work which will either displace employees of the principal from their jobs or reduce their regular working hours; (c) Contracting out of work with a ³cabo´. [A "cabo" refers to a person or group of persons or to a labor group which, in the guise of a labor organization, supplies workers to an employer, with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor.] (d) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment in any of the following instances: (i) In addition to his assigned function, requiring the contractual employee to perform functions which are currently being performed by the regular employee of the principal or of the contractor or subcontractor; (ii) Requiring him to sign as a precondition to employment or continued employment, an antedated resignation letter; a b lank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of the future claims; and chanrobles virtual law library (iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor,

2004). and any of the following elements are present: i) the contractor or subcontractor does not have substantial capital or investment which relates to the job. Labor Code. 91. 9. July 8. labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits. work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. b. R. or chanrobles virtual law library ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. . (e) Contracting out of a job. supplies or plac es workers to perform a job. Effects of a labor-only contracting arrangement. Manila Water Co. G. vs. The principal will become the employer as if it directly employed the workers engaged to undertake the subcontracted job or service. (Article 106. and (g) Contracting out of a job. For this purpose. In summary. Effects of Department Order No. 3. the following are the effects of a labor-only contracting arrangement: a. DOLE Primer on Contracting and Subcontracting. Series of 2001. What is labor-only contracting? Labor-only contracting is hereby declared prohibited. The subcontractor will be treated as the agent or intermediary of the principal. No. work or service to be performed and the employees recruited. et al. Inc.unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. work or service through an in-house agency as defined herein. (No. Since the act of an agent is the act of the principal. work or service for a principal. Pena.. 158255. work or service when not justified by the exigencies of the business and the same results in the reduction or splitting of the bargaining unit. representations made by the subcontractor to the employees will bind the principal.. (f) Contracting out of a job.

No.. [Feb. If the labor-only contracting activity is undertaken by a legitimate labor organization. (See Manila Electric Company vs. 13. (No. Substantial capital or investment. In Neri vs. machineries and work premises. among others. d. work or service contracted out. 2002]. it is a highly capitalized venture and cannot be deemed engaged in labor-only contracting. etc. Benamira. it need not prove that it made . meaning. 3. Effects of Department Order No. Substantial capital without investment in tools. Having substantial capital in the amount of P1 Million fully subscribed and paid for and is a big firm which services. Series of 2002. 21. 18-02. R. Effects of Department Order No. DOLE Primer on Contracting and Subcontracting. an international bank. pursuant to Article 239(e) of the Labor Code. The employees will become employees of the principal.. July 14. (Section 5. [Feb. 145271. Department Order No. 2005). Nos. July 23. G. 2002]). Department Order No. 1993. implements. The principal and the subcontractor will be solidarily treated as the employer.It will be responsible to them for all their entitlements and benefits under the labor laws. tools. Series of 2001). NLRC. a petition for cancellation of union registration may be filed against it. to determine not only the end to be achieved. meaning. 18-02. Series of 2001). government agencies. No. [G. subject to the classifications of employees under Article 28 of the Labor Code. a big local bank. Further. actually and directly used by the contractor or subcontractor in the performance or completion of the job. but also the manner and means to be used in reaching that end. a hospital center. 97008-09. the Supreme Court ruled that the labor contractor is not engaged in labor only contracting because it has sufficiently proved that it has substantial capital. etc. 8. equipment. c. 224 SCRA 7171]. 21. R. effect. ³Substantial capital or investment´ refers to capital stocks and subscribed capitalization in the case of corporations. It is a qualified independent contractor. Series of 2002. DOLE Primer on Contracting and Subcontracting. 3. a university. The ³right to control´ shall refer to the right reserved to the person for whom the services of the contractual workers are performed. chanrobles virtual law library Right of control. equipment. machineries. (Section 5.

Labor Secretary Bienvenido Laguesma. NLRC. 113347. machineries.. et al. et al. There is even no need for it to refute petitioners¶ contention that the activities they perform are directly related to the principal business of respondent bank (FEBTC). Moreover. March 13. R. chanrobles virtual law library In another similar case. chanrobles virtual law library On the contrary. Filipinas Synthetic Fiber Corporation [FILSYN] vs. business operations. in December 1993. cannot be considered as engaged in labor -only contracting being a highly capitalized venture. and has sufficient capital and resources to undertake its principal business. In the 2005 case of Wack Wack Golf & Country Club vs. then the conjunction ³and´ should have been used. chanrobles virtual law library If the intention was to require the contractor to prove that he has both capital and the requisite investment. NLRC. engaged in the management of projects. Its Articles of Incorporation proves its sufficient capitalization. P400. (BSMI). etc. (See also Baguio vs. G.investments in the form of tools. 79004-08. (Neri vs. July 23. 1996]. 195 SCRA 224. equipment. 224 SCRA 7171). G. while the janitorial services performed by the employee pursuant to the agreement between the indirect employer and the contractor may be considered directly related to the principal business of the indirect employer which is the manufacture of polyester fiber. the Supreme Court ruled that a contractor which is a going-concern duly registered with the Securities and Exchange Commission with substantial capitalization of P1. nevertheless. [G. 4. 9700809. Moreover. among others. 2005]. 1991. The law does not require both substantial capital and investment in such tools. 470). G. Nos. No. April 15. It had provided management services to various industrial and commercial business establishments. R. they are not necessary in its operation. R. Inc.. 202 SCRA 465. it was no longer necessary for the labor contractor to further adduce evidence to prove that it does not fall within the purview of ³labor-only´ contracting. Nos.. R.000 of which is actually subsc ribed. This is clear from the use of the conjunction ³or´ in the provision of fourth paragraph of Article 106 of the Labor Code. 1993. NLRC. the Supreme Court ruled that there is indubitable evidence showing that Business Staffing and Management. they are merely incidental thereto. R. No. But having established that it has substantial capit al. Oct. 223). Nos.6 Million. equipment. Federation of Free Workers (FFW)-Byron Jackson Services Employees . a corporation engaged in the business as Management Service Consultant. as opposed to being integral. is an independent contractor. NLRC. [G. in the case of In re Petit ion for Certification Election Among the Regular Rank -and-File Employees Workers of Byron-Jackson (BJ) Services International Incorporated. jobs and other kinds of business ventures. without which production and company sales will suffer. functions. 92777-78. 149793. NLRC. June 14. work premises. 1991. et al. (Ecal vs.

[Association Collectors Group. ratiocinated: ³First. [which was contracted by petitioner Manila Water Company. chanrobles virtual law library ³Lastly.000.. Mr. Further. Inc. only P62. to collect charges for the Balara Branch]. and although it was ACGI which ultimately disciplined private respondents. machineries. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors. and other materials. Moreover. No. petitioner. R. work premises. the penalty to be imposed was dictated by petitioner as . they were already working for petitioner. Inc. the Supreme Court. vs. Prior to private respondents¶ alleged employment with ACGI. 2004]. it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands. to qualify as an independent contractor. the collection of the charges therefor by private respon dents for the petitioner can only be categorized as clearly related to. Pena. he must notify petitioner or the branch office in the morning of the day that he will be absent. the work of the private respondents was directly related to the principal business or operation of the petitioner. Being in the business of providing water to the consumers in the East Zone. and in the pursuit of the latter¶s business. Peña. While it has an authorized capital stock of P1. Herminio D. In fact. does not have substantial capitalization or investment in the form of tools. in dealing with the consumers. The 121 collectors [composing ACGI] subscribed to four shares each and paid only the amount of P625. Inc.00.00 is actually paid-in. July 8. chanrobles virtual law library ³Second. the corporate address of ACGI was the residence of its president.Chapter.000. recognized BSMI as an independent contrac tor. [G. it monitored strictly their attendance as when a collector cannot perform his daily collection. free from the control and supervision of its principal.00 in order to comply with the incorporation requirements. private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. This form of control and supervision never changed although they were already under the seeming employ of ACGI. subject to its rules and regulations in regard to the manner and method of performing their tasks. private respondents used the receipts and identification cards issued by petitioner. in holding that the entity is not an independent contractor but a labor-only contractor. 158255. equipment.500. library chanrobles virtual law In the 2004 case of Manila Water Co. which cannot be considered substantial capitalization. ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method.] (ACGI).

chanrobles virtual law library ³Under this factual milieu. the High Court considered not only the capitalization of the contractor but also the fact that it was providing specific special services (radio/telex operator and janitor) to the employer. NLRC. vs. . that it is a member of the Social Security System. R. Consequently. and that the contractor was paid in lump sum for the services it rendered. No. it can be concluded that ACGI was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner. Although in the Neri case. These features of the Neri case make it distinguisha ble from the Philippine Fuji Xerox Corporation case where the service being rendered by the private respondent (contractor¶s employee) was not a specific or special skill that the contractor was in the business of providing. there is no doubt that ACGI was engaged in labor-only contracting. the Supreme Court cited the following: In the Neri case. that in 1984. R. July 8.. xxx.. the Supreme Court ruled that the manpower agency is a labor-only contractor notwithstanding the latter¶s invocation of the ruling in the Neri case (supra) that it is a highly-capitalized business venture. registered as an ³independent employer´ with the Securities and Exchange Commission as well as the Department of Labor and Employment. 1996]. that in another case (Associated Labor Union -TUCP vs. Pena. and as such. 111501. the Supreme Court had already found that the said contractor was an independent contractor. that the contractor retained control over the employees and the employer was actually just concerned with the end -result. This cannot be said of the service rendered by the private respondent (contractor¶s employee) in the Philippine Fuji Xerox Corporation case. that the contractor had the power to re-assign the employees and their deployment was not subject to the approval of the employer. G. vs. 101784.. office equipment and service vehicles. Inc.shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents.´ (Manila Water Co. the telex machine operated by the employee belonged to the employer. October 21. [G. NLRC. it had assets exceeding P5 Million and at least 20 typewriters. chanrobles virtual law library In the case of Philippine Fuji Xerox Corporation. R. and that it had employees of its own and a pool of 25 clerks assigned to clients on a temporary basis. March 5. 158255. G. In distinguishing the Philippine Fuji Xerox Corporation case [supra] from the Neri case. No. 2004). 1991). et al. the service was deemed permissible because it was specific and technical. These are indications that ACGI was not left alone in the supervision and control of its alleged employees. is considered merely an agent of the petitioner. No.

[G. the term and duration of the relationship. among others. equipment. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. ³Accordingly. R. the nature and extent of the work. it was held that the law did not require one to possess both substantial capital and investment in the form of tools. G. [G.. 126586. What it did was simply to supply manpower to Fuji Xerox. machinery and work premises. etc. NLRC. machinery. July 23. clearly contemplates tools.. R. where the contractor was adjudged to have engaged in labor-only contracting. The Supreme Court said: ³Petitioner also ascribes as error the failure of the Court of Appeals to apply the ruling in Neri vs. the right to . (Philippine Fuji Xerox Corporation. 324 SCRA 469]. equipment. et al. in Vinoya vs.. February 2. jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship. vs. machineries. chanrobles virtual law library ³However. which are directly related to the service it is being contracted to render. but not necessarily confined to. No. NLRC. [G.00 consisting of buildings. to be considered a job contractor. petitioner alleged that the appellate court and the NLRC erred when they declared MAERC a labor-only contractor despite the finding that MAERC had investments amounting to P4. to be considered an independent contractor. Inc. several factors may be considered. 2003].R. 111501. equipment.608.080. work premises and other materials which are necessary in the conduct of his business´ in the Implementing Rules. July 10. No. The 2003 case of San Miguel Corporation vs.. 144672. 1996). etc. 224 SCRA 717]. No. In fact. NLRC..R. equipment. we clarified that it was not enough to show substantial capitalization or investment in the form of tools. March 5.The argument in the Philippine Fuji Xerox Corporation case that the contractor had typewriters and service vehicles for the conduct of its business independently of the employer does not make it a legitimate job contractor because typewriters and vehicles bear no direct relationship to the job for which the contractor contracted its service of operating copier machines and offering copying services to the public. the skill required. In that case. Maerc Integrated Services. 1993. 2000. The fact is that the contractor did not have copying machines of its own. The second condition to establish permissible job contracting was sufficiently met if one possessed either attribute. et al. work premises. whether the contractor was carrying on an independent business. The phrase ³substantial capital and investment in the form of tools. further explained the principles of labor-only contracting. machinery and equipment. Nos. such as. 97008-09.

1998. 293 SCRA 366). there were only two (2) complainants in that case who were not only selected and hired by the contractor before being assigned to work in the Cagayan de Oro branch of FEBTC but the Court also found that the contractor maintained effective supervision and control over them. Inc. the Court considered not only the fact that respondent Building Care Corporation (BBC) had substantial capitalization but noted that BCC carried on an independent business and performed its contract according to its own manner and method. the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers. a university. et al. 124643. The existence of employer -employee relationship cannot be made subject of an agreement or contract. etc. tools and equipment amounted to more than P4 Million. the duty to supply premises. we cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis. (San Miguel Corporation vs. R. Moreover. (Citing Ponce v. Nor do we believe MAERC to have an independent business. the power of the employer with respect to the hiring. No. MAERC. as earlier discussed. The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for their principal.assign the performance of specified pieces of work.R. government agencies. a hospital center. ³In Neri. Stipulation in the contract. and the mode. G. firing and payment of the workers of the contractor. thus convincing us that it was created solely to service the needs of SMC. ³In comparison. The ³labor only´ contractor is considered merely an agent of the employer. Maerc Integrated Services. none of its workers was also ever assigned to any other establishment.. with the severance of relationship between MAERC and SMC followed MAERC¶s cessation of operations. materials and labor. manner and terms of payment. free from the control and supervision of its principal in all matters except as to the results thereof. a big local bank. 144672. effect. July 30. the control and supervision of the workers. displayed the characteristics of a labor-only contractor. NLRC.¶ Furthermore. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division.. appliances. Naturally. No. tools. an international bank. The status of BCC had also been passed upon by the Court in a previous case where it was found to be a qualified job contractor because it was µa big firm which services among others. while MAERC¶s investments in the form of buildings. July 10. Any liability shall devolve upon the . 2003). the control of the premises. G.

or job contractor. [169 SCRA 497 (1989)]. had simply supplied it with the manpower necessary to carry out its [California¶s] merchandising activities. We hold that it is one notwithstanding its vehement claims to the contrary. December 20. using its [California¶s] premises and equipment. i. in any manner and under any circumstances. and notwithstanding the provision of the contract that it is µan independent contractor. It is not. No. and that the Company has no control or s upervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor¶s obligations under this Agreement.³labor only´ contractor and the employer. 169 SCRA 497). 2001]. the character of its business.. In this connection. The Court cited the analogous case of Tabas vs. it being crucial that its character be measured in terms of and determined by the criteria set by statute.´ the contractor may still be considered a labor-only contractor. This was the holding of the Supreme Court in the case of Philippine Fuji Xerox Corporation [supra]..e. California Manufacturing Company. by the mere expedient of a unilateral declaration in a contract. NLRC. The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter¶s own business. the parties cannot dictate. we do not agree that the petitioners had been made to perform activities µwhich are not directly related to the general business of manufacturing. Inc. 121327. it contracts out labor in favor of clients. .¶ The petitioners had been charged with µmerchandizing [sic] promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occasional [sic] price tag ging. As held in the 2001 case of De los Santos vs. thus: ³There is no doubt that in the case at bar. whether as ³labor-only´ contractor.¶ The nature of one¶s business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. chanrobles virtual law library Thus. California Marketing Co. as if Livi had served as its [California¶s] promotions or sales arm or agents.¶ an activity that is doubtless. then. Inc. notwithstanding that the agreement or contract between the principal employer and the contractor states that the latter is an ³independent contractor´ and that the workers hired by it ³shall not. (Tabas vs. ³xxx.¶ California¶s purported µprincipal operation activity. Livi as a placement agency. jointly and severally. or otherwise. rendered a piece of work it [California] could not have itself done. Livi performs µmanpower services.. an integral part of the manufacturing business.¶ meaning to say.. R. [G. be considered employees of the Company.

´ (Philippine Fuji Xerox Corporation.L. publication. will not absolve California since liability has been imposed by legal operation. and not by declaration of parties. For another. G. It was likewise engaged in the publication business as evidenced by it magazine the ³Phenomenon. and Licron. March 5.L. 2000]. 1996). however. 124055. and as we indicated. 3) D. Livi would have been truly the employer of its employees and California. [G. NLRC. For one thing. No. its client. 111501. 2) The service contract between CMC and D. Petitioners here relied on the Tabas case in claiming that they are employees of said company. the fact that the petitioners were [are]. June 8. et al. Nabisco Biscuits. Corona Supply. petitioners who were likewise agency-supplied workers in the same company (California Manufacturing Co. Admark was actually engaged in several activities. x x x. further stated in said case that: ³It would have been different. we believe. It had several merchandising contracts with companies like Purefoods.´ chanrobles virtual law library In other words. L.. the Supreme Court cited the following circumstances that tend to establish it as such: 1) The SEC registration certificate of D. Admark (petitioners¶ employer) is a legitimate independent contractor. But in the 2000 case of Escario vs. Admark states that it is a firm engaged in promotional. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services ra ther than one of manpower placement. CMC can validly farm out its merchandising activities to a legitimate independent contractor. et al. For in Tabas. promotions. vs. NLRC. the Supreme Court ruled that therein contractor Livi Manpower Services was a mere placement agency and had simply supplied CMC with the manpower necessary to carry out the company¶s merchandising activity.´ chanrobles virtual law library . R.. marketing and merchandising. had Livi been discretely a promotions firm. marketing and merchandising activities.³The fact that the petitioners have allegedly admitted being Livi¶s µdirect employees¶ in their complaints is nothing conclusive. No. It was. R. or ³CMC´) were not similarly fortunate as those in Tabas [supra]. The Supreme Court considered such reliance on Tabas as misplaced. Inc. the relations of parties must be judged from case to case and the decree of law. For then.L. In declaring that D. and that California had hired it to perform the latter¶s merchandising activities. advertising. such as advertising.

R. PLDT. June 8. Maerc Integrated Services. ³Despite SMC¶s disclaimer. Inc. head of the Mandaue Container Service of SMC. in any manner and under any circumstances. It ratiocinated. July 10. and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract. it is the totality of the facts and surrounding circumstances of each case. It owned several motor vehicles and other tools. [G. be considered employees of the Company.´ disregarded the said stipulation in the contract. SMC maintained a constant presence in the workplace through its own checkers. No. the responsibility of watching over the MAERC workers by MAERC personnel became superfluous w ith the presence of additional checkers from SMC..´ chanrobles virtual law library The Supreme Court. In the June 2005 decision in the case of Abella vs. the language of the contract is not determinative of the parties' relationship. there are indicia that it actively supervised the complainants.4) It had its own capital assets to carry out its promotion business. that the checkers were also tasked to report on the identity of the workers whose performance or quality of work was not according to the rules and standards set by SMC. et al. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. Maerc Integrated Services. [G. R. it was stipulated in the contract of services between MAERC and SMC that MAERC was an independent contractor and that the workers hired by it ³shall not. 144672.. R. the Supreme Court ruled that the security guards .. 2003). 2005]. G. It paid rentals of P30. Singson. however. No. Inc. 159469. It had an authorized capital stock of P500.¶ ³Viewed alongside the findings of the Labor Arbiter that the MAERC organizational set-up in the bottle segregation project was such that the segregators/cleaners were supervised by checkers and each checker was also under a supervisor who was in turn under a field supervisor.´ (San Miguel Corporation vs. following the ³control test. Its asseveration that the checkers were there only to check the end result was belied by the testimony of Carlito R.020 for the office space it occupied. 144672. rather.000. materials and equipment to service its clients. thus: chanrobles virtual law library ³In deciding the question of control. µit (was) necessary to identify the names of those concerned so that the management [referring to MAERC] could call the attention to make these people improve the quality of work. No. According to Singson. In the 2003 case of San Miguel Corporation vs. 2003]. July 10.00.

supplied by People¶s Security. May 30. In holding that PSI is a legitimate job contractor. and Philippine Cable. and above all. G. Therefore. and (3) the principal who is deemed the real employer.. office equipments like computer. No. equipment. etc... 169 SCRA 341). (PSI) to PLDT are the employees of PSI and not of PLDT. Feb. the ³labor-only´ contractor is the agent of the principal. Crown Triumph. Pepito. R. the workers supplied by him are employees of the owner of the project to whom said labor was supplied. et al. G. 2004. Book II of the Omnibus Rules Implementing the Labor Code. R. et al. Under this scheme. R. ammunitions. then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. et al. G. work premises and other materials. Inc. among others. No. No. Inc. it is servicing clients other than PLDT like PCIBank. Sandoval Shipyards. et al. NLRC and Fortune Tobacco Corporation. et al.R. 138051. 126586.´ chanrobles virtual law library Nature of liability of employer and labor-only contractor. et al. 2001]. The law makes the principal responsible to the employees of the ³labor-only´ contractor as if the principal itself directly hired or employed the employees. typewriters. In a labor-only contract.. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. (Sonza vs. machineries. Here. there are three parties involved: (1) the ³laboronly´ contractor. 2000. It has substantial capital and investment in the form of guns. 143428. No. June 25. June 10. the security guards which PSI had assigned to PLDT a re already the former¶s employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement. NLRC. communication equipments.. photocopying machines. ABS-CBN Broadcasting Corporation. It has been consistently held in our jurisdiction that since the ³labor -only´ contractor does not have substantial capital investment in the form of tools. vehicle s. Industrial Timber Corporation vs. 112661. [G. (Vinoya vs. vs. (2) the employee who is ostensibly under the employ of the ³labor-only´ contractor. 2. Rule VII. vs. chanrobles virtual law library . the High Court declared: ³We hasten to add on this score that the Labor Arbiter as well as the NLRC and the Court of Appeals found that PSI is a legitimate job contractor pursuant to Section 8. the evidence as it stands is at odds with petitioners¶ assertion that PSI is an ³in-house´ agency of PLDT so as to call for a piercing of veil of corporate identity as what the Court has done in De leon. NLRC. 2001).

Manila Water Co. (Philippine Bank of Communications vs. 19. In a case.R. R. The client company controlled the performance of the duties of the messenger. Consequently. San Miguel Corporation v. R. 2005. et al. vs. The messengers worked in the premises of the client and were paid their salaries through the service agency. NLRC.. 10 July 2003). G. Consequently. 2004). 158255. in effect. July 8. where labor-only contracting exists in a given case. The employer is made by the statute responsible to the employees of the labor-only contractor as if such employees had been directly employed by the employer.. et al. The law. et al. the law creates an employer -employee relationship for a limited purpose. The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Thus. to prevent any violation or circumvention of any provision of said Code. The statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. Inc... 146 SCRA 347). (Manila Water Co. the labor-only contractor is treated as agent and the former. The Supreme Court declared that the service agency is engaged in ³labor -only´ contracting. this time for a comprehensive purpose: employer for purposes of the Labor Code. 144672. Pena. i. the nature of t he liability of the employer is more direct. chanrobles virtual law library Liability of legitimate contractor and labor-only contractor. G. the statute itself implies or establishes an employer -employee relationship between the employer (the owner of the project) and the employees of the labor-only contractor. 2004. Other than that.. No. Dec. No. NLRC. No. R. No. vs. 146 SCRA 347). et al. July 8. the principal. Inc. July 14. holds both the employer and the labor-only contractor responsible to the latter¶s employees for the more effective safeguarding of the employees¶ rights under the Labor Code. distinguished. the client was held liable to the complainant messenger as if the latter had been directly employed not only by the agency but also by said client. Benamira. Pena. No. (Philippine Bank of Communications vs. a bank. G. the principal employer is not responsible for any claim made by the . G. In legitimate job contracting. 1986.e. R. 158255. Inc. the labor-only contractor is treated as mere agent or intermediary of the employer. There is a wide gulf of distinction between the liability of a legitimate independent contractor and the liability of a labor -only contractor. (Manila Electric Company vs. G. 145271.The reason is. L-66598. MAERC Integrated Services.. to ensure that the employees are paid their wages. a service agency supplied 11 messengers to its client..

July 10. et al. the principal should be held liable for the separation pay of said workers. Duty to comply with legal requirements for valid termination in labor-only contracting situations. R. (San Miguel Corporation vs. therefore. Hence. 21. including the fines imposed for violations of the notice requirement. was declared a labor-only contractor for its failure to prove that it had substantial capital or investment in the fo rm of tools. work premises and other materials. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. July 10. Maerc Integrated Services.. (San Miguel Corporation vs. 95845.. NLRC. is a labor-only contractor and.. a. it is clear that if there is a finding of labor only contracting. R. et al. Resultantly. direct employer.. Maerc Integrated Services. (San Miguel Corporation vs. In a case involving retrenchment of workers effected by the labor -only contractor consequent to the termination of the labor-only contract. 1996). Inc. Illustrative cases of labor-only contracting. the principal should have complied with the requirement of written notice to both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date of retrenchment. 144672. therefore. The principal employer. 144672.. a mere agent of the petitioner-employer. 2003). the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. R. G. b. it was ruled that the principal was not discharged from paying the separation benefits of the workers inasmuch as the contractor was shown to be a labor-only contractor. et al. July 10. No. machineries. A company which supplies a considerable workforce totaling 120 mechanics. On the other hand. chanrobles virtual law library Having made the distinction between the liability of a job contractor and that of a labor-only contractor. becomes solidarily liable with the labor -only contractor for all the rightful claims of the employees. 2003). janitors. in labor-only contracting. G. R. Inc. 144672. equipment. (Tiu vs.. firemen and grasscutters to a garment manufacturer. the duty to comply with the requirements of the law for terminating employees as well as payment of monetary claims of the latter would necessarily devolve on the principal which is deemed the real. Moreover. No. No. G. Maerc Integrated Services. et al. Feb. Inc.. gardeners. 2003). An employee who hires dispatchers for the operator of a transportation company. in solidum with the labor-only contractor. G. .employees. No.

d. (Shoppers Gain Supermart. Moreover. chanrobles virtual law library e. necessary and vital to the day -to-day operations of the supermarket. NLRC.the work assigned to them are directly related to the business of the latter. Messengerial work . the supermarket is deemed the direct employer of the labor-only contractor¶s employees and thus liab le for all benefits to which such workers are entitled. among others: the company supplied all the tools. et al. vs. 110731. as its name indicates. tools and trained service personnel was not accepted by the Supreme Court. 3. c. No. cashiers. 19. like wages. labor-only contractors. No. in different client-companies for longer or shorter periods of time. et al. the workers supplied by three manpower agencies to a supermarket to work as merchandisers. machinery and materials necessary for the performance by . equipment. the labor agencies have ³substantial capital or investment in the form of tools. In accordance with the provisions of Article 106 of the Labor Code. NLRC. warehousemen and so forth were declared employees of the supermarket and the manpower agencies. equipment. sales ladies. No. there is no evidence . R. their jobs involved normal and regular functions in the ordinary business of the petitioner corporation and given the nature of their functions and responsibilities. Oct.is directly related to the day-to-day operations of the bank.the delivery of documents to designated persons whether within or without the bank premises . R. et al. The person who agreed with a motor company under the terms of their Work Contract to supply only labor and supervision over his contractual workers in doing automotive body-painting work and to hire or bring in additional workers as may be required by the company and to handle additional work load or to accelerate or facilitate completion of work in process is a labor-only contractor in the light of the following circumstances. R. 146 SCRA 347). July 26. Said company is not a parcel delivery company. as it were. A search company which supplies messengers to a bank is a labor -only contractor considering that the messengers rendered services to the bank. vs.as in fact. et al. 86010. Dec. work premises. et al. baggers. [114 SCRA 826 (1982)] if indeed such distinguishing way is needed. It is this factor that distinguishes this case from American President Lines vs. petitioners do not even allege . G. G. NLRC. 1986. L-66598. et al. It is a recruitment and placement corporation placing bodies. (Guarin. 1996).´ Resultingly. Its argument that it is not so engaged as labor-only contractor since it is possessed of substantial capital or investment in the form of office equipment.. Clave. (Philippine Bank of Communications vs.. within the premises of the bank and alongside other people also rendering services to the bank. Their work was directly related. check -out personnel.that aside from supplying the manpower. machineries. it is improbable that petitioners did not exercise direct control over their work. among others. separation benefits and so forth. 1989).. G.

the principal employer is considered the ³direct employer´ of the employees in accordan ce with the last paragraph of Article 106 of the Labor Code. the joint and several obligation of the principal employer and the legitimate job contractor is only for a limited purpose. are subject to correction by the company¶s supervisors. on the one hand. the principal employer is considered only an ³indirect employer´. vs. an employer-employee relationship is created by law between the principal employer and the employees of the labor-only contractor. What is ³in-house agency´? . e. b. No. the principal employer becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. In the former. while in the latter. on the other. and they are required to observe company rules. the labor-only contractor merely provides the personnel to work for the principal employer. permissible job contracting. In the former. to ensure that the employees are paid their wages. NLRC. 156 SCRA 522). c. Dec. the legitimate job contractor provides specific services. and the prohibited labor-only contracting. while in the latter. a. the legitimate job contractor undertakes to perform a specific job for the principal employer. their compensation was paid in lump sum.the former and his men of the contracted job within the premises of the company. chanrobles virtual law library Principal distinctions between legitimate job contracting and labor-only contracting. d. as this term is understood under Article 107 of the Labor Code.. defects in the workmanship of their jobs while in progress. the principal employer is not responsible for any claim made by the employees. while in the latter. The principal distinctions between legitimate. while in the latter. while in the latter. chanrobles virtual law library 92. 1987. 14. they were required to observe regular working hours and render overtime services when needed. 98382. Inc. that is. R. Other than this obligation of paying the wages. no employer-employee relationship exists between the employees of the job contractor and the principal employer (indirect employer). regulations and policies such as the wearing of identification cards and uniforms. (Broadway Motors. G. In the former. In the former. et al. the labor-only contractor provides only manpower. In the former.

94. xxx ³When ASDAI as contractor failed to pay the individual respondents. managed or controlled by the principal. 145271. MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it. What is the nature of the liability of an indirect employer? The nature of the liability of the principal is joint and solidary with the contractor or subcontractor for any violation of any provision of the Labor Code. July 14. Who is an indirect employer in a contracting or subcontracting arrangement? The principal is considered the indirect employer of the workers supplied by independent contractor or subcontractor. under Articles 106 and 109 of the Labor Code. chanrobles virtual law library 93. [G. the indirect employer shall be considered as direct employer. managing. The best illustration of these principles is the 2005 case of Manila El ectric Company vs. No. MERALCO as principal becomes jointly and severally liable for the individual respondents¶ wages.Similarly prohibited under the law is the operation of an ³in -house agency´ whereby a contractor or subcontractor is engaged in the supply of labor which: (i) is owned. Benamira. A finding that a contractor is a ³labor-only´ contractor is equivalent to a finding that there exists an employer-employee relationship between the owner of the project and the employees of the ³labor-only´ contractor since that relationship is defined and prescribed by law itself. or controlling it. and (ii) operates solely for the principal owning. Labor Code). R. 2005] where it was held. chanrobles virtual law library . thus: ³The fact that there is no actual and direct employer -employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. For purposes of determining the extent of their civil liability for the payment of wages. (Article 109.

2003. the creditor may choose which offer to accept. reimburse his share to the debtor paying the obligation. Judicial proceedings in rem is required for creditors¶ claims against debtors to become operative. As an employer. Article 110 applies only in case of bankruptcy or judicial liquidation of the employer.R. with the interest for the payment already made. [G. the solidary liability of MERALCO with that of ASDAI does not preclude the application of Article 1217 of the Civil Code on the right of reimbursement from his co-debtor by the one who paid. µHe who made the payment may claim from his co -debtors only the share which corresponds to each. What is meant by worker preference in case of bankruptcy? 1. If two or more solidary debtors offer to pay. while MERALCO is deemed the indirect employer of the individual respondents for the purpose of paying their wages in the event of failure of ASDAI to pay them. which provides: µART. ³However. such share shall be borne by all his co -debtors. November 11. in proportion to the debt of each. µWhen one of the solidary debtors cannot. ASDAI is charged with knowledge of labor laws and the adequacy of the compensation that it demand s for contractual services is its principal concern and not any other¶s. Payment made by one of the solidary debtors extinguishes the obligation. 1217. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution.¶ ³ASDAI may not seek exculpation by claiming that MERALCO¶s payments to it were inadequate for the individual respondents¶ lawful compensation. No. 144134. Court of Appeals. no interest for the intervening period may be demanded.´ 95. because of his insolvency. If the payment is made before the debt is due. 415 SCRA 573].xxx ³ASDAI is held liable by virtue of its status as direct employer. 2. The right to preference given to workers under Article 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. vs. To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position . 3. as held in Mariveles Shipyard Corp.

they would come within the ambit of the category of ordinary preferred credits under Article 2244. (G.than the State which could only assert its own prior preference in case of a judicial proceeding. reconstruction or repair of buildings. NO. NO. 126773. number 3. upon said buildings. 6. 7. R. it was held that there is no merit in the contention of the NLRC that taxes are also absol utely preferred claims only with respect to movable and immovable properties on which they are due. on the goods manufactured or the work done. R. NLRC. VS.´ or by Article 2242. chanrobles virtual law library 4. R. ET AL. number 3: ³claims of laborers and other workers engaged in the construction. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. 114761. ET AL. VS. INC. . JANUARY 19. Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer.. ET AL. number 6: ³claims for labor er¶s wages. canals and other works. 1999) where the same issue is discussed and further .. INC. NO. 128003. INC. number 6 and 2242. NLRC. REHABILITATION RECEIVERSHIP: 96. APRIL 14.). (G. 5. 2000) ALEMAR¶S SIBAL AND SONS. NLRC. JULY 26. therefore. Claims for unpaid wages do not.). (G. The right of preference as regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of the workers but a right to a first preference in the discharge of the funds of the judgment debtor. fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code. Preference of taxes.´ To the extent that claims for unpaid wages fall outside the scope of Article 2241. What is the effect of rehabilitation receivership on monetary claims of employees? RUBBERWORLD (PHILS. Mortgage credit. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. VS. except to the extent that such claims for unpaid wages are already covered by Article 2241. In one case. canals or other works. 2000) (SEE ALSO RUBBERWORLD (PHILS.A mortgage credit is a special preferred credit under Article 2241 of the Civil Code while workers¶ preference is an ordinary preferred credit.

PREFERENCE IN CASE OF BANKRUPTCY OR LIQUIDATION UNDER ARTICLE 110 OF THE LABOR CODE. chanrobles virtual law library ATTORNEY¶S FEES: 97. What is the amount of attorney¶s fees that may be allowed by law? 1. In cases of unlawful withholding of wages, the employer may be assessed attorney¶s fees equivalent to ten percent (10%) of the amount of wages recovered. 2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney¶s fees which exceed ten percent (10%) of the amount of wages recovered. 3. The attorney¶s fees may be awarded only when the withholding of wages is declared unlawful. 4. The basis of the 10% attorney¶s fees is the amount of wages recovered. Should there be any other monetary awards given in the proceedings, the same may not be assessed or subjected to the 10% attorney¶s fees. PROHIBITIONS REGARDING WAGES: 98. What is meant by the principle of non-interference in disposal of wages? Employers are not allowed to interfere in the disposal of wages of employees. 99. What are allowable wage deductions? Deductions from the wages of the employees may be made by the employer in any of the following cases: a. When the deductions are authorized by law, (e.g., SSS, PagIBIG), including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself; b. When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction;

c. Withholding tax mandated under the National Internal Revenue Code; d. Withholding of wages because of employee¶s debt to the employer which is already due; e. Deductions made pursuant to a judgment against the worker under circumstances where the wages may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter and medical attendance. f. When deductions from wages are ordered by the court; g. Deductions made for agency fee from non-union members who accept the benefits under the CBA negotiated by the bargaining union. This form of deduction does not require the written authorization of the non-union member. 100. What are deposits for loss or damage? No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations. 101. Is withholding of wages and kickback allowed? No. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker¶s consent. chanrobles virtual law library 102. May deduction be allowed to ensure employment or retention of employment? It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. 103. What are the retaliatory measures prohibited under the law? It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any

employee who has filed any complaint or instituted any proceeding or has testified or is about to testify in such proceedings. ADMINISTRATION AND ENFORCEMENT OF LABOR LAWS: 104. What is the legal basis for the exercise by the Secretary of Labor of his visitorial and enforcement powers? The legal basis is Article 128 which involves the exercise by the Secretary of Labor and Employment or his duly authorized representatives, of the visitorial and enforcement powers provided therein. Article 128 applies to inspection cases involving findings of the labor employment and enforcement officers or industrial safety engineers regarding violations of labor standards provisions of the Labor Code and other labo r legislation. Article 128 contemplates situations where the case for violation of labor standards laws and other labor legislations, arose from the routine inspection conducted by the labor employment and enforcement officer or industrial safety engineers of the Department of Labor and Employment, with or without a complaint initiated by an interested party. Here, it is generally the Department of Labor and Employment which initiates the action. chanrobles virtual law library EMPLOYMENT OF WOMEN: 105. What is nightwork prohibition? Regardless of age, no woman shall be employed or permitted or suffered to work, with or without compensation: (a) In any industrial undertaking or branch thereof between 10:00 o¶clock at night and 6 o¶clock in the morni ng of the following day; or (b) In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between midnight and 6 o¶clock in the morning of the following day; or (c) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine (9) consecutive hours. 106. What are the exceptions to nightwork prohibition? The nightwork prohibition shall not apply in any of the following ca ses: (a) In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disasters or calamity, to prevent loss of life or property, or in cases of force majeure or imminent danger to public safety;

(b) In case of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the employer would otherwise suffer; (c) Where the work is necessary to prevent serious loss of perishable goods; (d) Where the woman employee holds a responsible position of managerial or technical nature, or where the woman employee has been engaged to provide health and welfare services; chanrobles virtual law
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(e) Where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency by male workers; chanrobles virtual law library (f) Where the women employees are immediate members of the family operating the establishment or undertaking; and (g) Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations. 107. What are the required facilities for women? Employers are required to: (a) Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency; (b) To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; (c) To establish a nursery in a workplace for the benefit of the women employees therein; and chanrobles virtual law library (d) To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. 108. What are the acts of discrimination against women expressly prohibited under R. A. 6725 (May 12, 1989)? It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of em ployment solely on account of her sex.

The following are acts of discrimination: (a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee as against a male employee, for work of equal value; and (b) Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. There is criminal liability for the willful commission of any of the for egoing unlawful act. (R. A. 6725, id.). MATERNITY LEAVE BENEFITS: 109. What are maternity leave benefits? A covered female employee who has paid at least three monthly maternity contributions in the twelve-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for sixty (60) days subject to the following conditions: (a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide; (b) That the payment shall be advanced by the employer in two equal installments within thirty (30) days from the filing of the maternity leave application; (c) That in case of caesarian delivery, the employee shall be paid the daily maternity benefit for 78 days; (d) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same compensable period of sixty (60) days for the same childbirth, abortion or miscarriage; (e) That the maternity benefits shall be paid only for the first four deliveries after March 13, 1973; (f) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount of maternity benefits advanced to the employee by the employer upon r eceipt of

satisfactory proof of such payment and legality thereof; and
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(g) That if an employee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee would otherwise have been entitled to, and the SSS shall in turn pay such amount to the employee concerned. (R. A. 7322, March 3, 1992). 110. Is an unmarried pregnant woman entitled to maternity leave benefits? Every pregnant woman in the private sector, whether married or unmarried, is entitled to the maternity leave benefits. 111. Are maternity leave benefits included in the computation of 13th month pay? Maternity benefits, like other benefits granted by the SSS, are granted to employees in lieu of wages and, therefore, may not be included in computing the employee¶s 13th-month pay for the calendar year. 112. Are voluntary or self-employed members of the SSS entitled to maternity leave benefits? chanrobles virtual law library Voluntary or self-employed members are not entitled to the maternity benefit because to be entitled thereto, corresponding maternity contributions should be paid by employers. Voluntary or self -employed members have no employers so they do not have maternity contributions. PATERNITY LEAVE: 113. What is paternity leave? ³Paternity leave´ refers to the benefit granted to a married male employee allowing him not to report for work for seven (7) days (for each delivery for the first 4 deliveries) but continues to earn the compensation therefor, on the condition that his spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly-born child. If paternity leave is not availed of, it is not convertible to ca sh. 114. What is ³delivery´?

³Delivery´ shall include childbirth or any miscarriage. 115. What is meant by ³spouse´? ³Spouse´ refers to the lawful wife. For this purpose, lawful wife refers to a woman who is legally married to the male employee concern ed. 116. What is meant by ³cohabiting´? ³Cohabiting´ refers to the obligation of the husband and wife to live together. THE SOLO PARENTS' WELFARE ACT OF 2000: 117. What is parental leave? Republic Act No. 8972 (An Act Providing for Benefits and Privileges to Solo Parents and Their Children, Appropriating Funds Therefor and for Other Purposes), otherwise known as ³The Solo Parents¶ Welfare Act of 2000,´ was approved on November 7, 2000 providing for parental leave of seven (7) days. It is defined as follows: ³(d) µParental leave¶ - shall mean leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required.´ chanrobles virtual law
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It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. Thus, under Section 8 thereof, it is provided: ³Sec. 8. Parental Leave. - In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.´ 118. What is meant by flexible work schedule under R. A. No. 8972? Under Republic Act No. 8972, solo parents are allowed to work on a flexible schedule, thus: ³Sec. 6. Flexible Work Schedule. ± The employer shall provide for a flexible working schedule for solo parents: Provided, That the same shall not affect individual and company productivity: Provided, further, That any employer may request exemption from the above

requirements from the DOLE on certain meritorious grounds.´ (Section 6, Republic Act No. 8972). The phrase ³flexible work schedule´ is defined in the same law as follows: (e) ³Flexible work schedule´ - is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. (Section 3[e], Republic Act No. 8972). chanrobles virtual law library DISCRIMINATION AGAINST WOMEN: 119. What are the acts considered discriminatory against women under the law? It shall be unlawful for any employer: (1) To deny any woman employee the benefits provided for in the law or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under the Labor Code. (2) To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; (3) To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant; (4) To pay lesser compensation to a female employee as against a male employee for work of equal value. chanrobles virtual law library (5) To favor a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes. 120. What are stipulations against marriage? It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. 121. What is the status of women working in nightclubs, massage clinics, and similar establishments?

Any woman who is permitted or suffered to work. shall be considered as an employee of such establishment for purposes of labor and social legislation. radio program. (b) ³Child labor´ refers to any work or economic activity performed by a child that subjects him/her to any form of exploitation or is harmful to his/her health and safety or physical. and chanrobles virtual law library ii. in work or economic activity that is not child labor as defined in the immediately preceding sub-paragraph. Where there is no fixed or definite workplace. to include households employing children. massage clinic. cocktail lounge. or (ii)in public entertainment or information. and (2) all time during which a child is suffered or permitted to work. (d) ³Hours of work´ include (1) all time during which a child is required to be at a prescribed workplace. when the child is below eighteen (18) years of age. when the child below fifteen (15) years of age. literary. in any night club. (i) in work where he/she is directly under the responsibility of his/her parents or legal guardian and where only members of the child¶s family are employed. Rest periods of short duration during working hours shall be counted as hours worked. What are the relevant terms defined in the law? (a) ³Child´ refers to any person under 18 years of age. with or without compensation. premises or worksite where a child is temporarily or habitually assigned. cinema or film. chanrobles virtual law library (e) ³Workplace´ refers to the office. mental or psychosocial development. and cultural performances for television show. (f) ³Public entertainment or information´ refers to artistic. they may come and go as they please. the term shall include the place where th e child actually performs work to render service or to take an assignment. bar or similar establishments under the effective control or supervision of the employer for a substantial period of time as determined by th e Secretary of Labor and Employment. EMPLOYMENT OF CHILDREN: 122. . They are considered regular employees of said establishments except when the night club operator does not control nor direct the details and manner of their work in the entertainment of night club patrons and. (c) ³Working Child´ refers to any child engaged as follows: i. having no fixed hours of work.

safety. television or other forms of media is essential: Provided. before engaging such child. however. or chanrobles virtual law library (2) Where a child's employment or participation in public entertainment or information through cinema. debt bondage or deception. theater. print materials. commercial advertisement. abuse of authority or moral ascendancy. further. a work permit . and other media. use of force or coercion. That the employment contract is concluded by the child's parents or legal guardian. nor impairs his/her normal development: Provided. That his/her employment neither endangers his/her life. if possible. intimidation or threat. 123. What is the minimum employable age of children? Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided. public relations activities or campaigns. and the duration and arrangement of working time. and morals. safety. (g) ³Forced labor and slavery´ refers to the extraction of work or services from any person by means of enticement. and chanrobles virtual law library (c) The employer shall formulate and implement. radio. violence. health.theater. with the express agreement of the child concerned. health. a continui ng program for training and skills acquisition of the child. That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education. subject to the approval and supervision of competent authorities. In the above exceptional cases where any such child may be employed. (b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration. further. including deprivation of freedom. internet. (h) ³Child pornography´ refers to any representation of a child engaged in real or simulated explicit sexual activities or any representation of the sexual parts of a child for primarily sexual purposes. and the approval of the Department of Labor and Employment: Provided. the employer shall first secure. That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection. morals and normal development of the child.

for which he/she shall render a semi-annual accounting of the fund to the Department of Labor and Employment. December 19.] 124.000. the other parent shall administer the same. 7610. No. No. and in no case beyond forty (40) hours a week. R. 9231. 7610. December 19. in compliance with the provisions of this Act. The child shall have full control over the trust fund upo n . 2003). 7610. Trust Fund to Preserve Part of the Working Child's Income. A.A.A. A. 2003). R. education or skills acquisition and secondarily to the collective needs of the family: Provided. 2003). A. That not more than twenty percent (20%) of the child's income may be used for the collective needs of the family. as amended by R. How is the working child¶s income be used or administered? The wages. the order of preference on parental authority as provided for under the Family Code shall apply. chanrobles virtual law library (3) No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the evening and six o'clock in the morning of the following day and no child fifteen (15) years of age but below eighteen (18) shall be allowed to work between ten o'clock in the evening and six o'clock in the morning of the following day. No.00) annually. as amended by R. as amended by R. In the absence or incapacity of either of the parents. 9231. No. (Section 12-B. No.The parent or legal guardian of a working child below eighteen (18) years of age shall set up a trust fund for at least thirty percent (30%) of the earnings of the child whose wages and salaries from work and other income amount to at least two hundred thousand pesos (P200. (Section 12-A. December 19. (Section 12. In case both parents are absent or incapacitated. . earnings and other income of the working child shall belong to him/her in ownership and shall be set aside primarily for his/her support. What is the working hours of a working child? (1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours a week: Provided. That the work shall not be more than four (4) hours at any given day.from the Department of Labor and Employment which shall ensure observance of the above requirements. 125. salaries. The income of the working child and/or the property acquired through the work of the child shall be administered by both parents.A. No. [NOTE: The term "child" shall apply to all persons under eighteen (18) years of age. 9231. (2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8) hours a day. R.

A. 2003)? No child shall be engaged in the worst forms of ch ild labor. offering or exposing of a child for prostitution. emotional or sexual abuse. equipment and tools such as power-driven or explosive power-actuated tools. 9231. as defined under the "Anti-trafficking in Persons Act of 2003". A. R. elements. 7610. or (d) Involves the use of dangerous machinery. No. A. including the production and trafficking of dangerous drugs and volatile substances prohibited under existing laws.reaching the age of majority. but not limited to the dangerous feats of balancing. substances. No. (Section 12-C. 126. as amended by R. procuring or offering of a child for illegal or illicit activities. underwater or at dangerous heights. or (3) The use. or (e) Exposes the child to physical danger such as. or (4) Work which. co - . procuring. or which requires the manual transport of heavy loads. What is meant by ³worst form of child labor´ under R. or (2) The use. or practices similar to slavery such as sale and trafficking of children. debt bondage and serfdom and forced or compulsory labor. The phrase "worst forms of child labor" shall refer to any of the following: (1) All forms of slavery. by its nature or the circumstances in which it is carried out. or (c) Is performed underground. December 19. physical strength or contortion. safety or morals of children. 2003). or is found to be highly stressful psychologically or may prejudice morals. or (b) Exposes the child to physical. degrades or demeans the intrinsic worth and dignity of a child as a human being. for the production of pornography or for pornographic performances. is hazardous or likely to be harmful to the health. such that it: chanrobles virtual law library (a) Debases. including recruitment of children for use in armed conflict. or (f) Is performed in an unhealthy environment exposing the child to hazardous working conditions. No. 9231 (December 19.

flammable substances. gambling or any form of violence or pornography. No. noxious components and the like. 128. EMPLOYMENT OF HOUSEHELPERS: 129. 7610. or (g) At least three (3) concerned. (c) Ascendant or collateral relative within the third degree of consanguinity. viruses. intoxicating drinks. or (i) Involves the manufacture or handling of explosives and other pyrotechnic products. radiation. Who is a ³househelper´ or ³domestic servant´? . Is the employment of children in advertisements prohibited? No child shall be employed as a model in any advertisement directly or indirectly promoting alcoholic beverages. responsible citizens where the violation occurred. (f) Barangay chairman of the place where the violation occurred. tobacco and its byproducts.agents or processes involving ionizing.A. 2003). No. protozoans. (d) Officer. as amended by R. chanrobles virtual law library (e) Officer or social worker of the Department of Social Welfare and Development. noise levels. fungi. 127. or vibrations. (b) Parents or guardians. 9231. or chanrobles virtual law library (g) Is performed under particularly difficult conditions. R. social worker or representative of a licensed child-caring institution. or (h) Exposes the child to biological agents such as bacteria. where the child is residing or employed. or to extreme temperatures. A. Who may file a complaint in case of unlawful acts committed against children? Complaints on cases of unlawful acts committed against children as enumerated herein may be filed by the following: (a) Offended party. (Section 14. nematodes and other parasites. December 19. fire.

133. What should be paid by way of compensation to the househelper? The minimum wage rates of househelpers shall be the basic cash wages which shall be paid to the househelpers in addition to lodging. Househelper shall be assigned to work in a commercial. cooks. industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein. free of charge. food and medical attendance. Is an employer obligated to provide a househelper the opportunity for education? If the househelper is under the age of eighteen (18) years. The cost of education shall be part of the househelper¶s compensation. chanrobles virtual law library 131. What is the time and manner of payment of wages? Wages shall be paid directly to the househelper to whom they are due at least once a month. whether male or female. suitable and sanitary living quarters as well as adequate food and medical attendance. How should a househelper be treated? . and ministers exclusively to the personal comfort and enjoyment of the employer¶s family. the employer shall give him or her an opportunity for at least elementary education. 132. Is an employer obligated to provide board and lodging to a househelper? The employer shall furnish the househelper. who renders services in and about the employer¶s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof. 130. May a househelper be assigned to non-household work? No. 135. chanrobles virtual law library Household services include the services of family drivers. unless there is a stipulation to the contrary. The original contract of domestic service shall not last for more than two (2) years but it may be mutually renewed for such periods by the parties. chanrobles virtual law library 134. No deductions therefrom shall be made by the employer unless authorized by the househelper himself or by existing laws. nursemaids or family servants.³Househelper´ or ³domestic servant´ shall refer to any person. but not the services of laborers in a commercial or industrial enterprise.

undertaking. A. 8282). where there is an employer -employee relationship: Provided. chanrobles virtual law library . (b) Employee . 136. Who is an ³industrial homeworker´? An industrial homeworker is a worker who is engaged in industrial homework. or activity of any kind and uses the services of another person who is under his orders as regards the employment. chanrobles virtual law library THE SOCIAL SECURITY SYSTEM (SSS): 139. EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL: 137. Who is a ³field personnel´? A field personnel is a non-agricultural employee who regularly performs his duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot b e determined with reasonable certainty. That a self-employed person shall be both employee and employer at the same time. domestic or foreign. If the househelper leaves without justifiable reason. industry. No. That a self-employed person shall be both employee and employer at the same time. natural or juridical. except the Government and any of its political subdivisions.Any person who performs services for an employer in which either or both mental or physical efforts are used and who receives compensation for such services. he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days. business. Definition of terms under the SSS Law (R. (a) Employer.A househelper should be treated in a just and humane manner and n o physical violence should be inflicted on him. What is the indemnity for unjust termination of services of a househelper? If the period of household service is fixed. who carries on in the Philippines any trade.Any person. except for a just cause. The materials may or may not be furnished by the employer or contractor. If the househelper is unjustly dismissed. branches or instrume ntalities. a system of production under which work for an employer or contractor is carried out by a homeworker at his/her home. neither the employer nor the househelper may terminate the contract before the expiration of the term. 138. he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity. including corporations owned or controlled by the Government: Provided.

or if over twenty-one (21) years of age. (d) Compensation . if on any other basis. (g) Contribution . chanrobles virtual law library (e) Monthly salary credit . he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support. (2) The legitimate. chanrobles virtual law library (4) Service performed in the employ of a foreign government or international organization. physically or mentally. and (3) The parent who is receiving regular support from the member. (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof. however.The compensation base for contributions and benefits as indicated in the schedule in Section Eighteen of this Act. not gainfully employed. (f) Monthly . legitimated or legally adopted. daily or weekly basis. or their wholly-owned instrumentality: Provided.The dependents shall be the following: (1) The legal spouse entitled by law to receive support from the member. including the mandated cost-of-living allowance.(c) Dependents . µmonthly¶ shall mean a period of one (1) month.The amount paid to the SSS by and on behalf of the members in accordance with Section Eighteen of this Act. chanrobles virtual law library (2) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines. That this exemption notwithstanding.Any service performed by an employee for his employer except: (1) Employment purely casual and not for the purpose of occupation or business of the employer. as well as the cash value o f any remuneration paid in any medium other than cash except that part of the remuneration in excess of the maximum salary credit as provided under Section Eighteen of this Act. and has not reached twenty-one (21) years of age. and illegitimate child who is unmarried. (h) Employment . any foreign government.All actual remuneration for employment. international organization or their wholly-owned .The period from one end of the last payroll period of the preceding month to the end of the last payroll period of the current month if compensation is on hourly.

The dependent spouse until he or she remarries. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the service of said contra ctors. finally.For a member covered prior to January nineteen hundred and eighty five (1985) minus the calendar year of coverage plus the number of calendar years in which six (6) or more . In the absence of all the foregoing. (i) Beneficiaries . or the result obtained by dividing the sum of all the monthly salary credits paid prior to the semester of contingency by the number of monthly contributions pai d in the same period. whichever is greater: Provided. legitimated children of the member. chanrobles virtual law library (j) Contingency . In their absence. and illegitimate children. the dependent parents who shall be the secondary beneficiaries of the member. disability. injury or sickness and maternity of the member. That the injury or sickness which caused the disability shall be deemed as the permanent disability for the purpose of computing the average monthly salary credit. legitimated or legally adopted. death. further. (m) Credited years of service . legitimated or legally adopted children: Provided. That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate.instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines. who shall be the primary beneficiaries of the member: Provided. (l) Average daily salary credit .The retirement.The result obtained by dividing the sum of the six (6) highest monthly salary credits in the twelve-month period immediately preceding the semester of contingency by one hundred eighty (180). That in the absence of the dependent legitimate. the dependent legitimate. and (5) Such other services performed by temporary and other employees which may be excluded by regulation of the Commission. any other person designated by the member as h is/her secondary beneficiary. further. That the provisions of this Act shall be supplementary to any such agreement. (k) Average monthly salary credit . may enter into an agreement with the Philippine Government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems: Provided.The result obtained by dividing the sum of the last sixty (60) monthly salary credits immediately preceding the semester of contingency by sixty (60). his/her dependent illegitimate children shall be entitled to one hundred percent (100%) of the benefits. That the terms of such agreement shall conform with the provisions of this Act on coverage and amount of payment of contributions and benefits: Provided.

140.The worker who is covered under Section Nine and Section Nine-A of this Act.Net income before income taxes plus non -cash charges such as depreciation and depletion appearing in the regular financial statement of the issuing or assuming institution. which may be necessary to adopt by reason of the reduced contributions thereto as a r esult of the integration. further. (o) Self-employed . the number of calendar years in which six (6) or more contributions have been paid from the year of coverage up to the calendar year containing the semester prior to the contingency: Provided. For a member covered in or after January nineteen hundred and eighty five (1985). as defined under this Act. That in the case of domestic helpers. he shall pay to the SSS only the contribution required of him a nd he shall continue his contribution to such private plan less his contribution to the SSS so that the employer¶s total contribution to his benefit plan and to the SSS shall be the same as his contribution to his private benefit plan before the compulsory coverage: Provided.000. Who are covered by the SSS? (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age and their employers: Provided. reduced or otherwise impaired: Provided. chanrobles virtual law library (n) Member . (p) Net earnings . That private plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS in such a way where the employer¶s contribution to his private plan is more than that required of him in this Act. That any changes. shall be subject to agreements between the employers and employees concerned: Provided. their monthly income shall not be less than One thousand pesos (P1. further. That any benefit already earned by the employees under private benefit plans existing at the time of the approval of this Act shall not be discontinued. as well as those workers enumerated in Section Nine-A hereof. modifications.Any person whose income is not derived from employment. That the Commission may provide for a different number of contributions in a calendar year for it to be considered as a credited year of service. That nothing in this Act shall be construed as a limitation on the right of employers and employees to . eliminations or improvements in the benefits to be available under the remaining private plan. adjustments. further.00) a month: Provided. That the private benefit plan which the employer shall continue for his employees shall remain under the employer¶s management and co ntrol unless there is an existing agreement to the contrary: Provided. further. finally.contributions have been paid from January nineteen hundred and eighty five (1985) up to the calendar year containing the semester prior to the contingency.

directors. 2. trainers and jockeys. That the compulsory coverage of the self -employed person shall take effect upon his registration with the SSS. including but not limited to the following: 1. Individual farmers and fishermen. and 5. 141. Unless otherwise specified in the law.agree on and adopt benefits which are over and above those provided under this Act. Are self-employed persons covered? Coverage in the SSS shall also be compulsory upon such self -employed persons as may be determined by the Commission under such rules and regulations as it may prescribe. his employer¶s contribution on his account and his obl igation to pay contributions arising from that employment shall cease at the end of the month of separation. 3. chanrobles virtual law library 143. Partners and single proprietors of businesses. may be covered by the SSS on a voluntary basis. coaches. Actors and actresses. What is the effect of separation from employment? When an employee under compulsory coverage is separated from employment. 142. Professional athletes. (c) Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS on a voluntary basis. (b) Spouses who devote full time to managing the household and family affairs. but said employee shall be credited with all contributions paid on his behalf and entitled to benefits according to the . scriptwriters and news correspondents who do not fall within the definition of the term "employee" in Section 8 (d) of this Act. all provisions of the SSS LAW applicable to covered employees shall also be applicable to the covered self-employed persons. unless they are also engaged in other vocation or employment which is subject to mandatory coverage. chanrobles virtual law library 4. All self-employed professionals. When does coverage take effect? Compulsory coverage of the employer shall take effect on the first day of his operation and that of the employee on the day of his employment: Provided.

including the illegitimate child. (2) Dependents¶ pension . That no retroactive payment of contributions shall be allowed other than as prescribed under Section 22-A of the SSS Law. continue to pay the total contributions to maintain his right to full benefit. or is over the age of majority but incapacitated and incapable of self-support due to a mental or physical defect acquired prior to age of majority. (5) Permanent disability benefits.(3) Retirement benefits. its political subdivisions. (b) the legitimate. THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS): 146. legitimated. Definition of terms under the GSIS Law (R.A member who is not separated from the service. however. (a) Employer.The legal dependent spouse until he/she remarries and the dependent children.Dependents shall be the following: (a) the legitimate spouse dependent for support upon the member or pensioner. including government -owned or controlled corporations. however. No. 145. He may. (7) Sickness benefit. (b) Employee or Member. the legitimate descendants. He may. subject to the restrictions on dependent children. not over the age of majority. 144. be allowed to continue paying contributions under the same rules and regulations applicable to a separated employee member: Provided. (6) Funeral benefit. the constitutional commissions and the jud iciary. A.provisions of this Act. What is the effect of interruption of business or professional income? If the self-employed realizes no income in any given month. chanrobles virtual law library (c) Active Member. What are the benefits under the SSS Law? (1) Monthly pension. and financial institutions with original charters. (e) Primary beneficiaries.The national government. (d) Dependents. who is unmarried.Any person receiving compensation while in the service of an employer as defined herein. including barangay and Sanggunian officials. 8291). .The dependent parents and. (8) Maternity leave benefit. and (c) the parents dependent upon the member for support. (4) Death benefits. whether by election or appointment. branches. irrespective of status of appointment. he shall not be required to pay contributions for that month. (f) Secondary beneficiaries. agencies or instrumentalities. legally adopted child. not gainfully employed.

and premium shall be nine percent (9%) and twelve percent (12%) for employee and employer covering the AMC limit and below and two percent (2%) and twelve percent (12%) for employee and employer covering the compensation above the AMC limit. chanrobles virtual law library (k) Revalued average monthly compensation .000.Any loss or impairment of the normal functions of the physical and/or mental faculty of a member which reduces or eliminates .Any productive activity that provided the member with income at least equal to the minimum compensation of government employees. (m) Pensioner. That the average monthly compensation shall in no case exceed the amount and rate as may be respectively set by the Board under the rules and regulations implementing this Act as determined by the actuary of the GSIS: Provided. pursuant to his election/appointment. (l) Lump sum.(g) Compensation. That initially the average monthly compensation shall not exceed Ten thousand pesos (P10.00).00) of the average monthly compensation plus one hundred percent (100%) of the average monthly compensation in excess of One thousand pesos (P1. excluding per diems. (o) Disability.000. (i) Current Daily Compensation.The quotient arrived at after dividing the aggregate compensation received by the member during his last thirty-six (36) months of service preceding his separation/retirement/ disability/death by thirty-six (36). (h) Contribution.00).The amount payable to the GSIS by the member and the employer in accordance with Section 5 of this Act. honoraria. or by the number of months he received such compensation if he has less than thirty -six (36) months of service: Provided. allowances and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws.The basic monthly pension multiplied by sixty (60).The actual daily compensation or the actual monthly compensation divided by the number of working days in the month of contingency but not to exceed twenty-two (22) days. further. overtime pay.Any person receiving old-age permanent total disability pension or any person who has received the lump sum excluding one receiving survivorship pension benefits as defined in Section 20 of this Act. (j) Average Monthly Compensation (AMC). bonuses.000. (n) Gainful Occupation.The basic pay or salary received by an employee.An amount equal to one hundred seventy percent (170%) of the first One thousand pesos (P1.

and all other social security protections such as disability. and shall be entitled to whatever benefits he has qualified to in the event of any contingency compensable under this Act. irrespective of employment status. retirement. A member separated from the service shall continue to be a member. (s) Permanent Partial Disability. and contractuals who have no employer and employee relationship with the agencies they serve. and unemployment benefits. Compulsory membership in the GSIS. survivorship. all members of the GSIS shall have life insurance. chanrobles virtual law library (p) Total Disability.his/her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation. separation. 150. Except for the members of the judiciary and constitutional commissions who shall have life insurance only. 149. (r) Temporary Total Disability. Contributions. (q) Permanent Total Disability. despite which the member is able to pursue a gainful occupation.Complete incapacity to continue with his present employment or engage in any gainful occupation due to the loss or impairment of the normal functions of the physical and/or mental faculties of the member. GSIS benefits. It shall be mandatory for the member and employer to pay the monthly contributions specified in the GSIS Law. except members of the Armed Forces of the Philippines and the Philippine National Police.Accrues or arises when the impaired physical and/or mental faculties can be rehabilitated and/or restored to their normal functions.Accrues or arises when recovery from the impairment mentioned in Section 2 (Q) is medically remote. 148. Membership in the GSIS shall be compulsory for all employees receiving compensation who have not reached the compulsory retirement age. . subject to the condition that they must settle first their financial obligation with the GSIS. 147. Effect of Separation from the Service.Accrues or arises upon the irrevocable loss or impairment of certain portion/s of the physical faculties.

education.The amount paid by or in behalf of a member to the Program for coverage. . (a) Beneficiary . and such other plans as may be designed by the GSIS.Any person entitled to health care benefits under R. hospitalization.A. as amended by R. 9241): 151. Unemployment or Involuntary Separation Benefits. Permanent Disability Benefits. health. either physical or mental. chanrobles virtual law library (g) Diagnostic Procedure . or on other criteria as may be defined by the Philippine Health Insurance Corporation (³Corporation´). (e) Coverage . NATIONAL HEALTH INSURANCE PROGRAM (R. legitimated. is negotiated with a health care provider who shall be responsible in delivering or arranging for the delivery of health services required by the covered person under the conditions of a health care provider contract. Survivorship Benefits. memorial plans. (b) Benefit Package .Services that the Program offers to its members. Retirement Benefits. illegitimate. 2) the unmarried and unemployed legitimate. Temporary Total Disability Benefits. and on household earnings and assets. Funeral Benefits. acknowledged children as appearing in the birth certificate. (c) Capitation . A. to the benefits of the program. household or group. or any disability acquired that renders them totally dependent on the member of our support. based on salaries or wages in the case of formal sector employees. whether per person.The entitlement of an individual. for the member and/or his dependents. Separation Benefits. Optional Insurance and/or pre-need coverage embracing life.Any procedure to identify a disease or condition through analysis and examination. 7875. in the case of self-employed. 7875. family. Compulsory Life Insurance Benefit. legally adopted or step-children below twenty-one (21) years of age. chanrobles virtual law library (d) Contribution .A payment mechanism where a fixed rate. A. 3) children who are twenty-one (21) years old and above but suffering from congenital disability. as a member or as a dependent. Definition of Terms. (f) Dependent .Monthly Pension.The legal dependents of a member are: 1) the legitimate spouse who is not a member. 4) the parents who are sixty (60) years old or above whose monthly income is below an amount to be determined by the Corporation in accordance with the guiding principles set forth in Article I of this Act.

or (2) a health care professional. or chanrobles virtual law library . building. injury.An unforeseen combination of circumstances which calls for immediate action to preserve the life of a person or to preserve the sight of one or both eyes. Purchase of medical services by which h ealth care provider negotiations concerning the costs of providing a specific package of medical benefits is based solely on a predetermined and fixed budget. injuries. (l) Fee for Service . or bassinets for twenty-four hour use or longer by patients in the treatment of diseases. cribs. chanrobles virtual law library (i) Employee .The process to be determined by the Corporation in order to enlist individuals as members or dependents covered by the Program. or other health care professional or practitioner duly licensed to practice in the Philippines and accredited by the Corporation. nurseries. or abnormal physical and mental states. (j) Employer . which is duly licensed and accredited devoted primarily to the maintenance and operation of facilities for health promotion.(h) Emergency . disability. (n) Health Care Provider . or infirmaries. maternity cases or sanitarial care. rehabilitation centers and such other similar names by which they may be designated. or deformity.A reasonable and equitable health care payment system under which physicians and other health care providers receive a payment that does not exceed their billed charge for each unit of service provided. (k) Enrollment . or place where there are installed beds. nurse. diagnosis.Any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services. the hearing of one or both ears. midwife. drug addiction or in need of obstetrical or other medical and nursing care.Refers to: (1) a health care institution. prevention. where there is an employeremployee relationship. deformities. dispensaries. who is any doctor of medicine. or one or two limbs at or above the ankle or wrist.A natural or juridical person who employs the services of an employee. (m) Global Budget . dentist.An approach to the purchase of medical services by which health care provider negotiations concerning the costs of providing a specific package of medical benefits is based solely on a predetermined and fixed budget. It shall also be construed as any institution.

or (4) a community-based health organization. or arranges for coverage of designated health services needed by plan members for a fixed prepaid premium. 152. (s) Means Test . The following categories of personal health services granted to the member or his dependents as medically necessary or appropriate. as identified by the Local Health Insurance Office and based on specific criteria set by the Corporation in accordance with the guiding principles set forth in Article I of this Act. and utilization recording. He may be a paying member. or a pensioner/retiree member.The document issued by the Corporation to members and dependents upon their enrollment to serve as the instrument for proper identification.A person who has no visible means of income. ranging from the indigent in the community whose contributions should be totally subsidized by the government. which is an association of indigenous members of the community organized for the purpose of improving the health status of that community through preventive.Any person whose premiums have been regularly paid to the National Health Insurance Program. promotive and curative health services. and of the means available. Who are covered by the Philhealth Program? All citizens of the Philippines shall be covered by the National Health Insurance Program. (q) Inpatient Education Package . to those who can afford to subsidize part but not all the requir ed contributions for the Program. shall include: .A set of informational services made available to an individual who is confined in a hospital to afford him with knowledge about his illness and its treatment. (p) Indigent . Benefit package.A protocol administered at the barangay level to determine the ability of individuals or households to pay varying levels of contributions to the Program. (r) Member . to prevent the recurrence or aggravation of such illness and to promote his health in general. which is entity that provides. (o) Health Insurance Identification (ID) Card . 153.(3) a health maintenance organization. or whose income is insufficient for the subsistence of his family. particularly lifestyle changes. offers. eligibi lity verification.

Excluded personal health services. and other medical examination services. (d) optometric services. subject to the limitations described in Section 37 of this Act. (e) fifth and subsequent normal obstetrical deliveries. 2) services of health care professionals. subject to the limitations stated in Section 37 of this Act. laboratory. 5) prescription drugs and biologicals. The benefits granted under the law shall not cover expenses for the services enumerated hereunder except when the Corporation. and 4) prescription drugs and biologicals. (c) cosmetic surgery. 3) diagnostic. and . and other medical examination services. (c) Emergency and transfer services. recommends their inclusion subject to the approval of the Board: (a) non-prescription drugs and devices. (b) Outpatient care: 1) services of health care professionals. laboratory. 154. (b) alcohol abuse or dependency treatment. 2) diagnostic. 4) use of surgical or medical equipment and facilities. 3) personal preventive services.(a) Inpatient hospital care: 1) room and board. chanrobles virtual law library 6) inpatient education packages. after actuarial studies. and (d) Such other health care services that the Corporation shall determine to be appropriate and cost-effective.

voluntary arbitration.refers to that part of labor law which regulates the relations between employers and workers. shall be entitled to the benefits of the Program: Provided. as evidenced in his health insurance ID card: and Provided. Example: Book V of the Labor Code which deals with labor organizations. chanrobles virtual law library LABOR LAWS OF THE PHILIPPINES PART . conciliation and mediation. Provided. 7875. 155. further. grievance machinery. That such member can show that he contributes thereto with sufficient regularity.(f) cost-ineffective procedures. chanrobles virtual law library (b) Members who reach the age of retirement as provided for by law and have paid at least one hundred twenty (120) contributions. Who are not required to pay monthly contributions to be entitled to the benefits? The following need not pay the monthly contributions to be entitled to the Program¶s benefits: (a) Retirees and pensioners of the SSS and GSIS prior to the effectivity of R. such actuarial studies must be done within a period of three (3) years. That. . and then periodically reviewed.III LABOR RELATIONS LAW 1. A. Who are entitled to the benefits? A member whose premium contributions for at least three (3) months have been paid within six (6) months prior to the first day of his or his availment. to determine the financial sustainability of including the foregoing personal health services in the benefit package. and (c) Enrolled indigents. That he is not currently subject to legal penalties as provided for in Section 44 of the law. collective bargaining. 156. which shall be defined by the Corporation. What is the distinction between ³labor relations´ and ³labor standards´? Labor relations .

unfair labor practices. Secretary of Labor and Employment. ‡ National Labor Relations Commission (NLRC). and chanrobles virtual law library ‡ Regional Tripartite Wages and Productivity Board (RTWPB) / National Wages and Productivity Commission (NWPC). strikes. minors.refers to that part of labor law which prescribes the minimum terms and conditions of employment which the employer is required to grant to its employees. chanrobles virtual law library 2. ‡ Med-Arbiters. Examples: Books One to Four of the Labor Code as well as Book VI thereof which deal with working conditions. What are the quasi-judicial bodies which exercise jurisdiction over labor cases? A. and ‡ Philippine Overseas Employment Administration (POEA). D. hours of work. ‡ Bureau of Labor Relations (BLR)/Regional Office. ‡ President of the Philippines. ‡ Secretary of Labor and Employment/his duly authorized representatives. With Original Jurisdiction: ‡ Labor Arbiters. occupational health and safety. conditions of employment of women. ‡ DOLE Regional Directors/duly authorized hearing officers. C. ‡ National Labor Relations Commission (NLRC). holiday pay and other benefits. Jurisdiction over social security benefits claims: ‡ ‡ ‡ Social Security System (SSS). chanrobles virtual law library Labor standards . and Philippine Health Insurance Corporation (PHIC). ‡ National Conciliation and Mediation Board (NCMB). With Appellate Jurisdiction: ‡ ‡ ‡ National Labor Relations Commission (NLRC). medical and dental services. picketing and lockout. ‡ Grievance Machinery and Voluntary Arbitrators. wages. ‡ National Conciliation and Mediation Board (NCMB). With Special Powers: ‡ Secretary of Labor and Employment. termination of employment and retirement. and Director of the Bureau of Labor Relations. . Government Service Insurance System (GSIS). B. househelpers and homeworkers.

and chanrobles virtual law library 6. including those of persons in domestic or household service.JURISDICTION OF LABOR ARBITERS 3. exemplary and other forms of damages arising from the employer-employee relations. 3. What are the money claims over which Labor Arbiters have jurisdiction? Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be classified as follows: 1. if accompanied with claim for reinstatement. What is the nature of jurisdiction of Labor Arbiters? The jurisdiction is original and exclusive in nature. Labor Arbiters have no appellate jurisdiction. or chanrobles virtual law library 2. 2. Unfair labor practice (ULP) cases. What is the effect of receivership or liquidation of business on the jurisdiction of Labor Arbiters? The jurisdiction conferred upon Labor Arbiters and the NLRC would not be lost simply because the asset s of a former employer had been placed . Except claims for Employees¶ Compensation. all other claims arising from employer-employee relations. Termination disputes (or illegal dismissal cases). What are the cases falling under the jurisdiction of the Labor Arbiters? Labor Arbiters have jurisdiction over the following cases 1. any money claim. Cases arising from any violation of Article 264 of this Code. including questions involving the legality of strikes and lockouts.000. Cases that workers may file involving wages. 4. Medicare and maternity benefits. moral. 6. 5.00 per claimant (which does not necessarily involve termination of employment). hours of work and other terms and conditions of employment. regardless of whether accompanied with a claim for reinstatement. 4.000. rates of pay. exceeding the amount of P5. chanrobles virtual law libr ary 5. any money claim. Social Security. accompanied with a claim for reinstatement (which involves a termination case).00) regardless of whether accompanied with a claim for reinstatement. regardless of amount. involving an amount exceeding five thousand pesos (P5. Claims for actual.

R. Do Labor Arbiters have jurisdiction over money claims of Overseas Filipino Workers (OFWs)? Labor Arbiters have jurisdiction over all monetary claims of Overseas Filipino Workers arising from employer-employee relationship or by virtue of any law or contract involving Filipino wo rkers for overseas deployment. moral. chanrobles virtual law library [See also RUBBERWORLD (PHILS. involving or arising out of recruitment laws. G. INC. the SEC order becomes functus officio. exemplary and other forms of damages. To proceed with the labor proceedings is grave abuse of discretion. 7. the monetary awards cannot be executed. 2000) ± The suspension of the proceedings is necessary to enable the rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder the rescue of the distressed company. NLRC. Do Labor Arbiters have jurisdiction over wage distortion cases? Labor Arbiters have jurisdiction over wage distortion cases only in unorganized establishments. chanrobles virtual law library (NOTE: The POEA continues to have jurisdiction over recruitment or pre-employment cases which are administrative in nature. January 19. (ALEMAR¶S SIBAL AND SONS. 2000) Rehabilitation receivership of a company issued by the SEC has the effect of suspending all proceedings in all judicial or quasi -judicial bodies.). VS. No. Only when there is liquidation that the monetary claims may be asserted.under receivership or liquidation. jurisdiction is vested with Voluntary Arbitrators. In organized establishments. 9. No. ET AL. (G. ET AL. What is the effect of rehabilitation receivership on monetary claims of workers? RUBBERWORLD (PHILS.). including claims for actual. VS. R. VS. R. Thus. NLRC. 128003. 114761. 126773. April 14. 1999)]. there is no legal impediment for the execution of the decision of the Labor Arbiter for the payment of separation pay by presenting it with the rehabilitation receiver and liquidator. Once the receivership proceedings have ceased and the receiver/liquidator is given the imprimatur to proceed with corporate liquidation.. If already decided. INC. (G. ET AL. The NLRC may not proceed with hearing of monetary claims. 8. NLRC. INC. No.. rules and regulations. subject to the rules on preference of credits. . July 26.

. 8042. the claim for unpaid salaries of overseas workers should be whichever is less between salaries for unexpired portion of the contract or 3 months for every year of the remaining unexpired portion of the contract (in case contract is one year or more). Is termination dispute a grievable issue over which Labor Arbiters have no jurisdiction? It has long been settled that a termination dispute (illegal dismissal case) is not a grievable issue. How should the monetary claims of OFWs be computed? Skippers Pacific. 144314. Sr. quasi-judicial agencies that have the power to cite persons for indirect contempt pursuant to Rule 71 of the Rules of Court can only do so by initiating them in the proper Regional Trial Court. Do Labor Arbiters have injunction power? It must be noted that the provision in the 1990 version of the NLRC Rules granting injunction power to the Labor Arbiters is no longer found in its 2002 version. No. except in strikes and lockouts in industries indispensable to the national interest. Republic Act No. vs. Inc. Labor Arbiters have jurisdiction thereover. it must be noted that according to the 2003 case of Land Bank of the Philippines vs. November 18. August 5. 2002) Under Section 10. 152611. It is not within their jurisdiction and competence to decide the indirect contempt cases. R. November 21. No. in which case. (G. hence. No. Do Labor Arbiters have contempt powers? Yes. R. 10. [G. it was categorically ruled . It is opined that this deletion is correct since Article 218 of the Labor Code grants injunctive power only to the ³Commission´ which obviously refers to the NLRC¶s various divisions and not to the Labor Arbiter. 11. Listana. 14. 13. 12. et al. Inc. These matters are still within the province of the Regional Trial Courts. Not only this. 2002]. 2003]. Do Labor Arbiters have jurisdiction over legality of strikes and lockouts? Labor Arbiters have jurisdiction over the issue of legalit y of strikes and lockouts. either NLRC (in certified cases) or DOLE Secretary (in assumed cases) has jurisdiction. 142244. vs. In Atlas Farms. In the same Atlas Farms case. NLRC. Mira. However. the Supreme Court affirmed the earlier rulings to this effect..including money claims arising therefrom or violation of the conditions for issuance of license to recruit workers). R. [G.

is considered intra -corporate dispute. The Regional Trial Courts (not SEC) now have jurisdiction under R. Issues on the termination of their membership with the cooperative do not fall within the jurisdiction of the Labor Arbiters. JURISDICTION OVER INTRA-CORPORATE DISPUTES. (such as unpaid salaries. therefore. where there was already actual termination. otherwise known as ³The Cooperative Code of the Philippines´ are composed of members. (Lozon vs. October 8. thus placing them within the jurisdiction of the Labor Arbiter.that given the fact of dismissal. There is no evidence in this case that private respondents are members of petitioner cooperative and even if they are. chanrobles virtual law library In the case of Perpetual Help Credit Cooperative. these disputes are within the original and exclusive jurisdiction of the Labor Arbiter. G. vs. with alleged violation of the employee¶s rights. It must be emphasized that a corporate officer¶s dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. 02. the Supreme Court ruled that employees of cooperatives (as distinguished from members thereof) are covered by the Labor Code and. etc. 1995. But. 13th month pay. Labor Arbiters have jurisdiction over illegal dismissal cases of employees of cooperatives. -Labor Arbiters have no jurisdiction over termination of corporat e officers and stockholders which. Under Art. [G. Members of cooperatives are not employees. it may be referred to the grievance machinery set up in the CBA. R. What are the cases which do not fall under the jurisdiction of the Labor Arbiters? a. Where the dispute is just in the interpretation. 8799 (Securities Regulation Act of 2000). overtime pay. rest day and termination of employment. Labor Arbiters have jurisdiction over their claims. under the law.). A. 107660. R. 217 of the Labor Code. Do Labor Arbiters have jurisdiction over monetary claims and illegal dismissal cases of employees of cooperatives? a. No. Jan. Jurisdiction of RTC includes adjudication of monetary claims of the corporate officer who was dismissed. 240 SCRA 1) . bonuses. 6938. 2001]. 121948. 16. it is already cognizable by the Labor Arbiter. NLRC. it can be said that the cases were effectively removed from the jurisdiction of the Voluntary Arbitrator. b. the dispute is about payment of wages. No. Cooperatives organized under Republic Act No. Inc. or brought to voluntary arbitration. 15. Faburada. implementation or enforcement stage. leaves. damages and attorney's fees.

Consequently. However. chanrobles virtual law library The Supreme Court considered petitioner¶s argument untenable. trustees. petitioner underscores the fact that the IBC¶s By-Laws does not even include the position of comptroller in its roster of corporate officers. He points out that he had actually been appointed as such on January 11. Intercontinental Broadcasting Corporation.´ (Union Motors vs. cashier. R. March 21. 2002]. It held that even assuming that he was in fact appointed by the General Manager. the Supreme Court has held that one who is included in the by -laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. and managers. as petitioner¶s appointment as comptroller required the approval and formal action of the IBC¶s Board of Directors to become valid. petitioner argued that he is not a corporate officer of the IBC but an employee thereof since he had not been elected nor appointed as Comptroller and Assistant Manager by the IBC¶s Board of Directors. officers. 314 SCRA 531. and general manager. 539 [1999]) and that where a corporate officer is not specifically indicated in the roster of corporate officers in the by-laws of a corporation.Who are corporate officers?There are specifically three (3) officer s which a corporation must have under the statute: president..D. as they may deem necessary. 8799) which includes controversies involving both election and appointment of corporate directors. Consequently. that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P. therefore. The by-laws may and usually do provide for such other officers. vice president. In support of his argument. the Board of Directors may also be empowered . 902-A (now by the RTC under R. But what about if the position is not included in the roster of officers in the By-laws? Does the holder of the position to be considered a corporate officer? In the case of Nacpil vs. He. secretary. such board action would not have been required. No. it is clear. No. That the position of Comptroller is not expressly mentioned among the officers of the IBC in the by-laws is of no moment. the law does not limit corporate officers to these three. A.g. Had petitioner been an ordinary emplo yee. and treasurer. auditor. such appointment was subsequently approved by the Board of Directors of the IBC. because the IBC¶s Board of Directors is empowered under Section 25 of the Corporation Code and under the corporation¶s by-laws to appoint such other officers as it may deem necessary. e. [G. therefore. the ³by-laws may and usually do provide for such other officers. It must be noted that the Supreme Court has held that in most cases. NLRC. Section 25 of the Corporation Code gives corporations the widest latitude to provide for such other offices. 144767. 1995 by the IBC¶s General Manager. contended that his dismissal was a controversy falling within the jurisdiction of the labor courts.

including the signing of transmittal letters covering the same. to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased. NLRC.´ As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. 1963. as a regular employee. February 20. 2006]. 1991. she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. The Bank¶s contention that she merely holds an elective positi on and that. . The Labor Arbiter has thus jurisdiction over respondent¶s complaint.under the by-laws to create additional officers as may be necessary. Cortes. While. as held in Rural Bank of Coron [Palawan]. she is entitled to security of tenure. 353 (1995)]. at the same tim e. among others. in effect. the Assistant Vice-President was appointed Accounting Clerk by the Bank on July 14. [320 Phil. One who rose from the ranks is a regular employee and not a mere corporate officer. she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19. Inc. No. As earlier stated. that is. 6. chanrobles virtual law library A corporate officer may also be an employee whose dismissal may vest jurisdiction on the Labor Arbiter. 141093. This being in truth a case of illegal dismissal. 2001]. it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but to no avail. [G. (Tabang vs. not because of the mode or even the reason for hiring them. Then in 1982. chanrobles virtual law library A corporate officer may also be. she is not a regular employee is belied by the nature of her work and her length of service with the Bank. instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employee s. her services may be terminated only for a just or authorized cause. she is tasked. Inc. vs. It has been stated that ³the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. respondent was the Corporate Secretary of the Rural Bank of Coron. In Prudential Bank and Trust Company vs. The case of Mainland Construction Co.R. In fine.. 266 SCRA 462 [1997]). Reyes. Movilla. she was also its Financial Assistant and the Personnel Officer of the two other petitioner corporations. ³an employee is regular because of the nature of work and the length of service.´ Additionally. vs. 164888. Dec. she rose to become supervisor. As Assistant Vice President of the foreign department of the Bank. indeed. [G. an employee. From that position. No. R.

113191. Rodrigo. G. JURISDICTION OVER GOVERNMENT CORPORATIONS WITH ORIGINAL CHARTERS. the Supreme Court ruled that it enjoys immunity from legal process of every form and. Exception: when said entities perform proprietary activities (as distinguished from governmental functions). . c. such as the restaurant services offered at John Hay Air Station undertaken by the United States Government as a commercial activity for profit and not in its governmental capacity. (Department of Foreign Affairs vs. R. JURISDICTION OVER IMMUNED ENTITIES. For instance. Nos. 1995. 262 SCRA 39. ADB's officers. 109095109107. in an illegal dismissal case filed against the Asian Development Bank (ADB). 182 SCRA 644. (Lasco. 4344). [G. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. therefore. on their part. Aquino. the Court said that being a member of the United Nations and a party to the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations. 26.b. There is an exception to the immunity rule as exemplifi ed by the case of United States vs. et al. et al. 1990. chanrobles virtual law library . R. enjoy immunity in respect of all acts performed by them in their official capacity. United Nations Revolving Fund for Natural Resources Exploration [UNRFNRE]. it was held that when the function of the foreign entity otherwise immune from suit. vs. G. partakes of the nature of a proprietary activity. 79470. NLRC. et al. the Philippine Government adheres to the doctrine of immunity granted to the United Nations and its specialized agencies. 48 SCRA 242 [1972]). In dismissing the case. R. The reason is that by entering into the employment contract with the cook in the discharge of its proprietary functions. No. Here. World Health Organization vs. They have no jurisdiction if entity has original charter. the case for illegal dismissal filed by a Filipino cook working therein is well within the jurisdiction of Philippine courts. . Feb. Hon. February 29.Labor Arbiters have no jurisdiction over labor cases involving entities immuned from suit. In 1995. Both treaties have the force and effect of law. September 18.. the suit cannot prosper.Labor Arbiters have jurisdiction over cases involving employees of government-owned or controlled corporations without original charters (organized under the Corporation Code). 1996. the Supreme Court had occasion to assert and reiterate said rule in an illegal dismissal case filed against a specialized agency of the United Nations.. 660]. No. it impliedly divested itself of its sovereign immunity from suit.

Medicare and maternity benefits. R. in Zamboanga City Water District vs. bound to respect all the proceedings therein. May 27. Buat. They have no jurisdiction over quasi-delict or tort per Article 2176 of the Civil Code that have no reasonable causal connection to any of the claims provided for in the Labor Code. 104389. the Supreme Court. with whom Captain Tolosa had no employer-employee relationship. a complaint was lodged with the Labor Arbiter but later. [G. No. However. did not allow petitioner to belatedly raise the issue of jurisdiction before it.In Hagonoy Water District vs. (See also Tanjay Water District vs. the Supreme Court ruled that local water districts are quasi-public corporations and. No. 1989). No. other labor statutes. 1994]. JURISDICTION OVER TORTS. August 31. G. . 2003]. R. 81490. considering that it never raised said issue before the Executive Labor Arbiter. e. here. [G. NLRC. the NLRC or even before the Supreme Court in another related case. 63742. NLRC.As earlier emphasized. although the Labor Arbiter has no jurisdiction. In fact. No. other issues over which the Labor Arbiter or NLRC has no jurisdiction may be summed up as follows: 1. Labor Code). therefore. rules and regulations. R. Gabaton.d. April 17. R. [G. chanrobles virtual law library In Tolosa vs. the dismissal of their employees are gov erned by the civil service laws. it being evident that the issue presented therein involved the alleged gross negligence of the co -employees (shipmates) of Captain Tolosa. . 149578. the Supreme Court ruled that the Labor Arbiter has no jurisdiction over the case because it was established that the same was in the nature of an action based on a quasi -delict or tort. the petitioner is already estopped from assailing the jurisdiction of the NLRC and is. Social Security. (Article 217 [6]. JURISDICTION OVER LOCAL WATER DISTRICTS. Cases involving claims for Employees Compensation. April 10. 1988]. the deceased husband of the complainant. Labor Arbiters and the NLRC have no power or authority to grant reliefs from claims that do not arise from employer-employee relations. SUMMARY OF OTHER ISSUES BEYOND JURISDICTION OF THE LABOR ARBITERS OR NLRC. or collective bargaining agreements. it was petitioner itself which filed the complaint before the Executive Labor Arbiter and sought affirmative relief therefrom and participated actively in the proceedings therein. . Although jurisdiction over strikes and dismissals of employee s in local water districts is lodged not with the NLRC but with the Civil Service Commission. In addition to the foregoing. therefore.

Also the issue of liability in suretyship. chanrobles virtual law library 3. vs. Rules and Regulations Governing Overseas Employment) or criminal offenses or . 12. 122 SCRA 671). 11. Inciong. Violation of labor laws which are penal in nature. Issue of replevin intertwined with a labor dispute. Cases involving claim of employee for cash prize offered under the Innovation Program of a company which. G. Hernandez. R. 129 SCRA 485). L-47739. Juco. Cases involving an injunction filed by a third party with the regular court against the sheriff enforcing a decision in a labor case. 158 SCRA 53). PNOC-Exploration Corporation vs. 161 SCRA 719). chanrobles virtual law library 7. although arising from employer-employee relationship. Cases filed by government-owned corporations performing governmental functions. Cases of contempt involving a judge of the regular court. (National Housing Corporation vs. (Molave Motor Sales. Agarrado.2. (Asian Footwear vs. Metropolitan Waterworks and Sewerage System vs. June 22. 8. Hon. NLRC. Jr. NLRC. No. (Singapore Airlines vs. Cases initiated by employer against an employee for sum of money and damages for cost of repair jobs made on an employee¶s personal cars as well as for the purchase price of parts and vehicles. 10. (San Miguel Corporation vs. vs. 6. 122 SCRA 671). require the application of general civil law on contracts. Salas. 166 SCRA 625). (Philippine Association of Free Labor Union s [PAFLU] vs. June 22. 91 SCRA 563). Inc. Claims for commissions and certain reimbursements made by an independent contractor. (Singapore Airlines vs. Cases involving issue of whether sale of property being levied on execution was done in bad faith. (Section 10. R. (Tolentino vs. 134 SCRA 172. (Sara vs. Cases arising from violation of training agreement. 1983. Soriano. Rule X. Book II. Militante. Laron. 4. Hon. Examples are illegal recruitment cases. 143 SCRA 602. Ernani Cruz Pano. G. 1983. 164 SCRA 501). Ernani Cruz Pano. 5. Cases involving claim for liquidated damages for breach of a contractual obligation. 142 SCRA 49). 156 SCRA 299). 9. No. (Basaya. L-47739.

Exercise of equity jurisdiction to enjoin activities for purposes of compelling an employer to ignore a clear mandate of the law. Sanchez. 16. 13. October13. 120077. Insular Life vs. (Bulletin Publishing Corporation vs. chanrobles virtual law library 17. the main witnesses. Review of recruitment violation cases and other related cases decided by the POEA.felonies committed in the course of strikes and lockouts. Insolvency proceedings in the enforcement of the worker preference ordained under Article 110 of the Labor Code. Book VI.are not nationals of the Philippines. the NLRC has no jurisdiction when the main aspects of the case transpired in foreign jurisdictions and the only link that the Philippines has with the case is that the employee is a Filipino Citizen. The NLRC is not a convenient forum given that all the incidents of the case ± from the time of recruitment. to employment.occurred outside the Philippines. the Filipino was hired directly (without the intervention of the POEA) by the foreign employer while he was working in the Sultanate of Oman and was assigned to a hotel in China. Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995). Galang. the Supreme Court ruled that under the international law doctrine of forum non conveniens. 14. Maalat. Grepalife Assurance Corporation vs. or has no reasonable causal connection with. 15. 187 SCRA 694. 2000). Rule IV. NLRC. (Section 1. 179 SCRA 459). Mr. NLRC. employer -employee relationship. Schmidt and Mr.´ Likewise. . The Secretary of Labor and Employment has exclusive jurisdiction over these cases. The inconvenience is compounded by the fact that the proper defendants ± the Palace Hotel and MHICL . Henk are nonresidents of the Philippines. What is the doctrine of forum non conveniens? May this be invoked against the exercise of jurisdiction by the Labor Arbiters/NLRC? In the case of The Manila Hotel Corp. Labor Code). 144 SCRA 678). Neither are they ³doing business in the Philippines. (Section 12. 201 SCRA 695. chanrobles virtual law library 17. Cases involving issues which do not arise from. (Pepsi-Cola Distributors vs. (G. In this case. Cosmopolitan Funeral Homes vs. NLRC. Administrative action against the licensee or holder of authority cognizable by the POEA which could proceed independently from the criminal action. R. vs. 187 SCRA 773. Rules and Regulations Governing Overseas Employment). (Article 264. to dismissal . No.

One of the issues presented before the Supreme Court was whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy. common practices and customs´ of Singapore. It held that it was wrong for the Labor Arbiter to dismiss the case for lack of jurisdiction under its holding that ³labor relations system in the Philippines has no extra -territorial jurisdiction´. 2005]. The Certificate declared her a bona -fide contract worker in Singapore. Subsequently. No. which was affirmed by the NLRC. Roxas Boulevard. and (b) locally (direct) hired. not of the Philippines. Instead. noted a palpable error in the Labor Arbiter's disposition of the case. Significantly. Here. Manila. [G.The said Manila Hotel case should be distinguished from Philippine National Bank vs. she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon cer tification by the POEA. chanrobles virtual law library Citing the ruling in PNB vs. in answering this query in the affirmative. the Branch Office had two (2) types of employees: (a) expatriates or the regular employees. At the time her employment was illegally terminated. NLRC. June 21. 2007]. petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the Labor Arbiter. and that ³since complainant was hired and . Moreover. with principal offices at the PNB Financial Center. Cabansag [supra]. the High Court in Sim vs. Petitioner is a private banking corporation organized and existing under the laws of the Philippines. too. 157376. and tot ally ³governed by and subject to the laws. Thus. hired in Manila and assigned abroad including Singapore. After her 3-month probationary period. even assuming arguendo that she was considered at the start of her employment as a ³direct hire´ governed by and subject to the laws. [G. that ³it is limited to the relationship between labor and capital within the Philippines´. Cabansag. common practices and customs prevailing in Singapore. ruled that the Labor Arbiter has jurisdiction because the issue here involves termination of an OFW. petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore. 157010. in this case one deployed in Singapore. October 2. she was terminated. with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker. At the time. No. This circumstance militates against petitioner¶s contention that respondent was ³locally hired´. respondent¶s employment by the Singapore branch office had to be approved by the president of the bank whose principal offices were in Manila. noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. R. The Supreme Court. respondent was hired by the Singapore branch of petitioner-bank while she was a tourist in Singapore in 1998. she already possessed the POEA Employment Certificate. She applied for and was hired as Branch Credit Officer.R. however. with regard to the issue on jurisdiction. Hence. she filed a complaint before a Labor Arbiter. While she may have been directly hired in Singapore by petitioner.

166920. the Supreme Court cited the following reasons that do not warrant the application of the said principle: First. 1997.the Senior Officer. and Managing Director of PCIB. Ltd. According to the Supreme Court. the Labor Arbiter has jurisdiction not only on the basis of Article 217 of the Labor Code but under Section 10 of Republic Act No. although by a Philippine Corporation. In Bank of America. 274 SCRA 102).). she was promoted to Manager position until September 1999. chanrobles virtual law library The principle of forum non conveniens was also invoked by petitioners in Pacific Consultants International Asia. No. CA. vs.´ . Petitioners insisted on the application of the said principle since the respondent is a Canadian citizen and was a repatriate.Europe -. that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to. (Id. [448 Phil. when she received a letter from Remegio David -. it is properly considered as defense. including ter mination disputes involving all workers. provided. chanrobles virtual law library Third. G. among whom are overseas Filipino workers. Eventually. Inc. or the Migrant Workers and Overseas Filipinos Act of 19 95. (3) that the Philippine Court has or is likely to have power to enforce its decision.R. chanrobles virtual law library Second. 196 (2003)]. Under these provisions. as well as Section 62 of the Omnibus Rules and Regulations Implementing R. 19. European Head of PCIBank. and. 181. 8042. No. Bank of America International.A. hence. (Id. NT&SA. Xxx.R. In rejecting petitioner¶s contention. it follows that the law that governs their relationship is the law of the place where the employment was executed and her place of work or assignment. Schonfeld. [ G. (See PHILSEC Investment Corporation vs. vs. it was held that:³xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so.´ chanrobles virtual law libr ary The petitioner here was Corazon Sim who was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. The propriety of dismissing a case based on this principle requires a factual determination. 8042. Court of Appeals. it is clear that Labor Arbiters have original and exclusive jurisdiction over claims arising from employer employee relations.assigned in a foreign land. (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint. No.). Feb.informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. June 19. 2007]. 103493.

All cases decided by the Labor Arbiters including contempt cases. a. Injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which. 19. If a claim does not fall within the exclusive original jurisdiction of the Labor Arbiter. The NLRC does not have original jurisdiction on the cases over which Labor Arbiters have original and exclusive jurisdiction (see above enumeration). Certified labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest. and 2. may cause grave or irreparable damage to any party. b. Original jurisdiction. c. exclusive appellate jurisdiction.JURISDICTION OF THE NLRC 18. What are the two kinds of jurisdiction of the NLRC? The National Labor Relations Commission exercises two (2) kinds of jurisdiction: 1. the NLRC cannot have appellate jurisdiction thereover. Cases decided by the DOLE Regional Directors or his duly authorized Hearing Officers (under Article 129) involving recovery of wages. Injunction in strikes or lockouts under Article 264 of the Labor Code. original jurisdiction. What is the distinction between the jurisdiction of the Labor Arbiters and the NLRC? The NLRC has exclusive appellate jurisdiction on all cases decided by the Labor Arbiters. simple money claims and other benefits not exceeding P5. certified to it by the Secretary of Labor and Employment for compulsory arbitration. . 1. if not restrained or performed forthwith. a. 2. b.000 and not accompanied by claim for reinstatemen t. Exclusive appellate jurisdiction.

the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Denial of application for union registration or cancellation of union registration originally rendered by the Bureau of Labor Relations (BLR) . Power to order stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the nationa l interest. wage order or rules and regulations issued pursuant thereto. 2. 21.POWERS OF THE DOLE SECRETARY AND HIS DULY AUTHORIZED REPRESENTATIVES 20. chanrobles virtual law library 4. What is the power to assume jurisdiction or certify ³national interest´ labor disputes to NLRC? When. What is the visitorial and enforcement power of the DOLE Secretary and his duly authorized representatives under Article 128 of the Labor Code? 1. Orders issued by the duly authorized representative of the Secretary of Labor and Employment under Article 128 (Visitorial and Enforcement Power) may be appealed to the latter. except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. and the right to copy therefrom. 22. in his opinion. to question any employee and investigate any fact. (Art. What are the cases falling under the DOLE Secretary¶s appellate power? a. Power to inspect employer¶s records and premises at any time of the day or night whenever work is being undertaken therein. Power to issue writs of execution to the appropriate authority for the enforcement of their orders. condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law. Labor Code). 3. Power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. 128). (Article 263 [g]. chanrobles virtual law library b.

2. 259). c.000. (NOTE: Decisions of MedArbiters in intra-union disputes are appealable to the BLR). What are the cases falling under the jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators? . Decisions of the Med -Arbiter in certification election cases are appealable to the DOLE Secretary. the interpretation or enforcement of company personnel policies. the Regional Director or any of the duly authorized hearing officers of DOLE have jurisdictio n over claims for recovery of wages. simple money claims and other benefits.the interpretation or implementation of the Collective Bargaining Agreement (CBA). JURISDICTION OF GRIEVANCE MACHINERY IN THE CBA 24. and 2. appeal should be made to the BLR). (NOTE: All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the CBA) chanrobles virtual law library JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL OF VAs 25. the aggregate money claim of each employee does not exceed P5.00.may be appealed to the Secretary of Labor and Employment. (NOTE: If originally rendered by the Regional Office. 23. JURISDICTION OF THE DOLE REGIONAL DIRECTORS / DULY AUTHORIZED HEARING OFFICERS. What are the cases falling under the jurisdiction of the Grievance Machinery? Any grievance arising from: 1. the claimant does not seek reinstatement. provided that: 1. and 3. the claim must arise from employer-employee relationship. What are the money claims falling under the jurisdiction of DOLE Regional Directors? Under Article 129. (Art.

ET AL. who has jurisdiction over termination disputes. NO. Policy Instructions No. COURT OF APPEALS. 138938. the Voluntary Arbitrator may assume jurisdiction only when agreed upon by the parties. (Article 262). NO. (G.R. 2000) . 27. upon agreement of the parties. all other labor disputes including unfair labor practices and bargaining deadlocks. NLRC (G. How should cases falling under the jurisdiction of the Voluntary Arbitrator but erroneously filed with the Labor Arbiters or DOLE Regional Offices be processed? They shall immediately be disposed and referred to the Grievance Machinery or Voluntary Arbitration provided in the CBA. INC. all unresolved grievances arising from the implementation or interpretation of company personnel policies. JURISDICTION OF THE (BLR)/MED-ARBITERS BUREAU OF LABOR RELATIONS 28. Nov. HAMMONIA MARINE SERVICES. (Article 261). NLRC. (1998)]. Labor Arbiter or Voluntary Arbitrator? ATLAS FARMS. 616. VS. chanrobles virtual law library CELESTINO VIVERO VS.. and 2. What are the cases falling under the jurisdiction of the BLR? The BLR has original and exclusive jurisdiction over the following: 1. all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement after exhaustion of the grievance procedure.The Voluntary Arbitrator (or panel of Voluntary Arbitrators) has original and exclusive jurisdiction over the following: 1. 290 SCRA 603. OCTOBER 24. 56 issued by DOLE Secretary Confesor clarifying the jurisdiction of Labor Arbiters and Voluntary Arbitrations does not apply. 18. ³Inter-union disputes´ or ³representation disputes´ which refer to cases involving petition for certification election filed by a duly registered labor organization which is seeking to be recognized as the sole and exclusive bargaining agent of the rank-and-file . 3. In case of conflict. 26. It reiterated the ruling that dismissal is not a grievable issue.Under Article 262. 2002) Jurisdiction over termination disputes belongs to Labor Arbiters and NOT with Grievance Machinery nor Voluntary Arbitrator [cited Maneja vs. 142244. R.

8042. JURISDICTION OF POEA 31. A. The NCMB has jurisdiction over conciliation. 3. (2) keeping of registry of labor unions. What is the jurisdiction of the NCMB? Executive Order No. the same having been transferred to the Labor Arbiters by virtue of R. firm or establishment. except those ar ising from the interpretation or implementation of the CBA which are subject of grievance procedure and/or voluntary arbitration. 251 which created the National Conciliation and Mediation Board (NCMB) ordains that the conciliation. It performs preventive mediation and conciliation functions. It is with the NCMB that Notices of Strike or Lockout are filed. It is an attached agency under the administrative supervision of the Secretary of Labor and Employment. grievances or problems arising from or affecting labor-management relations in all workplaces. ³Intra-union disputes´ or ³internal union disputes´ which refer to disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of the union. mediation and voluntary arbitration cases. POEA¶s jurisdiction is now confined to recruitment or preemployment cases which are administrative in nature. It administers the voluntary arbitration program. maintains/updates a list of voluntary arbitrators. What are the cases falling under the jurisdiction of the POEA? The POEA has no more jurisdiction over monetary claims of OFWs. involving or arising . including any violation of the rights and conditions of union membership provided for in the Labor Code. 2. What are the relevant administrative functions of the BLR? The BLR has the following administrative functions: (1) registration of labor unions. 29. and provides counseling and preventive mediation assistance particularly in the administration of collective agreements.employees in the appropriate bargaining unit of a company. chanrobles virtual law library JURISDICTION OF THE MEDIATION BOARD (NCMB) NATIONAL CONCILIATION AND 30. and (3) maintenance and custody of CBAs. compiles arbitration awards and decisions. mediation and voluntary arbitration functions of the Bureau of Labor Relatio ns (BLR) shall be absorbed by NCMB. All disputes.

(Article 263[g]. Labor Code). May the President assume jurisdiction over national interest cases? Yes. and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. in his opinion. the NWPC has the power to review regional wage levels set by the RTWPBs to determine if these are in accordance with prescribed guidelines and national development funds. JURISDICTION OVER CLAIMS FOR SOCIAL SECURITY BENEFITS 34. including money claims arising therefrom or violation of the conditions for issuance of license to recruit workers. Labor Code). . What agencies of government administer social security programs? ‡ The Social Security System (SSS) for the private sector employees and the Government Service Insurance System (GSIS) for the public sector employees are the agencies which administer the income benefits of the social insurance programs of the government. (Articles 120-127. POWER OF REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)/ NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) 33. rules and regulations. injuries and deaths. In connection with labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest. POWER OF PRESIDENT TO NATIONAL INTEREST CASES ASSUME JURISDICTION OVER 32. medical and related benefits in cases of work-related illnesses. the President of the Philippines shall not be precluded from determining the industries that. provinces or industries therein and t o issue the corresponding wage order. are indispensable to the national interest. chanrobles virtual law library On the other hand. What are the powers of the RTWPB and NWPC? The RTWPB has the power to determine and fix minimum wage rates applicable in the region. subject to the guidelines issued by the NWPC.out of recruitment laws. ‡ The SSS and the GSIS likewise administer either the employees¶ compensation program which grants income benefits.

G. If the denial is issued by the Regional Office. From the decision of the NLRC. No. What are the modes of appeal from the decisions of the various labor tribunals? 1. 1995). R. If the denial is originally made by the BLR. DECISION OF VOLUNTARY ARBITRATORS: The decision of a Voluntary Arbitrator or panel of Voluntary Arbitrators is appealable by ordinary appeal under Rule 43 of the Rules of Civil Procedure directly to the Court of Appeals. it may be appealed to the BLR. From the ruling of the Court of the Appeals. September 16. DECISION OF LABOR ARBITERS: Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within ten (10) calendar days from receipt by the party of the decision. Which has jurisdiction over criminal and civil aspects of labor cases? By express provision of Article 241 of the Labor Code. over the civil aspects. (Luzon Development Bank vs. et al. 120319. et al. JURISDICTION OVER CRIMINAL AND CIVIL LIABILITIES 35.. it may be elevated to the Supreme Court by way of ordinary appeal under Rule 45 of the Rules of Civil Procedure. there is no appeal. chanrobles virtual law lib rary Other provisions of the Labor Code which vest jurisdiction in the regular courts over the criminal aspect of cases are Articles 272 and 288. From the Court of Appeals. APPEALS 36. both crim inal and civil liabilities arising from violations of the rights and conditions of membership in a labor organization enumerated in said Article. This provision should be distinguished from Article 247 of the Labor Code which vests jurisdiction upon the Labor Arbiters. G. appeal may be had to . The only way to elevate the case to the Court of Appeals is by way of the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure. 2. (St. DECISION OF THE BLR: A.‡ The Philippine Health Insurance Corporation has taken over the administration of the Medicare benefits which are now also in the hands of the SSS and the GSIS. R. Labor Code). (Article 247. No. Martin Funeral Home vs. 1998). October 6.. the case may be elevated to the Supreme Court by way of ordinary appeal under the same Rule 45. NLRC. Association of Luzon Development Bank Employees. 3. Denial of application for registration of a union. 130866. attorney¶s fees and other affirmative relief. shall continue to be under the jurisdiction of ordinary courts. including damages. of unfair labor practices cases.

(Abbott Laboratories Philippines. and . et al. DECISION OF THE DOLE REGIONAL DIRECTORS OR HIS DULY AUTHORIZED HEARING OFFICERS UNDER ARTICLE 129 INVOLVING RECOVERY OF WAGES. chanrobles virtual law library (c) If made purely on questions of law. JUNE 28.000 AND NOT ACCOMPANIED BY CLAIM FOR REINSTATEMENT . 131374.. R. NO. The decision of the BLR rendered in its appellate jurisdiction may not be appealed to the Secretary of Labor and Employment but may be elevated directly to the Court of Appeals by way of certiorari under Rule 65. DECISION OF THE MED-ARBITER IN CERTIFICATION ELECTION CASES ± The decision is appealable to the DOLE Secretary of Labor and Employment. January 26. chanrobles virtual law library The decision of the BLR rendered in its original jurisdiction may be appealed to the Secretary of Labor and Employment whose decision thereon may only be elevated to the Court of Appeals by way of certiorari under Rule 65. order or award was secured through fraud or coercion. If the cancellation is done by the BLR in a petition filed directly therewith. (NOTE: Appeal from CA to SC should be under Rule 45 (Petition for Review on Certiorari) and not Rule 65 (Special Civil Action for Certiorari) ± SEA POWER SHIPPING ENTERPRISES. 5. 4. G. (b) If the decision. Inc. If the cancellation of union registration is ordered by the Regional Office. ET AL. 2001) APPEAL TO THE NLRC FROM DECISIONS OF LABOR ARBITERS 37. including graft and corruption. COURT OF APPEALS. vs. What are the grounds for appeal? There are four (4) grounds. Abbott Laboratories Employees Union. to wit: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter. R. Cancellation of registration of a union. No. G. 2000). SIMPLE MONEY CLAIMS AND OTHER BENEFITS NOT EXCEEDING P5. INC. VS. 138270. the BLR¶s decision is appealable to the Secretary of Labor and Employment by ordinary appeal. B.. the same may be appealed to the BLR.the Secretary of Labor and Employment.The decision is appealable to the NLRC and not to the DOLE Secretary.

July 20. 58011-12. the appeal should be filed within the reglementary period. 39. Reliance on erroneous notice of decision . a. R. What is the reglementary period to perfect the appeal? The reglementary period is ten (10) calendar days. Allowing the appeal for other compelling reasons (due to typhoon falling on the 10th day. Appeal filed before the Vir-Jen case (G. Nos. 6. if judgment involves monetary award. b. d. Saturdays. What are the requisites for perfection of appeal? Requisites for perfection of appeal. and chanrobles virtual law library e. Sundays and Legal Holidays included in reckoning 10 day reglementary period. posting of cash or surety bond. 4. . 1. 38. 1982) at a time when the rule was 10 working days. When allowing the appeal "in the interest of justice. Appeal from decision of Labor Arbiter on third-party claim (10 working days). 10th day falling on a Saturday. proof of service to the adverse party. the Memorandum of Appeal should be under oath. Exceptions to 10-calendar day period rule." 7. Appeal from decision of Labor Arbiter in direct contempt cases (5 calendar days). 5. or excusable negligence).(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. payment of appeal fee. 2. a. c. 3. d. 10th day falling on a Sunday or holiday. b.

10 calendar-day period is counted from receipt of decision by counsel of party. Submission of new or additional evidence on appeal may be allowed. the employee may file a motion to cite the former in contempt. Failure to pay appeal docketing fee.. . The employee ordered reinstated need not secure a writ of execution from the Labor Arbiter. 280 SCRA 806 [1997]. 40.c. l. chanrobles virtual law library Options of the employer. k. What is the reinstatement aspect of the Labor Arbiter's decision? If reinstatement is ordered by the Labor Arbiter in an illegal dismissal case. h. In the case of Pioneer Texturizing Corporation vs. at the option of the employer).Raising new issues or changing theory on appeal is not allowed. Failure to appeal or perfect appeal within 10-calendar day reglementary period will make the Labor Arbiter's decision final and executory. Receipt by one of two counsels is receipt by the party. et al. Date of mailing (by registered mail) is date of filing. it is immediately executory even pending appeal. Motion for reconsideration of Labor Arbiter¶s decision is not allowed. m. it is the employer who is duty-bound to inform employee of the reinstatement (either in the payroll or in the position previously held or in a substantially equivalent position if no longer availab le. NLRC. chanrobles virtual law library f. g. The posting of bond does not stay reinstatement. Lack of verification of the memorandum of appeal is not fatal nor jurisdictional. e. d. not fatal to the validity of appeal.Labor Arbiter loses jurisdiction. i. If employer refuses to reinstate. Effect of perfection of appeal . j. Such award does not require a writ of execution. The 10-calendar day reglementary period to appeal is not extendible.

the Supreme Court prescribes the procedure to be followed. an award or order for reinstatement under Article 223 is self-executory. Failing to exercise any of the options. under pain of contempt. The notification is based on practical considerations for without notice. (Article 223. Inc. the employer has the right to choose whether to readmit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. employer should pay salary. Zamboanga City Water District vs. (Pioneer Texturizing Corporation vs. without requiring him to report back to his work. the employer still refuses to reinstate the employee. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries. The entitlement of the dismissed employee to his salaries occasioned by the unjustified refusal of the employer to reinstate him becomes effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Labor Code. 232 SCRA 587). All that the employer has is to avail of any of the following options: 1. the employee has no way of knowing if he has to report for work or not.The employer is practically left with no effective contra -remedy that may forestall or stay the execution of a Labor Arbiter¶s order for immediate reinstatement pending appeal. supra). Remedy in case of employer¶s refusal to comply with writ of execution to reinstate is contempt citation. supra). Employer has to notify employee of his choice of option. the employer can be compelled. actual reinstatement of the employee to his work under the same terms and conditions prevailing prior to his dismissal or separation. Buat. If despite several writs of execution.. reinstatement of the employee in the payroll of the company. the employer has to inform the employee of his choice. NLRC. the remedy is not the grant of additional backwages to . (Roquero vs. to pay instead the salary of the employee. or 2. In either instance. Philippine Air Lines. The employee should not be left without any remedy in case the employer unreasonably delays reinstatement. Having ruled in Pioneer Texturizing [supra] that henceforth.´ [Underscoring supplied] Failure to exercise option. thus: ³After receipt of the decision or resolution ordering the employee¶s reinstatement.

(Christian Literature Crusade vs. 171 SCRA 712. Inc. as if he was reinstated. 130866. it ordered petitioner APC to pay Zamora his . 152329. took place for it was Zamora himself who voluntarily terminated his employment by not reporting for work and by joining a competitor . the Labor Arbiter¶s decision was reversed and consequently. The case was remanded later from the Supreme Court to the Court of Appeals pursuant to the ruling in St. the Labor Arbiter granted the motion and issued a writ of execution directing petitioner APC to reinstate complainant to his former position. 113592. constructive or otherwise. The Court of Appeals reversed the ruling of the NLRC but. [G.Grand Air. the dismissal of the employee was held valid. the NLRC reversed the ruling of the Labor Arbiter and held that no dismissal. The employee did not appeal from that decision of the NLRC but filed a motion for a writ of execution of the order of reinstatement. Martin Funeral Home vs. the Labor Arbiter ordered the reinstatement of respondent Zamora who immediately filed a motion for execution of the said order of reinstatement. the dismissal of the employee was held not to be illegal.serve as damages but to file a motion to cite the employer for contempt. Thereafter. See also Industrial and Transport Equipment. No. if any. G. chanrobles virtual law library In the 2006 case of Air Philippines Corp. In the 2003 case of Roquero vs.R. Jan. On appeal. No. Philippine Air Lines. What. NLRC and Bienvenido Aricayos. NLRC. 2003]. Zamora filed a Motion for Reconsideration but the NLRC denied it. Aug. No. NLRC. No. on appeal to the Supreme Court.. September 16. Zamora. 15. Inc. [G. April 10. the dismissal of the employee was held valid by the Labor Arbiter. 2006]. vs. R. R. 148247. April 22. vs. 1998). Employer must pay for the salary of employee. 1998]. However. the dismissed employee was ordered reinstated. 7.R. [G. 1989. The Labor Arbiter granted the motion but the employer refused to execute the said order on the ground that it has filed a Petition for Review before the Supreme Court. was the legal consequence of the reinstatement order issued by the NLRC which was never complied with by the employer all throughout the pendency of the case on appeal up to the Supreme Court? Did the subsequent affirmance by the Supreme Court of the validity of the dismissal have the effect of exonerating the non -complying employer from his obligation to pay for the salary of the employee consequent to the reinstatement-pending-appeal order issued by the NLRC? chanrobles virtual law library The Supreme Court said that the employer is liable to pay for the salary of the employee previously ordered reinstated by the NLRC although later on. On appeal to the NLRC.

NLRC. G. supra and Aris [Phil. Aug. December 4. Philippine Airlines.R..R. 255). 5. [G. Payroll-reinstated employee should refund salary if dismissal is finally found legal on appeal. 1991.unpaid salaries and allowances in the total amount of P198. collective bargaining agr eement provisions. vs. 142732-33. Nos. this rule does not apply if employee was actually reinstated. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. pursuant to Article 223 of the Labor Code. In the eyes of the law. thus: ³The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of the Labor Arbiter. Although petitioner did not comply with this writ of execution. Displeased w ith the modification. Inc. However. 2007] insofar as illegally dismissed employees ordered to be reinstated in the payroll are concerned. or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws. 3 of the fallo of the September 3. Considering that Genuino was not reinstated to work or placed on payroll reinstatement.30 within fifteen (15) days from receipt of the resolution. 1994 NLRC Decision.´ In affirming the above grant by the NLRC of salaries and allowances to Zamora. complainant was as if actually working from the date respondent received the copy of the appealed decision of the Labor Arbiter directing the reinstatement of complainant based on his finding that the latter was illegally dismissed from employment. NLRC. then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries he/she received while the case was pending appeal. then she is not entitled to be paid the salaries stated in item no. 200 SCRA 246. No. then the employee is entitled to the compensation received for actual services rendered without need of refund. In this case. 90501. if the employee was reinstated to work during the pendency of the appeal.] Inc. and her dismissal is based on a just cause. the Supreme Court ratiocinated.´ (Citing Roquero vs. There is logic in this reasoning of the NLRC. the Supreme Court had taken the view that ³(i)f the decision of the Labor Arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal.´ .502. and company practices. The ruling in Roquero [supra] was qualified by the Supreme Court in its ruling in the 2007 case of Genuino vs. APC sought a partial reconsideration of the foregoing resolution but the NLRC denied the same and justifed the award of unpaid salaries on the ground that ³(t)he grant of salaries and allowances to complainant arose from the order of his reinstatement which is executory even pending appeal of respondent questioning the same.

however. While it is now well-settled that a writ of execution is not necessary to implement the reinstatement order issued by a Labor Arbiter upon a finding of illegality of dismissal since it is self -executory in accordance with Pioneer Texturizing [supra]. if the reinstatement order is issued by the NLRC on appeal.. it is necessary in case reinstatement is ordered by the NLRC on appeal. There is still a need for the issuance of a writ of execution. 173076.´ In view. that of the NLRC is not. Inc. there is a need to secure a writ of execution from the Labor Arbiter a quo to enforce the reinstatement of the employee. Consequently. [G. the Commission or any Labor Arbiter. PAL [supra]. When it is the NLRC on appeal or the Court of Appeals which affirmed the NLRC¶s ruling orders reinstatement. there is still a need for . No. Resuena. CAP Philippines. 10. Earlier. or med-arbiter or voluntary arbitrator may. such writ shall be served by the sheriff upon the losing party or upon any other person required by law to obey the same. Feb. issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory. under Rule III of the NLRC Manual on the Execution of Judgment. [G. Citing Roquero vs. 9.R. o rders or awards of the NLRC. motu proprio or on motion of any interested party. ruled that unlike the order for reinstatement of a Labor Arbiter which is self-executory. The reason is that under the sixth paragraph of Article 223. 2007]. the Supreme Court clarified that Article 223 of the Labor Code providing that reinstatement is immediately executory even pending appeal applies only when the Labor Arbiter himself ordered the reinstatement. As contemplated by Article 224 of the Labor Code. the Secretary of Labor and Employment or any Regional Director.R. No. chanrobles virtual law library This was the holding in the 2007 case of Mt.While writ of execution is not required in case reinstatement is ordered by the Labor Arbiter. and such party or person may be punished for contempt if he disobeys such decision or order for reinstatement. the NLRC decision becomes ³final and executory after ten calendar days from receipt of the decision by the parties. 161305. the same ruling was made in Panuncillo vs. Oct. the order of the NLRC to reinstate her and to pay her wages was immediately executory even while the case was on appeal before the higher courts: The High Court. an office or an employment. it is provided that if the execution be for the reinstatement of any person to a position. 2007]. petitioner argued that following the third paragraph of Article 223 of the Labor Code on reinstatement pending appeal. however. of Article 224 of the Labor Code which requires the issuance of a writ of execution to execute decisions. Carmel College vs. where the Labor Arbiter directed the reinstatement of the petitioner which was affirmed by the NLRC on appeal. however. what applies is not Article 223 but Article 224 of the Labor Code.

106370. it is as if a temporary restraining order was issued. 6. employer is not liable to pay backwages. petitioner is not entitled to collect any backwages from the time the NLRC decision became final and executory up to the time the Court of Appeals reversed said decision. the decision of the Labor Arbiter ordering the reinstatement of the respondentemployees and the payment of their backwages until their actual reinstatement and in case reinstatement is no longer viable. Inc v. 236 SCRA 371.R.´ In such a case. In the same 2007 case of Panuncillo.´ chanrobles virtual law library But in the 2006 case of Triad Security & Allied Servic es.the issuance of a writ of execution of the NLRC decision to implement its order of reinstatement. the Labor Arbiter or the NLRC must exercise extreme prudence and observe judicial courtes y when the circumstances so warrant if one is to heed the injunction of the Court in Philippine Geothermal. [G. Feb. the Supreme Court further ruled that since it has affirmed the challenged decision of the Court of Appeals finding that petitioner was validly dismissed and accordingly reversing the NLRC Decision that petitioner was illegally dismissed and should be reinstated. he could probably be merely observing judicial courtesy. No.R. No. While under the sixth paragraph of Article 223 of the Labor Code. Ortega. 1994. thus: ³It does not appear that a writ of execution was issued for the implementation of the NLRC order for reinstatement. Had one been issued. [G. In this case. 2006]. vs. September 8. If during the pendency of the review no order is issued by the courts enjoining the execution of a decision of the Labor Arbiter or NLRC which is favorable to an employee. Inc. and following Roquero. 160871. NLRC. respondent would have been obliged to reinstate petitioner and pay her salary until the said order of the NLRC for her reinstatement was reversed by the Court of Appeals. petitioner would not have been obliged to reimburse respondent for whatever salary she received in the interim. the Supreme Court still ordered the payment of backwages for the period when the employees should have been reinstated by order of the Labor Arbiter. the payment of separation pay. became final and executory due to the failure of the . chanrobles virtual law library If reinstatement order of Labor Arbiter is not executed and the finding of illegal dismissal is later reversed. the decision of the NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by the parties. If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of an employee even if there is no restraining order. It ratiocinated. the adverse party is not precluded from assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to the Supreme Court via a Petition for Review under Rule 45. 378-379]. which is advisable ³if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court.

the High Court declared that respondents herein were minimum wage earners who were left with no choice after they were illegally dismissed from their employment but to seek new employment in order to earn a decent living. the illegally dismissed employee¶s entitlement to backwages. 20.petitioner-employer to seasonably appeal the same. Sept. No. In the meantime. 13th month pay. their obligation to the dismissed employees. It should be pointed out that an order of reinstatement by the labor arbiter is not the same as actual reinstatement of a dismissed or separated employee. In Sevilla vs. NLRC. 108878. The second dismissal gave rise to a new cause of action. Thus. chanrobles virtual law library Employment elsewhere does not affect reinstatement order and obligation to pay backwages. the Supreme Court ruled in the affirmative. the Labor Arbiter could not have ruled on the legality of the second dismissal. it was held that the order of reinstatement pending appeal under Article 223 issued in the first case. In not giving credence to this claim. until the employer continuously fails to actually implement the reinstatement aspect of the decision of the Labor Arbiter. 1994]. if not outright refusal. R. shall apply only to the first case and shall not affect the second dismissal. the emplo yer should not be allowed to remain unpunished for the delay. Until the payment of separation pay is carried out. insofar as accrued backwages and other benefits are concerned. If the former position is already filled up. It is only when the illegally dismissed employee receives the separation pay that it could be claimed with certainty that the employer-employee relationship has formally ceased thereby precluding the possibility of reinstatement. On the issue of whether backwages should continue to run even after the payment of separation pay. the petitioners claimed that they could not reinstate respondents as the latter had already found jobs elsewhere. they could not be faulted for their perseverance in looking for and eventually securing new employment opportunities instead of remaining idle and awaiting the outcome of this case. a case involving two (2) successive dismissals. [G. The Labor Arbiter was correct in denying the third motion for reinstatement filed by the petitioner (employee) because what she should have filed was a new complaint based on the second dismissal. to immediately execute the reinstatement aspect of the labor arbiter¶s decision. and other benefits subsists. In the same case of Triad Security [supra]. Surely. Reinstatement when position already filled up. Inasmuch as no new complaint was filed. Reinstatement in case of two successive dismissals. continues to accumulate. the employee ordered reinstated under Article 223 should be admitted back to work in a s ubstantially .

Remedy of employee in case employer failed to post bond is to file a motion to dismiss the appeal. Pedroso vs. In order to effectively stop the running o f the period within which to perfect the appeal. g. If bond is not genuine. and . (Medina vs. excluded from computation of bond. it should be filed within the reglementary period. property or surety bond is required for perfection of appeal from monetary award. e. The Fifth Division of the Honorable Court of Appeals. 2. d.Award of moral and exemplary damages and attorney¶s fees. April 29. Motion to reduce bond may be granted only in meritorious cases such as when the monetary claims have already prescribed. b. the motion to reduce bond must comply with the requisites that: 1. R. appeal is not perfected.equivalent position. Castro. If the amount of the monetary award is not included in the judgment. 42. no appeal bond required. The surety bond should be issued by an accredited surety company. Cash. Labor Arbiter¶s decision or order is required to state the amount awarded. it should be based on meritorious grounds. 141 SCRA 252 [1986]). (Orozco vs. No monetary award. [G. 222 SCRA 707. Non-posting of bond will not perfect the appeal. Consolidated Broadcasting System [CBS]-DZWX. the appeal bond equivalent to the amount of the monetary award is not required to be posted. May a Motion to Reduce Bond be filed? 1. h. No. chanrobles virtual law library f. 2. Bond should be posted within the 10-calendar day reglementary period. 2005]) c. 41. The filing of a motion to reduce bond does not stop the running of the period to perfect appeal. What are the rules in case of appeal involving monetary award? The following basic principles are wort h mentioning: a. 155207.

91935. NLRC. May 9. the failure to pay was due to the excusable oversight or error of a third party. Velarde. R. vs. R. mistake or excusable negligence. The eventual posting of the bond cannot be considered as substantial compliance warranting the relaxation of the rules in the interest of justice. R. If there is no such willingness exhibited by petitioner and his failure to pay the bond was due simply to his own mistake n conclusion that he was exempt from paying because he was not the employer of the respondent-employees and thus was not liable to them. NLRC. April 30. 254 SCRA 211]. e. vs. 2003]. CA. accident. Furthermore. 236 SCRA 580 [1994]) within the 10-day period provided by law. a belated appeal was allowed as the questioned decision was served directly upon petitioner instead of her . if the petitioner¶s failure to post a bond was due to his own negligent and mistaken belief that he was exempt. chanrobles virtual law library Moreover. 1996. exhibited willingness to pay by posting a partial bond (See Teofilo Gensoli & Co. [G. that is.3.g. the appellants.. NLRC. 2005. In Mary Abigail¶s Food Services. properly vested the judge with discretion to approve or admit an appeal filed out of time. Thus. in the case of Quiambao vs. NLRC. also Star Angel Handicraft vs. 289 SCRA 407 [1998]) or by filing a motion for reduction of bond (See Rosewood Processing Inc. [G. The failure to post the bond must be caused by a third party. 290 SCRA 408 [1998]. technical consid erations had to give way to considerations of equity and justice. where the presence of any justifying circumstance recognized by law. 140294. No. March 4. 140753. No. a reasonable amount of bond in relation to the monetary award should be posted together with said motion. the Supreme Court pointed out that. the failure of the Labor Arbiter to state in the decision the exact amount awarded and the inclusion of the bond as a requisite for perfecting an appeal. according to Santos vs. not by the appellant himself. such as fraud. at the very least. G. No. the Supreme Court has allowed tardy appeals in judicious cases. or where on equitable grounds. Inc. this rule will not apply. such is a reckless conclusion since there was no circumstance which would have warranted such a belief. there was substantial compliance with the rule. it was held that in the cases where delayed payment of the bond was allowed. in the cases where belated posting of a bond was allowed. especially if the Labor Arbiter¶s decision states the exact monetary awards to be paid and there is nothing in the decision which could have given the petitioner the impression that the bond was not necessary or that he was excused from paying it. vs. In the instances where the Supreme Court acknowledged substantial compliance. But.

04 as bond is ³unjustified and prohibitive´ and prayed that the same be reduced to a ³reasonable level. G. 226. does not necessarily give the employer-appellant a µmeritorious case¶ and does not automatically warrant a reduction of the appeal bond. when not proper. After careful scrutiny of the motion to reduce appeal bond. the exercise of that authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. he filed a motion to reduce bond alleging that the amount of P1.´ The NLRC denied the motion and consequently dismissed the appeal for non-perfection. 152494. 119289. vs. Rule VI of the NLRC New Rules of Procedure allows the Commission to reduce the amount of the bond . the Supreme Court declared that while Section 6. Inc.´ Alternative remedy is to pay partial appeal bond while motion to reduce bond is pending with the NLRC.O Enterprises vs. However.´ Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond. R. 2004]. NLRC. In the case of Ong vs. 110827.427. 1996. even if it runs into millions. resolution or decision. 235 (1996)]. August 8.counsel of record who at the time was already dead. Court of Appeals. In Calabash Garments. the result would have been the same since he failed to post cash or surety bond within the prescribed period. 2000. April 12. No. Petitioner contends that he was deprived of the chance to post bond because the NLRC took 102 days t o decide his motion. chanrobles virtual law library In holding that the petitioner¶s argument is unavailing. 260 SCRA 441. R. 286 SCRA 729 [1998]). 329 Phil. No. it was held that ³a substantial monetary award. the petitioner filed his memorandum of appeal and paid the corresponding appeal fees on the last day for filing the appeal. Kathy . The fact that the NLRC took 102 days to resolve the motion will not help petitioner¶s case. resolution or decision of the NLRC to forestall the finality of such order.802. No. . the Supreme Court agreed with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied petitioner¶s motion for the same failed to either elucidate why the amount of the bond was ³unjustified and prohibitive´ or to indicate what would be a ³reasonable level. (Catubay vs. R. in lieu of the required cash or surety bond. NLRC. [G. September 22. The NLRC Rules clearly provide that ³the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal.´ Petitioner should have seasonably filed the appeal bond within the tenday reglementary period following the receipt of the order. NLRC. [G. chanrobles virtual law library Motion to reduce bond.

NLRC. (G. But the petitioner in Ong did not post a full or partial appeal bond within the prescribed period. the NLRC has no authority to entertain the appeal. 239 [1998]). The late filing of the bond divests the NLRC of its jurisdiction to entertain the appeal since the decision of the Labor Arbiter has already become final and executory with the lapse of the reglementary period. should be made within the reglementary period. much less to reverse the decision of the Labor Arbiter. Several weeks later. appellants posted an additional bond. 1999. February 16. in order to forestall the decision of the Labor Arbiter from becoming final and executory. [G. 352 Phil. 122725. Clearly then. For this reason. 2005]. NLRC. In the 2004 case of Ong [supra]. The partial payment of bond must be made during the reglementary period. which was still less than the required amount. 232. vs. Inc. Sotelo. vs. R. no appeal was perfected from the decision of the Labor Arbiter. While the bond requirement on appeals involving monetary awards has been relaxed in certain cases. .In the 1998 case of Rosewood Processing. No. while its motion to reduce appeal bond was pending before the NLRC. Improper granting of motion to reduce bond. However. thus. NLRC. 1013 (1998)]. immutable. 153859. at the very least. 163786. In Filipinas [Pre-fabricated Bldg. 11. September 8. the decision sought to be appealed to the NLRC had become final and executory and. Dec. Inc. vs. 661 (1999)]. therefore. NLRC. R. appellants filed another motion for reconsideration of the order of denial. Any amendment or alteration made which substantially affects the final and executory judgment is null and void for lack of jurisdiction. 372 Phil. 653. [352 Phil. as was held in Biogenerics Marketing and Research Corporation vs. 2003). [G. it was held that the partial payment of the bond. Three (3) months . No. (See also Teofilo Gensoli & Co.] Systems µFilsystems. exhibited willingness to pay by posting a partial bond. In Times Transportation Company.¶ Inc. the appellants¶ motion to reduce bond was denied and the NLRC ordered them to post the required amount within an unextendible period of ten (10) days. instead of complying with the directive. this can only be done where there was substantial compliance of the Rules or where the appellants. vs. Inc. the payment only of a moderate and reasonable sum for the premium. the petitioner was declared to have substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance. the Supreme Court suggested as an alternative remedy to the full payment of the monetary award. No. R. including the entire proceeding held for that purpose.

´ (See also Globe General Services and Security Agency vs. In Buenaobra vs. [G. The NLRC co uld not be said to have abused its discretion in requiring the posting of bond after it denied private respondents¶ motion to be exempted therefrom. Effect when NLRC grants additional time to post bond after denial of motion to reduce bond. a circumstance which would give the employer the opportunity to wear out the energy and meager resources of the workers to the point that they would be constrained to give up for less than what they deserve in law. not sufficient ground. In this case. vs. that it was impossible to secure the required bond and file it within the ten-day reglementary period because after receiving a copy of the decision of the Labor Arbiter on December 23. i. the reason given by the petitioners to justify their late posting of the bond. was considered simply unacceptable by the . 653.after the filing of the motion for reconsideration. No. 140294. We have held that to extend the period of appeal is to prolong the resolution of the case. An appellant cannot invoke financial difficulties as a gro und in support of a Motion to Reduce Bond. By delaying the resolution of appellants¶ motion for reconsideration. 661 [1999]). NLRC. R. it has unnecessarily prolonged the period of appeal. but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. the Supreme Court did not consider as grave abuse of dis cretion the act of the NLRC in granting to the appellant-employer ³an unextendible period of ten (10) days´ upon receipt of the order denying the motion to exempt from filing appeal bond. the cash or surety bond was actually posted four (4) months after the filing of their memorandum on appeal. Long Christmas holiday. 531. What appellant has to pay is a moderate and reasonable sum for the premium for such bond.e. 150147. (Times Transportation Company. Said the High Court: ³We agree with the Court of Appeals that the foregoing constitutes grave abuse of discretion on the part of the NLRC. NLRC. 2005]. Financial difficulties. In Mary Abigail¶s Food Services. 537 [1995]). 1998. 319 Phil.. CA. No. 2004]. Inc. vs. supra citing Biogenerics Marketing and Research Corporation vs. January 20. Sotelo. a long holiday (Christmas) season followed. not an excuse. Inc. strict observance of the reglementary periods may be relaxed if warranted. within which to post cash or surety bond. Lim King Guan. May 9. Suffice it to say that the law does not require outright payment of the total monetary award. [G. R. 372 Phil. The Supreme Court reasoned that if only to achieve substantial justice. the NLRC reversed its previous order and granted the motion for reduction of bond.

Surely. Labor Code). What is the concept of unfair labor practice? An unfair labor practice act violates the right of workers to self organization. is inimical to the legitimate interests of both labor and management. (1) (2) Employer (Article 248. Labor Code). What are the elements of ULP? Before an employer or labor organization. namely: (1) Civil. the following ingredients must both concur: chanrobles virtual law library 1.Supreme Court. Name the parties which may commit unfair labor practice. 45. Pursuing petitioners¶ excuse. no bond would ever be posted on time whenever the reglementary period to file the same falls on such a season. Labor Arbiters shall have jurisdiction over the civil aspect of all cases involving unfair labor practices. 46. No criminal prosecution may be instituted without a final judgment finding that an unfair labor practice was committed having been first obtained in the labor case. UNFAIR LABOR PRACTICES 43. including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect. and . exemplary and other forms of damages. moral. Parties who may commit ULP. which may include claims for actual. the occurrence of the holiday season did not at all make impossible petitioners¶ fulfillment of their responsibility to post the required bond. 44. at torney¶s fees and other affirmative relief. disrupts industrial peace and hinders the promotion of healthy and stable labor-management relations. and (2) Criminal. may be said to have committed unfair labor practices acts. there should exist an employer-employee relationship between the offended party and the offender. and Labor Organization (Article 249. as the case may be. What are the aspects of unfair labor practice? There are two (2) aspects. Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code.

COMPANY UNION). hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment. restrain or coerce employees in the exercise of their rights to self-organization. Series of 2002. [Note: The act of an employer in having work or certain services or functions being performed by union members contracted out is not generally an unfair labor practice act. there is no ULP. 2002])]. 21. the act complained of must be expressly mentioned and defined in the Labor Code as constitutive of unfair labor practice. 47. if such non -union members accept the benefits under the collective bargaining agreement: Provided.a.2. that the individual authorization required under Article 242. paragraph (o) o f this Code shall not apply to the non-members of the recognized collective bargaining agent. (e) To discriminate in regard to wages. except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Department Order No. 18-02. assist or otherwise interfere with the formation or administration of any labor organization. .k. YELLOW DOG CONTRACT). including the giving of financial or other support to it or its organizers or supporters (a. It is only when the contracting out of a job.a. restrain or coerce employees in the exercise of their right to self-organization. restrain or coerce employees in the exercise of their right to self -organization that it shall be unlawful and shall constitute unfair labor practice. Absent one of the elements above will not make the act an unfair labor practice act. (d) To initiate. [Feb.k. What are the ULPs of the employer? (a) To interfere with. Section 6 [f]. If not mentioned. chanrobles virtual law library (c) To contract out services or functions being performed by union members when such will interfere with. (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs (a. work or service being performed by union members will interfere with. dominate. Labor Code. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent. (Article 248 [c].

FEATHERBEDDING). or chanrobles virtual l aw library (i) To violate a collective bargaining agreement (but only if gross in character).(f) To dismiss. (d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value.a. including the demand for fee for union negotiations (a. (h) To pay negotiation or attorney¶s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute. 48. 49. only the officers and agents of corporations. for services which are not performed or not to be performed. . (g) To violate the duty to bargain collectively as prescribed by this Code. or refuse to bargain collectively with the employer. chanrobles virtual law library (b) To cause or attempt to cause an employer to discriminate against an employee. including discrimination against an employee with respect to whom membership in such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members. in the nature of an exaction.k. provided it is the representative of the employees. discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code. What are the ULPs of labor organizations? (a) To restrain or coerce employees in the exercise of their right to self organization. or (f) To violate a collective bargaining agreement. authorized or ratified unfair labor practices shall be held criminally liable. (but o nly if gross in character). (e) To ask for or accept negotiation or attorney¶s fees from employers as part of the settlement of any issue in collective bargaining or any other dispute. (c) To violate the duty. However. a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership. associations or partnerships who have actually participated in. Who may be held criminally liable for ULPs of employer? On the part of the employer.

may be held to be constitutive of unfair labor practice because of the circumstances under which they were uttered.50. chanrobles virtual law library 54. authorized or ratified the unfair labor practices shall be held criminally liable. 53. What are the types of union security clause? . in case they are already members of a labor organization. that they shall not join or belong to a labor organization. What is ³union security clause´? A ³union security clause´ is a stipulation in the CBA whereby the management recognizes that the membership of employees in the union which negotiated said agreement should be maintained and continued as a condition for employment or retention of employmen t. a representation by the employee that he is not a member of a labor organization. Who may be held criminally liable for ULPs of a labor organization? On the part of the union. members of governing boards. An expression which might be permissibly uttered by one employer. a promise by the employee that upon joining a labor organization. or attempt to organize one. be deemed improper and consequently actionable as an unfair labor practice. only the officers. the history of the particular employer¶s labor relations or anti-union bias or because of their connection with an establ ished collateral plan of coercion or interference. during their period of employment or that they shall withdraw therefrom. What is ³yellow-dog contract´? A ³yellow dog contract´ is an agreement which exacts from workers as a condition of employment. The obvious purpose is to safeguard and ensure the continued existence of the union. 51. he will quit his employment. What is totality of conduct doctrine? The ³totality of conduct doctrine´ means that expressions of opinion by an employer. in the mouth of a more hostile employer. though innocent in themselves. 2. 52. might. The typical yellow dog contract embodies the following stipulations: 1. a promise by the employee that he will not join a union. representatives or agents or members of labor associations or organizations who have actually participated in. and 3.

Respondent company¶s allegation that petitioners were accorded due . Upon demand of the federation. (5) Exclusive bargaining agreement. R. [G. An e mployee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job. Greenfield (MSMGUWP) vs. What are the legal principles pertinent to union security clause arrangements? To validly dismiss an employee based on violation of union security clause. (8) Preferential hiring agreement. May 8. February 28. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. (7) Agency shop agreement. this does not erode the fundamental requirement of due process. R.Classification. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts. the company terminated the petitioners without conducting a separate and independent investigation. Although the Supreme Court has ruled that union security clauses embodied in the CBA may be validly enforced and that dismissals pursuant thereto may likewise be valid. respondent company terminated petitioners from employment when a separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers. The right of an employee to be informed of the charges against him and to a reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped away by a union security clause or a union shop clause in a CBA. employer should still afford due process to the expelled unionists. (2) Maintenance of membership agreement. NLRC. 1990. 55. Relying merely upon the federation¶s allegations. under a maintenance of membership provision of the CBA. the Supreme Court pronounced that while the company. cannot override one¶s right to due process. No. 2000]. this undertaking should not be done hastily and summarily. 91086. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing. Ramos. . In the case of Cariño vs. is bound to dismiss any employee expelled by the union for disloyalty upon its written request. (3) Union shop agreement. No. [G. petitioner union officers were expelled by the federation for allegedly committing acts of disloyalty and/or inimical to the interest of the fed eration (ULGWP) and in violation of the Constitution and By-laws. 185 SCRA 177]. 113907. (4) Modified union shop agreement. In Malayang Samahan ng mga Manggagawa sa M. (6) Bargaining for members only agreement.(1) Closed shop agreement.

90 SCRA 391. Liberty Cotton Mills. . as held in the 2000 case of M. 1953. Employer¶s liability in illegal dismissal based on union security clause. the employer needs only to determine and prove that: (1) the union security clause is applicable. 8 SCRA 700. Inc. Requisites for termination based on union security clause. and chanrobles virtual law library (3) there is sufficient evidence to support the union¶s decision to expel the employee from the union. R. 29. chanrobles virtual law library The foregoing requisites constitute just cause for terminating an employee based on the CBA¶s union security provision. 211 SCRA 361). The employer should not rely solely upon the request of the union. 14. the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter. vs. (Liberty Cotton Mills Workers Union vs. Feb. In the case of Alabang Country Club. Inc. No.process is belied by the termination letters received by the petitioners which state that the dismissal shall be im mediately effective. [G. The company is liable for the payment of backwages for having acted in bad faith in effecting the dismissal of the employees. notwithstanding the fact that the dismissal was at the instance of the federation and that it undertook to hold the company free from any liability resulting from such a dismissal. (2) the union is requesting for the enforcement of the union security provision in the CBA.. G. the Supreme Court declared that in terminating the employment of an employee by enforcing the union security clause. No. (Liberty Cotton Mills Workers Union vs. Greenfield [supra]. Liberty Cotton Mills. L-18782. Thus. 170287. NLRC. Before dismissal may be effected by the employer for breach of a union security agreement. 2008]. Binalbagan-Isabela Sugar Co. Sanyo Philippines Workers Union ± PSSLU vs. The employee sought to be dismissed must be given the opportunity to be heard. Aug. Effect of Union Security Clause on religious freedom. 90 SCRA 391). due process must be observed by the employer. Philippine Association of Free Labor Unions [PAFLU]. Canizares. [BISCOM] vs.R.

[G. on religious grounds. [180 SCRA 749]. 1974] upholding the right of members of the Iglesia ni Kristo sect not to join a labor union for being contrary to their religious beliefs. 56. [G. R.´ is specious. vs. the plainly discernible intendment of the law is to grant the right to vote to all bona-fide employees in the bargaining unit.An employee may not be compelled to join a union if it is based on religious objection. No. 1992]. ruled on the issue of whether members of the Iglesia ni Kristo may be allowed to vote in a certification election. the Supreme Court. Inc. On the contrary. L-25246. June 20. [G. Neither law. Trajano. whether they are members of a labor organization or not. No law. No.´ Payment of agency fee to the bargaining union/agent which negotiated the CBA is but a reasonable . The Honorable BLR Director Pura Ferrer-Calleja. regardless of religious affiliation. from joining or forming any labor organization. June 2. 1027] vs. 84433. The public respondent correctly observed that the ³recognition of the tenets of the sect xxx should not infringe on the basic right of self -organization granted by the constitution to workers. Ferrer-Calleja. September 12. and ³hence.). not one of the unions which vied for certification as sole and exclusive bargaining representative. Cresenciano B. Elizalde Rope Workers¶ Union. administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections. R. No. the respondents¶ argument that petitioners are disqualified to vote because they are not constituted into a duly organized labor union but members of the Iglesia ni Kristo which prohibits its followers. R. L-82914.´ chanrobles virtual law library In 1992. Considering that they are not members of any union and they refused to participate in the previous certification election. as held in Airtime Specialists. administrative rule nor jurisprudence requires that only employees affiliated with any labor organization may take part in a certification election. Neither does the contention that petitioners should be denied the right to vote because they ³did not participate in previous certifica tion elections in the company for the reason that their religious beliefs do not allow them to form. What is agency fee (check-off from non-union members)? The dues and other fees that may be assessed from non -union members within the bargaining unit who accept and avail of the benefits flowing from the CBA are called ³agency fees. does not bar the members of that sect from forming their own union. join or assist labor organizations. In 1988. the Supreme Court rendered a decision in the case of Kapatiran sa Meat and Canning Division [Tupas Local Chapter No. 1988] where it ruled that the decision in Benjamin Victoriano vs. (Ibid.´ persuade acceptance. in the case of Alexander Reyes vs.

Labor Code. Their acceptance of the benefits flowing from the CBA and their act of paying the agency fee does not make them members thereof. 59. Series of 2003. What are the CBA-related ULPs under the law? In connection with the right of workers to collective bargaining. It may also be a relocation motivated by anti -union animus rather than for business reasons. 40-03. to prevent non-union members from enriching themselves at the expense o f union members. as amended by Department Order No.). What is a runaway shop? A ³runaway shop´ is an industrial plant moved by its owners from one location to another to escape union labor regulations or state laws. Section 4. Amalgamated Laborers Association vs. Clave. Any contract. 128 SCRA 112. Trajano. agreement or arrangement of any sort to the contrary shall be null and void. It must be emphasized that non-members of the certified bargaining agent which successfully concluded the CBA are not required to become members of the latter. in the nature of an exaction. chanrobles virtual law library . Pacific Banking Corporation vs. (Article 222 [b]. including the demand for fee for union negotiations. 58. 144 SCRA 138. 17. 2003]). it is unfair labor practice of the employer: 1. Rule XXV. Labor Code). [Feb. it shall be unfair labor practice for a labor organization. to pay negotiation or attorney¶s fees to the union or its office rs or agents as part of the settlement of any issue in collective bargaining or any other dispute (Article 248 [h]. CIR. 2. Galvadores vs. 57. its officers. Rules to Implement the Labor Code. No attorney¶s fees. negotiation fees or similar charges of any kind arising from any CBA shall be imposed on any individual member o f the contracting union. 22 SCRA 1266). Labor Code. for services which are not performed or not to be performed. What is ³feather-bedding´? According to this doctrine. may be charged against union funds in an amount to be agreed upon by the parties. however.requirement recognized by law. to violate the duty to bargain collectively as prescribed in the Labor Code (Article 248 [g]. Ibid. Book V. agents or representatives to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value. (See Article 248 [e]. Attorney¶s fees.

(Insular Life Assurance Co.. Employees Association-NATU. No. Ibid. (Article 239 [g]. L25291. is unfair labor practice. G. Ltd.On the part of the union. Nov. contrary to the stipulation in the CBA.. Violation of the CBA is ULP only if gross in character which means flagrant and/or malicious refusal to comply with the economic provisions thereof. which increase is intended to be distinct and separate from any other benefits or privileges that may be forthcoming to the employees. Oceanic Pharmacal Employees Union vs. The act of the employer in refusing to implement the negotiated wage increase stipulated in the CBA. Jan. CIR. 1979.). is unfair labor practice. violation of the CBA is no longer considered ULP. BCI Employees and Workers Union.. R. R. G. (Benguet Consolidated vs. 66 SCRA 181. 3. (Philippine Apparel Workers Union vs. (National Development Co. The following acts of the employer were generally held as unfair labor practice acts: 1. . 30. Insular Life Assurance Co. vs.. 1971. to give salary adjustments according to the improved salary scales in the collective bargaining agreements. to violate a collective bargaining agreement. 22 SCRA 1293). vs. No. NDC Employees and Workers Union. 1981.. Inc. absent employees individually during a strike following unproductive efforts at collective bargaining that the plant would be operated the next day and their jobs were open for them should they want to return to work. The act of the employer to permit non-union members to participate in the service charges. Labor Code). 1984). asking for or accepting attorney¶s fees or negotiation fee from employers is a ground for cancellation of union registration. (Article 248 [i]. Alba Patio de Makati Employees Association. No. July 31. 94 SCRA 270). Ltd. Refusal for a considerable number of years. 7. G. NLRC. Alhambra Industries. If not gross. vs. is unfair labor practice. R. L-37922. 37 SCRA 244). The act of the employer in refusing to comply with the terms and conditions of a CBA constitutes bargaining in bad fa ith and is considered an unfair labor practice. (Alba Patio de Makati. has been held to be an unfair labor practice. The employer¶s act of notifying through letters. L-50320. as an active interference with the right of collective bargaining through dealing with the employees individually instead of through their collective bargaining representatives. No. L-50568. March 16. R. vs. ILLUSTRATIVE CASES INVOLVING UNFAIR LABOR PRACTICES OF EMPLOYERS. G. 35 SCRA 550). Inciong.

). 1 SCRA 17). National Fastener Corporation vs. PAV Watchmen¶s Union. employer¶s promise of benefits in return for the striking employees¶ abandonment of their strike. 30. Sept. 99 Phil. to a group of strikers in a restaurant that if the strikers returned to work. The act of the employer in refusing to reinstate strikers who voluntarily and unconditionally offered to return to work but did not accept the new discriminatory conditions imposed against them because of their union membership or activities.2. chanrobles virtual law library 8. Progressive Federation of Labor. R. Inciong. 5. (Velez vs.´ ³free coffee and occasional movies. Offer of a Christmas bonus to all ³loyal´ employees of a company shortly after the making of a request by the union to bargain. L -50568. G. (Ibid. 4. so they would abandon the strike and return to work. 1964). new benefits such as hospitalization. constitute strike-breaking and union-busting which is unfair labor practice.´ ³overtime pay´ for work performed in excess of eight hours and ³arrangements´ for their families. (Cromwell Commercial Employees and Laborers Union vs. (Macleod vs. (Scoty¶s Department Store vs. The act of the employer in asking the union¶s recruiter to surrender the union affiliation forms and threatening him with bodily harm. L19778. Nov. 7. 15 SCRA 174). (Ibid. made about six (6) weeks after the strike started. The act of the employer in instructing an employee not to affiliate or join a union. CIR. Micaller. wage increase given for the purpose of mollifying employees after the employer has refused to bargain with the union. chanrobles virtual law library 9. Philippine Marine Officers Guild. CIR. which hampers their exercise of free choice. vs. 97 Phil. CIR. (Visayan Stevedores vs. No. or to induce strikers to return to work. Withdrawal by the employer of holiday pay benefits stipulated under a supplementary agreement with the union. 107 Phil. 689). The act of the employer in interrogating its employees in connection with their membership in the union or their union activities. and the employer¶s statement. 205). profit sharing and a new building to work in. G. 3. 6. chanrobles virtual law library . 7. will be given to them. accident insurance. No. 19 SCRA 426. (Oceanic Pharmacal Employees Union vs. 1979). 762.). Philippine Steam Navigation Co. Offer of reinstatement and attempt to ³bribe´ the strikers with ³comfortable cots. The act of the employer in indirectly forcing its employees to join another union. R.

The uneven application by the employer of the comp any¶s marketing plan which caused undue hardship to the president and vice president of the union. Inc. R. When an employer engages in surveillance or takes steps leading his employees to believe it is going on. (Re Louisiana Plastics. 116 SCRA 459). intended to induce the employees to vote against the union. 73721. The Association of Sweepstakes Staff Personnel. vs. (Litex Employees Association. No. The act of the purchasers of a business establishment in replacing the union members who were negotiating a CBA with the old owner at the time of the sale. G. 17. The announcement by the employer of benefits prior to the conduct of a certification election. a violation results because the employees come under threat of economic coercion or retaliation for their union activities. vs. The act of the employer in suspending union officers who attended the hearing in the petition for certification election they filed. Nos. (Henriz Manufacturing Co. L -27546. 67158-62. 16. CIR. 9. Sept. G. NLRB vs. 218. L-39154. 405). That would be taking of property without due process of law which the employer . L-31276. 278). No. G. R. CIR. 9.. The determination to cease operations is a prerogative of management that is usually not interfered with by the State as no business can be required to continue operating at a loss simply to maintain the workers in employment. No. G. 1982). chanrobles virtual law library 13. 173 NLRB No. Refusal of the employer to reinstate an employee who was illegally dismissed based on the union security clause. R. (CLLC E. (AHS/Philippine Employees Union vs. 1987). 382. NLRB. G. 15. p. (51A CJS Sec.10. Surveillance is illegal since it shows the opposition of the employer to the existence of the union. 1982). R. July 16. Gochangco Workers Union. vs. Sept. NLRC. The grant of concessions and privileges d uring the pendency of certification election case to members of one of the unions participating therein. 14. and the furtive nature of his activity tends to demonstrate spectacularly the state of his anxiety. March 30. The act of the employer in ceasing its operation due to establishment of the union. vs. chanrobles virtual law library 12. 375 U. (Philippine Charity Sweepstakes Office. The act of the employer in conducting espionage or surveillance of the meetings and activities of the union. G. S. May 30. 1982. No. unless the latter admits his guilt. 1988). 321 F 2d 00). NLRC. Exchange Parts Co. R. 11. (National Labor Union vs.

No. No. chanrobles virtual law library 22. the law provides the employer with ample remedies to protect his interest. CIR.. No. Nos. 1990. (Moncada Bijon Factory vs. If the employer feels that the action is tainted with illegality. CIR. June 6. 151 SCRA 355). This is an unwarranted interference with the rights of workers to self-organization and to engage in concerted activities. Zamora. in order for it to be able to effectuate the mass lay -off of union members. (Samahan ng Manggagawa sa Bandolino LMLC vs. 1988). (Samahan ng Manggagawa sa Bandolino-LMLC vs. Sy Chie Junk Shop vs. 30964. . R. (Carmelcraft Corporation vs.has a right to resist. 275 SCRA 633 [July 17. Inc. While a strike may result in hardships or prejudice to the school and the studentry. The act of the employer in asking the employees to disclose the names of the members of the union. R. 1988). vs. 1997]). 1997]). 1997. 1987. 78604. chanrobles virtual l aw library 18. the State is bound to intervene. with no satisfactory justification why said employees were singled out. April 18. (Mabeza vs. But where it is manifest that the closure is motivated not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations with the management. NLRC G. G. The act of the employer in putting on ³rotation´ only the alleged members of the union. chanrobles virtual law library 19. R. Inc. L-48237. R. No. Federacion Obrero de la Industria. 275 SCRA 633 [July 17. NLRC. 118506. 271 SCRA 670).. The retrenchment of employees who belong to a particular union. NLRC. Simulated sale in bad faith of business. Cruz vs. 42 SCRA 68. 4 SCRA 756. NLRC.. G. 20. The act of the employer in compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not. the employer is not without recourse. resorted to merely to get rid of the employees who were members of the union. PAFLU. May 9. R. National Labor Union vs. (Madrigal & Co. G. (Bataan Shipyard and Engineering Co. June 30. 90634-35. 21. An apprehension that there might be a future strike in the school is not a ground for dismissal of teachers who have attained permanent status. chanrobles virtual law library 23. 116 SCRA 417). The act of the employer in engaging in capital reduction to camouflage the fact that it had been making profit. May 9. vs. G. together with the act of terminating or coercing those who refuse to cooperate with the employer¶s scheme. 24. NLRC.

No. 1981). R. To justify the closure of a business and the termination of the services of the concerned employees. G. 156292. NLRC. Inc. Rance vs. Sept. 29. Nov. The rea son invoked by petitioners to justify the cessation of corporate operations was alleged business losses which they. (Oceanic Air Products. This holds true even where business conditions justify a lay -off of employees. 68147. 255 SCRA 133. R. Inc. 26. NLRC. NLRC. as well as the resumption of business barely a month after. NLRC. L39889. R. See also Bataan Shipyard and Engineering Co. R. G. No. vs. Oct. chanrobles virtual law library 28. 1996. 1982. Union of Supervisors [R. R.] NATU vs. L-18704. The cessation of a company¶s operations shortly after the organization of a labor union. vs. 27. The act of the employer in effecting discriminatory dismissal where only unionists were permanently dismissed. 59012-13. 108001.. No. failed to substantiate by any credible evidence. The act of the employer in dismissing the union officers and members on the ground of losses about two years after it has allegedly sustained losses and after the dismissed officers and members became more militant when they demanded for the improvement of their working conditions in the company. No. CIR. (San Carlos Milling Co. 141.. (San Miguel Corporation vs. vs. G. (Rizal Memorial Colleges Faculty Union vs. the law requires the employer to prove that it suffered substantial actual losses. 12. 31. G. G. B. Me-Shurn Workers Union ± FSM. 161 SCRA 271 [1988]). Jan. Secretary of Labor and Republic Bank. CIR. L-39154. These acts constitute unfair labor practices. (Litex Employees Association. The act of an employer in unduly dismissing workers based on union security clause in the CBA. Jan. 9. G. 1989). vs. No.Dismissal of employees in anticipation of an exercise of a constitutionally protected right is not one of them. June 30. which act is . 12. 116 SCRA 459. CIR. 30. No. 1 SCRA 734. however. G. The act of the employer in dismissing its employees because of their union activities. No. (Me-Shurn Corporation vs. The mass lay-off or dismissal of 65 employees due to retrenchment absent any losses or financial reverses. 11. gives credence to the employees¶ claim that the closure was meant to discourage union membership and to interfere in union activities. 25. 2005). 1988). March 15. 1963). Retrenchment would constitute a lame excuse and a veritable smokescreen of the employer¶s scheme to bust the union and thus unduly disturb the employment tenure of the employees concerned. R. R.

Nov. (Manila Pencil Co. (Visayan Bicycle Manufacturing Co. 80 SCRA 434). 36. 1976). chanrobles virtual law library ILLUSTRATIVE CASES WHERE UNION WAS DECLARED GUILTY OF UNFAIR LABOR PRACTICE. Inc. L -39603. G. G. No.. which dismissal was under the pretext of retrenchment due to reduced dollar allocations. Jan. Jan. CIR. 13. Inciong. 75093. Dismissal occasioned by the implausible and unproved allegation of overpricing of needles the employee was ordered to buy and for alleged tampering of receipts. Rizal Cement Co. 21 SCRA 226). National Labor Union and CIR. (Progressive Development Corporation. both the union and management were declared guilty of unfair labor practice when the union requested the dismissal of fifteen . Feb. R. 34. L-51494. 1965. The act of the employer in provoking the union officers into a fight by two recently hired employees pursuant to a strategy of the company designed to provide an apparently lawful cause for their dismissal. No. 23. 1982). L-50985. 115 SCRA 887. 14 SCRA 5). [G. L-19997. R. vs. 35. Dismissal of an employee who had worked for 19 years because he had filed money claims against the employer. CIR. Dismissal of employees because of their refusal to resign from their union and to join the union favorable to the employer. Dismissal occasioned by the refusal of employees to give up thei r union membership. (Sibal vs. (Judric Canning Corporation vs. No. R. 1977. R. 1990).certainly an unfair labor practice. vs. L-19779. 1966]. the latter¶s formation having been aided and abetted by the company. No. (Kapisanan ng Manggagawa sa Camara Shoes vs. Aug. R. chanrobles virtual law library In the case of Rizal Labor Union vs. 14 SCRA 953). G. L-39546. No. R. Employees Union. July 30. CIR. 1982. G. vs. 33. (Republic Savings Bank vs. May 19. chanrobles virtual law library 37. G. R. G. and said dismisse d employees have not figured in similar incidents before or violated company rules in their many years with the company. 30. 19. Notre Dame of Greater Manila. Dismissal of an employee because of his act of soliciting signatures for the purpose of forming a union. (People¶s Bank and Trust Co. People¶s Bank and Trust Co. 31. 24. Dismissal of employees because of their act of engaging in valid and legal concerted union activities. vs.. Camara Shoes. No. No. 32.

the Supreme Court adjudged both the mother federation and the employer accountable for the dismissal of workers who instigated the disaffiliation of the local union from the federation. at least. The Supreme Court ruled that union security clauses are governed by law and by principles of justice.. it appearing that the union security clause in the CBA merely provided for a lim ited closed shop which did not justify the dismissal. the Supreme Court ruled that it is wellsettled that unions are not entitled to arbitrarily exclude qualified applicants for membership and a closed shop provision would not justify the employer in discharging. with more reason may the law and the courts exercise the coercive power when the employee involved is a long -standing union member who. CIR. the dismissed employee was ordered reinstated to his former or substantially equivalent position in the company. 1967]. R. 4. [G. p rudence and judiciousness. Nonetheless. L-22987. without any reasonable ground therefor. Surely. A union member may not be expelled from her union. the said union member withdrew or revoked his resignation but the union refused to readmit him. he may. In Liberty Cotton Mills Workers Union vs. fair play and legality. [154 SCRA 369]. Sept. NLRC. [G. upon being advised by the company of the consequence of his resignation which is dismissal from the company. owing to provocations of union officers. fairness. In Manila Mandarin Employees Union vs. The right to disaffiliate is inherent in the contract and the act of disaffiliation was justified by the alleged negligence of the federation in attending to the needs of the local union. where the union member resigned from the union but. No. Inc. the union was held guilty of unfair labor practice when it expelled and demanded and caused the dismissal of a union member based on the union security clause in the CBA. if said unions may be compelled to admit new members who have the requisit e qualifications. and with back pay which should be borne exclusi vely by the union.(15) employees and management acceded by effecting the dismissal on the ground that the said employees formed another union. and consequently from her job. and cannot arbitrarily be denied readmission. chanrobles virtual law library In Salunga vs. invoke the rights of those who seek admission for the first time. No. Sept. 27. for personal or impetuous reasons or for causes foreign to the closed . except with a high sense of responsibility. which he forthwith withdrew or revoked. 1975]. Union security clauses cannot be used by union officials against an employer. The union here was declared to have committed unfair labor practice but the company was spared from any liability. or a union in insisting upon the discharge of. Liberty Cotton Mills. was impelled to tender his resignation. without prejudice to his seniority and/or rights and privileges. much less their own members. Needless to say. R. L-22456. an employee whom the union thus refuses to admit to membership.

driven to desperation. chanrobles virtual law library Consequently. according to its discretion and judgment. it was declared by the High Court that the scandalous haste with which respondent corporation dismissed 125 employees lent credence to the claim that there was connivance between respondent corporation and respondent union. nor timely notices of the hearing on the sa me. R. It is evident that private respondents were in bad faith in dismissing petitioners. Those who came were not only threatened with persecution but also made to write the answers to questions as dictated to them by the union and the company representatives. provided no basis for the union¶s accusation of disloyalty. [G. payment of three-year backwages and payment of exemplary damages. NLRC. all aspects of employment. found shelter in the other federation who took the cudgels for them. The Board of Directors of the union acted as prosecutor.shop agreement and in a manner characterized by arbitrariness and whimsicality. in vestigator and judge at the same time. The dismissed union members were denied due process when they were dismissed for disloyalty to the union based on the union security clause in the CBA. The proceedings would have been a farce. 68147. The absence of a full blown investigation of the expelled members of the union by an impartial body. are guilty of unfair labor practice. Such . Employees are entitled to due process before they may be expelled from the union on charge of disloyalty. There was no impartial tribunal or body vested with authority to conduct disciplinary proceeding under the constitution and by -laws and the expelled union members were not furnished notice of the charge against them. 1988]. Management has the prerogative to regulate. They are entitled to reinstatement to their positions without reduction in rank. They. it was held that the act of some union members of seeking help from another federation cannot constitute disloyalty as contemplated in the CBA. The grant of profit-sharing benefits to managers. No. In Rance vs. Petitioners had no idea that they were charged with disloyalty. Even if the petitioners appeared in the supposed investigation proceedings to answer the charge of disloyalty against them. the private respondents. The following cases do not involve unfair labor practice: 1. supervisors and all rank-and-file employees not covered by the CBA is not discriminatory but a valid exercise of management prerogative. June 30. At most. chanrobles virtual law library CASES NOT INVOLVING UNFAIR LABOR PRACTICES. it could not have altered the fact that the proceedings violated the rule of fair play. it was an act of self-preservation of workers who.

It is a valid exercise of management prerogative. R. (AHS/Philippine Employees Union vs. (Philippine Graphic Arts. G. R. March 30. No. G. Wise and Co. 13. No. L-21510. G. R. 1989). Inc. 87677. The promotion of employees to managerial positions is a prerogative of management. Inc. (Bulletin Publishing Co. Sanchez. vs. Inc. is not an unfair labor practice act. vindictive nor wanton manner. 75704. oppressive. R. R. 3. vs. 6. NLRC. L-20044. it does not constitute an unfair labor practice that would justify the staging of a strike. 7. Employees Union. Oct. 73721. R. April 30. In the absence of any evidence which directly reflects interference by the company with the employee¶s right to self-organization. The remedy is an action for reinstatement with prayer for backwages and damages. Mandatory or forced vacation leaves imposed by the employer due to economic crisis and not in a malicious. retained his original rank and salary. In the absence of a showing that the illegal dismissal was dictated by anti-union motives. 1986). 5. (National Union of Restaurant Workers [PTUC] vs. G. No. 4. July 19. No. CIR.management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer¶s interest and not for the purpose of defeating or circumventing the rights of employees under special laws or valid agreement and is not exercised in a malicious. . harsh. Inc. harsh. (Nevans vs. 1964). (Wise and Co. 74425. G. vs. G. 166 SCRA 118). The transfer of employees is a prerogative of management such as in one case where the employee who was transferred to a lower position. June 29. A promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that such a promotion was made simply to deprive the union of the membership of the promoted employee. The dismissal of an employee cannot be considered an unfair labor practice act if it appears that other employees more active than him in the union were retained. 1989). CIR. oppressive. No. vindictive or wanton manner or out of malice or spite.. where the workers were paid while on leave but the same was charged against their respective earned leaves. The dismissal of an employee due to loss of confidence is not unfair labor practice.. 2. Oct. 1987). No. (Rubber world [Phils. 7.]. the transfer of the employee should be considered legal. NLRC. NLRC. vs. 1968).

Discrimination in the context of the Labor Code involves either encouraging membership in any labor organization or is made on account of the employee¶s having given or being about to give testimony under the Labor Code. The act of the employer in refusing to re-admit striking workers after the strike was declared illegal. G. There is no ULP if this is not proven by evidence. NLRC. Bacolod-Murcia Milling vs. No. is not unfair labor practice. Feb. 113907. chanrobles virtual law library . (Great Pacific Life Employees Union vs. 102 Phil. 13. VictoriasManapla Workers.8. Nov. is not unfair labor practice. (Lakas ng Manggagawang Makabayan vs. 12. 93 SCRA 1). chanrobles virtual law library 11. (Singapore Airlines Local Employees Association vs. Ople. the business of the employer was completely paralyzed. G. CIR. L-33015. Dismissal of workers pursuant to the union security clause in the CBA. 118 SCRA 422). R. absent any malice or bad faith. Greenfield (MSMG-UWP) vs. (GOP-OCP Workers Union vs. 12. after affording them due process. 10. 130 SCRA 472). The decision of the employer to consider the top officers of petitioner union as unfit for reinstatement is not essentially discriminatory and constitutive of an unlawful labor practice of employers under Article 248 of the Labor Code. There were machines that were not in operating conditions because of long disuse during the strikes. CIR. No. 2000. 28.chanrobles virtual law library 14. Great Pacific Life Assurance Corporation. G. An error in the interpretation of a provision of the CBA. (Fortich vs. 127 SCRA 580). 1979). 11. No. The failure of the employer to comply with the final order of reinstatement cannot be considered unfair labor practice in the light of a government directive which rendered reinstatement an impossibility. Sept. 10. Ang Tibay. Honest differences in construction may arise in the actual application o f contractual provisions. G. (Arrastre Security Associatio n vs. Ramos. Marcelo Enterprises. Feb. Failure to re-admit striking workers at the same time is not unfair labor practice as there exist justifiable reasons not to effect their simultaneous readmission. R. 126717. (Samahan ng mga Manggagawa sa M. No. 669. Dismissal of a supervisor who organized a labor union composed of men under his supervision is not unfair labor practice. 1982. Malayang Manggagawa vs. 38258. is not an unfair labor practice act. 9 SCRA 154). 9. As a consequence of the two strikes which were both attended by widespread violence and vandalism. R. R. 1999).

(Enriquez vs. Oct.15. R. 51382. 16. However. R. 1986). 1999). G. Nos. If at all. No. 17. 60. with the inclusion of the federation president in the union¶s negotiating panel. G. In a case involving the mass ³protest retirement/resignation´ of pilots. and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self -organization or on the right to collective bargaining of the employees. 107 Phil. The records show that after the initiation of the collective bargaining process. especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with the manager¶s suggestion that the bank lawyers be excluded from its negotiating panel. June 16. The act of the employer in filing a petition for cancella tion of the union¶s registration is not per se an act of unfair labor practice. NLRC. It is not an anti-union conduct from which it can be inferred that the bank consciously adopted such act to yield adverse effects on the free exercise of the right to self -organization and collective bargaining of the employees. Zamora. 275). Confesor. 2004]. (Rural Bank of Alaminos Employees Union [RBAEU] vs. It cannot be said that they were dismissed. Dec. R. it was declared that if an employer interferes in the selection of the union¶s negotiators or coerces the union to exclude from its panel of nego tiators a representative of the union. 29. the act of the bank¶s Human Resource Manager in suggesting the exclusion of the federation president from the negotiating panel was not considered ULP. It must be shown by substantial evidence that the filing of the petition for cancellation of union registration by the employer was aimed to oppress the union. Lanting. (Associated Watchmen and Security Union vs. the negotiations pushed through. Such refusal is legitimate exercise of the right to protect its own interests. No unfair labor practice is co mmitted by their employer when it accepted their said retirement/resignation from the company. 114974. The refusal of a shipping agency to hire and employ se curity guards affiliated with a security agency which does not post a bond is not unfair labor practice. the suggestion should be construed as part of the normal relations and innocent communications which are all part of the friendly relations between the union and the bank. In the case of Standard Chartered Bank Employees Union [NUBE] vs. 100342-44. ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. in this case. No. the Supreme Court ruled that such is not a concerted activity which is within the protection of the law as they did not assume the status of strikers. What are the latest cases involving the issue of ULP? Interference in the choice of union¶s bargaining panel. 29. chanrobles virtual law library . [G.

the use of armed guards to prevent the organizers to come in. the Supreme Court considered the act of the employer in presenting the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicative of the employer¶s pressure on its employees. one cannot but conclude that the employer did not want a union in its hacienda . 2004]. [G. National Federation of Sugarcane Workers ± Food and General Trade. To enforce their rightful benefits under the laws on labor standards. No. the early payslips of petitioners show that their salaries were initially paid by FTC. In Hacienda Fatima vs. It appears from the records that FISI. its tobacco redrying plant and warehouse. R. Moreover. The ill-timed letters of resignation from the union members indicate that the employer had interfered with the right of its employees to self-organization. while having its own corporate identity. chanrobles virtual law library In De Leon vs. Thus. January 28. R. FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of companies. the stockholders of FISI sold all their participations in the corporation to a new set of stockholders which renamed the corporation . 2003]. and the dismissal of union officials and members. On February 1. February 11. In General Milling Corporation vs. Inc. there is sufficient ground to conclude that respondents were guilty of interfering with the right of petitioners to self-organization which constitutes unfair labor practice under Article 248 of the Labor Code. The records show that the employer presented these letters to prove that the union no longer enjoyed the support of the workers. R. The records s how that the two corporations had identical stockholders and the same business address. NLRC and Fortune Tobacco Corporation.a clear interference in the right of the workers to self-organization. 112661. Hence. No. the Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the employer¶s refusal to bargain to its acts of economic inducements resulting in the promotion of those who withdrew from the union. the Supreme Court held that based on the facts. 1991. 149440. tasked to provide protection and security in the company premises. petitioners formed a union which was later certified as bargaining agent of all the security guards. Petitioner-security guards have been employed with Fortune Integrated Services.its main factory plant. CA. 2001]. [G.Interference in the employees¶ right to self-organization. No. The fact that the resignations of the union members occurred during the pendency of the case before the Labor Arbiter shows the employer¶s desperate attempts to cast doubt on the legitimate status of the union. 146728. [G. (FISI) since the 1980¶s and have since been posted at the premises of Fortune Tobacco Corporation (FTC) . was a mere instrumentality of FTC. the employer is guilty of unfair labor practice. it is guilty of unfair labor practice for interfering with the right of its employees to self-organization. May 30.

Hence. in the 2000 case of Colegio de San Juan de Letran vs. February 11. 1988. the company committed an unfair labor practice under Article 248 of the Labor Code. September 18. Association of Employees and Fac ulty of Letran.Magnum Integrated Services. 1991. was declared as constitutive of union busting as it interfered with the employees¶ right to self-organization. FTC. because it was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on December 1. 141471. [G. As MISI had no other clients. [G. The relation between labor and management should be undisturbed until the last 60 days of the fifth year. it was still the certified collective bargaining agent of the workers. CA. it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA on November 29. R. without any reason. This resulted in the displacement of petitioners. 2004]. Inc. The outright termination for alleged insubordination of the union president. 1991. All these facts indicate a concerted effort on the part of respondents to remove petitioners from the company and thus abate the growth of the union and block its actions to enforce their demands in accordance with the labor standards laws. For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. the Supreme Court declared that the petitioner is guilty of unfair labor practice under Article 248 [g] for refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. The factual backdrop of her termination leads to no other conclusion that she was dismissed in order to strip the union of a leader who would fight for the right of her coworkers at the bargaining table. It ruled: ³The law mandates that the representation provision of a CBA should last for five years. it failed to give new assignments to petitioners. 2000]. On October 15. No. It was obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. R. When termination of union president constitutes interference with the employees¶ right to self-organization. No. Petitioners have remained unemployed since then. The union¶s proposal was also submitted within the prescribed 3-year period from the date of effectivity of the CBA. effect. while the CBA negotiation was on-going. albeit just before the last day of said period. chanrobles virtual law library Failure or refusal of management to give counter-proposal. preterminated its contract of security services with MISI and contracted two other agencies to provide security services for its premises.´ chanrobles virtual law library . In the 2004 case of General Milling Corporation vs. 146728.

[G. chanrobles virtual law library According to Standard Chartered Bank Employees Union [NUBE] vs. There can be no surface bargaining. chanrobles virtual law library ³Blue-sky bargaining´ on the part of union. Here. surface bargaining involves the question of whether an employer¶s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.´ Hence. (Standard Chartered Bank Employees Union [NUBE] vs. (See also National Union of Restaurant Workers [PTUC] vs. 312 NLRB 770. 10 SCRA 843 [1964]). No. R. However. 141471. Sloane and Fred Witney. (Luck Limousine. (Arthur A. which tend to show that it did not want to reach an agreement with the union or to settle the differences between it and the union. Association of Employees and Faculty of Letran. 114974. 2004]. 2004). at bottom. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves. 789 [1993]). No. June 16. 195). Confesor. ³Surface bargaining´ is defined as ³going through the motions of negotiating´ without any legal intent to reach an agreement.³Similarly. 114974. ³Blue-sky bargaining´ means making exaggerated or unreasonable proposals. R. in the earlier 2000 case of Colegio de San Juan de Letran vs. the petitioner school was declared guilty of unfair labor practice when it failed to make a timely reply to the proposals of the union more than a month after the same were submitted by the union. ³Surface bargaining´ on the part of management. June 16. R. 2000]. it must be emphasized that the duty to bargain ³does not compel either party to agree to a proposal or require the making of a concession. absent any evidence that management had done acts. both at and away from the bargaining table. Labor Relations. CIR. and usually such intent can only be inferred from the totality of the challenged party¶s conduct both at and away from the bargaining table. its actuation showed a lack of sincere desire to negotiate rendering it guilty of unfair labor practice. chanrobles virtual law library . admittedly. Clearly. p. The resolution of surface bargaining allegations never presents an easy issue. the school merely offered the feeble excuse that its Board of Trustees had not yet convened to discuss the matter. the parties were not able to agree and reached a deadlock. Confesor. In explaining its failure to reply. the parties¶ failure to agree does not amount to ULP under Article 248 [g] for violation of the duty to bargain. [G. a question of the intent of the party in question. G. September 18. No. 7th Edition 1991.

(Standard Chartered Bank Employees Union [NUBE] vs. 277 SCRA 680. G. G. Who has the burden of proof in ULP cases? In unfair labor practice cases. 61. exception. No. In the same 2004 case of Standard Chartered Bank [supra]. Who may exercise the right to self-organization? . 2005.. management cannot be held liable for ULP. 687. however. NLRC. No. R. while the signing bonus was included in the CBA itself.In order to be considered as unfair labor practice. 18. Inc. See also Schering Employees Labor Union [SELU] vs. After all. Hence. 142506. the approval of the CBA and the release of signing bonus do not necessarily mean that the union waived its ULP claim against the management during the past negotiations. Consequently. While the refusal to furnish requested information is in itself an unfair labor practice and also supports the inference of surface bargaining. March 25. 17. it cannot be said that the union was guilty of ULP for blue-sky bargaining. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negat e even a prima facie showing to warrant such a belief.R. 2004). Feb. G. 123276. supra). the minutes of the meeting show that the union based its economic proposals on data of rank-and-file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the bank in the Asian region. No. the conclusion of the CBA was included in the order of the Secretary of Labor and Employment. The eventual signing of the CBA does not operate to estop the parties from raising ULP charges against each other. Confesor. Schering Plough Corporation. there must be proof that the demands made by the union were exaggerated or unreasonable. -NAFLU vs. if the union failed to put its request in writing as required in Article 242 [c] of the Labor Code. (Tiu vs. 140992. it is the union which has the burden of proof to present substantial evidence to support its allegations of unfair labor practices committed by the employer. LABOR ORGANIZATIONS COVERAGE OF RIGHT TO SELFORGANIZATION 62. Signing of CBA does not estop a party from raising issue of ULP. Sulpicio Lines. R. Refusal to furnish financial information is ULP. 1997. Samahang Manggagawa sa Sulpicio Lines. Inc. Aug. as held by the High Court in Standard Chartered Bank [supra].

A. What are the three categories of employees? a. or educational institutions. Labor Code. as certified by the Department of Foreign Affairs. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. shall have the right to self-organization and to form. Basic Amendments under R. charitable. whether employed for a definite period or not. Ambulant. join. industrial and agricultural enterprises and in religious. May employees in the public service exercise their right to self-organize? Employees of government corporations established under the Corporation Code (without original charters) shall have the right to organize and to bargain collectively with their respective employers. Supervisory employees.All persons employed in commercial. chanrobles virtual law library Any employee. medical. Rank-and-file employees. Managerial employees. intermittent and itinerant workers. if they are nationals of a country which grants the same or similar rights to Filipino workers. No. See also Article 277 [c]. whether operating for profit or not. 65. chanrobles virtual law library 63. May aliens exercise the right to self-organization? General rule: All aliens. shall beginning on the first day of his/her service. and c. 10. 66. prepared by Members of the Senate-House Conference Committee of Congress). 64. b. natural or juridical. as well as foreign organizations are strictly prohibited from engaging directly or indirectly in all forms of trade union activities without prejudice to normal conta cts between Philippine labor unions and recognized international labor centers. self-employed people.. (Ibid. What are the three types of managerial employees? The three (3) types of managerial employees are as follows: . rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. or assist labor organizations of their own choosing for purposes of collective bargaining. Exception: Alien employees with valid working permits issued by the DOLE may exercise the right to self-organization and join or assist labor organizations for purposes of col lective bargaining. be eligible for membership in any labor organization. 6715.

A union with such mixed membership is no union at all. What is the distinction between managerial employees and supervisory employees? The principal distinction between managerial employees and supervisory employees is: the former have the power to decide and do managerial acts. confidential employees are not allowed to join any union (as they are treated like managers) when they: (1) assist or act in a confidential capacity. Are managerial employees allowed to unionize? How about supervisory employees? As a general rule. G. if these two conditions do not concur. (See United Pepsi0Cola Supervisors Union vs. the law does not allow mixed membership of both supervisory and rank-and-file employees in one union. and effectuate management policies specifically in the field of labor relations. while the latter have the power only to recommend managerial acts such as laying down policy. 288 SCRA 15 and Paper Industries Corp. R. What is the ³confidential employee´ doctrine? Under the ³confidential employee rule´. 101738. First-line managers (or supervisory employees) are allowed to join a supervisory union but not the union of rank -and-file employees or vice-versa. Laguesma. and 3. they can join a union. What is the ³separation of unions´ doctrine? The ³separation of unions´ doctrine simply means that the affiliation of both the rank-and-file union and supervisory union in the same company with one and the same federation is not allowed if the rank -and-file employees are under the direct supervision of the supervisors composing the supervisory union. only top and middle managers are not allowed to join any labor organization. Otherwise. Laguesma. hiring or dismissal of employees and the like. If not.Top management. In fact. chanrobles virtual law library 70.1. if the confidential information to which an . determine. of the Philippines vs.First-line management. No. It cannot exercise the rights of a legitimate labor organization. (2) to persons who formulate. April 12. 2000) 67. Simply put. said affiliation with one and the same federation is allowed. chanrobles virtual law library 69.Middle management. 2. 68.

What is a labor organization? A labor organization is any union or association of employees which exists in whole or in part for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment. . No. 76. What is the significance of issuance of Certificate of Registration to a union? In Tagaytay Highlands International Golf Club. It is considered "legitimate" if duly registered with DOLE. Registration with DOLE makes it legitimate. the Supreme Court ruled that the effect of issuance of certificate of registration to a union is that it becomes legitimate and its legal personality can only be attacked through a petition for cancellation of registration and not thru intervention in a certification election petition.employee has access has nothing to do with labor relations. while a workers' association is organized for the mutual aid and protection of its members but not for collective barg aining purposes. LABOR ORGANIZATIONS 71. 72. What is a workers¶ association? A workers' association is any association of workers organized for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining.. 75. Inc. What are the purposes of a labor organization? (1) Collective bargaining. 142000. and (2) Dealing with employers regarding the terms and conditions of the employment relationship. vs. 73. How is a labor organization registered? The application for registration must be supported by at least 20% of the members of the bargaining unit. 74. Tagaytay Highlands Employees Union -PGTWO (G. such employee cannot be considered a confidential employee under this rule. R. What is the distinction between a labor organization and a workers¶ association? A labor organization is established principally for collective bargaining purposes. January 22. 2003).

or 2. April 29. it was held that a local or chapter need not be independently registered to acquire legal personality. chanrobles virtual law library CHARTERING AND AFFILIATION 78. chanrobles virtual law library 80. standards and programs. What is an independent union? ³Independent Union´ refers to a labor organization operating at the enterprise level that acquired legal personality through independent registration under Article 234 of the Labor Code. Are local chapters required to acquire independent registration in order to have legal personality? In Laguna Autoparts Manufacturing Corporation vs. 82. 157146. registered with the Bureau of Labor Relations. No. R.´ 81. What is a national union or federation? ³National Union´ or ³Federation´ refers to a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member-unions or for participating in the formulation of social and employment policies. What is a bargaining unit? A "bargaining unit" is the group or cluster of jobs or positions that supports the labor organization which is applying for reg istration. this is known simply as ³local´ or ³chapter. Under the old rule. an independent union affiliated with a federation. [G. . within the employer¶s establishment. a local chapter which was subsequently granted independent registration but did not disaffiliate from its federation. national union. Office of the Secretary. 79. What is a chartered local? ³Chartered Local´ refers to a labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a federation or a national union.77. DOLE. What is an affiliate? ³Affiliate´ refers to: 1. 2005].

. The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president. An independently-registered union does not lose its independent legal personality when it affiliates with a federation or national union. A. That where the chapter¶s constitution and by-laws are the same as that of the federation or the national union. chanrobles virtual law library 84. chanrobles virtual law library 2. . The chapter shall acquire leg al personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. and the principal office of the chapter. 2008]. Local chapter. if: 1. the agent.A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. this fact shall be indicated accordingly. What is the effect of affiliation? A labor union which affiliates with a federation or national union becomes subject to the rules and regulations of the latter. 9481 [June 14. No. 83. it is provided. The federation is the principal and the local union.Under Article 234-A of the Labor Code. Which one is liable for damages in case of illegal strike ± the local union or federation? . What is the proof of affiliation with a federation? The proof of affiliation depends on the nature of the affiliation. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter¶s officers. Thus. their addresses. Independently-registered union.contract of affiliation between federation and the union. Appending the name of the federation to the local union's name does not mean that the federation absorbed the latter. as amended by R. Chartering and Creation of a Local Chapter.Charter certificate issued by the federation or national union. thus: ART. . 234-A. and (b) The chapter¶s constitution and by-laws: Provided. 85.

1999). a local union may sever its relationship with its parent union. vs. by collective action. (G. 66 SCRA 512]. It cannot be effected by a mere minority group of union members. 2002). 115180. It was held in Philippine Skylanders. Inc. 127374. November 16. by disaffiliating from the old federation to join a new federation. R. Liberty Cotton Mills.In Filipino Pipe and Foundry Corporation vs. In the absence of specific provisions in the federation¶s constitution prohibiting disaffiliation or the declaration of autonomy of a local union. Disaffiliation should always carry the will of the majority. that the right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. The local union. What is disaffiliation? The right to disaffiliate by the local union from its mother union or federation. a certification election is the most expeditious way of determining which labor organization is to be treated as the exclusive bargaining agent. 86. Thus. Inciong. January 31. R. it was held that it is the local union and not the federation which is liable to pay damages in case of illegal strike. It is not an act of disloyalty on the part of the local union nor is it a violation of the ³union security clause´ in the CBA. The obligation to check-off federation dues is terminated with the valid disaffiliation of the local union from the federa tion with which it was previously affiliated. NLRC. Absent any enforceable provisions in the federation¶s constitution expressly forbidding disaffiliation of a local union. Inc. a local may dissociate with its parent union. 1975. 121 SCRA 444). (Villar vs. the Supreme Court upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations. Once the fact of disaffiliation has been manifested beyond doubt. [No. it was held that there can be no disloyalty to speak of since there is no provision in the federation¶s constitution which specifically prohibits disaffiliation or declaration of autonomy. L-33987. No. (G. The sole essence of affiliation is to increase. local unions do not owe their creation and existence to the national federation to which they are affiliated but. to the will of their members. is a constitutionally -guaranteed right which may be invoked by the former at any time. In the landmark case of Liberty Cotton Mills Workers Union Vs. in one case. the common bargaining power of local unions for the effective . instead. is merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. NLRC. No. September 4.

the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation.enhancement and protection of their interests. chanrobles virtual law library It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. unaided by other support groups. Once a chartered local disaffiliates from the federation. Admittedly. The disaffiliation of an independently -registered union does not affect its legitimate status as a labor organization. Surely. Inciong. and free also to renounce the affiliation upon the terms laid down in the agreement which brought suc h affi1iation into existence. Yet the local unions remain the basic units of association. or an equivalent of 92. distinguished. There is nothing shown in the records nor is it claimed by AFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. As PSEA had validly severed itself from PAFLU. the same thing may not be said of a union which is not independently -registered (chartered local). It cannot file a petition for certification election. Does the act of the union in disaffiliating and entering into a CBA with the employer constitute unfair labor practice? . Upon an application of the afore-cited principle to the issue at hand. free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation. (Villar vs. 1983). Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union. but it is a case where almost all loca1 union members decided to disaffiliate. April 20. the impropriety of the questioned Decisions becomes clearly apparent. there are times when without succor and support local unions may find it hard. 87. 121 SCRA 444. Disaffiliation of independently-registered union and chartered local. As such. to secure justice for themselves. 88. However. this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation. it ceases to be entitled to the rights and privileges granted to a legitimate labor organization. there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members. Such dictum has been punctiliously followed since then.

(Section 1 [g].CGW. and consequently. As the local union had validly severed itself from the old federation.. the local union and their respective officers. there exists no sufficient basis to terminate the employment of said employees. the complaint for unfair labor practice was instituted against the wishes of workers who are members of the local union whose interests it was supposedly protecting. it was pronounced that the union security clause in the CBA cannot be used to justify the dismissal of the employees who voted for the disaffiliation of the local union from the federation. However. 2002]. 31. Jan. The complaint for unfair labor practice lodged by the federation against the employer. In the first place. the disaffiliation was held valid and. should have been dismissed at the first instance for failure to state a cause of action. 1990]. and the local union and their respective officers because of the act of the local union in disaffiliating from the mother federation and in entering in to a CBA with the employer without its participation. [G. the federation ceases to have any personality to represent the local union in the CBA negotiation. there would be no restrictions which could validly hinder it from subsequently affiliating with the new federation and entering into a CBA in behalf of its members. Inc. The Supreme Court ruled that there was no such unfair labor practice committed. What is cancellation proceedings against labor organization or workers¶ association? ³Cancellation Proceedings´ refer to the legal process l eading to the revocation of the legitimate status of a union or workers¶ association. having been filed by a party which has no legal personality to institute the complaint. 127374. 20. in a situation where it does not involve the withdrawal of merely some employees from the union but the whole union itself withdraws from the federation with which it was affiliated. R. 90. R. vs. In the second place. Tropical Hut Food Market. 89. vs. No. Inc. as . therefore. [G. Book V. Is disaffiliation a violation of union security clause? In Tropical Hut Employees Union . Rules to Implement the Labor Code. the mother federation with which the local union was formerly affiliated instituted a complaint for unfair labor practice against the employer (which refused to negotiate a CBA with said federation because the local union had already effectively and validly disaffiliated from it). it is entirely reasonable for it to enter into a CBA with the local union which is now affiliated with a new federation. No. More so in a case where the CBA imposes dismissal only in case employees are expelled from the union for their act of joining another federation or for forming another union or if they failed or refused to maintain membership therein. Rule I.In Philippine Skylanders. there can be no violation of the union security clause i n the CBA. Jan. As far as the employer is concerned. NLRC. L-43495-99.

Rule XIV. Effect of a Petition for Cancellation of Registration. In David vs. What is the effect of cancellation during the pendency of a case? . What is the effect of filing or pendency of a cancellation proceeding? The filing or initiation of a cancellation proceeding against a labor organization does not have the effect of depriving it of the rights accorded to a legitimate labor organization. . Book V.. 1979)]. the labor organization whose registration is sought to be cancelled shall continue to enjoy said rights. (Itogon-Suyoc Mines vs.). 2003]). 17. The union is indisputably entitled to be heard before a judgment could be rendered canceling its certificate of registration. 2007]. chanrobles virtual law librar y Under Article 238-A of the Labor Code. (Alliance of Democratic Free Labor Organization [ADFLO] vs. G. No. 31. Laguesma.as a rule . 9481 [June 14. 1996). For as long as there is no final order of cancellation. G. by the Bureau Director. as amended by R. Such pendency cannot also bar the conduct of a certification election. 238-A. national or industry unions and trade union centers. (Section 1. (Samahan ng Manggagawa sa Pacific Plastic vs. [Feb. 40-03.A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. 24 SCRA 873). upon the filing of an independent complaint or petition for cancellation. Ibid. No. Laguesma. R. Series of 2003. Sangilo-Itogon Workers Union.its rights under the Labor Code. nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts. Jan. [94 SCRA 707. it loses . 713-714 (December 14. R. The cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. it is provided as follows: ART. 92. 91.amended by Department Order No. A. or in the case of federations. For without such registration. Aguilizan. In case of cancellation. the registration of any legitimate independent labor union. chartered local and workers' association may be cancelled by the Regional Director. The pendency alone of cancellation proceedings does not affect the right of a labor organization to sue. 108625. No. March 11. 1997). 111245. chanrobles virtual law libr ary Subject to the requirements of notice and due process. it was held that a decision rendered without any hearing is null and void.

The reason is that. May registration of a labor organization be cancelled due to non-compliance with reportorial requirements? Where a registered labor organization in the private sector failed to submit the reports required under Rule V [Reporting Requirements of Labor Unions and Workers¶ Associations]. (Philippine Land-Air-Sea Labor Union [PLASLU]. What is meant by ³sole and exclusive bargaining agent´? . 93. it has juridical personality and the respondent court had validly acquired jurisdiction over the case. or its notices were returned unclaimed. may be rendered therein shall only be binding on those members of the union who have not signified their desire to withdraw from the case before its trial and decision on the merits. vs. 40-03. (Section 5. as amended. shall be cancelled administratively by the Bureau of Labor Relations due to non -compliance with the reportorial requirements unless: (a) non-compliance is for a continuous period of five (5) years. chanrobles virtual law library The non-renewal of registration or permit does not result in the dismissal of a case pending with the Department of Labor and Employment. Rule XV. 17. 2003]). [Feb. Sangilo-Itogon Workers Union. Book V. Book V. as amended by Department Order No. vs. 24 SCRA 873). (Itogon-Suyoc Mines. No registration of labor organization. 93 Phil. (Section 1. Ibid. at the time of the filing of the case. however. Rules to Implement the Labor Code. Inc. Series of 2003. however. chanrobles virtual law library CERTIFICATION ELECTION & REPRESENTATION ISSUES 94.). Inc. Book V of the Rules to Implement the Labor Code. the latter may cause the institution of the administrative process for cancellation of its registration. CIR. Rule XV. and (c) the labor organization concerned has not responded to any of the notices sent by the Bureau. upon its own initiative or upon complaint filed by any party -in-interest. for five (5) consecutive years despite notices for compliance sent by the Labor Relations Division or the Bureau of Labor Relations. (b) the procedures laid down in the Implementing Rules were complied with. the labor organization whose registration is cancelled may still continue to be a party to the case without necessity for substitution.In case cancellation of a union registration is made during the pendency of a case. 47). Whatever decision.

96. Four (4) ways of determining a bargaining agent: 1. Voluntary recognition of union. for purposes of collective bargaining. . . 95.The term ³sole and exclusive bargaining agent´ refers to any legitimate labor organization duly recognized or certified as the sole a nd exclusive bargaining agent of all the employees in a bargaining unit. or 2. provided. chanrobles virtual law library Certification election.refers to an election between the labor unions receiving the two (2) highest number of votes when a certification election which provides for three (3) or more choices results in no choice receiving a majority of the valid votes cast. to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. voluntary recognition in cases where there is only one legitimate labor organization operating within the bargaining unit. .Voluntary recognition of bargaining agent is the free and voluntary act of the employer of extending and conferring full recognition to a union as the sole and exclusive bargaining representative of the employees in an appropriate bargaining u nit. This is allowed when there is only one union operating in the bargaining unit. or 3. Definition of terms. What is the distinction between consent election and certification election? Consent election is a separate and distinct process and has nothing to do with the import and effort of a certification election in the sense that the . for purposes of collective bargaining. Consent election. that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. run-off election.refers to the process of determining through secret ballot the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit. . or 4. chanrobles virtual law library 97.refers to the election voluntarily agreed upon by the parties. Exclusive bargaining representative. consent election. certification election. with or without the intervention of the Department of Labor and Employment. how determined. chanrobles virtual law library Run-off election.

What is a bargaining unit? A ³bargaining unit´ refers to a group of employees sharing mutual interests within a given employer unit. they are all needed and important for its continued existence and smooth operations. another unit. there should be a logical basis for the formation of the bargaining unit. (Philtranco . 111262. comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within su ch employer unit. 98). G. Bargaining unit. Confesor. another unit. 99. 98. Substantial mutual interests principle or community or mutuality of interests rule.purpose of the latter is to determine the sole and exclusive bargaining agent of all the employees in the bargaining unit. R. 100. It is characterized by similarity of employment status. Certainly. On the part of the company. Globe doctrine [will of the employees]. and so on. in one company. There are no specific criteria under the law but any of the following four (4) modes may be used: chanrobles virtual law library 1. messengers. another unit. No. 19. Employment status. SUBSTANTIAL MUTUAL INTERESTS RULE: Under the substantial mutual interests rule. 1996. Sept. chanrobles virtual law library Since it is impossible for all employees in one company to perform exactly the same work. There is commonality of interest among them . it is highly fragmentatious for typists and clerks to organize one bargaining unit. Is direct certification allowed? Direct certification of union is not allowed. chanrobles virtual law library 2. 3. the employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they perform. same duties and responsibilities and substantially similar compensation and working conditions. 262 SCRA 81. janitors. accountants. 4. how determined. Collective bargaining history.which is the progress of their company and their desire to share equitably in the profits or fruits of their endeavors. (San Miguel Corporation Employees Union-PTGWO vs.

Manila. a different legal principle applies. 1989). it would not be for the best interests of these employees if they would further be fractionalized. sales and dispensary departments perform work which have nothing to do with production and maintenance. packing. 1969]. it was held that they can form their own bargaining unit separate and distinct from those involved in the production and maintenance such as those employed in the raw leaf. In Alhambra Cigar and Cigarette Manufacturing Co. the Supreme Court applied this principle in a petition of the union which seeks to represent the sales personnel in the various Magnolia sales offices in Northern Luzon. 1994]. [G.´ In another case involving the same company.. The distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. and in San Fernando. . [211 SCRA 451 (1992)]. San Miguel Corporatio n Supervisors and Exempt Employees Union vs. No. 380-381]. R. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. cigarette. Although the businesses of two companies are related and the employees of one were originally the employees of the other. No. hence. employees in the administrative. [G. where all non-academic rank-and-file employees of the University of the Philippines in Diliman. G. cigar. Padre Faura. Los Banos. 277 SCRA 370. No. the fact that the three plants comprising the bargaining unit are located in three different places. Metro Manila. Even the bargaining unit sought to be represented by respondent union in the entire North Luzon sales area consists only of approximately fifty -five (55) employees. 85343. chanrobles virtual law library In the case of San Miguel Corporation vs. Quezon City. [G. engineering and maintenance departments. But in the case of employees of two (2) companies. Feb. Pan dacan. in Otis. in Cabuyao. 20.Service Enterprises vs. 100485. 1997. Pampanga was declared immaterial. Ferrer-Calleja. Laguna. No. R. June 28. Surely. September 21. Bureau of Labor Relations. Laguesma. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in University of the Philippines vs. namely. vs. Alhambra Employees Association -PAFLU. August 15. L-13573. contrary to the position taken by the company that each sales office consists of one bargaining unit. Laguesma. Said the Court: ³What greatly militates against this position (of the company) is the meager number of sales p ersonnel in each of the Magnolia sales office in Northern Luzon. the employees of both companies cannot be treated a s one bargaining unit because they are employed by two separate and distinct entities. The adage µthere is strength in number¶ is the very rationale underlying the formation of a labor union. R. 110399. R. Laguna and the Visayas were allowed to participate in a certification election.

LVN Pictures.. vs. hence. Since a majority or 84 out of the 149 qualified voters cast their votes. [G. G. In a case involving a film outfit. 101 SCRA 534. their separation into two (2) distinct bargaining units was declared proper. Nov. in Golden Farms. The Honorable Secretary of Labor. teaching and office personnel in its five (5) campuses. 3. 23. the dissimilarity of interests between monthly-paid and daily-paid workers . Dec. 1994]. Thus. R. Inc. construction and transportation employees of the Tandang Sora campus and not on all the employees in St. 3. GLOBE DOCTRINE: . The computation of the quorum should be based on the rank -and-file motor pool. R. James¶ five (5) campuses. Feb. Also. vs. Calica. construction and transportation employees) of petitioner-school¶s Tandang Sora campus. 151326. Inc. Indophil Textile Mill Workers Union-PTGWO vs. Moreover. 1994]. R. Ople. Samahang Manggagawa sa St. They do not belong to the bargaining unit that the union seeks to represent. that there is substantial difference between the work performed by musicians and that of other persons who participate in the production of a film which suffices to show that they constitute a proper bargaining unit. No. James School of Quezon City vs. No. respondent union sought to represent the rank -and-file employees (consisting of the motor pool. 1980.where the former primarily perform administrative or clerical work. 1992). [1 SCRA 132 (1961)]. July 26. [G. a quorum existed during the certification election. it was ruled that there is no commonality of interest between the employees in the garment factory and cinema business. The motor pool. Inc. while the latter mainly work in the cultivation of bananas in the field ± was held proper basis for the formation of a separate and distinct bargaining unit for the monthly -paid rank-and-file employees. Nov.(Diatagon Labor Federation Local 110 of the ULGWP vs. the administrative. No. 102130. [G. 2005].R. The Supreme Court disagreed with said contention. G. construction and transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election. Philippine Musicians Guild. teaching and office personnel are not members of the union. Laguesma. it was pronounced following the substantial mutual interests test. R. 107610. 25. chanrobles virtual law library In St. it was ruled that the 149 qualified voters should be used to determine the existence of a quorum during the election. No. James School of Quezon City. 96490. In Cruzvale. L-44493-94. Nos. vs. Petitioner-school opposed it by contending that the bargaining unit should not only be composed of said employees but must include administrative.

Sept. R. the collective bargaining history of the school also shows that these groups were always treated separately. infra). that in a case where the company¶s production workers can be cons idered either as a single bargaining unit appropriate for purposes of collective bargaining or. R. 79526. [G. infra. 100485. as three (3) separate and distinct bargaining units. 1990]. a certification election sho uld be held separately to choose which representative union will be chosen by the workers. despite the history of said two divisions being treated as separate units and notwithstanding their geographical distance. In the case of International School Alliance of Educators [ISAE] vs. the Supreme Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. despite the collective bargaining history of having a separate bargaining unit for each sales office. 1994].. 21. However. L-28223. 2000]. 30. COLLECTIVE BARGAINING HISTORY: The principle called collective bargaining history en unciates that the prior collective bargaining history and affinity of the employees should be considered in determining the appropriate bargaining unit. [G. No. chanrobles virtual law library For instance. the determining factor is the desire of the workers themselves. Dec. the Supreme Court ruled that foreign-hired teachers do not belong to the same bargaining unit as the local-hires because the former have not indicated their intention to be grouped with the latter for purposes of collective bargaining. No. the Supreme Court in National Association of Free Trade Unions vs. And in another case. [3 NLRB 294 (1937)] where it was ruled. Quisumbing. Mainit Lumber Development Company Workers Union. (San Miguel Corporation vs. June 1. No. R. 21. Moreover. San Miguel Corporation vs. (See also Mechanical Department Labor Union sa Philippine National Railways vs. Aug. Laguesma. [G. National Association of Free Trade Unions vs. G. declared that there is mutuality of interest among the workers in the sawmill division and logging division as to justify their formation of a single bargaining unit. Mainit Lumber Development Company Workers Union. in defining the appropriate bargaining unit. 1968). R. Consequently. EMPLOYMENT STATUS DOCTRINE: . CIR. This. 128845. the Supreme Court applied the principle of mutuality or commonality of interests in holding that the appropriate bargaining unit is comprised of all the sales force in the whole of North Luzon. No.The Globe doctrine [will of the employees] is was enunciated in the United States case of Globe Machine and Stamping Co. Laguesma.

the Supreme Court ruled that it is beyond question that the employees of the livestock and agro division of the co rporation perform work entirely different from those performed by employees in the supermarts and cinemas. Ferrer-Calleja. July 19. Nov. including the categories of their positions and employment status. Among others. [G. R. rates of pay. 1989. pp. Confidential employees. (Philips Industrial Development. the rank-and-file employees of the livestock -agro division fully constitute a bargaining unit that satisfies both requirements of classification according to emp loyment status and of the substantial similarity of work and duties which will . by the very nat ure of their functions. hours of work. vs. due to the nature of the business in which its livestock agro division is engaged. vs. 77395. their inclusion in the bargaining unit composed of the latter employees is not justified. No. they cannot be allowed to be included in the rank-and-file bargaining unit. 1960]. assist and act in a confidential capacity to. 1992. The union can also become company -dominated with the presence of managerial employees in union membership. Hence.. assist or join a labor union equally applies to them. according to the Supreme Court in Philippine Land -Air-Sea Labor Union vs. the determination of appropriate bargaining unit based thereon is considered an acceptable mode. G. 1988]. 78755. 29. the latter might not be assured of their loyalty to the union in view of evident conflict of interest. Definitely. vs. R. they have very little in common with the employees of the supermarts and cinemas. which involves a corporation engaged in piggery. L-14656. Sanchez. [G. For instance. Nov. the overwhelming majority of which are seasonal and casual and not regular employees.Under the doctrine of employment status. CIR. Hence. As such. do not have the mutuality or community of interest with regular and permanent employees. 29. 88957. (Bulletin Publishing Co. R. In Belyca Corporation vs. 144 SCRA 628). the noted differences are: their working conditions. 482-510). The rationale for this inhibition is if these managerial employees would belong to or be affiliated with a union. As stated by petitioner corporation in its position paper. NLRC. persons who exercise managerial functions in the field of labor relations. No. very few of its employees in the division are permanent. No. Ferrer-Calleja. casual employees and those being employed on a day -today basis. 175 SCRA 471). Golden Farms. June 25. planting of agricultural crops and operation of supermarts and cinemas. poultry raising. Undeniably. the rationale behind the ineligibility of managerial employ ees to form. To lump all the employees of petitioner in its integrated business concerns cannot result in an efficacious bargain ing unit comprised of constituents enjoying a community or mutuality of interest. or have access to confidential matters of. (Rothenberg on Labor Relations. G. No. Inc. Inc. R.

The collective bargaining history in the School also shows that these groups were always treated separately. Ople. R. the companies would consequently have their respective and distinctive concerns in terms of the nature of work. Such transformation of the companies is a management prerogative and business judgment which the courts cannot look into unless it is contrary to law. it used all the four (4) factors mentioned above. hours of work. wages. such as housing. Application of foregoing 4 factors in one case. [101 SCRA 534 (1980)]. shipping costs. Cebu Stevedoring. are reasonably related to their status as for eign-hires. G. they became distinct entities with separate juridical p ersonalities.´ 101. Quisumbing. (See also Democratic Labor Association vs. and justify the exclusion of the former from the latter. 111262. public policy or morals. Thus. local-hires enjoy security of tenure. and home leave travel allowance. In one case involving the spin -off by a corporation of two of its divisions. and other conditions of employment. 2000]. in the case of International School Alliance of Educators [ISAE] vs. No. foreign-hires are accorded certain benefits not granted to local-hires. Although foreign-hires perform similar functions under the same working conditions as the local-hires. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. Foreign-hires have limited tenure. What is the effect on the bargaining unit of spin-off of business? The employer may validly effect a spin -off of some of its divisions to operate as distinct companies. 103 Phil. June 1. .ultimately assure its members the exercise of their collective bargaining rights. As earlier mentioned. the employees cannot belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP vs. R. transportation. In so holding. 1103). No. Confesor. (San Miguel Corporation Employees Union-PTGWO vs. [G. thus: chanrobles virtual law library ³It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. Interests of employees in the different companies perforce differ. These benefits. the Supreme Court disallowed the inclusion of foreign -hired teachers in the bargaining unit composed of locally -hired teachers. taxes. the Supreme Court declared that after the said spin-off. 128845. Considering the spin-offs.

De la Salle University Employees Asso ciation. the Supreme Court affirmed the findings of the Voluntary Arbitrator that the employees of the College of St. May employees of one entity join the union in another entity? In the same case of De la Salle [supra]. it was held that the express exclusion of certain employees from the bargaining unit of rank -and-file employees in the past CBA does not bar any re-negotiation for the future inclusion of the said employees in the bargaining unit. 1993). based on the nature of their duties. March 5. R. the alleg ed confidential nature of the said employees¶ functions (as computer operator and discipline officers) were proven to be incorrect. and 3. No. 109002. they are not confidential employees and should. G. that such petition is verified. that the petition is supported by the written consent of at least twenty-five percent (25%) of all employees in the bargaining unit. As carefully examined by the Solicitor General. 1. 1996. the parties may not only renew the existing CBA but may also propose and discuss modifications or amendments thereto. As to the discipline officers.Sept. 2000]. 102. What are the requisites for certification election in organized establishments? The following are the requisites for certification election in organized establishments. because the two educational institutions have their own separate juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate fiction. More so in this case where. 104. During the freedom period. 262 SCRA 81. What is the requirement for certification election in unorganized establishments? . Benilde should be excluded from the bargaining unit of the rank-andfile employees of De la Salle University. See also Borbon vs. No. therefore. chanrobles virtual law library 2. the service record of a computer operator reveals that his duties are basica lly clerical and non-confidential in nature. that a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the 60-day freedom period. 103. May excluded employees be included in the bargaining unit under the new CBA. 105. [G. Laguesma. after a careful consideration of the pleadings filed. be included in the bargaining unit of rank-and-file employees. April 12. In De la Salle University vs. 19. R. 101766.

(As amended by Section 12. certification year-bar rule. whether the petition for certification election is filed by an employer or a legitimate labor organization. a legitimate labor organization. 9481 [June 14. . The employer¶s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature. Who may file petition for certification election? A petition for certification election may be filed by: 1. Employer as Bystander. 106. What are the exceptions to the general rule? The exceptions when no certification election may be held are as follows: 1. Republic Act No. an employer. When to file petition for certification election. However. or 2. it has no legal personality to file the petition for certification election. 108. a petition for certification election may be filed at any time. 2007] amended the Labor Code by introducing the following provisions: Article 258-A.In all cases. ROLE OF EMPLOYER IN CERTIFICATION ELECTION CASES: R. . and (2) submitting the list of employees during the pre-election conference should the Med -Arbiter act favorably on the petition. certification election shall be "automatically" conducted upon the filing of a petition for certification election by a legitimate labor organization. 9481 which lapsed into law on May 25. The general rule is. it must be emphasized that the petitioner-union should have a valid certificate of registration. 2007 and became effective on June 14. but only when requested by a labor organization to bargain collectively and the status of the union is in doubt. the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. 2007). 107.In unorganized establishments. in the absence of a collective bargaining agreement duly registered in accordance with Article 231 of the Labor Code. general rule. otherwise. No. A.

Trajano. September 9. thus: ³This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case. take any action to legally compel the employer to comply with its duty to bargain collectively. nor did it file any unfair labor practice suit against the employer or initiate a strike against the latter. consent or run-off election.. 1991. or 2. there was proof that the certified bargaining agent. Under the circumstances. or 3. 1997. [G. What is certification year-bar rule? Under the certification year-bar rule. [G. Laguesma. the bargaining deadlock-bar rule was not applied because the duly certified exclusive bargaining agent of all rank -and-file employees did not. consent or run-off election or from the date of voluntary recognition. February 4. 267 SCRA 503]. bargaining deadlock-bar rule. neither may a representation question be entertained if: 1. a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been submitted to conciliation or arbitration or had become the subject of valid notice of strike or lockout. no CBA was executed. hence. 75810.e.2. chanrobles virtual law library In the case of Kaisahan ng Manggagawang Pilipino [KAMPIL -KATIPUNAN] vs. a certification election may be validly held. the duly recognized or certified union has commenced negotiations with the employer within the one-year period from the date of a valid certification. R. contract-bar rule. before the filing of a petition for certification election. But in the case of Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers vs. The Supreme Court ratiocinated. What is bargaining deadlock-bar rule? Under the bargaining deadlock-bar rule. R. the bargaining deadlock -bar rule was applied. No. 109. whose factual milieu is similar to said case of Kaisahan. for more than four (4) years. respondent union. No. 110. a certification election petition may not be filed within one (1) year: (1) from the date of a valid certification. had taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively. or (2) from the date of voluntary recognition. 118915. 201 SCRA 453 (1991)]. i. charging the employer with unfair labor practice and conducting a strike in protest against the employer¶s .

3.´ 111. when the CBA is not registered with the BLR or DOLE Regional Offices. Section 3. when the documents supporting its registration are falsified. Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance. e. 4. when the collective bargaining agreement was entered into prior to the 60-day freedom period. chanrobles virtual law library 7. fraudulent or tainted with misrepresentation. What are the exceptions to the contract-bar rule? The exceptions to the contract -bar rule are as follows: 1.refusal to bargain. Thus. chanrobles virtual law library 5. where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively. What is a contract-bar rule? Under the contract-bar rule. COLLECTIVE BARGAINING AGREEMENT (CBA) 113. during the 60-day freedom period. The reasons are: 112. It is only just and equitable that the circumstances in this case should be considered as similar in nature to a µbargaining deadlock¶ when no certification election could be held. 2. 6. contains provisions lower than the standards fixed by law. although registered. Rule V.. This is also to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any certified bargaining agent from negotiating a CBA.g. when the CBA. What is a Collective Bargaining Agreement (CBA)? . the Bureau of Labor Relations shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties. when there is a schism in the union resulting in an industrial dispute wherein the collective bargaining agreement can no longer foster industrial peace.when the collective bargaining agreement is not comp lete as it does not contain any of the requisite provisions which the law requires.

‡ The DOLE Secretary cannot order inclusion of terms and conditions in CBA which the law and the parties did not intend to reflect therein. not bad faith. February 11. 115.´ Consequently. [G. the employer¶s failure to make a timely reply to the proposals presented by the union is indicative of its bad fai th and utter lack of interest in bargaining with the union. R. The requirement under the law that a party should give its reply within said period is m erely procedural and non-compliance therewith is not unfair labor practice. [10 SCRA 843].no effect if its contents are not incorporated in the CBA. ‡ Making a promise during the CBA negotiation is not considered bad faith.Collective Bargaining Agreement (CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages. ‡ Signing bonus. the procedure in collective bargaining prescribed by the Labor Code under Article 250 is mandatory because of the basic interest of the State in ensuring lasting industrial peace. ‡ Minutes of CBA negotiation . Recently. ‡ Adamant stance resulting in impasse. however. It underscored the fact that the other party upon whom the proposals was served ³shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. chanrobles virtual law library 114. hours of work and all other terms and conditions of employment in a bargaining unit. 2004]. there has been a shift in the interpretation of the provision of Article 250. Is the collective bargaining procedure in Article 250 mandatory? In National Union of Restaurant Workers vs. ‡ Allegations of bad faith. Its provisions are construed liberally. 146728. was mainly dilatory as it turned out to be utterly baseless. it was held that failure to reply within ten (10) calendar days does not constitute refusal to bargain. The CBA is deemed the la w between the parties during its lifetime. Its excuse that it felt the union no longer represented the workers. According to the pronouncement in General Milling Corporation vs. No. not demandable under the law. CA. wiped out with signing of CBA. What are the legal principles applicable to Collective Bargaining Agreement (CBA)? ‡ A proposal not embodied in CBA is not part thereof. CIR. Consequently. the employer in this case was .

petitioner still had not made any counter-proposals. chanrobles virtual law library The same holding was made in Kiok Loy vs. 141471. Petitioner could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse for failing to file its reply. Series of 2003. (See also The Bradman Co. What are the kinds of bargaining under the latest implementing rules? The Rules to Implement the Labor Code. 116. 17. Court of Industrial Relations. In Colegio de San Juan de Letran vs. September 18. and 2. as amended by Department Order No. 118. there is a clear evasion of the duty to bargain collectively. Inc. Single-enterprise bargaining. [G. Any voluntarily recognized or certified labor union may demand negotiations with its employer for terms and conditions of work covering employees in the bargaining unit concerned. petitionerschool was declared to have acted in bad faith because of its failure to make a timely reply to the proposals presented by the union. 78 SCRA 10. What is multi-employer bargaining? . Rule XVI. provide for two (2) kinds of bargaining. This is a clear violation of Article 250 of the Labor Code governing the procedure in collective bargaining. Where the employer did not even bother to submit an answer to the bargaining proposals of the union. 40-03. vs. Association of Employees and Faculty of Letran. The school¶s refusal to make a counter-proposal to the union¶s proposed CBA is an indication of its bad faith. 117. 15 [1977]). No. (Section 3. [Feb. What is single enterprise bargaining? Single-enterprise bargaining involves negotiation between one certified labor union and one employer. R. namely: chanrobles virtual law library 1. 1996. [141 SCRA 179. Book V. Its actuation shows a lack of sincere desire to negotiate rendering it guilty of unfair labor practice. Rules to Implement the Labor Code. as amended in 2003.. 186 (1986)] where the company¶s refusal to make any counter -proposal to the union¶s proposed CBA was declared as an indication of its b ad faith. 2000]. Multi-employer bargaining. This inaction on the part of petitioner prompted the union to file its second notice of strike on March 13. 2003]).held guilty of unfair labor practice under Article 248 [g] of the Labor Code. More than a month after the proposals were submitted by the union. NLRC.

among other pertinent provisions. However. Essentially. provided: (a) only legitimate labor unions which are incumbent exclusive bargaining agents may participate and negotiate in multi -employer bargaining. Any legitimate labor unions and employers may agree in writing to come together for the purpose of collective bargaining. should likewise be fully satisfied before such negotiations may be validly held. (Section 5. Rule XVI. the duty to bargain in this situation still requires the performance of the obligation by the employer and the union to meet. Book V. Accordingly. should be followed by the employer and the representatives of the employees in their collective bargaining efforts. the law itself mandates that the procedures in collective bargaining laid down in the Labor Code. What is meant by ³duty to bargain collectively´ when there exists a CBA? When there is a collective bargaining agreement. without having to worry about possible past agreements affecting the current ones for discussion. (b) only employers with counterpart legitimate labor unions which are incumbent bargaining agents may participate and negotiate in multi-employer bargaining. What is meant by ³duty to bargain collectively´ when there has yet been a CBA? Article 251 contemplates a situation where there is yet no CBA or other voluntary arrangements or modes providing for a more expeditious manner of collective bargaining. convene and confer for coll ective bargaining purposes. chanrobles virtual law library 120. The advantage of negotiating a CBA for the first time lies in the fact that both parties are not restricted or encumbered by any previous agreement on any of the issues that may be raised in the course thereof. 119.Multi-employer bargaining involves negotiation between and among several certified labor unions and employers.). The basic requisites of collective bargaining such as the existence of employer-employee relationship. Ibid. either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. the duty to bargain collectively shall mean that neither party shall terminate nor modify such agreement during its lifetime. specifically Article 250 thereof. It shall be the duty of both parties to keep the . and chanrobles virtual law library (c) only those legitimate labor unions which pertain to employer units which consent to multi-employer bargaining may participate in multi-employer bargaining. They a re free to take positions on anything. majority status of the bargaining union and the demand to negotiate an agreement.

chanrobles virtual law library d. ratification and registration of the CBA? a. Ratification by majority of the members of the bargaining unit. Non-compliance therewith will render the CBA ineffective. Rules to Implement the Labor Code. The general rule is that the CBA is required to be posted in two (2) conspicuous places in the work premises. This requirement on the posting of the CBA as above-described is considered a mandatory requirement. Series of 2003. Registration of CBA. (Associated Trade Unions [ATU] vs. e. for a period of at least five (5) days prior to its ratification. May 5. (Associated Labor Union [ALU] vs. R. Said CBA shall affect only those employees in the bargaining units who have ratified it. chanrobles virtual law library 121. No. The CBA shall be registered with the Department of Labor and Employment in accordance with the Rules to Implement the Labor Code. (Section 7. 40-03. 2003]). Posting of CBA. R. 1988).status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60 -day period and/or until a new agreement is reached by the parties. L-75321. G. No. 1989). Book V. (Section 7. Rule XVI. Rule XVI. Ferrer-Calleja. In the case of multi-employer bargaining. c. G. Posting is responsibility of employer. Trajano. June 20. Rules to Implement . 77282. The ratification of the CBA should be made not by the majority of the members of the bargaining union but by the majo rity of the members of the bargaining unit which is being represented by the bargaining union in the negotiations. 17. Book V. The posting of copies of the CBA is the responsibility of the employer which can easily comply with the requirement through a mere mechanical act. [Feb. What are the mandatory requisites of publication. as amended by Department Order No. two (2) signed copies of the CBA should be posted for at least five (5) days in two (2) conspicuous areas in each workplace of the employer units concerned. as amended in 2003. b. Posting is mandatory.

17. 340 SCRA 587. But the employer failed in its duty under Article 252. [G. by questioning the existence of the union and the status of its membership to prevent any negotiation. 2000. What is the effect of the refusal of party to sign the CBA? A party to a fully-concluded CBA may be compelled to sign it. 859). What is the effect if there is no meeting of the minds? In University of the Immaculate Concepcion. Such refusal is considered unfair labor practice. 146291. the management¶s refusal to make a counter -proposal to the union¶s proposal for CBA negotiation is an indication of its bad faith. January 23. [G. As held in General Milling Corporation vs. 141471. the petitioner presented to the union a draft of the CBA allegedly embodying all the terms and conditions agreed upon during the conciliation sessions held by the NCMB. No. What is the consequence of refusal of party to negotiate the CBA? The refusal of the employer to bargain with the collective bargaining representative. 11.the Labor Code. the union lived up to this obligation when it presented proposals for a new CBA to the management within three (3) years from the effectivity of the original CBA. Secretary of Labor and Employment. may indicate bad faith. 1986. CA. Inc. 22. vs. 320 F 2d. by ignoring all notices for negotiations and requests for counter-proposals so much so that the union had to resort to conciliation proceedings. No. No. the company commits an unfair labor practice act under Article 248 [g] of the Labor Code (violation of the duty bargain collectively). Jan. [Feb. Association of Employees and Faculty of Letran. 2002]. 54334. 146728. especially if said refusal to sign is the only remaining hitch to its being implemented. 141 SCRA 179). Feb. (Kiok Loy vs. as amended by Department Order No. 18. The Hon. 40-03. R.R. chanrobles virtual law library 123. 2004]. NLRC. For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. R. 595]. What it did was to devise a flimsy excuse. (Roadway Express vs. [G. G. Series of 2003. Sept. Petitioner contended that the union was bound to comply with the terms contained in the draft-CBA since said draft allegedly contains all the items already agreed upon before the NCMB. 124. General Teamster. chanrobles virtual law library According to Colegio De San Juan De Letran vs. R. In affirming the finding of the Court of . there is a clear evasion of the duty to bargain collectively. 2003]). No. Where the employer did not even bother to submit an answer to the bargaining proposals of the union. 122. The Supreme Court disagreed.

using the cessation of its business as reason therefor. Oct. therefore. who assumed jurisdiction on January 23. they still have the duty to negotiate a new collective bargaining agreement in good faith. vs. the old one having already expired. Although it is true that the university and the union may have reached an agreement on the issues raised during the collective bar gaining negotiations. 1994 conference. the employer -employee relationship is merely . ³Petitioner insisted that a new collective bargaining agreement was concluded through the conciliation proceeding before the NCMB on all issues specified in the notice of strike. 1995 only was set to resolve the distribution of the salary increase of the covered employees. 1996. it follows that a new CBA will be needed to govern the employment relations of the parties. In the absence of any other information. no CBA could be concluded because of what the union perceived as illegal deductions from th e 70% employees¶ share in the tuition fee increase from which the salary increases shall be charged. as already indicated above. For. the Supreme Court ratiocinated. that while the employer cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified. Inc. pursuant to the applicable provisions of the Labor Code.´ 125. ³In this case. R. [G. among other reasons. illega l and invalid. there must be clear indications that the parties reached a meeting of the minds. 11. Secretary of Labor.Appeals that there was still no new CBA because the parties had not reached a meeting of the minds. 263 SCRA 98]. No. the DOLE Secretary. thusly: ³As in all other contracts. it was held in San Pedro Hospital of Digos. 104624. the manner of computing the net incremental proceeds was yet to be agreed upon by the parties. still no agreement was concluded by them because. neither can the employer evade its obligation to bargain with the union. the plain and natural presumption is that the employer would resume operations after six (6) months and.¶ ³Considering the parties failed to reach an agreement regarding certain items of the CBA. Can a CBA be negotiated and concluded during suspension of operation? There is no legal basis to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations which an employer can lawfully do under Article 286 of the Labor Code. Also. Consequently. The Court of Appeals found that µthere are many items in the draft-CBA that were not even mentioned in the minutes of the July 20.

And since it refused to bargain without valid and sufficient cause. chanrobles virtual law library Under this situation.suspended (and not terminated) for the duration of the temporary suspension. in the exercise of his powers under Article 263 [i] of the Labor Code to decide and resolve labor disputes. 127. loses its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. However. The Supreme Court said in the same case of San Pedro Hospital [supra] that it cannot impose upon the employer the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel the employer to continue its business when it had already decided to close shop. when one of the parties abuses this grace period by purposely delaying the bargaining process. its provision shall continue to govern the relationship between the parties until a new one is agreed upon. following the provision of Article 253 which imposes on both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60 day period [prior to its expiration date] and/or until a new agreement is reached by the parties. lock. 126. the employer which violates the duty to bargain collectively. The general rule is that when a CBA already exists. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. that neither party is guilty of bad faith. It shows abuse of this option and bad faith on the part of the employer. has lately consistently ruled that the CBA. the proposals of the union may be adopted as the CBA and. consequently. The rule necessarily presupposes that all other things are equal. Hence. as proposed by the union. a dep arture from the general rule is warranted. stock and barrel. chanrobles virtual law library . stock and barrel on employer who refused to negotiate a CBA? The Supreme Court. the DOLE Secretary. Can a CBA be negotiated and concluded in case of closure of business? An employer which has already decided to close shop cannot be compelled to enter into a new CBA. That is. properly granted the wage increase and imposed the union shop provision. Article 253 basically mandates the parties to keep the status quo while they are still in the process of working out their respective proposals and counter proposals. imposed on the employer. and that would be judicial tyranny on its part. may be unilaterally imposed on the employer in the event the latter fails to discharge its duty to bargain collectively by refusing to make any counter-proposals to the proposals of the union or engaging in bad faith bargaining. Can a CBA proposed by the union be imposed lock.

[No. Sweden Ice Cream Plant. the High Tribunal upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. Thus. Divine Word University of Tacloban vs. It is also the time when the majority status of the bargaining union or agent may be challenged by another union by filing appropriate petition for certification election. 2004]. [213 SCRA 759. [G. NLRC. stock and barrel.General Milling Corporation vs. CA. No. alter or modify the existing agreement. Secretary of Labor and Employment. refused to submit any counter proposal to the CBA proposed by its employees¶ certified bargaining agent. What is ³freedom period´? ³Freedom period´ is the last sixty (60) days of the lifetime of a collective bargaining agreement immediately prior to its expiration It is so called because it is the only time when the law allows the parties to serve notice to terminate. Likewise. This was because of the employer¶s refusal to counter -propose to the union¶s proposals which constitutes unfair labor practice under Article 248 [g] of the Labor Code. NLRC. 11. 128. In General Milling Corporation vs. in Divine Word University of Tacloban vs. To rule otherwise. Kiok Loy vs. the Supreme Court deemed it proper to apply in General Milling the rationale of the doctrine in the said two cases. Distinction between the aforesaid cases. R. 188].lock. September 11. the Supreme Court found that petitioner therein. Feb. L-54334. the Supreme Court imposed on the employer the draft CBA proposed by the union for two years commencing from the expiration of the original CBA. petitioner therein refused to perform its duty to bargain collectively. CA. Secretary of Labor and Employment. January 22. according to the Court. It ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. In the case of Kiok Loy vs. Nonetheless. disregarded. Thus. As strictly distinguished from the facts of General Milling [supra]. 1992]. chanrobles virtual law library . too. there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban. 1986. 141 SCRA 179. would be to allow General Milling to have its cake and eat it. 146728. the High Court did not hesitate to impose on the erring company the CBA proposed by its employees¶ union .

Today¶s Knitting Free Workers Union vs. What is the term (lifetime) of a CBA? Representation aspect (sole and exclusive status of certi fied union): The term is 5 years which means that no petition questioning the majority status of the incumbent bargaining agent shall be entertained by DOLE and no certification election shall be conducted outside of the 60 -day freedom period. 28. [159 SCRA 387 (1988)]. What is ³automatic renewal clause´? ³Automatic renewal clause´ means that at the expiration of the freedom period. (Vassar Industries Employees Union [VIEU] vs. 28. (See also Oriental Tin Can Labor Union vs. R. it was held that an agreement prematurely signed by the union and the company during the freedom period does not affect the petition for certification election filed by another union. 75 SCRA 450). 294 SCRA 640). Aug. No. 179 SCRA 127 [1989]). Jan. 1998. 288. G. 116751. G. the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. What is the effect of CBA renewal or registration before or during 60-day period? The representation case shall not be adversely affected by a CBA registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation ca se. with a pending petition for certification. Laguesma. No. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them. Bureau of Labor Relations. Calleja. It is well-settled that the sixty-day freedom period based on the original CBA shall not be affected by any amendment. 82 SCRA 280. 267 SCRA 303. In the case of Warren Manufacturing Workers Union [WMWU] vs. 1978. 131. 111245. (ALU vs. Feb.129. extension or renewal of the CBA for purposes of certification election. The reason is. 31. 1977. 1997. (Samahan ng Manggagawa sa Pacific Plastic vs. 310). R. L-45057. No. Secretary of Labor and Employment. March 31. Noriel. . Estrella. 130. L-46562.

chanrobles virtual law library ³In the instant case. with the peculiar and unique intention of not merely promoting industrial peac e at PAL. What is meant by ³retroactivity´ of CBA? a. Inasmuch as the agreement sough t to promote industrial peace at PAL during its rehabilitation. (G. Article 253-A has a two-fold purpose. The collective bargaining agreement or other provisions of such agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement shall retroact to the day immediately following such date. . it was PALEA. after all. No. includes the right to suspend it. 133. 1. that voluntarily entered into the CBA with PAL.135547.All other provisions (which refer to both economic and non -economic provisions except representation): Shall be renegotiated not later than three (3) years after its execution. promoted the shared responsibility between workers and employers. prohibits the parties from waiving or suspecting the mandatory timetables and agreeing on the remedies to enforce the same. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. and they exercised voluntary modes in settling disputes. Rule involving CBAs concluded by the parties through negotiation (not concluded through arbitral award). ratiocinated.R. The agreement afforded full protection to labor. as the exclusive bargaining agent of PAL 's ground employees. The Supreme Court. Either case was the union's exercise of its right to collective bargaining. Nothing in Article 253A. One is to promote industrial stability and predictability . We find no conflict between said agreement and Article 253-A of the Labor Code. The right to free collective bargaining. Espiritu. May CBA negotiations be suspended for 10 years? Yes. including conciliation to foster industrial peace. in the case of Rivera vs. thus: ³The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer. but preventing the latter's closure. January 23. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. chanrobles virtual law library ³The acts of public respondents in sanctioning the 10 -year suspension of the PAL-PALEA CBA did not contravene the "protection to labor" policy of the Constitution.". said agreement satisfies the first purpose of Article 253-A. 2002). 132.

2000 ruling which was rendered after a Motion for Partial Reconsideration was filed by Meralco.. vs. In case of arbitral awards. What are the remedies in case of CBA deadlock? In case of a deadlock in the negotiation or renegotiation of the collective bargaining agreement. Roldan Confesor. . i. Thus. 1999 ruling. the effectivity of the CBA was made retroactive. 2001). Rule involving CBAs concluded through arbitral awards by DOLE Secretary. Secretary of DOLE. the retroactivity of the CBA provided under Article 253-A of the Labor Code (enumerated above) has no application. in its August 1. 1996 to May 31. [G. per its February 22. 209]. Inc. the Supreme Court finally changed the effectivity date thereof. Referral of case to compulsory or voluntary arbitration. the effectivity date was made prospective per its January 27. 2000 ruling in the same case which was rendered upon motion for reconsideration. (G. 127422.Conciliation and mediation by the NCMB. the Supreme Court ruled that retroactivity of CBA in arbitral awards is subject to the discretion of the DOLE Secretary chanrobles virtual law library 134. NLRC or Voluntary Arbitrator (Jurisprudence varies). the effective date of the new CBA should be the date the Secretary of Labor and Employment has resolved the labor dispute. chanrobles virtual law library LATEST RULING: In the case of LMG Chemicals Corporation vs.e. If any such agreement is entered into beyond six (6) months. Quisumbing. In Manila Electric Company vs. Torres. It held that the arbitral award should retroact to the first day after the six-month period following the expiration of the last day of the CBA. January 27. from June 1. b.Declaration of a strike or lockout. R. No. 1999. Luke's Medical Center. DOLE. as the case may be. April 17. vs. Inc. Later. 302 SCRA 173. No. In Pier 8 Arrastre and Stevedoring Services. the parties may exercise the following rights under the Labor Code: 1. 3.2. the effectivity date was made retroactive to the date of the expiration of the previous CBA. [241 SCRA 294. the Supreme Court ruled: chanrobles virtual law library In St. [223 SCRA 779 (1993)]. 307 (1995)]. R. 2. 1998. the parties shall agree on the date of effectivity thereof. 127598. But later.

the NCMB shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators. It usually consists of successive steps starting at the level of the complainant and his immediate supervisor and ending. What is grievance machinery? "Grievance machinery" refers to the mechanism for the adjustment and resolution of grievances arising from the interpretation or implementation of a CBA and those arising from the interpretation or enforcement of company personnel policies. parties to a CBA shall name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators. All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of their submission shall automatically be referred to voluntary arbitration prescribed in the CBA. 137. at the level of the top union and company officials. pursuant to the selection procedure agreed upon in the CBA. or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators. What is voluntary arbitration? . as may be necessary. It is part of the continuing process of collective bargaining. when necessary. What is grievance procedure? ³Grievance procedure´ refers to the internal rules of procedure established by the parties in their CBA with voluntary arbitration as the terminal step. It refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement. chanrobles virtual law library 136. which are intended to resolve all issues arising fr om the implementation and interpretation of their CBA. preferably from the listing of qualified Voluntary Arbitrators duly accredited by the NCMB. 138. It is a complaint or dissatisfaction arising from the interpretation or implementation of the CBA and those arising from interpretation or enforcement of personnel policies. What is a grievance? ³Grievance´ is any question by either the employer or the uni on regarding the interpretation or application of the collective bargaining agreement or company personnel policies or any claim by either party that the other party is violating any provisions of the CBA or company personnel policies. For this purpose.GRIEVANCE AND VOLUNTARY ARBITRATION 135. which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above.

³Voluntary arbitration´ refers to the mode of settling labor-management disputes by which the parties select a competent, trained and impartial third person who shall decide on the merits of the case and whose decision is final and executory. (Section 1 [d], Rule II, NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. 15, 2004]). 139. Who is a Voluntary Arbitrator? ³Voluntary Arbitrator´ refers to any person who has been accredited by the NCMB as such, or any person named or designated in the CBA by the parties as their Voluntary Arbitrator, or one chosen by the parties with or without the assistance of the Board, pursuant to a selection procedure agreed upon in the CBA or one appointed by the Board in case either of the parties to the CBA refuses to submit to voluntary arbitration. The term includes panel of Voluntary Arbitrators. (Section 1 [e], Rule II, NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. 15, 2004]; See also Article 212 [n], Labor Code; Section 1, Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]; Section 1 [27], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases). A Voluntary Arbitrator is not part of the government or of the Department of Labor and Employment. But he is authorized to render arbitration services provided for under labor laws. (Ludo & Luym Corporation vs. Saornido, G. R. No. 140960, Jan. 20, 2003). Under the NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [October 15, 2004], there are two kinds of Voluntary Arbitrators, namely: 1. ³Permanent Arbitrator´ referring to the Voluntary Arbitrator specifically named or designated in the CBA by the parties as their Voluntary Arbitrator; and chanrobles virtual law library 2. ³Ad-Hoc Arbitrator´ referring to the Voluntary Arbitrator chosen by the parties in accordance with the established procedures in the CBA or the one appointed by the Board in case there is failure in the selection or in case either of the parties to the CBA refuses to submit to voluntary arbitration. 140. How is the decision of a Voluntary Arbitrator enforced? Under Article 262-A of the Labor Code, upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary

Arbitrators, for any reason, may issue a writ of execution requiring either the sheriff of the NLRC or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award. chanrobles virtual law library STRIKES, LOCKOUTS AND PICKETING 141. What is a strike? A strike is any temporary stoppage of work by the concerted action of the employees as a result of an industrial or labor dispute. It consists not only of concerted work stoppages but also slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities and similar activities. 142. What is a lockout? A lockout is any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. 143. What is picketing? ³Picketing´ or ³peaceful picketing´ is the right of workers to peacefully march to and fro before an establishment involved in a labor dispute generally accompanied by the carrying and display of signs, placards and banners intended to inform the public about the dispute. 144. What is an industrial or labor dispute? An industrial or labor dispute includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing maintai ning, changing or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee. 145. What are the various forms of strikes? a. Legal strike - one called for a valid purpose and conducted through means allowed by law. b. Illegal strike - one staged for a purpose not recognized by law, or, if for a valid purpose, conducted through means not sanctioned by law.. c. Economic strike - one declared to demand higher wages, overtime pay, holiday pay, vacation pay, etc. It is one which is declared for the purpose of forcing wage or other concessions from the employer which he is not required by law to grant. chanrobles virtual law library

d. ULP strike - one called to protest against the employer¶s acts of unfair labor practice enumerated in Article 248 of the Labor Code as amended, including gross violation of the collective bargaining agreement (CBA) and union-busting. e. Slow down strike - one staged without the workers quitting their work but by merely slackening or by reducing their normal work output. f. Wildcat strike - one declared and staged without the majority approval of the recognized bargaining agent. g. Sit down strike - one where the workers stop working but do not leave their place of work. In Interphil Laboratories Employees Union -FFW vs. Interphil Laboratories, Inc., [G. R. No. 142824, Dec. 19, 2001], overtime boycott was considered a form of illegal strike. Discussing work slowdown, the Supreme Court, in the same case, declared that it is an inherently illegal activity essentially illegal even in the absence of a no -strike clause in a collective bargaining contract, or statute or rule. It is a ³strike on the installment plan;´ a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. Such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees ³continue to work and remain at their positions and acce pt the wages paid to them,´ they, at the same time, ³select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer¶s damage, to do other work.´ In other words, they ³work on their own terms.´ 146. What are the procedural but mandatory requisites of a lawful strike or lockout? There are seven (7) mandatory requisites, namely: First requisite: Valid and factual ground a. Valid grounds: There are only two (2), namely: (1) CBA Deadlock; and (2) Unfair labor practice (ULP). b. No other grounds are allowed except the two mentioned above.

The following grounds, therefore, may not be properly cited as valid grounds for a strike or lockout in view of the pertinent provisions of the Labor Code, authoritative labor issuances and jurisprudence: 1. Violation of collective bargaining agreements, except those which are gross in character. Under Article 261, simple violation of the CBA is no longer treated as unfair labor practice but as mere grievance which should be processed through the grievance machinery in the CBA. It becomes an unfair labor practice only when it is gross in nature which means that there is flagrant and/or malicious refusal to comply with the economic provisions of such agreemen t by either the employer or the union. 2. Inter-union or intra-union disputes. The reason is these issues are resolved following the med -arbitration procedures prescribed by law and not through the staging of a strike/lockout. Thus, a strike declared more on the ground of inter-union and intra-union conflict which is a non-strikeable issue is patently illegal pursuant to the provision of paragraph [b] of Article 263 of the Labor Code. (Filcon Manufacturing Corporation vs. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMFLMLC], G. R. No. 150166, July 26, 2004). chanrobles virtual law library 3. Issues already assumed by the DOLE Secretary or certified by him to the NLRC for compulsory arbitration. chanrobles virtual law library Once the Secretary of Labor and Employment assumes jurisdiction over a labor dispute affecting national interest or certifies the same to the NLRC for compulsory arbitration, the issues involved in said labor dispute can no longer be invoked by the union in staging a strike or by management in conducting a lockout. chanrobles virtual law library 4. Issues already brought before grievance machinery or voluntary arbitration. chanrobles virtual law library In a plethora of case, it was held that a strike is illegal because of the failure to exhaust all the steps in the grievance machinery/voluntary arbitration provided for in the CBA. (Union of Filipro Employees, vs. Nestle Philippines, Inc., G. R. No. 88710-13, Dec. 19, 1990). chanrobles virtual law library For example, in San Miguel Corporation vs. NLRC, [G. R. No. 99266, March 2, 1999], where the union, instead of asking the CBA¶s Conciliation Board composed of five representatives each

from the company and the union to decide the conflict, petitioner declared a bargaining deadlock, and thereafter, filed a notice of strike, the Supreme Court ruled that for failing to exhaust all the steps in the CBA, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co., [91 Phil. 72], the Supreme Court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the CBA, ruling that: ³xxx the main purpose of the parties in adopting a procedure in the settlement of their disputes is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. xxx Strikes held in violation of the terms contained in the CBA are illegal, especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved. xxx.´ In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA, private respondent union violated the mandatory provisions of the CBA. The above ruling was reiterated in the 2003 case involving the same employer - San Miguel Corporation vs. NLRC, [G. R. No. 119293, June 10, 2003]. As in the abovecited case, petitioner company evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. Respondent union, however, resorted to force without exhausting all available means within its reach. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. As declared long ago: ³Strikes held in violation of the terms contained in a CBA are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.´ (Citing Insurefco Paper Pulp & Project Workers¶ Union vs. Insular Sugar Refining Corp., 95 Phil. 761 (1954). 5. Issues already brought before compulsory arbitration. In view of the provisions of the second paragraph of Article 264 [a] of the Labor Code, a strike or lockout is illegal if declared while a certain case is pending involving the same grounds for the strike or lockout. (Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 428). Thus, a strike conducted during the pendency of the compulsory arbitration proceedings on a labor dispute certified to the NLRC

for compulsory arbitration is illegal. (Filsyn Employees Chapter vs. Drilon, G. R. No. 82225, April 5, 1989). chanrobles virtual law library 6. Issues involving labor standards. The law provides for certain procedures in case of labor standards violations. 7. Issues involving legislated wage orders. Under Republic Act No. 6727 otherwise known as the Wage Rationalization Act, a strike is illegal if based on alleged salary distortion. The legislative intent that solution to the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts or other concerted activities of the employees or management, is made clear in the rules implementing Republic Act No. 6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the said law. Second requisite: Notice of strike or notice of lockout a. When to file notice: (1) In case of ULP: 15 days from intended date of strike/lockout (2) In case of CBA Deadlock: 30 days from intended date thereof b. Parties who may file notice: (1) Certified union, in case of strike; and (2) Employer in case of lockout. c. Where to file notice: - NCMB Third requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the taking of the strike/ lockout vote by secret balloting, informing said office of the decision to conduct a strike vote/lockout vote, and the date, place, and time thereof. This is the newest requisite added by the Supreme Court per its 2005 ruling in Capitol Medical Center, Inc. vs. NLRC, [G. R. No. 147080, April 26, 2005. This requisite is designed to: chanrobles virtual law library (a) inform the NCMB of the intent of the union to conduct a strike vote;

(b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto; and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer, to supervise the strike vote, to give it ample time to prepare for the deployment of the requisite personnel, including peace officers if need be. Unless and until the NCMB is notified at least 24 hours of the union¶s decision to conduct a strike vote, and the date, place, and time thereof, the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal. (Ibid.). chanrobles virtual law library Fourth requisite: Strike vote or lockout vote a. Majority approval of strike or lockout is required b. Strike vote still necessary even in case of union -busting. Fifth requisite: Strike vote report or lockout vote report a. When to submit strike or lockout vote report - at least 7 days prior to strike or lockout, as the case may be. b. Effect of non-submission of strike vote to NCMB, DOLE strike or lockout is illegal c. Effect on 7-day waiting period if filed within cooling-off period: the 7-day waiting period shall be counted from the day following the expiration of the cooling -off period. d. Strike vote report in case of union-busting - still necessary, it being mandatory unlike the cooling -off period which may be dispensed with. chanrobles virtual law library Sixth requisite: Cooling-off period a. General rule: (1) In case of CBA Deadlock - 30 days

(2) In case of ULP - 15 days b. Exception: In the case of union-busting where the cooling-off period need not be complied with. chanrobles virtual law library c. When cooling-off period starts: from the time the notice of strike/lockout is filed with NCMB, DOLE. chanrobles virtual law library d. Purpose of the cooling-off period: for the parties to settle the dispute. Seventh requisite: 7-day waiting period or strike ban a. Cooling-off period and waiting period, distinguished. Waiting period is counted from the time of submission of strike vote report to NCMB; Cooling-off period is counted from the filing of the Notice of Strike/Lockout with NCMB. chanrobles virtual law library b. Purpose of the 7-day waiting period: To ensure that the strike vote was indeed taken and that the majority of the members approved of it. c. Deficiency of even one day of the 7 -day strike ban (or cooling off period) is fatal. Hence, the strike is illegal. 147. Summary of principles governing strikes: 1. A strike or lockout is illegal if any of the legal requisites (enumerated above) is not complied with. Procedural requirements are mandatory. 2. A strike or lockout is illegal if it is based on non -strikeable issues (e.g., inter-union or intra-union disputes or wage distortion). 3. A strike or lockout is illegal if the issues involved are already subject of compulsory or voluntary arbitration or conciliation or the steps in grievance machinery are not exhausted. 4. A strike or lockout is illegal if unlawful means were employed or prohibited acts or practices were committed (e.g., Use of force, violence, threats, coercion, etc.; Barricades, blockades and obstructions of ingress to [entrance] or egress from [exit] the company premises). 5. A strike or lockout is illegal if the notice of strike or notice of lockout is already converted into a preventive mediation case. (See further discussion below).

A strike is illegal if staged by a minority union. 88201. R. January 23. 1991. The Supreme Court reasoned. thus: ³The NCMB had declared the notice of strike as µappropriate for preventive mediation. The conversion has the effect of dismissing the notice.6. Once dropped therefrom. In c. chanrobles virtual law library 7.¶ The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes. Once a notice of strike/lockout is converted into a preventive mediation case. What is the effect of conversion of the notice of strike/lockout into a preventive mediation case? chanrobles virtual law library Under the NCMB rules. vs. A strike or lockout is illegal if conducted for unlawful purpose/s (e.g. During the pendency of preventive mediation proceedings no strike could be legally declared. No. Secretary of Labor and Employment. A strike or lockout is illegal if staged in violation of the ³No -Strike. No-Lockout´ clause in the collective bargaining ag reement. there is a remedy called ³preventive mediation. Such authority is in pursuance of the NCMB¶s duty to exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably and in line with the state policy of favoring voluntary modes of settling labor disputes. while preventive . as provided in Rule 41 of the NCMB Rules. 8. in view of the NCMB¶s conversion of the notice therein into a preventive mediation case. [G. 193 SCRA 223] where the strike was declared illegal for lack of a valid notice of strike. 148.. 9.´ The NCMB has the authority to convert a notice of strike filed by the union into a preventive mediation case if it finds that the real issues raised therein are non-strikeable in character. as if there was no notice of strike. A strike or lockout is illegal if staged in violation of a temporary restraining order or an injunction or assumption or certification order. The strike which the union mounted. it will be dropped from the docket of notices of strikes/lockouts.: Strike to compel dismissal of employee or to compel the employer to recognize the union or the so-called ³Union-Recognition Strike´) 10. A case in point is Philippine Airlines.. a strike/lockout can no longer be legally staged based on the same notice. The local union and not the federation is liable to pay d amages in case of illegal strike.

[G. (MSMG -UWP vs. chanrobles virtual law library . Greenfield (MSMG-UWP) vs. 119293. the Supreme Court said: ³Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP. the strike is illegal. (Samahan ng mga Manggagawa sa M. when the NCMB orders the preventive mediation in a strike case. a strike can no longer be staged based on said notice for the reason that upon such conversion. In the case of NUWHRAIN vs. [287 SCRA 192 (1998)] where the petitioner-union therein similarly defied a prohibition by the NCMB. 2003]. no lockout´ provision in the CBA is a valid stipulation althoug h the clause may be invoked by an employer only when the strike is economic in nature or one which is conducted to force wage or other concessions from the employer that are not mandated to be granted by the law itself. the notice of strike filed by the union was also converted into a preventive mediation case.¶ The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith. Ramos. the union thereupon loses the notice of strike it had filed.´ Such disregard of the mediation proceedings is deemed a blatant violation of the Implementing Rules. which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings. if it still defiantly proceeded with the strike while mediation was ongoing. NLRC. but not strikes grounded on unfair labor practices. When the NCMB ordered the preventive mediation. 113907. In the 2003 case of San Miguel Corporation vs. 28. What is the ³NO-STRIKE. Feb. Ramos. there is no more notice of strike to speak of. G. Consequently. After such conversion. No. NLRC. the union had ther eupon lost the notice of strike it had filed. No. NO-LOCKOUT´ clause in the CBA? The right to strike is not absolute. 2000) Jurisprudence abounds in its enunciation that such no -strike provision in the CBA only bars strikes which are economic in nature. June 10. therefore. 326 SCRA 428 (2000). 149.mediation proceedings were ongoing. hence not µstrikeable. was aptly described by the petitioner as µan ambush. NLRC 219 SCRA 47 [1993]). It has heretofore been held that a ³nostrike. citing Master Iron Labor Union vs. applying the aforecited ruling. R. R.¶´ (Emphasis supplied) Clearly.

G. Oct. What is the effect of a strike staged in violation of an assumption or certification order? A strike that is undertaken after the issuance by the Secretary of Labor and Employment of an assumption or certification order becomes a prohibited activity and thus illegal. 287. it suffices that the striking workers are shown to have acted honestly on an impression that the company has committed such unfair lab or practice and the surrounding circumstances could warrant such a belief in good faith. 2004). [G. 151. (National Federation of Labor vs. 15. 10. an act in violation of the law and in defiance of authority. Oct. 102672. likewise. the Supreme Court considered the conduct of ³overtime boycott´ and ³work slowdown´ by the employees as constitutive of illegal strike and a violation of the CBA which prohibits the union or employee. which is in violation of the terms of the CBA. Dec. having abandoned their employment. Marcopper Mining Corporation vs. No. G. R. What is the effect of a strike conducted in violation of a temporary restraining order or injunction? . the workers forfeit their right to be readmitted to work. 1997). R. (Panay Electric Company. (Filcon Manufacturing Corporation vs. chanrobles virtual law library Thus. 150166. No. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMF-LMLC]. during the existence of the CBA. 112 SCRA 430). it is not essential that the unfair labor practice act has. he is deemed to have abandoned his job.an act which is illegal. No. NLRC. 1995. People¶s Industrial and Commercial Corporation. NLRC. 119360. Brillantes. is illegal. 1997. Inc. been committed.In a situation where ULP is alleged. 142824. from the moment a worker defies a return-to-work order. The union officers and members. vs. The loss of employment results from the striking employees¶ own act . December 19. pursuant to the second p aragraph of Article 264 of the Labor Code. Inc. 4. July 26. provides that by staging a strike after the assumption or certification for arbitration. Interphil Laboratories. 150. are deemed to have lost their employment status for having knowingly participated in an illegal strike. in Interphil Laboratories Employees Union -FFW vs. Brillantes. (Philippine Airlines. R.. vs. 283 SCRA 275. R. No. to stage a strike or engage in slowdown or interruption of work. especially when such terms provide for conclusive arbitration clause. G. in fact. 254 SCRA 595). Case law. Stated differently. as a result. 2001]. Inc. People¶s Industrial and Commercial Employees and Workers Organization [FFW] vs. chanrobles virtual law library The Supreme Court consistently ruled in a long line of cases that a strike is illegal if staged in violation of the ³No Strike/No Lockout Clause´ in the CBA stating that a strike.

305 SCRA 219). July 26. be unlawful. December 18. reason or motive.. moved or led members of a labor union to stage a strike. 2004]. G. 52 O. Interwood Employees Association vs. Strike to compel dismissal of employee. even if they had acted in good faith in staging it. 3936). Strike for unlawful purpose is illegal. unjust. 150166. G. it was held that a strike conducted by a minority union is patently illegal. 145496. said strike would have to be considered as illegal. 1968]. Absent a showing as to the legitimate status of the labor organization. prompted. comes into being and is safeguarded by law only if the acts intended to render material aid or protection to a labor union arise from a lawful ground. 120505. it is a remedy which can only be availed of by a legitimate labor organization. [26 SCRA 435. not being an absolute right. unreasonable or trivial. 1999. R. Interwood Hardwood and Veneer Company of the Philippines. Can a strike be staged by a union whose legitimacy is in question? In the 2004 case of Stamford Marketing Corp. illegitimate. March 25. NLRC. To permit the union¶s picketing activities would be to flaunt at the will of the majority.A strike is illegal if it violates a t emporary restraining order (TRO) or injunction issued for the purpose of enjoining the union and/or its members from obstructing the company premises. Torres. 154.G. But if the motive which had impelled. No. the strike may be declared illegal. the Supreme Court had occasion to rule that a strike conducted by a union which has not been shown to be a legitimate labor organization. R. . 2004. 153. is illegal. only a legitimate labor organization is entitled to file a notice of strike on behalf of its members. What are the examples of a strike conducted for unlawful purposes? a. Can a minority union lawfully stage a strike? In United Restauror¶s Employees & Labor Union -PAFLU vs. (Association of Independent Unions in the Philippines vs. Under Article 263 [c]. No. Julian. No labor dispute which will justify the conduct of a strike may exist between the employer and a minority union. [G. vs. February 24. Strike. R. (Filco n Manufacturing Corporation vs. 152. No. and ordering the removal therefrom of all the barricades. chanrobles virtual law library b. While the right to strike is specifically granted by law. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMF-LMLC].

86 Phil. G. G. In Caltex Filipino Managers and Supervisors Association vs. Trivial and puerile purpose. 1950. A strike staged by a union to compel the employer to extend recognition to it as the bargaining representative is illegal. (Association of Independent Unions in the Philippines vs. the same may not be considered illegal. No. May 30. under Article 248 [g] constitutes an unfair labor practice act. . the company agreed to recognize for membership in the Association the position titles mentioned in Annex ³B´ of said agreement. Significantly.For instance. in the voluntary return-to-work agreement entered into between the company and the Association thereby ending the strike. 305 SCRA 219). d. 1999. the strike of the Association was declared not just for the purpose of gaining recognition but also for bargaining in bad faith on the part of the company and by reason of the unfair labor practices committed by its officials. A union -recognition-strike. the union may lawfully stage a strike based on such refusal which. 86 Phil. If a strike is declared for a trivial. a strike cannot be declared by reason of non-recognition by management of said union for purposes of collective bargaining. that the employer¶s refusal to the demand for collective bargaining negotiations becomes illegal. and not the other contending group. is calculated to compel the employer to recognize one¶s union. L-2660. 507). 120505. Hence. Roldan. March 25. NLRC. 507). May 30. c. CIR. (Luzon Marine Department Union vs. No. This goes to show that striking for recognition is productive of good result insofar as a union is concerned. But if the strike is triggered not only by the desire for recognition by the union but also because of the unfair labor practices committed by the employer. L-2660. as the employees¶ bargaining representative to work out a CBA despite the striking union¶s doubtful majority status to merit voluntary recognition and lack of formal certification as the exclusive representative in the bargaining unit. Union-recognition-strike. unjust or unreasonable purpose or if carried out through unlawful means. It is only when the union¶s majority status is established through appropriate certification election. G. R. R. Rold an. illegal. [44 SCRA 351]. the law will not sanction it and the court will declare it illegal. No. (Luzon Marine Department Union vs. Even if the strike were really declared for the purpose of recognition. as its legal designation implies. a strike staged for the purpose of unreasonably demanding the dismissal of a factory foreman is illegal. 1950. the concerted activities of the officers and members of the Association in this regard may not be said to be unlawful nor the purpose thereof as trivial. If the majority status of a union is in doubt. R.

NLRC. Master Iron Labor Union vs. if the employees believe in good faith that ULP acts exist so as to constitute a valid ground to strike. 219 SCRA 47. Strike to circumvent contracts and judicial orders. 287 SCRA 192. June 29. the presumption of legality prevails even if the allegation of unfair labor practice is subsequently found to be untrue provided that the union and its members believed in good faith in the truth of such averment. Premature strike. Insurefco. corollarily. (Samahan ng mga Manggagawa sa M. even if no ULP acts are committed by the employer. However. June 26. As an exception. G. 2000. Panay Electric Co. No. R. 291 SCRA 231. For instance. chanrobles virtual law library . 939. 155. 1998.. Workers Union . 95 Phil. the resulting strike may be considered legal although.e. 118223. 1982). 17. Greenfield (MSMG-UWP) vs. NLRC. 248 SCRA 688). f. Pepsi-Cola Labor Union vs. R. 1999). CIR. It suffices if such belief in good faith is entertained by labor as the inducing factor for staging a strike. NLRC. 1993). R. March 6. Inc. (ALPAP vs. 124823. NLRC.NAFLU vs. Feb. R. NLRC. G. A strike is illegal if staged without giving the employer reasonable time to consider and act on the demands made by the union. 28) or to circumvent judicial orders lawfully issued. CIR. NLU. No. R. 114 SCRA 930. No. such allegations of unfair labor practices were found to be groundless. (PNOC Dockyard and Engineering Corporation vs. (Almeda vs. Inc. Oct. a strike grounded on ULP is illegal if no such acts actually exist. subsequently. good faith cannot be invoked as a defense if the ocular inspection by the labor authorities of the employer¶s facilities yields no semblance of such good faith. 60. Feb. a strike based on a ³non -strikeable´ ground is generally an illegal strike. G. NLRC. 96 Phil. therefore. vs. 4. G. chanrobles virtual law library Indeed. 1995. 28. Restaurants and Allied Industries vs. 1998. 102672. 125561. 761). (National Union of Workers in Hotels. A strike is illegal if used as a means to circumvent valid contractual commitments (Manila Oriental Sawmills vs. 91 Phil. As a general proposition. where the union believed that the employer committed ULP and the circumstances warranted such belief in good faith. Ramos. July 28. 306. Insurefco Paper vs. No. No. (PASVIL/Pascual Liner. however. 76 SCRA 274). G. then the strike held pursuant to such belief may be legal. 113907. What is a good faith strike? It is a well-established policy enunciated in several labor cases that a strike does not automatically carry the stigma of illegality even if no unfair labor practice were committed by the employer.

687] that it is the union which had the burden of proof to present substantial evidence to support its allegations (of unfair labor practices committed by management). [G. Restaurants and Allied Industries vs. August 18.. [G.R. was attended by acts of harassment and violence. 156. if the strike conducted was violative of the mandatory legal requirements. Aug. NLRC. R. 1991]. chanrobles virtual law library . 1984] where the Supreme Court held that the finding of illegality attending a strike does not justify the wholesale dismissal of strikers who were otherwise impressed with good faith. 1997). Inc. was unconvinced because it found the accusation of union-busting bereft of any proof. It is not enough that the union believed that the employer committed acts of ULP when the circumstances clearly negate even a prima facie showing to sustain such belief. However. L-56856. NLRC. having been staged in response to what its officers and members honestly perceived as unfair labor practice or union -busting committed by respondent company. In Samahang Manggagawa sa Sulpicio Lines. Hence. 123276. Cement Workers Union. as held in Reliance Surety and Insurance Co.. 86917-18. Ople. 277 SCRA 680. 2004]. 1997. 140992. (Ferrer vs. NLRC. No. ± NAFLU vs. existing unfair labor practice committed by the employer. and there was no semblance of good faith. therefore. 123276. an established caveat that a mere claim of good faith would not justify the holding of a strike if the circumstances would not warrant such belief. R.It is. 18. supra. 17 SCRA 353. No. NLRC. cannot be applied here. The facts and the evidence did not establish even at least a rational basis why the union would wield a strike based on alleged unfair labor practices it did not even bother to substantiate during the conciliation proceedings. the petitioner union claimed that the strike was legal for it was done in good faith. vs. R. G. The ruling in Bacus vs. No. The Court. the strike is illegal. Tiu vs. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. R. Inc. Jan. (National Union of Workers in Hotels. however. the strike was declared illegal in the light of the ruling in Tiu vs. Cebu Portland Cement Company vs. CIR. the strikers cannot be said to have lost their status as employees of the company although they did not wait for the cooling-off period to lapse before staging the strike. [G. Sulpicio Lines. No. [G. March 25. Scanning the records very carefully failed to indicate any evidence to sustain such charge. was prompted by no actual. Inc. 25 SCRA 504). October 23. May strikers be dismissed in cases of ³good faith´ strikes? In case the strike is declared by the union upon the belief in ³good faith´ that the employer has committed unfair labor practices. No. 25.

chanrobles virtual law library b. May 5. What is ³improved offer balloting´? Improved offer balloting. conduct a referendum by secret balloting on the improved offer of the employer on or before the 30th day of the strike. the striking workers shall immediately return to work and the employer shall thereupon readmit them upon the signing of the agreement. 160. 157. (NOTE: The President may also exercise the power to assume jurisdiction over a labor dispute).Thus. When at least a majority of the union members vote to accept the improved offer. if no notice of strike and a strike vote were conducted.strikers or locked out employees should immediately return to work and employer should readmit them back. On actual strike or lockout . vs. (See also First City Interlink Transportation Co. NLRC.In case of a strike. as pronounced in National Federation of Labor vs. 1997].In case of a lockout. When at least a majority of the board of directors or trustees or the partners holding the controlling interest in the case of partnership.All shall be subsumed/absorbed by the assumed or certified case except when the order specified otherwise. . What is the effect of such assumption or certification of labor dispute to the NLRC? a. the workers shall immediately return to work and the employer shall thereupon readmit them upon the signing of the agreement. 158.automatically enjoined even if a Motion for Reconsideration is filed. even if the union acted in good faith in the belief that the company was committing an unfair labor practice. or certify it to the NLRC for compulsory arbitration. the Regional Branch of the NCMB shall conduct a referendum by secret balloting on the reduced offer of the union on or before the 30th day of the lockout. No. Dec. On intended or impending strike or lockout . . 287-288. [283 SCRA 275. R. at its own initiative or upon the request of any affected party. The . What is ³reduced offer balloting´? Reduced offer balloting. in his opinion. 159. Confesor. What is the power of the DOLE Secretary to assume jurisdiction over a labor dispute or certify it to the NLRC for compulsory arbitration? The DOLE Secretary may assume jurisdiction over a labor dispute. the Regional Branch of the NCMB shall. vote to accept the reduced offer. it may cause or likely to cause a strike or lockout in an industry indispensable to the national interest. 1997). G. 15. the said strike is illegal. On cases filed or may be filed . if. 106316. c.

Hence. as amended.parties to the case should inform the DOLE Secretary of pendency thereof. Inc. Section 3 of the Constitution. Roldan-Confessor. this privilege is not absolute. this Court declared that it recognizes the exercise of management prerogatives and it often declines to interfere with the legitimate business decisions of the employer. but subject to exceptions. 188189 [1996]). 2005]. xxx. In the 2005 case of University of Immaculate Concepcion. the University contends that the Secretary cannot take cognizance of an issue involving employees who are not part of the bargaining unit. 151379. National Labor Relations Commission. Inc. vs. (225 SCRA 301. R. as expressed in PAL v. the directive to the parties to refrain from performing acts that will exacerbate the situation is intended to ensure that the dispute does not get out of hand. However. In Metrolab Industries. The Honorable Secretary of Labor. [G. then they cannot be covered by the Secretary¶s assumption order. It insists that since the individual respondents had already been excluded from the bargaining unit by a final and executory order by the panel of Voluntary Arbitrators. This is in keeping with the general principle embodied in Article XIII. January 14. ³When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual respondents. is the maintenance and upholding of the status quo while the dispute is being adjudicated. (Article XIII. Section 3 of the Constitution) which is further echoed in Article 211 of the Labor Code. One of these exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes inv olving industries indispensable to the national interest under Article 263(g) of the Labor Code. ³The University¶s act of suspending and terminating union members and the Union¶s act of filing another Notice of Strike after this Office . 1995. No. the Secretary of Labor rightly held: ³It is well to remind both parties herein that the main reason or rationale for the exercise of the Secretary of Labor and Employment¶s power under Article 263(g) of the Labor Code. thereby negating the direct intervention of this office. nor did the Secretary gravely abuse the same. Said the Supreme Court: ³This Court finds no merit in the UNIVERSITY¶s contention. In her Order dated March 28. v. (254 SCRA 182. It must be pointed out that one of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. the Secretary did not exceed her jurisdiction. 308 [1993]).

chanrobles virtual law library ³Indeed. 1008. (Caltex vs. It is basically treated as a weapon that the law guarantees to employees for the advancement of their interest and for their protection. By any standards[. May picketing be enjoined? Are there exceptions? As a general rule. This policy applies even if the strike appears to be illegal in nature. The rationale for this policy is the protection extended to the right to strike under the constitution and the law. or 2. are part of the bargaining unit. (Mortera vs. It is not a question anymore of whether or not the terminated employees. excepted from this legal proscription are the following situations: 1. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the te nsions between the parties should be considered an act of exacerbation and should not be allowed. CIR. It is clear that the actions of both parties merely served to complicate and aggravate the already strained labor-management relations. the law vests in the NLRC the authority to issue injunctions to restrain the commission of illegal acts during the strik es and pickets. strikes and lockouts validly declared.´ chanrobles virtual law library 161. CIR. 4 SCRA 1196). 44 SCRA 350). 79 Phil. May an injunction be issued in strike or lockout cases? As a general rule. 161. where injunction becomes necessary to protect the rights of third parties (PAFLU vs. the individual respondents herein. Caltex vs.] these acts will not in any way help in the early resolution of the labor dispute. injunction cannot be issued against the conduct of picketing by the workers. Barot. However. or 3. 345). Under our constitutional set up. CIR. Lucero. Ordinarily. Cloribel. enjoy the protection of law and cannot be enjoined unless illegal acts are committed or threatened to be committed in the course of such strikes or lockouts. 79 Phil. 345). picketing is considered part of the freedom of speech duly guaranteed by the constitution. it is clear that the act of the UNIVERSITY of dismissing the individual respondents from their employment became the impetus for the UNION to declare a second notice of strike. 99 Phil. where picketing involves the use of violence and other illegal acts (PAFLU vs. where picketing is carried out through the use of illegal means (Mortera vs.has assumed jurisdiction are certainly in conflict with the status quo ante. . 27 SCRA 465).

misuse thereof can be the subject of judicial intervention. public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike. [G. 74425. 7. however. NLRC. no coercive powers of injunction. Having been so converted. 2003]. [G. NLRC. the Supreme Court ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. the Supreme Court ruled that injunction may be issued not only against the commission of illegal act in the course of the strike but the strike itself. It is automatic in nature which means that it may be . chanrobles virtual law library In the earlier case of San Miguel Corporation vs. In IBM vs. The NLRC. What is meant by ³return-to-work´ order? A return-to-work order is an indispensable consequence of the assumption or certification order issued by the DOLE Secretary in national interest cases. Article 264(a) of the Labor Code explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity. Failure promptly to issue an injunction by the NLRC was likewise held therein to be an abuse of discretion. in some cases.However. it was held that it is the ³legal duty and obligation´ of the NLRC to enjoin a partial strike staged in violation of the law. the NCMB which effected the conversion. R. Upon such conversion. In this case. the legal effect is that there is no more notice of strike to speak of. Clearly. the notice of strike filed by the union has been converted into a preventive mediation case. 193 SCRA 223 [1991]). (See also PAL vs. but did not enjoin the unlawful strike itself. 1986]. injunction was allowed against a strike which was staged to compel the employer to ignore the law. petitioner company sought recourse from the NLRC. No. No. Oct. When the NCMB ordered the preventive mediation the union had thereupon lost the notice of strike it had filed. NLRC. 162. In the 2003 case of San Miguel Corporation vs. injunctions issued to enjoin the conduct of the strike were held to be valid. 119293. [304 SCRA 1(1999)] where the same issue of NLRC¶s duty to enjoin an unlawful strike was raised. R. Consequently. has. It ignored the fatal lack of notice of strike consequent the conversion thereof into a preventive mediation case. The reason is when trade unionism and strikes are used in violation of the law. Drilon. June 10. However. under the law. issued a TRO only for free ingress to and egress from petitioner¶s plants. a strike can no longer be staged based on said notice. Sanchez. chanrobles virtual law library In Bulletin Publishing vs. which may be prevented through an injunction in accordance with Article 254. [198 SCRA 586 (1991)].

G. Inciong. Cf. 2005]. Nos. 602.´ (Emphasis supplied) In the 2005 case of PLDT vs. Thus.´ In setting aside this ³qualified´ return-to-work order for being contrary to law. 119381. Scholastica¶s College vs. R. [G. 163. What is meant by the phrase ³all striking or locked-out employees´ and ³readmit all workers´ within the context of a return-to-work order? Under Article 263 [g]. if one has already taken place. it is error for striking workers to continue with their strike alleging absence of a return-to-work order. Article 263 [g] is clear. once an assumption or certification order is issued. Violation thereof. CA. R. all strikers should immediately return to work. 18. strikes are enjoine d or. St. No. is ³not a matter of option or voluntariness but of obligation. Dec. Torres. R. Manggagawa ng Komunikasyon sa Pilipinas. she directed the return to work of all strikers ³except those who were terminated due to redundancy. all striking or locked-out employees shall immediately ret urn to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. would make the strike illegal.´ (Marcopper Mining Corporation vs.). 208 SCRA 157 [1992]). Brillantes. G. 2000). the Court of Appeals observed that: ³The phrase µall striking or locked-out employees¶ and µreadmit all workers¶ does not distinguish or qualify and emphat ically is a catchall embracing enumeration of who should be returned to work. even for one day. 210 SCRA 565 [1992]. 1996. If one has already taken place at the time of assumption or certification. thus: ³Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. 143013-14. . (Telefunken Semiconductors Employees Union -FFW vs. Tomas certified the labor dispute to the NLRC for compulsory arbitration. March 11. Once an assumption/certification order is issued. Federation of Free Workers vs. July 14. Returning to work.enforced even if it is not expressly stated in the assumption or certification order because it is considered the logical and legal effect of the issuance of said order. the consequence thereof is clear. therefore. No. id. 162783. In her order. This holds true even if a Motion for Reconsideration of the assumption or certification order is filed. (Ibid. 254 SCRA 595. Secretary of Labor and Employment Patricia Sto.. on the part of a worker.

which was the condition present on December 22. 349 SCRA 24 [2001] ). courts should not distinguish (Recaña v. Inc.R. the Supreme Court had occasion to describe what status quo prior to the strike means. 2002. . July 07. This is the status quo that must be maintained. must be maintained. What is meant by the phrase ³under the same terms and conditions prevailing before the strike´ within the context of a return-to-work order? Article 263 [g] constitutes a limitation or exception to the management prerogative of hiring. 2004]. And to the extent that Article 263 [g] calls for the admission of all workers under the same terms and conditions prevailing before the strike. demotion and promotion of employees.´ 164. ± Unlicensed Crews Employees Union ± Associated Labor Unions [TASLI-ALU] vs. transfer. the employer is restricted from exercising its generally unbounded right to transfer or reassign its employees. then the unmistakable mandate must be followed by the Secretary. (Trans-Asia Shipping Lines. Since the strike was held on the aforementioned date. In the 2004 case of TransAsia Shipping Lines. Article 263 [g] directs that the employer must readmit all workers under the same terms and conditions prevailing before the strike. then the condition prevailing before it. or as in this case the certification of the same to the NLRC for compulsory arbitration. No. 2002. CA. firing. on December 22. 145428.-Unlicensed Crews Employees Union-Associated Labor Unions (Tasli-Alu) vs. always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. No. [G. Court of Appeals. G.µWhere the law does not distinguish. Court of Appeals. Assumption of jurisdiction over a labor dispute. it was held: chanrobles virtual law library ³. 165. July 7. Records show that the strike occurred on December 23. Inc. 2002.¶´ The Supreme Court affirmed said ruling of the CA. 2004). What is meant by ³status quo ante´ within the context of a return-to-work order? In the same 2005 PLDT case [supra]. 145428. the 383 members of the private respondent-union who were dismissed on December 31. As Article 263 [g] is clear and unequivocal in stating that ALL striking or locked -out employees shall immediately return to work and the employer shall immediately resume operations and readmit ALL workers under the same terms and conditions prevailing before the strike or lockout. . Undoubtedly. . R. 2002 due to alleged redundancy were still employed by the petitioner and holding their respective positions.

The Court upheld said order of the Secretary of Labor as it quoted the assailed resolution therein. R. including the sixteen (16) union officials. NLRC. Pending resolution of said dispute. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts. chanrobles virtual law library In Trans-Asia Shipping Lines. assumed jurisdiction over the labor dispute at Metro Drug. pursuant to Article 263 [g].´ The Court ruled therein that the grant of substantially equivalent academic assignments could not be sustained because it could not be considered a reinstatement under the same terms and conditions prevailing before the strike. [254 SCRA 182 (1996)]. In this case. ± Unlicensed Crews Employees Union ± Associated Labor Unions [TASLI-ALU] vs. 145428. Roldan -Confesor.. viz. under the same terms and conditions prevailing prior to the present dispute. vs.´ Instead of fully complying therewith by allowing the faculty members to teach in the classroom. No. 2004]. July 7. Inc. under the said order. The Secretary of Labor declared the layoff illegal and ordered the company to reinstate the employees. the company laid -off ninety-four (94) of its rank-and-file employees invoking the exercise of management prerogative. is particularly instructive. Inc. the university gave some of them ³substantially equivalent academic assignments without loss in rank.. management prerogatives must always be exercised consistently with the statutory objective. 166.The case of Metrolab Industries. [190 SCRA 758 (1990)]. ³ Likewise apropos is the case of University of Sto. it was ruled that the respondent company cannot rightfully exercise its management¶s prerogative to determine where its employees are to be assigned or to determine their job assignments in view of the explicit directive contained in the return -to-work orders of the Secretary of Labor to accept the striking workers back ³under the same terms and conditions prevailing prior to the strike. where the Secretary of Labor. The respondent is mandated.´ The order simply means that the employees should be returned to their ship assignments as before they staged their strike. Tomas v s. Court of Appeals. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. Inc. the Secretary of Labor. [G. pay or privilege. to issue embarkation orders to the employees to enable them to report to their ship assignments in compliance with the Order of the Secretary of Labor. pursuant to Article 263 [g]. directed the university to ³readmit all its faculty members. Is ³payroll reinstatement´ proper to implement a return-towork order? .: ³.

allowed payroll reinstatement in University of Immaculate Concepcion. G. instead of actual reinstatement. they are hereby ordered placed under payroll reinstatement until the validity of their termination is finally resolved. 2005). vs. R. Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. The Honorable Secretary of Labor. CA.The Supreme Court. No. ³In ordering payroll reinstatement in lieu of actual reinstatement. [G. then Acting Secretary of Labor Jose S. the Secretary assumed jurisdiction over the labor . This Court sees no grave abuse of discretion on the part of the Acting Secretary of Labor in ordering the same. therefore. vs. Inc. the same is usually not allowed. No. NLRC. It said: ³With respect to the Secretary¶s Order allowing payroll reinstatement instead of actual reinstatement for the individual respondents herein. payroll reinstatement must rest on special circumstances that render actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the law. The same holding was made in the earlier case of University o f Santo Tomas [supra]. thereby rendering their actual and physical reinstatement impracticable and more likely to exacerbate the situation. chanrobles virtual law library ³The µsuperseding circumstances¶ mentioned by the Acting Secretary of Labor no doubt refer to the final decision of the panel of arbitrators as to the confidential nature of the positions of the twelve private respondents. UST vs. 190 SCRA 758 [1990]). 151379. G. Furthermore. 151379. we find that superseding circumstances would not warrant the physical reinstatement of the twelve (12) terminated employees. 2005]. Inc. The payroll reinstatement in lieu of actual reinstatement ordered in these cases. the issue has not been raised by any party in this case. This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental to the national interest. (Manila Diamond Hotel Employees Union vs. 2004]. 16.¶ chanrobles virtual law library ³As an exception to the rule. January 14. R. Brillantes said: chanrobles virtual law library µAnent the Union¶s Motion.´ (University of Immaculate Concepcion. 14. Jan. The Hon. Secretary of Labor. No. 140518 [Dec. The phrase ³under the same terms and conditions´ makes it clear that the norm is actual reinstatement. an amendment to the previous Orders issued by her office. appears justified as an exception to the rule until the validity of their termination is finally resolved. Hence.R. Here.

R. Bitter labor disputes always leave an aftermath of strong emotions and unpleasant sit uations. For instance. in a subsequent order. The Supreme Court affirmed the validity of such an order and ruled that NLRC did not commit grave abuse of discretion in providing for the alternative remedy of payroll reinstatement. It distinguished the case from the earlier case of University of Santo Tomas (UST) vs. especially if national interest is involved. 140518. It observed that the NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious problem. payroll reinstatement was not allowed by the Supreme Court. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions. the government must still perform its function and apply the law. the High Court disallowed the payroll reinstatement of workers who were ordered to return to work by reason of the assumption order. 2004]. The petitioner-union correctly pointed out that labor disputes naturally involve strained relations between labor and management. the Supreme Court in Manila Diamond Hotel declared the Secretary¶s subsequent ord er for mere payroll reinstatement as constitutive of grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed. payroll reinstatement in lieu of actual reinstatement . the ³great breadth of discretion´ by the Secretary once he assumes jurisdiction over a labor dispute is recognized. NLRC. When is ³payroll reinstatement´ not proper? In some cases. therefore. but the university could not immediately rein state them since it would be impracticable and detrimental to the students to change teachers at that point in time. However. The High Tribunal declared that a strained relationship between the striking employees and management is no reason for payroll reinstatement in lieu of actual reinstatement. Court of Appeals. 167. there was no showing that the facts called for payroll reinstatement as an alternative remedy. in Manila Diamond Hotel Employees¶ Union vs. In the Manila Diamond Hotel case. The Hon. the relations between the strikers and the non-strikers will similarly be tense. faced with a situation where the striking teachers were entitled to a return-to-work order. The NLRC was. and that in most strikes. which is not correctible by a special civil action for certiorari. As a consequence of the above findings. [G. the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. Nevertheless.dispute between striking teachers and the university. No. December 16. However. [190 SCRA 758 (1990)] (supra) in the light of one very important fact: the teachers in the latter case could not be given back their academic assignments since the order of the Secretary fo r them to return to work was given in the middle of the first semester of the academic year. Moreover. the Supreme Court found that it was merely an error of judgment. however.

Insurefco. 102 Phil. R. R. Liner. (Philippine Airlines Employees Association vs. 761). (Reformist Union of R. (Insurefco Pulp vs. July 7. 38 . 2004].. Does the filing of a Motion for Reconsideration affect the return-to-work order? The filing of a motion for reconsideration does not affect the immediate executory character of the return-to-work order issued as a consequence of an assumption or certification ord er. the deadline fixed for the returnto-work would. in the ordinary course. 438). Nos. for by then. (Telefunken Semiconductors Employees Union-FFW vs. Secretary of Labor and Employment. 145428. it agreed to reinstate them and comply fully with the return-to-work order issued by the Secretary of Labor and Employment. No. according to Unlicensed Crews Employees Union ± Associated Labor Unions [TASLI-ALU] vs. G. an employer may be considered to have waived its right to proceed against the striking employees for alleged commission of illegal acts during the strike when. during a conference before the Chairman of the NLRC. chanrobles virtual law library However. In the same breadth. The reason is simple: a return-towork order is immediately effective and executory notwithstanding the filing of a motion for reconsideration. as in the UST case aforementioned. 1997. 122743 and 127215. Such act of returning to work only meant that they desisted from the strike which des istance is a personal act of the strikers and cannot be used against the union and interpreted as a waiver by it of its original demands for which the strike was adopted as a weapon. NLRC. the issue of the legality of the strike.is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable.. Dec. To say that the effectivity of the return-to-work order must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import. Are the demands of the union deemed waived upon a voluntary return to work? The act of strikers in voluntarily returning to work does not result in the waiver of their original demands. Inc. Philippine Airlines. [G. CA. a return-to-work order does not have the effect of rendering as moot and academic. 266 SCRA 713 [1997]) 169. (Bisaya Land Transportation Co. Inc. CIR. hence. can no longer be affirmed insofar as the time element is concerned. vs. Inc. 283 SCRA 145). None appears to have been established in this case. 12. 95 Phil. have already passed and. vs.B. 168. or otherwise not conduci ve to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest.

1990). No. Employers who refuse to re-admit returning workers may be liable. 153664-65. No. he may be held liable to pay backwages. Rules of Procedure of the NLRC. from the date of actual refusal until the workers are re-admitted. including dismissal or loss of employment status and even to criminal prosecution. that in case of non-compliance by the strikers with return-to-work order issued in connection with the assumption/certification by the Secretary of Labor and Employment. as amended by NLRC Resolution No. Series of 2002. 24. b. upon filing of proper petition for the payment of wages and other benefits. Rules of Procedure of the NLRC. it is clear that from the moment a worker defies a return-to-work order. (No. Rule IX. The Supreme Court held in the 2004 case of San Juan de Dios Educational Foundation Employees Union ± AFW vs. R. Genuine Labo r Organization of Workers in Hotel Restaurant and Allied Industrial [GLOWHRAIN]. Under Article 264. even criminal prosecution against him. Series of 2002). 18. The strike becomes a prohibited activity under the same provision. Oct. San Juan de Dios Educational Foundation. 01-02. he is deemed to have abandoned his job. Nos. a. Rule IX. G. What is the effect of defiance of assumption or certification order or return-to-work order? Non-compliance with the assumption/certification order of the Secretary of Labor and Employment or a return-to-work order issued pursuant thereto by either the Secretary or the NLRC to which a labor dispute is certified. Guidelines Governing Labor Relations). they may be subjected to immediate disciplinary action. G. In case of non-compliance by the employer with the return-to-work order issued in connection with the assumption/certification of the labor dispute. . 2000). Nos. Inc. July 18. R. Dacanay. CA. May 28. damages and other positive or affirmative reliefs. 2003). Dec.R. (See also Grand Boulevard Hotel vs. as amended by NLRC Resolution No. Telefunken Semiconductors Employees Union -FFW vs. G. paragraph [a]. It is already in itself knowingly participating in an illegal act. 170. (Article 263[g]. 143341. Effect on strikers in case of strike. 18. [Hospital].SCRA 372. 89920. NLRC. (See Section 4. Labor Code. Section 4. University of Santo Tomas vs. (G. 2004). 01-02. is considered an illegal act committed in the course of the strike or lockout. Grand Boulevard Hotel vs. Effect on employers in case of lockout. R. 143013-14.

receipt of the order would mean that the strike can no longer push through. R. PAL vs. CA. it is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal. Nestle Philippines. All preparations. chanrobles virtual law library Such being the case. Can Co. 035. 88728. 19. [G.´ (Navale vs. Precisely. Oct. Refusal to acknowledge receipt of assumption order. R. e. The strike is illegal because of the brazen disregard of the return -to-work order of the Secretary. 88710-13. vs. it is difficult to serve assump tion or certification orders. they will also claim payment for work not done. Picketing and Lockout). L-8197. Admittedly. Worse. Any further continuation thereof would be fatal as it may result in the loss of employment status of the defiant strikers. The Supreme Court is aware of this difficulty of serving said orders on striking unions and their members who invariably view the DOLE¶s process servers with suspicion and hostility. R.c. the Supreme Court said that it cannot allow the union to thwart the efficacy of the assumption and return-to-work orders . If a strike has not yet been staged. said the Supreme Court in Asian Transmission Corporation vs. NLRC. Contempt citation. the purpose of the return-towork order is to maintain the status quo while the determination is being made. Primer on Strike. receipt of such order would mean that the strike has to end. Otherwise. Nov. No. in many instances. therefore. 22. The Secretary of Labor and Employment may cite the defiant party in contempt pursuant to the power vested in him under the provisions of the Labor Code. 31. No. PALEA. (No. Inc. 1958). d. the workers who contend that the strike is legal can refuse to return to their work and use a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. Dec. If a strike is on-going. Effect on the legality of strike. G. ³an apparent attempt to frustrate the ends of justice. G.. 253 SCRA 705). would all be put to naught. 1989]. 91 Phil. chanrobles virtual law library Where the return-to-work order is issued pending the determination of the legality of the strike. Liberal Labor Union vs. 1990. 72. on the ground that they are still legally employed although actually engaged in activities inimical to their employer¶s interest. The refusal to receive such orders and other processes is. as described by the Supreme Court in one case.. No. The aversion to receive such orders is understandable. (Union of Filipro Employees. Phil.

however. similarly refused to acknowledge receipt of the 8 September 1995 Order on 9 September 1995 at 1:25 p. Allan Montano. of 18 September 1995. ³Likewise.). per the process server¶s return. although a certain Virgie Cardenas also refused to acknowledge receipt. the Union ± with its officers and members in attendance ± never questioned the propriety or adequacy by which these Orders were served upon them. however. shows that the Notice of Order of 8 September 1995 was actually served on the Union President.´ f. it would be stretching the limits of credibility if We were to believe that the Union was unaware of the said Orders during all the conciliation conferences conducted by the NCMB -DOLE. Furthermore. . the DOLE process server¶s discharge of his function is an official act carrying the presumption of regularity in its performance which the Union has not disproved. The 2000 case of Telefunken Semiconductors Employees Union -FFW vs.m. 143013-14. found this contention untenable in the light of what had already been clearly es tablished in this case. ³Records also show that the Order of 16 September 1995 was served at the strike area with copies left with the striking workers. The Union¶s counsel of record. the reports of the DOLE process server. R. The certification/assumption order may be served at any time of the day. The latter.m. [G. presents a good study on this point. 2000]. and on 11 September 1995 at 9:30 a. December 18. CA.m.issued in the national interest. ³The foregoing clearly negate the Union¶s contention of inadequate service of the Orders dated 8 and 16 September 1995 of Acting Secretary Brillantes. much less disputed with clear and convincing evidence. Atty. to wit: ³x x x. refused to acknowledge receipt of the same on two separate occasions (on 8 September 1995 at 7:15 p. in the conciliation meetings after the issuance of the Order of 8 September 1995 to settle the unresolved CBA issues and after the issuance of the Order of 16 September 1995 to establish the mechanics for a smooth implementation of this Office¶s return -towork directive. Petitioners here claimed that the assumption and return -towork orders issued by the Secretary of Labor were allegedly inadequately served upon them. The Federation of Free Workers officially received a copy as acknowledged by a certain Lourdes at 3:40 p. through the simple expediency of refusing to acknowledge receipt thereof. The Supreme Court. Nos.m. Specifically.

As pointed out by the Secretary of Labor in his decision. the defiant workers should not be dismissed. R. The argument. radio and television cannot be considered hearsay and subject to authentication considering that the subject thereof were the lawful Orders of a competent government authority. should be rejected that since the defianc e of the return-to-work order did not last for five (5) months as in the case of Sarmiento vs.To cast doubt on the regularity of the aforesaid service of the two Orders issued by the Secretary of Labor. Rule III of the same NLRC Manual provide that such ³execution shall issue only upon a judgment or order that finally disposes of an action or proceeding. not material. Tuico. Period of defiance of return-to-work order. Rule IX of the NLRC Manual on Execution of Judgment which provides that: chanrobles virtual law library ³Section 1. he is deemed to have abandoned his job. however. to wit: ³The admissibility of the evidence presented by the Company. between the hours of eight in the morning and five in the afternoon. ± Writ of Execution shall be served at any day. pictures of which were presented by the Company in evidence. the Supreme Court observed that the above-cited rule is not applicable to the case at bar inasmuch as Sections 1 and 4.´ g. Hours and Days When Writ Shall Be Served. petitioners in Telefunken [supra] cite Section 1. The numerous publications of the subject DOLE Orders in various newspapers. It is well-settled that the length of time within which the return-to-work order was defied is not significant in determining the liability of the defiant party to the legal consequences thereof. petitioners cannot now feign ignorance of his official intervention. therefore. Since the veracity of the contents of the announcements on the bulletin board were never denied by the Union except to claim that these were µself-serving. It is already in itself knowingly participating in an . tabloids. except Saturdays. Sundays and holidays.´ The assumption and return-to-work orders issued by the Secretary of Labor in the case at bar are not the kind of orders contemplated in the immediately cited rule of the NLRC because such orders of the Secretary of Labor did not yet finally dispose of the labor dispute. In the case of the announcements posted on the Union¶s bulletin board. No. June 27.¶ We cannot but admit the same for the purpose for which it was presented. 75271-73. 1988]. unverified/unverifiable and thus utterly inadmissible. It is clear from the law that from the moment a worker defies a return-to-work order. has been questioned. The Union¶s arguments are less than convincing. [G. x x x´ However. suffice it for us to state that the bulletin board belonged to the Union.

173. in which case. May employees in the government service conduct strike? Concerted activities and strikes in the government service are not allowed because the terms and conditions of government employment are governed by law. 171. No. it shall be the duty of the striking union or locking out employer to provide and maintain an effective skeletal workforce of medical and other health personnel. In Federation of Free Workers vs. they shall be deemed to have also lost their employment status. 172. whose mo vement and services shall be unhampered and unrestricted. most especially emergency cases. The mere declaration of the illegality of strike would result in the termination of employment of union officers. What is the effect of the illegality of strike on employment of strikers? The rule is different for union officers. for the duration of the strike or lockout. Otherwise. Power to assume or certify strikes or lockouts in hospitals. clinics or medical institutions. as distinguished from ordinary members of the union. This adverse consequence does not apply to ordinary union members except when they participated in the commission of illegal acts in the course of the strike. clinics and medical institutions. L-49983. the termination from work of the strikers who defied the return-towork order for only nine (9) days was upheld. 1992]. [G. the worker will just simply refuse to return to his work and cause a standstill in the company operations while retaining the position he refused to discharge or allow management to fill. R. 174.illegal act. or (2) exercise of prerogatives. the Supreme Court held in CCBPI Postmix Workers . They are deemed to have lost their employment status. however. Inciong. Government employees may. April 20. In labor disputes adversely affecting the continued operation of such hospitals. as are necessary to insure the proper and adequate protection of the life and health of its patients. The DOLE Secretary may immediately assume jurisdiction over the labor dispute within 24 hours from his knowledge thereof. organize government employees' organizations and may negotiate certain terms and conditions of employment except: (1) those requiring appropriations. Who are the ³union officers´ who should be terminated as a result of illegal strike? As to who the union officers are for purposes of determining liability for the illegal strike.

299 SCRA 410). Secretary of Labor and Employment. 122743 and 127215. This is true even if the alleged ground constitutes a criminal offense. it was held that declaration of a wholesale forfeiture of employment status of all those who participated in the strike is not allowed if there was inadequate service of the certification order on the union as of the date the strike was declared and there was n o showing that the striking members had been apprised of such order by the union. [G. No wholesale forfeiture of employment status. The mere filing of charges against an employee for alleged illegal acts during a strike does not by itself justify his dismissal. chanrobles virtual law library With respect to the company¶s allegation that by being signatories to the CBA. the Supreme Court ruled in the same case that that such did not sufficiently establish the status of the employees as union officers during the illegal strike. and the Memorandum and Amendments. b. (Coca-Cola Bottlers Phils. 248 SCRA 95. Quite interestingly. NLRC. The charges must be proved at an investigation duly called where the employee shall be given an opportunity to defend himself. being public records. 123491. R. in the absence of clear and convincing evidence that they are flawed. stimulated by rising emotions. R. Thus. could not be terminated. 283 SCRA 145]. vs.Union vs. the union members. union officers could not have the monopoly of action and reaction. Nov. 12. a. 1998] that the certifications issued by the Chief of the Labor Organization Division of the Bureau of Labor Relations. R. (See also Batangas Laguna . No. NLRC. In Telefunken Semiconductors Employees Union -FFW vs. It must be emphasized that the penalty of dismissal could be imposed only on union officers serving and acting as such during the period of illegal strike. As a necessary implication. No. 27. NLRC. Only the union officers during the strike are liable. Dec. (Lapanday Workers Union vs. Especially so when they signed said documents as mere witnesses. enjoy the presumption of regularity and deserve weight and probative value. joined their leaders and immersed themselves in the dealings and negotiations. therefore. 1998. chanrobles virtual law library Neither were their active roles during the bargaining negotiations may be considered as evidence of their being union officers. supra). NLRC. Finding themselves to be similarly situated. they may not be held liable and. 114521. Nos. they should be taken on its face value. the c oncerned employees have effectively represented themselves as union officers. as to the union officers. 106). G. in situations such as negot iations and strikes. Inc. 1997. (CCBPI Postmix Workers Union vs. if employees acted as union officers after said strike. Nov. [G. 27.

R. ± NAFLU vs. And in the event . 2004] pleads that its officers who participated in the one-day strike should not be dismissed from the service. Invoking compassion. 799-801). 176. petitioner -union in Samahang Manggagawa sa Sulpicio Lines. conditions of work or in the exercise of right to self-organization or collective bargaining. It is worth reiterating that the strike is illegal for failure of petitioner to submit the strike vote to the Department of Labor and Employment at least seven (7) days prior thereto. Who are strike breakers? A strike breaker is any person who obstructs. the hiring of replacements for the strikers during a strike is not an unfair labor practice act of an employer. when permanent. violence. Aug. Inc. impedes or interferes with by force. Sulpicio Lines. the participation of the union officers in an illegal strike forfeits their employment status. much less paralyzed. He is entitled to do it in his effort to carry on the business. What is the nature of the ingress to and egress from the establishment subject of the strike? The ingress to (entrance) and egress from (exit) the establishment struck against are not part of the strike area and. Such hiring may even be done on a permanent basis in the case of an economic strike. 150 SCRA 429). [G. R. c. Also. Aguas. 101858. No. we must take care that in the contest between labor and capital. petitioner failed to prove that respondent company committed any unfair labor practice. considering that respondent¶s business activities were not interrupted. As a general rule. thus. 212 SCRA 792. threats. said the Supreme Court.Tayabas Bus Company vs. G. Hiring of replacements. Amid this background. 1992. Primer on Strike. or intimidation any peaceful picketing by employees during any labor controversy affecting wag es. No. Picketing and Lockout). the results achieved are fair and in conformity with the law. March 25. 177. (Progressive Workers Union vs. NLRC. however. What is the rule on hiring of replacements? a. 025. Use or employment of strike breakers is prohibited by law. Peaceful ingress and egress of workers who may want to work and those of third parties transacting lawful business with the company under strike is legal. 140992. (No. Union officers ordered dismissed despite illegal strike for only 1 day. may not be blocked or picketed. Inc. coercion. 175. 21. While we sympathize with their plight..

1966). Nos. 1996. (Section 12. No. R. G. Bautista. 1986). PLDT. 10. Labor Union vs. What is the extent of the application of security of tenure? . No. L -17038 and L-17057. Feb. NLF vs. chanrobles virtual law library In case of such defiance of return -to-work order. R.. 1967. Hiring of replacements for strikers who refuse to return to work. (The Insular Life Assurance Co.IV LAW ON TERMINATION OF EMPLOYMENT SECURITY OF TENURE 1. c. the employer is not duty bound to dismiss said permanent replacements. 1458 dated May 1. a hearing is not required in order for the employer to validly hire replacements for strikers who committed the defiance. [G. But in an unfair labor practice strike. PART . L-21278. NLRC. 1985 insofar as it allows management to replace striking workers who defy return-to-work orders. (Free Telephone Workers Union vs. that in case of non-compliance with an assumption or certification order. (Consolidated Labor Association of the Philippines vs. Dec. when not permanent. 139 SCRA 589. G. However. Insular Life Assurance Co. 24. 111 repealed Letter of Instructions No. PCFW. such a sanction is merely provisional to enable the employer to comply with its duties and functions which are closely related to the interest of the public. the Department of Labor and Employment is authorized to impose such sanctions as may be provided for by law which may include the hiring of replacements for workers defying the order. R.. Norton & Harrison Co. 258 SCRA 724].. 37 SCRA 244. 58 SCRA 762). 116128. NLRC. G. such replacements may not be permanently employed. Employees Association vs. and Jackbilt Concrete Blocks Co. Executive Order No. The reason is. Marsman & Co. 27. it was held in Allied Banking Corporation vs. L-18461. b. The employer is duty-bound to discharge them when the strikers are reinstated to their former positions. Hiring of replacements. No. RCPI vs. 113 SCRA 662. Dec. July 12.. R.that the strikers decide to resume their work. 111. 1964). July 31. Feati University vs. Norton & Harrison Company and Jackbilt Concrete Blocks Co. Executive Order No.

the exercise of management prerogative is not absolute. chanrobles virtual law library This privilege is inherent in the right of employers to control and manage their enterprise effectively. 2005. No. NLRC. G. No. What is the extent of the rights and prerogatives of management? Our laws recognize and respect the exercise by management of certain rights and prerogatives. Rural Bank of Lucban. 155421. 11. No. (The Philippine American Life and General Insurance Co. No. labor laws discourage interference in employers¶ judgment concerning the conduct of their business. June 15. R. place. What are the limitations on the exercise of management prerogatives? Needless to state. In fact. G. 189 SCRA 767 [1990]). G. It also applies to probationary. (Philippine Industrial Security Agency Corporation vs. G. R. No. Mendoza vs. Maglutac vs. Sept. R. every aspect of its busin ess. 2004). Aguinaldo. chanrobles virtual law library The fact that one is a managerial employee does not by itself exclude him from the protection of the constitutional guarantee of security of tenure. For this reason. manner and other aspects of work? . according to its own discretion and judgment. 2004). 149974. 2000). Rural Bank of Lucban. G. What is the extent of management¶s prerogative to prescribe working methods. 2004). vs. Tolentino. G. 21. CA. 4. generally without restraint. The principle of security of tenure applies not only to rank -and-file employees but also to managerial employees. An employer can regulate. (Deles. (Mendoza vs. courts often decline to interfere in legitimate business decisions of employers. Managerial employees also enjoy security of tenure. (PLDT vs.R. 3. chanrobles virtual law library MANAGEMENT RIGHTS AND PREROGATIVES. July 7. March 9. 121348. employment contract. No.R. 155421. vs. R.Security of tenure does not exclusively apply to regular employment only. The exercise of management prerogative is subject to the limitations imposed by law or by CBA. No. project and other forms of employment during the effectivity thereof. 07 July 2004). 143171. 2. Gramaje. employer policy or practice and general principles of fair play and justice. 158232. (Fujitsu Computer Products Corporation of the Philippines vs. G. NLRC. Jr. Nov. R. 156963. April 8. time. 2005. seasonal.

Test to determine validity of transfer. management retains the prerogative. NLRC. tools to be used. work assignments. level or salary. R. G. Inc. vs. working regulations. No. NLRC. work supervision. Rural Bank of Lucban. This is a privilege inherent in the employer¶s right to control and manage its enterprise effectively. In particular. it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. to change the working hours of its employees. G. What is the extent of management¶s prerogative to transfer or re-assign workers? a. (Sime Darby Pilipinas. No. Benguet Electric Cooperative vs. 289 SCRA 86). R. No. without a break in the service. time. The Supreme Court has recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment. vs. Hav ing the right should not be confused with the manner that right is exercised. July 7. dismissal and recall of workers.Employers have the freedom and prerogative. 1998). 158606. whenever exigencies of the service so require. A transfer means a movement (1) from one position to another of equivalent rank. R. Inc. b. NLRC. Thus.R. to regulate and control all aspects of employment in their business organizations. (Mendoza vs. Sept. provided there is no demotion in rank or diminution of salary. No. But like all other rights. 122468. 3. made in bad faith. Aug. 155421. 4. transfer of employees. c. G. and the action is not motivated by discrimination. G. lay-off of workers and the discipline. supervision of workers. the employer must be able to show . or effected as a form of punishment or demotion without sufficient cause. Transfer. (Sentinel Security Agency. 2004. according to their discretion and best judgment. (Philippine Airlines. 2000). chanrobles virtual law library Thus. inherent right of management. as held in one case. processes to be followed. chanrobles virtual law library 5. 119205. Such aspects of employment include hiring. vs. Inc. 15 April 1998. March 9. G. No. and other privileges. Fianza. concept and meaning. or (2) from one office to another within the same business establishment. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. 2004). benefits. place and manner of work. working methods. there are limits. 115785. R. Transfer of employees.

Inc. Six months from the time the employer made the offers to her. 2000]. it was held that the several offers made by the employer to transfer an employee was indicative of bad faith. 150092. an employee complained that his right was violated by the transfer effected by management. NLRC. Gramaje.that the transfer is not unreasonable. 156963. 112752. 299 SCRA 169. More importantly. Sept. . His transfer to the Sugar Sales Department. 160391. The employer tried to recall the termination when it was learned that she was going to file a complaint with the NLRC for illegal dismissal. [G. He argued that management cannot transfer him because his ³Special Contract of Employment´ which was executed after his retirement at age 60 to extend his service. G. (See also Tan vs. NUWHRAIN ± Dusit Hotel Nikko Chapter. No. 106107. R. the offers were made to the employee but she had not been transferred to another position at all. In OSS Security & Allied Services. vs. Refusal to transfer. The Supreme Court overruled his argument. 9. Globe Telecom. 1994]. Certainly. chanrobles virtual law library d.. 27. Further. In Chu vs. the offers were made after said employee was dismissed due to redundancy under a Special Early Retirement P rogram (SERP). No vested right to position. 11. (The Philippine American Life and General Insurance Co. Shipping and Marine Department. Sugar. No. the employee¶s transfer is tantamount to constructive dismissal. Inc. No. [G. good faith cannot be attributed on the part of the hotel. R. chanrobles virtual law library e. Nov. according to him. R. Feb. stipulated that his position is ³Head´ of the Warehousing. inconvenient or prejudicial to the employee. [G. NLRC. the latter never heard from the former again. No. R. the High Court ruled that an employee has a right to security of tenure but this does not give her such a vested right in her position as would deprive the employer of its prerogative to change her assignment or transfer her where her service will be most beneficial to the employer¶s client. Florendo-Flores. vs. caused him inconvenience and was unreasonable. 2004. G. 2005]. June 2. the offers made could not have the effect of validating an otherwise arbitrary dismissal. Should the employer fail to overcome this burden of proof. R. August 9. More so when the contemplated transfer was from a higher position to a much lower one. vs. In Dusit Hotel Nikko vs. An employee¶s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogatives to change his assignment or transfer him where he will be most useful. 2002). NLRC. The mere specification in the employment contract of the position to be held by the employee is not such stipulation. As a ploy to stave off the filing of said case. 180 [1998]). No.

chanrobles virtual law library In Abbott Laboratories. It constitutes willful disobedience of a lawful order of an employer. the fact that petitioners. vs. Fairness at the workplace and settled expectations among employees require that this practice be honored and this policy commended. 1990]. September 17. in Yuco Chemic al Industries. [G. No. Hon. October 12. R. Ministry of Labor and Employment. According to the High Court. The refusal of the employees to be transferred may be held justified if there is a showing that the transfer was directed by the employer under questionable circumstances. The reason is. Further. Rendering the transfer more questionable is the fact that there was no showing that the company cannot hire employees in Manila who can perform the job assigned to the employees sought to be transferred. when he applied and was accepted for the job. This should be deemed necessary and later to have ripened into a company practice or policy that could no longer be peremptorily withdrawn. NLRC. For instance. in the case of Zafra vs. [G. 75656. R. No. 121621. Inc. but later refused to be transferred from Manila to a provincial assignment. the transfer from the province to Manila was made after classes started. agreed to be transferred or assigned to any branch should not be taken in isolation. Fianza. NLRC. [G. May 28. Inc. he agreed to the policy of the company regarding assignment anywhere in the Philippines as demanded by his employer¶s business operation. No. when such transfer is valid. 2002]. May 3. 1987]. in their application for employment. their refusal to be transferred from Cebu to Manila which was made a condition for their training abroad (Germany) was held valid. Despite their knowledge that the lone operations . (Westin Philippine Plaza Hotel vs. G. which job did not require any special dexterity which only said employees can perform. (Benguet Electric Cooperative vs. the dismissal of a medical representative who acceded in his employment application to be assigned anywhere in the Philippines. but rather in conjunction with the established company practice in PLDT (the respondent employer) of disseminating a notice of transfer to employees before sending them abroad for training. R. No. the employer knowing fully well that they were working students. 2004). G. No. March 9. or eliminated by the employer. 139013. 158606. is guilty of insubordination. CA. the employees were being transferred during the height of union concerted activities in the company where they were active participants. R.An employee who refuses to be transferred. vs. despite the petitioner-employees¶ agreement in their application for employment to be transferred or assigned to any branch. R. But. 76959. discont inued. was held valid. 1999).

and maintenance center of the 33 ALCATEL 1000 S12 Exchanges for which they trained abroad would be ³homed´ in Sampaloc. Reassignment to Metro Manila is prejudicial to the employee. Even if the employer directed her to be assigned at his store in Metro Manila. PLDT officials neglected to disclose this vital piece of information to petitioners before they acceded to be trained abroad. and involves a demotion in rank or diminution of salaries. 1999. On arriving home. [G. R. upon receipt of the order of transfer. inconvenient. when he reported back to . petitioners could have declined the foreign training intended for personnel assigned to the Manila office. had they known about their pre-planned reassignments. No. chanrobles virtual law library In Damasco vs. such action affecting their families are burdensome. Her reassignment order was unreasonable. and prejudicia l. inconvenient. it was the employer¶s order that appears to be whimsical if not vindictive. From the employees¶ viewpoint. or prejudicial to the employee. No. necessitating their families¶ relocation from Cebu to Manila. [G. benefits. the employee simply took an extended vacation leave. considering the attendant circumstances. Needless to say. It is no exaggeration to say that their forced transfer is not only unreasonable. the willfulness of the employee¶s insubordination was shown by his continued refusal to report to his new work assignment. petitioners were unceremoniously transferred. R. While transfer of an employee ordinarily lies within the ambit of management prerogatives. as she and her family are residing in Olongapo City. This act of management appears to be arbitrary without the usual notice that should have been done even pr ior to their training abroad. Thus. 2000]. 306 SCRA 631]. her act of refusing to be detailed in Metro Manila could hardly be characterized as a willful or intentional disobedience of her employer¶s order. NLRC. but also in defiance of basic due process and fair play in employment relations. December 4. the refusal of the employee to be transferred from Olongapo City to Metro Manila was not considered serious misconduct or willful disobedience of lawful order in connection with her work. a transfer amounts to constructive dismissal when the transfer is unreasonable. May 3. NLRC. f. This would entail separation from her family and additional expenses on her part for transportation and food. however. and other privileges. In the present case. economically and emotionally. Then. On the contrary. The lure of a foreign trip is fleeting while a reassignment from Cebu to Manila entails major and permanent readjustments for petitioners and their families. Manila. 115755. they did not give complaining workers any other option but placed them in an either/or straightjacket that appeared too oppressive for those concerned. 121621. Continued refusal to report to new work assignment. In Westin Philippine Plaza Hotel vs.

199 SCRA 485]. No. 76645. the employee was a cashier at the Baguio City Branch of PT&T who was directed to transfer to the company¶s branch office at Laoag City. Nov. 144412. the refusal of the employee to be transferred was upheld because no law compels an employee to accept a promotion and because the position he was supposed to be promoted to did not even exist at that time. July 23. chanrobles virtual law library An employee could not validly refuse the lawful transfer orders on the ground of parental obligations. g. the employee¶s intransigence was very evident. In the case of Allied Banking Corporation vs. while he came to the hotel everyday. In Dosch vs. Telegraph and Telephone Corp. and the anguish he would suffer if assigned away from his family. R. CA. the Supreme Court held that the transfer from one city to another within the country is valid as long as there is no bad faith on the part of the employer. he just went to the union office instead of working at the linen room. additional expenses and anguish. (Allied Banking Corporation vs. [208 Phil. plus the fact that an assignment to a far place will be a big sacrifice for her as she will be kept away from her family which might adversely affect her efficiency. In refusing the transfer. the Supreme Court distinguished transfer from the Philippines to overseas post and transfer from city to city within the Philippines. when he was asked to explain why no disciplinary action should be taken against him. The High Court observed that the transfer of an employee to . It said: ³Certainly the Court cannot accept the proposition that when an employee opposes his employer¶s decision to transfer him to another workplace. No. NLRC.´ h. 2003]. the employee averred that she had established Baguio City as her permanent residence and that such transfer will involve additional expenses on her part. Refusal to transfer due to parental obligations. Based on the foregoing facts. 18. Worse. he did not discharge his duties as linen room attendant despite repeated reminders from the personnel office as well as his union. there being no bad faith or underhanded motives on the part of either party. 123 SCRA 296 (1983)]. R. In ruling for the employer. it is the employee¶s wishes that should be made to prevail. Refusal to transfer to overseas assignment distinguished from refusal to transfer within the country. [G. Laplana. G. CA. No. More than that. In Phil. additional expenses.work. [G. vs. 259. 1991. i.R. the employee merely questioned the transfer order without submitting the required explanation. November 18. 2003). 144412. Refusal to transfer consequent to promotion.

138). Telegraph and Telephone Corp.´ Consequently. (Philippine Industrial Security Agency vs. Dapiton. (Cinema. . 18 SCRA 1071 [1996]). 1999. CIR. Transfer pursuant to company policy. improper or underhanded purpose can be ascribed to the employer and the objection to the transfer was solely on the personal inconvenience or hardship that will be caused to the employee by virtue of the transfer. [supra] as well as the instant case. k. 39 SCRA 81). 8. Dec.an overseas post. Transfer due to standard operating procedure of management. Transfers can be effected pursuant to a company policy to transfer employees from one place of work to another place of work owned by the employer to prevent connivance among them. CA. Particularly so when no illicit. CIR. the standard practice of a bank in constantly transferring its officers and personnel with accounting responsibilities from one branch to another among its more than a hundred branches throughout the country primarily for internal control and to enable its employees to gain the necessary experience for eventual promotion. as in the 1991 case of Phil. 127421. No. Transfer in accordance with pre-determined and established office policy and practice. (Castillo vs. is legal. j. The Manual directs that the ³duties of personnel handling cash. unannounced and long enough to permit disclosure of any irregularities or manipulations. l. supra). m. The employer has the right to transfer an employee to another office in the exercise of sound business judgment and in accordance with pre determined and established office po licy and practice. in its Manual of Regulations for Banks and Other Financial Intermediaries requires the rotation of bank personnel. (where the refusal of the employee was upheld as valid) cannot be likened to a transfer from one city to another within the country.R. Rotation among bank employees. 320 SCRA 124. as in the Dosch case [supra]. legally required. G. Where the rotation of employees from the day shift to the night shift was a standard operating procedure of management. (Allied Banking Corporation vs. Consequently. Stage and Radio Entertainment Free Workers vs. an employee who had been on a day shift for sometime may be transferred to the night shift. The Bangko Sentral ng Pilipinas. securities and bookkeeping records should be rotated´ and that such rotation ³should be irregular. the refusal to be transferred within the Philippines based on personal grounds was considered willful disobedience of a lawful order.

July 7. No. chanrobles virtual law library In The Philippine American Life and General Insurance Co. The position may not be said to have been abolished because the employee was the occupant thereof. 17. Transfer occasioned by abolition of position. G. For example: in Duncan Association of Detailman -PTGWO vs.n. 2004). 155264. March 9. A transfer from one position to another occasioned by the abolition of the position is valid. Mendoza vs. effect. Frequent transfers of short duration. No. 2005. The abolition of a position deem ed no longer necessary is a management prerogative and absent any findings of malice and arbitrariness on the part of management. Transfer of an employee to avoid conflict of interest is a valid exercise of management prerogative and does not constitute constructive dismissal. has assigned the security guard to at least f our (4) different establishments. In a case where the security agency. 2004). in a span of less than three (3) months. Gramaje. May 6. insensibility or disdain by an employer becomes unbearable to the employee. R. 158606. supra). Glaxo Welcome Philippines. Sept.´ (Floren Hotel vs. Rural Bank of Lucban. The transfer of an employee may constitute constructive dismissal when it amounts to ³an involuntary resignation resorted to when continued employment is rendered impossible. Fianza. (Philippine Industrial Security Agency Corporation vs. unreasonable or unlikely. q. it was held that such frequent transfers to different posts on short periods of time were indirect ways of dismissing him.R. NLRC. when there is a demotion in rank and/or a diminution in pay. chanrobles virtual law library p. R. . the medical representative¶s transfer of assignment was held valid as the same was necessitated by a possible conflict of interest since his wife holds a sensitive supervisory position in a competitor firm who takes an active participation in the market war characterized as it is by stiff competition among pharmaceutical companies. Transfer to avoid conflict of interest. o. G. vs. R. 2004]. or when a clear discrimination. Inc. 1554 21. [G. Transfer may constitute constructive dismissal. 162994. (Benguet Electric Cooperative vs. the position was abolished because the functions of the position had become redundant and unnecessary. No. leaving him uncertain as to when and where his next assignments would be. will not efface such privilege if only to protect the person holding that office. G.. rather. Dapiton. No.

The employer must be able to show that the transfer is not unreasonable. 2002. in addition to reinstatement. the employee was ordered reinstated to his former. the employer has the burden of proving that the transfer and demotion of an employee are for just and valid grounds such as genuine business necessity . the Supreme Court declared the transfer of the respondent Assistant Vice-President from the Pensions Department to the Legal Department as not a legitimate exercise of management prerogative on the part of petitioner-employer. R. As the High Court explained in Globe Telecom. September 27. discrimination. In the case of Paguio vs. 154072. No. any person who willfully causes loss or injury to another in a manner that is contrary to morals.. De la Salle University Employees Associat ion. [G. No. It must not involve a demotion in rank or a diminution of salary and other benefits.. What is the extent of management¶s prerogative to reorganize? The Supreme Court. No. Under Article 21 of the Civil Code. chanrobles virtual law library 6. position without loss of seniority rights. where there was no clear justification for the transfer of the employee except that it was done as a result of his disagreement with his superiors with regard to company policies. 149974. 2004]. or a substantially equivalent. vs. And with the finding that the transfer was illegal. R. has recognized and aff irmed the prerogative of management to implement a job evaluation program or . bad faith. No. inconvenient. Philippine Long Distance Telephone Co. (De la Salle University vs. Damages. good customs or public policy shall compensate the latte r for the damage. 2005]: ³In constructive dismissal. 390 SCRA 201] and in Philippine Industrial Security Agency Corporation vs. or prejudicial to the employee. If the employer cannot overcome this burden of proof. 150092. Inc. 330 SCRA 363 [2000]). Florendo -Flores. and disdain towards respondent were already displayed by petitioner leading to the conclusion by the court that she was constructively dismissed. Inc. December 3. Aguinaldo. The illegal transfer of an employee to a functionless office is clearly an abuse on the part of the employer of its right to control the structure of its organization. may be recovered for illegal transfer. Before the order to transfer was made. in a number of cases. 156963. 2002]. R. [G. the Supreme Court ordered the payment in his favor of moral and exemplary damages as well as attorney¶s fees. November 11. the employee¶s demotion shall be tantamount to unlawful constructive dismissal.[G. [G. An employee who was illegally transferred is entitled to damages. June 15. R.´ chanrobles virtual law library r.

125038. 18. 20 SCRA 954). G. on the other hand. Any person may refuse to accept a gift or reward. G. Refusal to be promoted. 7. R. b. 6. NLRC. (Arrieta vs. Promotion is the advancement from one position to another involving increase in duties and responsibilities as authorized by law. No. 29. legal effect. (Philippine Telegraph & Telephone Corporation vs. G. 1997). morals or public policy. 279 SCRA 326). CA. chanrobles virtual law library Apparently. Nov. 2003). Any increase in salary should only be considered incidental but never determinative of whether or not a promotion is bestowed upon an employee. involves lateral movement from one position to another of equivalent level. higher either in rank or salary. NLRC. No. Transfer. Promotion. There is no law which compels an employee to accept a promotion. If the purpose of a reorganization is to be achieved. c. (Millares vs. R.a reorganization for as long as it is not contrary to law. (Millares vs. supra). 152057. R. (Hongkong and Shanghai Banking Corporation Employees Union vs. It is hard to accept the claim that an employer would go through all the expenditure and effort incidental and necessary to a reorganization just to dismiss a single employee whom they no longer deem desirable. Sept. No. (Ibid. Promotion denotes a scalar ascent o f an officer or an employee to another position. Subido. An employee has the right to refuse promotion. To insist on one¶s old position and ranking after a reorganization would render such endeavor ineffectual. Sept. Such refusal to be promoted is a valid exercise of such right and he . Subido. Distinction between transfer and promotion. 126230. 1997. and increase in compensation and benefits. changes in the positions and rankings of the employees should be expected. What is the extent of management¶s prerogative to promote? a. Promotion is in the nature of a gift or reward. rank or salary. the indispensable element for there to be a promotion is that there must be an ³advancement from one position to another´ or an upward vertical movement of the employee¶s rank or position.). the concomitant elevation to the higher positions. defined. This can be likened to the upgrading of salaries of government employees without conferring upon them.

G. (Philippine Telegraph & Telephone Corporation vs. on a per square-meter basis in the company¶s premises . there is also demotion if there is a change in the workplace such as in the case of transfer of an employee from the laboratory . See also Erasmo vs. No. NLRC. What is the extent of the employer¶s prerogative to demote? a. 51182. or willful disobedience of a lawful order of the employer. July 5. 29. Definitely. Hence. NLRC. 8. another aspect of comparison to determine the existence of demotion is the workplaces themselves. No. supra). No. G. chanrobles virtual law library For instance. R. in the consolidated cases of Leonardo vs. CA. June 16. 139251. chanrobles virtual law library An employee. 2002). NLRC. R. 125303. 112963. R. NLRC. G. July 20. 1983. rank or salary as a result of a transfer. supra). (Dosch vs. (Ibid. (Petrophil Corporation vs. is transferred to another position where she performed mere mechanical work . G. R. Aquino. 1999).virtually a transfer from a position of dignity to a servile or menial job. 14.cannot be punished therefor. Consequently. Inc. In addition to the comparison involving nature of work. A transfer that results in promotion or demotion. G. advancement or reduction or a transfer that aims to lure the employee away from his permanent position cannot be done without his consent. No. even if merely as a result of a transfer. (Blue Dairy Corporation vs. 129843. chanrobles virtual law library There is demotion when an employee occupying a highly technical position requiring the use of an employee¶s mental faculty. [G. Sept. the exercise by the employees of their right cannot be considered in law as insubordination. R. Concept. [G. NLRC. L-64048. 29. The employer has the right to demote and transfer an employee who has failed to observe proper diligence in his work and incurred habitual tardiness and absences and indolence in his assigned work. (Blue Dairy Corporation vs. Aug. 1999). Home Insurance & Guaranty Corporation. a transfer from a workplace where only highly trusted authorized personnel are allowed to access to a workplace that is not as critical is another reason enough for the employee to howl a protest. (Philippine Wireless.to the vegetable processing section which involves processing of vegetables alone. No. 2000] and Fuerte vs. therefore. 1986). NLRC. Hence. No. R. No. 126937. without his consent. [Pocketbell] vs. employees cannot be dismissed on that basis. June . There is demotion where there is reduction in position. cannot be promoted.R. Aug.the most expensive work area.).

May 6. 2005). (St. Due process principle in termination cases applies to demotions. upon erring employees. like dismissal. An employer is entitled to impose productivity standards for its workers. considering that demotion is. (Floren Hotel vs. 315 SCRA 129. (Leonardo vs. This is a management prerogative where the free will of management to conduct its own affairs to achieve its purpose takes form. R. Right to discipline. R. Should a supervisor such as the employee (Fuerte) fail to meet his quota for a certain number of consecutive months. No. Under this scheme. Simply put. commensurate to the offense involved and to the degree of the infraction. While due process required by law is applied in dismissals. be given a chance to contest the same. NLRC. supra). When the employee concerned succeeds in meeting the quota again. he is re -appointed supervisor and his allowance is restored. Moreover. NRLC. 145280. even the employer¶s right to demote an employee requires the observance of the twin-notice requirement. The employer¶s right to conduct the affairs of his business. 2001. he will be demoted. Michael¶s Institute v s. non-compliance may be visited with a penalty even more severe than demotion. as in cases of dismissals. 4. The only criterion to guide the exercise of its management prerogative is that the policies. and in fact. 139 [1999]).16. when prescribed. the employee being demoted should. G. No. Dec. the employer claims that the employee was demoted pursuant to a company policy intended to foster competition among its employees. NLRC. The Supreme Court said that this arrangement appears to be an allowable exercise of company right s. supra. its employees are req uired to comply with a monthly sales quota. Santos. chanrobles virtual law library . rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties. G. What is the extent of the employer¶s prerogative to discipline and/or dismiss erring employees? a. 155264. Blue Dairy Corporation vs. whereupon his supervisor¶s allowance will be withdrawn and be given to the individual who takes his place. NLRC. b. includes the prerogative to instill discipline in its employees and to impose penalties. chanrobles virtual law library 9. according to its own discretion and judgment. is also protected by law. under the same terms and conditions. also a punitive action. the same is also applicable to demotions as the latter likewise affect the employment of a worker whose right to continued employment. Consolidated Food Corporation vs. 2000]. includ ing dismissal.

CA. R. The employer cannot be compelled to maintain in his employ the undeserving. (Reyes vs. if not humane. NLRC. The employer¶s inherent right to discipline is. for the deserving. vs. April 15. the employer. (Associated Labor Unions-TUCP vs. it should not be supposed t hat every labor dispute will be automatically decided in favor of labor. as such. However. Out of its concern for those with less privileges in life. 2000]. Jr. Such favoritism. alleged that under its rules. 1999. 121348. Management also has its own rights which. It was thus held that the dismissal imposed on pet itioner is unduly harsh and grossly disproportionate to the infraction which led to the termination of his services. PLDT vs. NLRC. to be dis pensed in the light of the established facts and applicable law and doctrine. Management may lawfully impose reasonable penalties such as dismissal upon an employee who transgresses the company rules and regulations. are entitled to respect and enforcement in the interest of simple fair play. . G. A lighter penalty would have been more just. 120450. b. Inc. has not blinded the Court to rule that justice is. No. NLRC. Right to discipline and/or dismiss. The law. R. 9. RCPI. No. Feb. 74229. vs. 276 SCRA 1 [1997]).this would have been his first offense. R. 2000). 11. February 10. subject to police power. Feb. G. employees. NLRC. In the case of Farrol vs. No. R. authorizes neither oppression nor self-destruction of the employer. Minister of Labor. 1998). While the constitution is committed to the policy of social justice and the protection of the working class. No. in protecting the rights of the laborer. Inc. however. 1989). March 9. G. Right to dismiss. petitioner¶s infraction is punishable by dismissal. 119205. Aug. 10. subject to reasonable regulation by the State in the exercise of its police power. 1989). G. (Shoemart. chanrobles virtual law library c. in every case. 48705. the Supreme Court said that the employer¶s rules cannot preclude the State from inquiring whether th e strict and rigid application or interpretation thereof would be harsh to the employee. vs. [G. if not undesirable. The right of the employer to dismiss its erring employees is a measure of self-protection. R. NLRC. Petitioner has no previous record in his twenty -four long years of service . 133259. however. (Sime Darby Pilipinas. (Deles. the Supreme Court has inclined more often than not towards the worker and upheld his cause with his conflicts with the employer.Instilling discipline among its employees is a basic management right and prerogative. No.

1997) chanrobles virtual law library f. to what extent and what proper penalty to impose. NLRC. Right to prescribe company rules and regulations. 148256. It is well recognized that company policies and regulations are. Accordingly. G. Oct. vs. Inc. G. unless shown to be grossly oppressive or contrary to law. generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority. CA. G. management may lawfully impose appropriate penalties on erring workers pursuant to company rules and regulations. NLRC.that the penalty imposed should be commensurate to the gravity of his offense has been observed in a number of cases. The 2004 case of Philippine Long Distance Telephone Company vs. No. 10. R. R. [260 SCRA 49 (1996)]. (Felix vs. Jr. CA. (Soriano vs. Hence. 2004). The prerogative of an employer to prescribe reasonable rules and regulations necessary or proper for the conduct of its business and to provide certain disciplinary measures in order to implement said rules. [G. Right to impose penalty. 118041. Feb. in determining the validity of dismissal as a form of penalty. This rule on proportionality . NLRC. where it was declared that the penalty imposed must be commensurate to the depravity of the malfeasance. G. September 21. 143171. Dismissal should not be im posed if it is unduly harsh and grossly disproportionate to the charges. No. The penalty must be commensurate with the act. NLRC. June 11. No. 337 SCRA 286 [2000]). proportionality rule. R. vs. 2004]. Tolentino. infractions committed by an employee should merit only the corresponding sanction demanded by the circumstances. and to assure that the same would be complied with has been recognized in this jurisdiction. the charges for which an employee is being administratively cited must be of such nature that would merit the imposition of the said supreme penalty. 133259. violation or . (Phimco Industries. vs. Nov. R. 2000). reiterated the ruling in the 1998 case of Hongkong and Shanghai Bank Corporation vs.d. 75510. (Farrol vs. 17. 27. Right to determine who to punish. 1987). e. No. (Alcantara. No. The employer has latitude to determine who among its erring officers or employees should be punished. R. However. (Philippine Airlines. 386 SCRA 370 [2002]). conduct or omission imputed to the employee and imposed in connection with the employer¶s disciplinary authority. NLRC. Inc.

must always be fair and reasonable. R. No. the dismissal of the employee accused of serious misconduct of falsification or deliberate misrepresentation. appears to be too harsh a penalty. Moreover. R. those directives. must be commensurate to the offense involved and to the degree of the infraction. [G.´ respectively. It goes without saying that care must be taken and due regard given to an employee¶s circumstances. due consideration must still be given to his length of service and the number of violations committed during his employment. under the attendant circumstances. Where a penalty less punitive would suffice. [G. under said rules. January 19. for dereliction of duty for one school day when they participated in a rally denouncing school authority. No. vs. was considered too harsh a penalty in the light of the fact that it was not supported by the evidence on record and it was an unintentional infraction. involving the dismissal of an employee for sleeping on the job. and the corresponding penalties. rules and regulations on work related activities of the employ ees. A grave injustice is committed in the name of justice when the penalty imposed is grossly disproportionate to the wrong committed. considering that he was being held liable for the first time. the Supreme Court said that while an employer enjoys a wide latitude of discretion in the promulgation of policies. December 4. Jan. Inc. 107320. No. however. aside from absence of substantiation of the alleged offense. In the case at bar. 2001]. R. under the attendant factual antecedents in St. NLRC.crime being punished. The dismissal meted out on the teachers. 19. Inc. 125031. the dismissal meted out on private respondent for allegedly sleeping on the job. Inc. [G. [G. in the application of such punishment. A¶ Prime Security Services. Even when an employee is found to have transgressed the employer¶s rules. 2000]. R. chanrobles virtual law library In VH Manufacturing. the Supreme Court ruled that the employee¶s violations of the company rules against sleeping on post and quarrelling with a co-worker. when prescribed. NLRC. Dismissal is the most severe penalty an employer can impose on an employee. cannot be considered proper grounds for dismissal as the same were first infractions which merit only ³warning´ and ³onemonth suspension. 145280. Michael¶s Institute vs. In a similar case. vs. In Permex. 2000]. was also declared too harsh a penalty considering that they are being held liable for a first time offense and despite long years of unblemished service. after nine (9) long years of unblemished service. vs. for an alleged offense which caused no prejudice to the employer. 2000]. it was his first offense committed without malice and committed also by others who were not equally penalized. NLRC. Santos. in the actual imposition of penalties upon the erring employee. No. January 24. whatever missteps may have been committed by . 130957.

28. chanrobles virtual law library . No. 1988]. e. literally applied. No employer may rationally be expected to continue in employment a person whose lack of morals. This is dictated by logic. would result in absurdity. 74187. Right to choose which penalty to impose. Company Rules and Regulations cannot operate to altogether negate the employer¶s prerogative and responsibility to determine and declare whether or not facts not explicitly set out in the rules may and do constitute such serious misconduct as to justify the dismis sal of the employee or the imposition of sanctions heavier than those specifically and expressly prescribed. despite the heavier penalty provided therefor by the Labor Code. has so plainly and completely been bared. vs.. Obviously.the employee ought not to be visited with a consequence so severe such as dismissal from employment. 19. NLRC. this. grave offenses. [G. It was certainly within the employer-bank¶s prerogative to impose on the respondent-employee what it considered the appropriate penalty under the circumstances pursuant to its company rules and regulations. 156515. or otherwise dictated by common sense. would be penalized by mere suspension. where the managerial employee questioned the imposition of the accessory penalty of restitution on him without imposing the principal penalty of ³Written Reprimand/Suspension. In Stanford Microsystems. or has not resulted in any prejudice to the company. The employer-bank was left with no other recourse but to impose the ancillary penalty of restitution. regard for his employer¶s rules. its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected. Like all other business enterprises.g. otherwise. R. In China Banking Corporation vs. h. Inc. No.´ it was ruled that the employer¶s Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other penalties. the fact that the offense was committed for the first time. the rules. g. Jan. Borromeo. in view of his voluntary separation from the employer-bank. respect and loyalty to his employer. and appreciation of the dignity and responsibility of his office. Oct. was held not to be a valid excuse. rape. 2004]. The employer has the right to impose a heavier penalty than that prescribed in the company rules and regulations if circumstances warrant the imposition thereof. R. the imposition of the penalty of reprimand or suspension would be futile. Right to impose heavier penalty than what the company rules prescribe. The matter of imposing the appropriate penalty depends on the employer. [G.

i. petitioner was found to have deliberately misrepresented on two occasions the total number of empties and was consequently suspended for six (6) days. Moreover. petitioner has been investigated for shortages in remittances of collections from customers. 24. for the first offense. 2005]. [85 Phil. chanrobles virtual law library In Permex. In 1991. the penalty imposable on first offenders necessarily depends on such factors as gravity of the offense. [G. 166 (1949)]. 2000].). Jan. However. Inc. as early as Tide Water Associated Oil Co. NLRC. (Ibid. vs. the Supreme Court affirmed the validity of the dismissal because respondent company has presented evidence showing that petitioner has a record of other violations from as far back as 1986. the penalty prescribed thereunder for first offenders should be followed. No. And where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. Coca-Cola Bottlers Phils. In case there is a set of company rules and regulations describing certain offenses and the corresponding penalty for violation thereof. it was ruled that. June 15. among others. 165586. [G. where the employee was dismissed on the charge of serious misconduct of falsification or deliberate misrepresentation involving alleged false entry in his daily time record which was not supported by the evidence on record and wherein he was not afforded an opportunity to be heard. Victory Employees and Laborers¶ Association. Rule in case of first offense. effect when management tolerates violation of company policy. In 1990 and 1991. Inc. not to mention that it was his first offense committed without malice. then the same could not serve as a basis for termination. the company rules violated by petitioner are punishable.. person aggrieved. vs. where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. or extent of injury or damage. On several occasions. petitioner was also suspen ded for his involvement in vehicular accidents which caused damage to another car and an outlet store.. . then the same could not serve as a basis for termination. These misdemeanors are aggravated by s everal AWOLS which petitioner had taken in the course of his employment. R. with the penalty of suspension. No. R. As a general rule. the Supreme Court held the dismissal as too harsh a penalty for an unintentional infraction. admittedly.In Cruz vs. and committed also by others who were not actually penalized. 125031.

Department Order No. R. otherwise known as the Labor Code of the Philippines in Book VI. 9 and 10. nor shall any person be denied the equal protection of the laws´ (Section 1. What are ³just causes´ and ³authorized causes´? Just causes and authorized causes. to wit: chanrobles virtual law library ³To be sure.D. the valid and authorized causes of employment termination under the Labor Code. i. What is due process? Contrary to the time-honored principle that the right to due process of law is a constitutionally-guaranteed right. Procedural due process requirements for dismissal are found in the Implementing Rules of P. statutory due process should be differen tiated from failure to comply with constitutional due process.. as amended by Department Order Nos. No..e. Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. [G. while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. NLRC. as amended. Due process is that which comports with the deepest notions of what is fair and right and just. 9 took effect on 21 June 1997.e. Sec. has two aspects: substantive. chanrobles virtual law library ³Constitutional due process protects the individual from the government and assures him of his rights in criminal. 1987 Constitution). Rule I. 2004]. i. . there are two (2) kinds of causes or grounds to terminate employment by employer. ³Just causes´ which refer to those instances enumerated under Article 282 [Termination by employer] of the Labor Code. liberty or property without due process of law. 2. ³Due process under the Labor Code. (Department Order No. civil or administrative proceedings. distinguished constitutional due process and statutory due process. like Constitutional due process. Article III [Bill of Rights]. Breaches of these due process requirements violate the Labor Code. It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. the manner of dismissal. however. it being a basic constitutional tenet that ³no person shall be deprived of life. and procedural. to wit: 1. Therefore.As mentioned in Article 279.DUE PROCESS 10. 442. the Due Process Clause in Article III. .´ chanrobles virtual law library 11. 10 took effect on 22 June 1997). 158693 November 17. the 2004 case of Agabon vs.

Lastly. 142732 -33. 2007]. reiterating its earlier holding in King of Kings Transport. What are the twin requirements of notice and hearing? The twin requirements of notice and hearing constitute the essential elements of the procedural due process and neither of these elements can be eliminated without running afoul of the procedural mandate.The first written notice to be served on the employees should contain the specific causes or grounds for termination against them. Nos. Mamac. in order to enable the employees to intelligently prepare their explanation and defenses. 12.After serving the first notice.R. June 29. Moreover.The requirement of due process is two-fold. consult a union official or lawyer. No. thus: chanrobles virtual law library (1) First written notice. ³Reasonable opportunity´ under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. 13. ³Authorized causes´ which refer to those instances enumerated under Articles 283 [Closure of establishment and reduction of personnel] and 284 [Disease as ground for termination] of the Labor Code. 2007].2. (2) Hearing required. . NLRC.R. the notice should specifically mention which company rules. The Supreme Court. [G. and decide on the defenses they will raise against the complaint. A general description of the charge will not suffice. [G. Two notices and a hearing required. December 4. are violated and/or which among the grounds under Article 282 is being charged against the employees. explained the due process requirement in Genuino vs. . and (2) Procedural aspect. and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Inc. gather data and evidence.. thus: (1) Substantive aspect. the employers should schedule and conduct a hearing or conference wherein the employees will . the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. 166208. What is the two-fold due process requirement? Two-fold due process requirement. vs. if any. This should be construed as a period of at least five (5) calendar days from rece ipt of the notice to give the employees an opportunity to study the accusation against them.

G. 4 above. for an authorized cause under Article 283. R. chanrobles virtual law library 2. No. the employees are given the chance to defend themselves personally. THE EMPLOYER IS NOT LIABLE TO PAY ANY BACKWAGES OR DAMAGES. 4. and (3) rebut the evidence presented against them by the management. the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered. During the hearing or conference. THE EMPLOYER IS NOT LIABLE TO PAY ANY BACKWAGES OR DAMAGES. in the 2005 . Moreover. 6. chanrobles virtual law library In connection with situation No. (2) present evidence in support of their defenses.be given the opportunity to: (1) explain and clarify their defenses to the charge against them. .After determining that termination of employment is justified. 3. The dismissal is for just or authorized cause but due pr ocess was not observed ± THE DISMISSAL IS LEGAL BUT THE EMPLOYER IS LIABLE TO PAY INDEMNITY IN THE FORM OF NOMINAL DAMAGES (PER AGABON CASE). R. SO EMPLOYEE SHOULD BE REINSTATED (BUT NOT AS A RELIEF). Cabansag. HENCE. THE EMPLOYEE SHOULD BE REINSTATED. June 21. The dismissal is for a just cause under Article 282. and (2) grounds have been established to justify the severance of their employment. 14. The dismissal is for a cause which later on is prove n to be non-existent ± THE DISMISSAL IS NOT EFFECTIVE. and due process was observed ± THE DISMISSAL IS LEGAL. May 6. No. or for health reasons under Article 284.´ (See also PNB vs. the Supreme Court. this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. PLDT. What are the six (6) situations in termination disputes? The rules on termination of employment in the Labor Code and pertinent jurisprudence are applicable to six (6) different scenarios. (3) Second written notice. G. The dismissal is without just or authorized cause and there was no due process ± THE DISMISSAL IS ILLEGAL. 2005. with the assistance of a representative or counsel of their choice. THE AMOUNT OF NOMINAL DAMAGES VARY FROM CASE TO CASE. Millares vs. 2005). 157010. 5. The dismissal is not supported by evidence ± NO DISMISSAL TO SPEAK OF. namely: 1. 154078. The dismissal is without just or authorized cause but due process was observed ± THE DISMISSAL IS ILLEGAL.

as in this case. 151378. Pacot. or. on the other. some violation against the employer. i.000. Thus.case of Jaka Food Processing Corporation vs. when he decides to cease business operations or when. respondents were dismissed due to retrenchment. ³At this point. which is one of the authorized causes under Article 283 of the same Code. [G.e.000. payment of separation pay. there ought to be a difference in treatment when the .e. or is guilty of.00 to distinguish it from the Agabon case where the penalty was P30. ³On another breath. ³A dismissal for just cause under Article 282 implies that the employee concerned has committed.00. when the employer opts to install labor saving devices. he undertakes to implement a retrenchm ent program. 2005]. the employees were terminated due to valid retrenchment but it was effected without Jaka complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. and a dismissal for authorized cause under Article 283. the High Court declared: chanrobles virtual law library ³The difference between Agabon and the instant case is that in the former. as a rule. as in Agabon. R. In this case. ³The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first. Instead. the employee has committed some serious misconduct. March 28. a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. In awarding a ³stiffer´ sanction of P50. we note that there are divergent implications of a dismissal for just cause under Article 282. is not required. while in the second. the dismissal process is initiated by the employer¶s exercise of his management prerogative. is guilty of some fraud against the employer. distinguished the legal effects and consequences of termination for just cause but without due process (as in the Agabon case) and termination for authorized cause but also without due process. ³For these reasons. the law requires payment of separation pay. the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case. i. it can be said that the employee himself initiated the dismissal process. he has neglected his duties. on one hand.

[G. R. 2001]. in fact. Separation pay. the employer does not intend to dismiss the employee but the dismissal was effected nonetheless for a specific cause which turns out to be non-existent. 20. there is no intention on the part of the employer to dismiss the employee concerned. Accordingly. 6 above. NLRC. the Supreme Court also ordered the reinstatement but without backwages of the employee (Fuerte) who was not deemed to have abandoned his job nor was he constructively dismissed. 1999. (See also Indophil Acrylic Manufacturing Corporation vs. The case of Asia Fancy Plywood Corporation vs. Under situation No. where the Supreme Court found that petitioner did not dismiss respondent security guards.´ chanrobles virtual law library In ³termination for non-existent cause. no backwages should be awarded since the same is proper only if an employee is unjustly or illegally dismissed. reinstatement is in order. according to Capili vs. [G. 114316. NLRC. 63370. No. June 16. No. (Pepito vs. Aquino. The employees should simply be ordered to report for work and for the employer to accept them to their former or substantially equivalent position without backwages. 113099. 5 above. As pointed out by the Court. No. in a case where the employee¶s failure to work was occasioned neither by his abandonment nor by a termination. 2000]. 226 SCRA 723 [1993]). June 16. R. G. each party must bear his own loss. expressed its willingness to accept them back to their former positions. R. NLRC. the burden of economic loss is not rightfully shifted to the employer. Secretary of Labor. (Magtoto vs. Inc. Jan. No. No. [G. R. 96 SCRA 454). 126937. their employer has. [G. 1985). NLRC. 18. 125303. March . January 26.´ contemplated under situation No. and that the latter did not abandon their employment. R. absent the reason which gave rise to his separation from employment. Example is when the employee is terminated due to his detention by the military for alleged subversive act which later was not proven and the case dismissed for lack of evidence. [G. R. 2000] and Fuerte vs. NLRC. the employee was not actually dismissed but nonetheless has filed an illegal dismissal case. 301 SCRA 189] is an example of a case where the employees¶ conclusion that they were dismissed was unsubstantiated as there was no evidence that they were dismissed from employment by their employer nor were they prevented from returning to work. In the consolidated cases of Leonardo vs. In such a case. No.ground for dismissal is one of the just causes under Article 282. Reinstatement without backwages was also ordered in the 2001 case of Security and Credit Investigation. Here. Nov. and when based on one of the authorized causes un der Article 283. 117378. NLRC. vs. Hence.

In fact. In a case where there was no dismissal at all. separation pay should not be awarded. June 28. If she was indeed dismissed on said date.26. In Jo Cinema Corporation vs. 270 SCRA 488]. and he should be happy that his employer is accepting him back. There is no proof at all. the Supreme Court found that respondent employee has not established convincingly that he was dismissed. it was she who signified her intention not to report for work when she filed the instant case. Having thus determined that the employee was not dismissed from the service. Both the Labor Arbiter and the NLRC found that Alfredo was not dismissed and their findings of fact are entitled to great weight. The common denominator of those instances wh ere payment of separation pay is warranted is that the employee was dismissed by the employer. R. she filed a case for illegal dismissal. His complaint for illegal dismissal. 132837. the employee pre-empted the outcome of the investigation by filing a complaint for illegal dismissal. CALS notified him in a letter dated March 12. Abellana.not as and by way of relief proceeding from illegal dismissal but as and by way of a declaration or affirmation that the employee may return to work because he was not dismissed in the first place. she even attended said investigation where she admitted having encashed the checks. But in Cals Poultry Supply Corporation vs. Undoubtedly. [G. was properly dismissed by the Labor Arbiter for lack of merit as Alfredo was not dismissed. Thus. the payment of separation pay and backwages are not in order. 1996. Before the lapse of said period and while the investigation was on-going. 1997. 2002]. The Supreme Court ruled that she was not dismissed. except his self-serving assertion. Alfredo Roco. No. 150660. [G. 1996 to resume his work. R. No. that he was prevented from working after the end of his leave of absence on January 18. She could not have been dismissed on the day she was preventively suspended because a formal investigation was still being conducted. The employee should instead be ordered reinstated . it was he who unilaterally severed his relation with his employer. In fact. The award of backwages belongs to an illegally dismissed employee by direct provision . 2001. as she claims. No notice of termination was given to him by CALS. cannot likewise be ordered paid to the employees who were not dismissed by the employer. chanrobles virtual law library Case where the employee filed illegal dismissal case to pre -empt lawful dismissal. the employee was placed under preventive suspension for 20 days for unauthorized encashment of check. It must be emphasized that the right of an employee to demand for separation pay and backwages is always premised on the fact that the employee was terminated either legally or illegally. petitioners would not have continued with the investigation. therefore. July 30.

he only became the subject of a n investigation in which he was apparently loath to participate. inclusive of allowances. but he refused to receive it. No. 5.Attorney¶s fees (10% of all monetary awards). whichever is higher. is awarded as an alternative to illegally dismissed employees where reinstatement is no longer possible. Inc.Damages (moral. The reliefs mentioned above are not available to a legally dismissed employee.Other benefits or their monetary equivalent. the computation is up to the time of finality of decision]. (Philippine Airlines. Separation pay. . 3. What are the reliefs available to an illegally dismissed employee under the Labor Code and the Civil Code? The following reliefs may be awarded: 1. [G. this begs the question. he was given a memorandum asking him to explain the incident in question. payment of separation pay in lieu thereof may be awarded. 536 (1996)]. R.Reinstatement without loss of seniority rights and other privileges. no factual and legal bases.Full backwages. the petitioneremployee protests that he was never accorded due process. 2 and 3 above are computed from the time the compensation was withheld from the employee (date of dismissal) up to the time of his actual reinstatement. 2. on the other hand. for he was never terminated.of law and it is awarded on grounds of equity for earnings which a worker or employee has lost due to illegal dismissal. According to the Supreme Court. computed at one month or one month pay per year of service. 4. Any order of reinstatement and award of backwages have. if the dismissal is with malice or effected in bad faith). So should it be here. Case where employee refused to be investigated. NLRC. exemplary. June 16. NLRC. 2000]. In Leonardo vs. [252 SCRA 531. chanrobles virtual law library In case reinstatement is not poss ible. it was held that an employee¶s refusal to sign the minutes of an investigation cannot negate the fact that he was accorded due process. 15. 125303. however. In an analogous instance in the case of Pizza Hut/Progressive Development Corporation vs. As testified to by the personnel manager. under such situation. [NOTE: Nos. If reinstatement is not possible.

Aug. CA. G. No. Millares vs. Mira. For termination based on authorized causes under Article 283. 9. with the assistance of counsel if the employee so desires. 2005). R. vs. however. NLRC. 144089. chanrobles virtual law library The following is an attempt at standardizing the due process requirement under the different situations contemplated under the law. (Skippers Pacific. G. No. 21. No. Nov. 2002. (PNB vs. 2000). chanrobles virtual law library These requirements are mandatory. May 6. G. R. 2005. G. 16. Inc. Due process under Article 282 means compliance with the following requirements of two (2) notices and a hearing: (a) A written notice (first notice) served on the employee specifying the ground or grounds for termination. there had been no clear-cut standards. (b) A hearing or conference (or at least an opportunity to be heard) during which the employee concerned. 144314. August 4. 157010. a. R. and giving to said employee reasonable opportunity to explain his side. grounds have been established to justify his termination. Cabansag. No. 115785. PLDT. June 21. chanrobles virtual law library b. While the two-fold requirement of substantive and procedural due process as well as the twin requirements of notice and hearing are the well-known and wellentrenched features thereof. is given opportunity to respond to the charge. and (c) A written notice of termination (second notice) served on the employee indicating that upon due consideration of all the circumstances. present his evidence or rebut the evidence presented against him. How should the due process requirement under the law be standardized? [NOTE: For years. G. No. R.vs. The requirements of due process is deemed complied with upon the service of a written notice to: . R. For termination based on just causes under Article 282. non-compliance with which renders any judgment reached by management void and inexistent. 154078. 2001). which were prescribed by the Department of Labor and Employment that may be used as simple guideposts to gauge whether due process was indeed observed in a given case or situation]. the due process requirement had been interpreted in so many ways. Concorde Hotel vs.

9.(1) the employee. the silence of the law should not be construed that the sick employee may be terminated without complying with certain procedural requirements. May 20.R. and (2) the appropriate Regional Office of the Department of Labor and Employment at least thirty (30) days before the effectivity of the termination. [G. Series of 1997). 158693. 10. (Section 2. the employer should have reported that fact accordingly. [G. it is sufficient that a written notice is served the employee within a reasonable time from the effective date of termination. Transport Corporation vs. Is there any instance where notices alone. Rule I. as amended by Article III. Rules to Implement the Labor Code. Book VI. Department Order No. Rule XXIII. 2004)]. For termination of probationary employment based on failure to meet the standards of employment. For termination based on completion of contract or phase thereof. If the employee really abandoned his work. (Article 283. In R. no prior notice is required. Book VI. without the benefit . Department Order No. Ejandra. No. Series of 1997). 17. the Supreme Court observed that the procedural requirements under Article 283 are likewise applicable to Article 284. Rule I. 148508. Book V of Department Order No. 17. did not report such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7. no. (Section 2. Nov. f. Monthly report of dismissal to DOLE for policy guidance and statistical purposes. when treated as evidence of valid dismissal. Article 284 does not specify the standards of due process to be followed in case an employee is dismissed due to disease. series of 1997 is an indicium that the employee did not commit said offense. chanrobles virtual law library d. For termination based on disease under Article 284. specifying the ground or grounds for termination. 10. R. However. chanrobles virtual law library e. If the termination of probationary employment is brought about by the failure of an employee to meet the standards of the employer. as amended by Article III. If the termination is brought about by the completion of the contract or phase thereof. Labor Code). Rules to Implement the Labor Code. NLRC. c. In Agabon vs. it was held that the fact that the employer who claimed that the employee had abandoned his job. 2004].

Federico Nuez. an opportunity to defend themselves. with the aid of their counsel. chanrobles virtual law library In the earlier case of Nuez vs. 149349. R. [G. Thus.of hearing. they were still able to file a Complaint with the Labor Arbiter. 1994]. He was ordered by a superior officer to drive some of the employees to the head office. NLRC. and a formal investigation. 2005]. Nuez said that he had a previous engagement. To each Memorandum. and. was the company driver. The notice did not state that the employee was being dismissed. Furthermore. In his written reply. March 11. [239 SCRA 518. he refused. No. why they had refused to return the vehicles.. vs. December 28. the High Tribunal ruled that the three (3) Memoranda served on the errant employees were sufficient compliance with the due process rule. the errant employee. and with greater opportunity to take care of the financial needs of their family pendente lite. why they should not be dismissed for gross insubordination. The Memoranda specified the acts that constituted gross insubordination. the Court of Appeals held that the dismissal and suspension meted upon two employees of petitioner company were not legal because they were not accorded the benefit of a proper charge. The Memoranda served the purpose of informing them of the pending matters beclouding their employment and of extending to them an opportunity to clear the air. petitioner¶s Memoranda amply gave them a distinct. In reversing said CA ruling. However. were held to be compliant with due process requirement? There are certain cases decided by the Supreme Court where the dismissal was held valid despite the fact that no hearing was conducted after the respondent employee has explained his side in answer to the first notice apprising him of the administrative charges. Moreover. the notice served on the employee merely asked him to explain why he should not be administratively dealt with for his refusal to comply with a valid order of his superior. chanrobles virtual law library In the 2005 case of Glaxo Wellcome Phils. and that what was asked of him was not an emergency that warranted the charge of disobedience. with better knowledge of the cause of their dismissal. different and effective first level of remedy (which was to surrender the vehicles) to protect their jobs. in effect. the company vice president issued a Memorandum to Nuez terminating the latter¶s employment for insubordination. respondents were able to reply and explain. respondents in Glaxo deliberately disregarded or . Nagkakaisang Empleyado ng Wellcome-DFA. but it was still deemed sufficient compliance with the notice required under the Implementing Rules. Without a doubt. Inc. Thereafter. with longer time to prepare their case. he was required to explain why he should not be administratively dealt with for disobeying the order of an officer. It must be noted that in this case.

In Philippine National Bank vs. Ubaldo [supra]. 103209. The Supreme Court said that as a regular employee. 18. In arriving at the decision to dismiss them. In the Glaxo case. petitioner took into consideration the explanations they had offered. NLRC. a written explanation did not excuse the fact that there was a complete absence of the required notice. must be differentiated from Loadstar vs. When notice alone will not suffice. benefits and privileges provided under our labor laws. [G. R. R. Under the circumstances. 1997. 15701 0. No. a memorandum to an employee which does not state with particularity the acts and omission for which he is being charged does not comply with the first kind of notice preparatory to his dismissal. there was no necessity for an actual hearing. bare as it was. Consistent with San Miguel Corporation vs. 2003]. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation. (Bondoc vs. August 7. they were nonetheless given adequate opportunity to answer the charge. [408 SCRA 478. Their written explanations admitted their refusal to obey petitioner¶s directive to return the vehicles. one month notice upon confirmation or the equivalent of one (1) day¶s or month¶s salary in lieu of notice. among others. 2005]. respondent was entitled to all rights. July 28. the employee was not apprised of the particular acts for which his employment was terminated. chanrobles virtual law library Thus. without citing any ground. The factual milieu in Glaxo. 276 SCRA 288).´ chanrobles virtual law library After probationary period. The twin requirements of notice and hearing constitute the essential elements of . June 21. thus: ³6. He was dismissed immediately after he had submitted his written explanation to his employer. One of her fundamental rights is that she may not be dismissed without due process of law. respondents¶ explanations were in response to specific acts and grounds that had duly been stated with clarity. the employment contract between the parties stipulated.disobeyed a company policy. Cabansag. a memorandum advising an employee of his dismissal but which does not ³clearly´ cite the reason for the dismissal does not comply with the second kind of notice required prior to dismissal. G. His explanations were futile. however. In the same vein. Mesano. as he did not even know which particular acts or omissions should be explained. the employee was terminated by a mere notice. No. which in fact they did. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. In this case. That the employee was able to present.

Inc. Bungabong. even if she were given the opportunity to be heard. for she knew no cause to answer to. chanrobles virtual law library In the 2005 case of Cruz vs. 165586. R. NLRC. 20. Coca-Cola Bottlers Phils. 1998.procedural due process. 2005]. the notices given to petitioner were declared legally deficient. (BPI Credit Corporation vs. At any rate. It has already been held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days¶ salary. There is here a deprivation of procedural due process. The first notice dated July 27. she c ould not have defended herself effectively. The evidence in this case is crystal-clear. 154315. Respondent was not notified of the specific act or omission for which her dismissal was being sought. R. R. were different from the ones cited for his termination. May 9. Consequently. No. the employer must furnish them the two written notices. The first notice issued in this case merely stated that respondent is being charged of dispensing and drinking beer o n December 5. petitioner was not sufficiently apprised of the gravity of the situation he was in. No. No. [G. A cursory reading of this notice likewise shows that it does not st ate that petitioner was in fact facing a possible dismissal from the company.. In dismissing employees. as required by law. petitioners violated respondent¶s right to due process. Neither was she given any chance to be heard. G. July 25. 1994).m. 1997. The notice to the employee should embody the specific charges for which he is being asked to explain. Notice to explain must correctly and fully inform the employee of the charges against him. The employee must be dismissed based on the same grounds . [G. and neither of these elements can be eliminated without running afoul of the constitutional guarantee. The notice was also couched in general terms that it only mentions the specific sections and rule numbers of the Red Book that was violated without defining what such violation was. particularly the requirement of first notice because the offense notice petitioners gave to respondent is insufficient since it did not comply with the requirement of the law that the first written notice must apprise the employee that his termination is being considered due to the acts stated in the notice. did not contain the particulars of the charges nor the circumstances in which the violation happened.. vs. chanrobles virtual law library In Philippine Pizza. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day. around 11:30 to 11:45 p. 19. June 15. 2005]. An employee cannot be dismissed if the charges mentioned in the notice for which he was required to explain and for which he was heard. Inc. together with the equivalent of a one-month pay.. 106027. and nothing more.

Inc. 158693. chanrobles virtual law library If indeed.mentioned in the first notice. chanrobles virtual law library 21. supra). he is deemed to have been deprived of procedural due process. The letters cum notice cannot be considered to include dishonesty or misconduct. Agabon vs. supra. the employer must also observe the procedural aspect of due process in giving the employee notice and the opportunity to be heard to defend himself. No. (Section 2. No. the Supreme Court declared that there was no abandonment or commission of dishonest acts by the dismissed workers when the employer merely sent notices individually addressed to the workers on 6 September 1991. as amended by Article III. The dismissal of an employee must be based on the same grounds cited in the first notice given to him to explain. It would be a gross violation of the workers¶ right to due process to dismiss them for that cause of which they were not given notice or for a charge for which they were never given an opportunity to defend themselves. Notice posted in bulletin board. [G. 17. Rule I. their abandonment. 14. 1995]. . and warned them in the form of a reminder that such absence is a ground for separation or dismissal from the company. 22. 222 SCRA 818 [1993]). It is less than fair for management to charge an employee with one offense and to dismiss him for having committed another offense with which he had not been charged and against which he was unable to adequately defend himself. G. Series of 1997. he could not be expected to adequately defend himself as he was not fully or correctly informed of the charges against him which management intended to prove. BPI Credit Corporation vs. In case of termination. (Glaxo Wellcome Phils. 10. (See also Imperial Textile Mills. Nagkakaisang Empleyado ng Wellcome -DFA. NLRC.. San Miguel Corporation vs. R. vs. chanrobles virtual law library In Artemio Labor vs. Sept. Notice should be served at employee¶s last known address. then the company should have put them down in black and white. For in this situation. the petitioners were guilty of both abandonment and dishonesty or misconduct. Rules to Implement the Labor Code. Inc. NLRC. Book VI. If an employee is dismissed based on grounds different from those cited in said notice. 2004). the notices shall be served on the employee¶s last known address. vs. Department Order No. in short. A dismissal must not only be for a valid or substantial cause. NLRC. Nov. 110388. NLRC. according to the Supreme Court. Nothing was mentioned therein about dishonesty or any other misconduct on the part of the petitioners.R. where it sought an explanation from them on their alleged absence without official leave or. 217 SCRA 237 [1993]. not sufficient. NLRC.

No. 23. 2005]. How should answer be made in case of termination for just cause? . In the 2005 case of Nueva Ecija Electric Cooperative [NEECO] II vs. The order for petitioner to submit a written explanation under oath was just a formality. chanrobles virtual law library ³All transactions with Mr. 154308. March 10. NLRC. In the position paper. it was held that the allegation on the part of the petitioner-employer that the respondent-employee refused to receive the memorandum that is why it was not served to him is too self-serving a claim in the absence of any showing of the signature or initial of the proper serving officer. chanrobles virtual law library 25. G. it was shown that on July 31. the same day he was suspended. In the 2005 case of Caingat vs. R. NLRC. petitioner could have easily remedied the situation by the expediency of sending the memorandum to private respondent by registered mail at his last known address as usually co ntained in the Personal Data Sheet or any personal file containing his last known address. The termination was a fait accompli. R. 1996 are no longer honored by these offices. 259 SCRA 411). The pro-forma notice made even more glaring management¶s intent to separate him from the companies¶ service. the following appeared in the Philippine Daily Inquirer: ³NOTICE TO THE PUBLIC ³This is to notify the public that as of June 20. 110731. Moreover. (Shoppers Gain Supermart vs. Remedy if employee refused to receive notice . 2005]. NLRC. it stated that ³there is no evidence that respondents dismissed the complainant. Notice in a newspaper. June 23. [G. chanrobles virtual law library 24. 1996. 1996.service by registered mail to last known address. R.´ (Underscoring supplied) The Supreme Court ruled that neither the public notice in the Philippine Daily Inquirer. a newspaper of general circulation. No. CAINGAT is no longer connected with RS Night Hawk Security and Investigation Agency and with RS Maintenance and Services. 157603. nor the demand letter could constitute substantial compliance. No. however. 1996. Caingat after June 20. BERNARDINO A. July 26. What the public notice did was to inform the public that petitioner was already separated as of June 20.´ On record. MR. the respondent-employer denied it dismissed the complainant. 1996. [G. not sufficient.The mere posting of the notice to terminate the employee¶s employment on the employees¶ bulletin board is not sufficient compliance with the statutory requirement.

The law does not specify what constitutes reasonable period within which an employee being cited administratively must submit his answer or explanation. the Supreme Court. R. CA. 2004. NLRC. 305 SCRA 592 [1999]). chanrobles virtual law library For instance. This is in consonance with the express provision of the law on the protection to labor and the broader dictates of procedural due process. Cindy & Lynsy Garment vs. 16. petitioner was also made to answer for loitering and wasting company time. What is hearing requirement in termination for cause? The essence of due process is simply an opportunity to be heard. What is frowned upon is the absolute lack of notice and hearing. Non-compliance therewith is fatal because these requirements are conditions sine qua non before dismissal may be validly effected. Hon. if he so desires. considered the two-day period given to petitioner to explain and answer the charges against her as most unreasonable. Inc. getting salary of an absent employee without acknowledging or signing for it and disobedience and insubordination.The worker may answer the allegations stated against him in th e first notice within a reasonable period from receipt of such notice. an opportunity to explain one¶s side or an opportunity to seek a reconsideration of the action or ruling complained of. (Austria vs. 124382. The decision to dismiss must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative. Aug. No. (IBM Philippines. [G. No. R. 1999). chanrobles virtual law library . The law mandates that every opportunity and assistance must be accorded to the employee by the mana gement to enable him to prepare adequately for his defense. vs. some of which were allegedly committed almost a year before. 129329. R. G. Hon. A formal or trial-type hearing is not at all times and in all instances essential. 2001]. The reasonableness of the period necessarily depends on the distinctive circumstances of each case. as the due process requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. in the case of Asuncion vs. NLRC. 26. July 30. 284 SCRA 38 [1998]). July 31. considering that she was charged with several offenses and infractions (35 absences. NLRC. 23 half-days and 108 tardiness). NLRC. not to mention the fact that the charges leveled against her lacked particularity. or as applied to administrative proceedings. Apart from chronic absenteeism and habitual tardiness. G. 146621. (Valiao vs. No.

April 13. 80500. The employer investigated him 22 days after the first dismissal and was again served with a termination letter for the second time sometime later. one day before respondent went to the HRD Office for the alleged investigation. 1999] presents an extreme case of illegal dismissal. 1997. Bizarre case of employee illegally dismissed twice. the decision to terminate respondent which was made effective on December 19. In Philippine Pizza. G. 305 SCRA 592). No. Inc. nothing that respondent could say or do would have changed the d ecision to dismiss him. vs. Otherwise. vs. [G. but he was not given a fair and reasonable opportunity to confront his accusers and defend himself against the charge of theft. 124166. Such failure by petitioners to give respondent the benefit of a hearing and an investigation before his termination constitutes an infringement of respondent¶s constitutional right to due process. He was able to submit his explanation denying that he stole beer from the company dispenser. 154315. . show that he was not afforded due process. was already final. even before respondent could present his side and refute the charges against him. 1999. Clearly then. It was merely a token gesture to cure the obviously defective earlier dismissal. The Supreme Court ruled that the composition of the fact-finding committee 22 days after the employee was first terminated was obviously an afterthought to give a semblance of compliance with the 30 -day notice requirement provided by law. 1989). 1997. Guianan. his termination was tinged with bad faith. vs. NLRC and Felizardo A. The termination letter was issued by the HRD Vice President on December 15. May 9. at that point. Outright termination violates due process. Benguet Corporation vs. 2005]. The employer should give an employee who committed an act considered lawful cause for his dismissal. Thus. Bungabong. R. Indeed. (Robusta Agro Marine Products.³Ample opportunity´ means every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense including legal representation. NLRC. it will be a violation of his right to security of tenure and due process of law. November 16. R. R. 117221. G. however. Inc. There should be no outright termination of his employment without due process. July 5. No. No. [G. while there was just cause for the employee¶s dismissal. Inc. Gorombalem. the records of the case. (IBM Philippines. No. The employee who had served the company for more than two decades was first dismissed on the basis of an anonymous letter. R. the opportunity to explain or present his side. When dismissal was already a foregone conclusion.

i. (Segismundo vs. Termination due to disease under Article 284. usually invoked in criminal cases. 13.´ (Section 17. b. R. Article III [Bill of Rights]. 1987 Constitution). 152514. Termination due to abandonment. No person shall be compelled to be a witness against himself. j. No. hearing is not required to be conducted by the employer in order for the termination to be valid. May the right against self-incrimination be invoked in administrative proceedings? The Constitution provides: ³SECTION 17. rests on the employer and failure to discharge the same would mean that the dismissal is not justified and. Termination due to authorized causes under Article 283. Admission of guilt by employee. therefore. Llamera. Termination due to expiration of tenure made coterminous with lease. Termination due to expiration of period of probationary employment. Termination by the employee (resignation). vs. 30. No. Termination after 6 months of bona-fide suspension of operation.27. 2005). 1994). illegal. 112203. k. the rule is that in illegal dismissal cases. What are the instances when hearing is not required? In the situations mentioned below. chanrobles virtual law library May this constitutionally-guaranteed right. What is the quantum of evidence required in labor cases? All administrative determinations require only substantial proof and not clear and convincing evidence. July 12. that the dismissal was not illegal. Who has the burden of proof in illegal dismissal cases? Time and again. c. Termination due to closure or stoppage of work by government authorities. f. Termination due to expiration of contractual employment. chanrobles virtual law library n. m. Termination of casual employment. d. Inc. R. NLRC. Termination due to lapse of season in case of seasonal employment. chanrobles virtual law library h. G. 28. 29. Termination due to completion of project in project employment. (Limketkai Sons Milling. chanrobles virtual law library e. Dec. a. l. g. G. the onus of proving that the employee was not dismissed or if dismissed. be validly invoked in administrative proceedings? . Termination due to expiration of fixed-period employment.

280 SCRA 735). Therefore. Oct. (Pascual. 1969. No. Board of Medical Examiners. C. chanrobles virtual law library 32. 113271. L-25018. [G. Dec. vs. the Supreme Court declared that it finds no reason to revise the doctrine laid down in People vs. Kapunan. Jr. September 17. 29. May the right to counsel be asserted in administrative proceedings? The right to counsel under Section 12 of Article III [Bill of Rights] of the 1987 Constitution is meant to protect a suspect in a criminal case under custodial investigation. R. the exclusionary rule under said p rovision of the Bill of Rights of the 1987 Constitution applies only to admissions made in a criminal investigation but not to those made in an administrative investigation. 16. Jr. It is not true that the citizens have no recourse against such assaults. chanrobles virtual law library 33. 28. May 16. G. 127553. Marti. May the right to equal protection of the laws be asserted in administrative proceedings? In the case of Duncan Association of Detailman-PTGWO vs. Custodial investigation is the stage where the police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a particular suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit incriminating statements. G. May the right against unreasonable searches and seizures be invoked in administrative proceedings? As applied to labor cases. No. R. 1962). [193 SCRA 57 (1991)]. On the contrary. N. R. 162994. that the Bill of Rights does not protect citizens from unreasonable searches and seizures perpetrated by private individuals. NLRC. G. if the hearing partakes of the nature of a criminal proceeding because of the nature of the penalty that may be imposed for the offense. R.. such an invasion gives rise to both cri minal and civil liabilities. Cabal vs.The answer is in the affirmative. Glaxo Welcome Philippines. 31. L19052. R. Construction Supply. 2004]. where the employer prohibited its employees against personal or marital . 1997. the admissions made during such investigation may be used as evidence to justify dismissal. No. (Manuel vs. No. 1997. Nov. 282 SCRA 326). G. If the investigation is merely an administrative investigation conducted by the employer and not a criminal investigation. Inc. It is that point when questions are initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. (Waterous Drug Corporation vs.. The right to counsel attaches only upon the start of such investigation. No.

the termination is in implementation of a mass lay-off. Significantly. it was held tha t such prohibition is reasonable under the circumstances because relationships of that nature might compromise the interests of the company and the same does not violate the equal protection clause in the Constitution. The employer may place the worker concerned under preventive suspension for a period of 30 days if his continued employment poses a serious and imminent threat to the life or property of the employer or of . (Ibid. In any event. Legal basis. the company actually enforced the policy after repeated requests to the employee to comply with the policy. (Article 277 [b]) 35. The Labor Code does not contain any provision on preventive suspension. or 2. .relationships with employees of competitor companies. this exception is not present in this case.). period. chanrobles virtual law library b. Its employees are free to cultivate relationships with and marry persons of their own choosing. however. has been found to have become entwined or involved in a wrongful private conduct. in any of its manifestations or actions. When may the effects of termination be suspended? Grounds. Obviously. What is preventive suspension? a. with due regard for the lot of the employee. the termination may cause a serious labor dispute.The Secretary may suspend the effects of termination pending resolution of the case in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom the dispute is pending that: 1. The legal basis for the valid imposition thereof is found in the Rules to Implement the Labor Code. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. Indeed. Justification for imposition of preventive suspension (not a penalty). it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. the application of the said policy was made in an impartial and even-handed manner. The only exception occurs when the state. from the wordings of the contractual provision and the policy in its employee handbook. chanrobles virtual law library 34.

One must keep in mind that a worker¶s employment is property in the constitutional sense. February 28. What is suspension as a penalty? When dismissal is too harsh a penalty due to certain mitigating factors such as. [G. inter alia. certain company rules of internal control procedures. At most. . then a reprimand or even a suspension. or directing others to commit fictitious transactions. vs. 36. ‡Period of preventive suspension must be definite. the employee failed to comply with. the employee should be paid his wages during the period of extension. 2005]. Inc. conspiring or conniving with. suspension is deemed sufficient penalty.his co-workers. more specifically for violation of the company policy on fictitious sales transactions. Consequently. In the 2005 case of Coca-Cola Bottlers. Phils. the petitioner-employer failed to adduce clear and convincing evidence that the respondent had committed said acts. no demonstration of such moral perverseness as would have justified the claimed loss of confidence attendant to the job. in fact. only 15 days. or even violated. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW. it was ruled that for his infractions. the respondent-employee should be meted a suspension of two (2) months instead of dismissal. to be not inexcusable under the circumstances. but certainly not outright dismissal from employment. R. individual petitioner should first ha ve been given a mere warning. 148205. falsification of company records/data/documents/reports. it was ruled that the extreme penalty of dismissal was too harsh and manifestly disproportionate to the infraction committed. There was no dishonesty. Considering the factual backdrop in this case. ‡Extension of period must be justified.. the absence of malice or the fact that the employee is a first offender. No. but to say that it was deliberate is gratuitous. and. chanrobles virtual law library ‡Preventive suspension of workers in the constru ction industry. But if the 30-day period is extended because the employer has not finished its investigation of the case. The company must bear a share of the blame for entrusting a mere driver-helper with a highly fiduciary task knowing that he did not possess the require d skills. the employee is not entitled to his wages. and he cannot be deprived thereof without due process and unless it was commensurate to his acts and degree of moral depravity. the respondent-employee was dismissed for dishonesty. which appears to have been fully explained. During the said period. chanrobles virtual law library Perhaps. and inefficiency in the performance of duties. However. negligence and blatant disregard of or deviation from established control and other policies and procedures.

although the issue of the grant of separation pay was never contested even at the level of the Labor Arbiter nor assigned as error at the NLRC level. effect. No. May 9. distinguished. 121288. there is nothing left to be done except the execution thereof. 27. NLRC. chanrobles virtual law library In Pheschem Industrial Corporation vs. 299 SCRA 1.The consequence of illegality thereof is reinstatement without loss of seniority rights and with full backwages (inclusive of allowances and other benefits computed from the time his compensation was withheld up to the time of his actual reinstatement). Reinstatement when not prayed for. however. Reinstatement under Articles 279 and 223 of the Labor Code. applies in a case where reinstatement was not prayed for in the complaint but the payment of separation pay in lieu thereof. Reinstatement when what is prayed for is separation pay. 219 SCRA 549 [1993]). respondent¶s omission to pray for reinstatement in his position paper before the Labor Arbiter was not considered as an implied waiver to be reinstated. R. [G. What is reinstatement? a. NLRC. the petitioner therein would have been entitled to reinstatement as a consequence of his illegal dismissal from employment. As pronounced in Dela Cruz vs. It was considered a mere procedural lapse which should not affect his substantive right to reinstatement. Consequently. Reinstatement under Article 223 of the Labor Code. 2005]. the Labor Arbiter¶s ruling where he granted petitioner separation pay instead of ordering his reinstatement should be corrected.37. R. [G. NLRC. by expressly asking for separation pay. 1998. 161158. Dec. However. Nov. according to Manipon vs. Moldez. It is a settled principle that technicalities have no place in labor cases as rules of pr ocedure are designed primarily to give substance and meaning to the objectives of the Labor Code to accord protection to labor. [G. may be availed of as soon as the Labor Arbiter renders a judgment declaring that the dismissal of the employee is illegal and ordering said reinstatement. 20. 13]. No. R. In the interest of justice. It may be availed of even pending appeal. 105338. Reinstatement should be granted although he failed to specifically pray for the same in his complaint. The failure to allege reinstatement as one of the reliefs in the complaint for illegal dismissal is not fatal. No. chanrobles virtual law library ‡ In case of illegal dismissal . however. Reinstatement under Article 279 presupposes that the judgment has already become final and executory. 1994]. A different rule. he is . (See also General Baptist Bible College vs.

R. CA. following settled jurisprudence. However. the proper remedy is to award separation pay in lieu of reinstatement. so the petitioner maintains. Nov. NLRC.deemed to have opted for separation pay in lieu of reinstatement. This is the tenor of the holding in Reformist Union vs. It should be stressed that while the petitioner manifested the closure of the Tondo Plant. However. 1999. the company¶s Tondo Plant. 124166. 139847. he should be award ed separation pay at the rate of one (1) month for every year of service as an alternative. No. 2004]. 16. where the respondent was assigned. 25. No. at the end of the proceeding. R. G. the Supreme Court said that by so doing. Espejo vs. Consequently. NLRC and Felizardo A. The employee who files an illegal dismissal case may choose between reinstatement and payment of separation pay in lieu of reinstatement. he is entitled to separation pay equivalent to one month pay for every year of service. [G. Guianan. March 5. without loss of seniority rights to another position of similar nature in the company. (Benguet Corporation vs. after more than a year after the respondent was placed on payroll reinstatement. as an alternative to reinstatement. he has no other option but to abide thereby. R. Clearly. In the 2004 case of Procter and Gamble Philippines vs. While reinstatement is a relief mandated in illegal d ismissal cases. the Supreme Court recognizes an exception. it was constrained to discontinue the respondent¶s payroll reinstatement. Since the respondent¶s employment could not be maintained at the Tondo Plant. 151026. NLRC. No. [G. 2003]. if the respondent no longer desires to be reinstated. the respondent is entitled to reinstatement. No. Aug. He is bound by the relief he prayed for in his complaint. In such a case. March 29. chanrobles virtual law library In the 2003 case of Solidbank Corporation vs. the same cannot be awarded in instances where it is no longer feasible as in a case where private respondent is already over -aged. R. . from the time of his illegal dismissal up to the finality of this judgment. Bondesto. G. chanrobles virtual law library Employee ordered reinstated may. [266 SCRA 713. he forecloses reinstatement as a relief by implication. 728-729 (1997)] to the effect that separation pay is awarded as an alternative to reinstatement. 112678. opt for separation pay instead. If ordered reinstated later on after the end of the proceedings. it failed to indicate the absence of an unfilled position more or less of a similar nature as the one previously occupied by the respondent at its other plant/s. was shut down. chanrobles virtual law library Reinstatement not possible due to old age. where the employee explicitly prayed for an award of separation pay in lieu of reinstatement.

Fire which gutted the hotel and resulted in its total destruction. Rule I. Inc. Nov. Ople. (Electruck Asia. Jr. [G. However. An illegally dismissed employee is ent itled to be reinstated to his former position. NLRC. considering that more than ten (10) years have since elapsed from the date of their dismissal. Castro. 30. What is the distinction between reinstatement and . as held in Tanduay Distillery Labor Union vs. Closure of the business of the employer. June 28. R. R. 1988). separation pay equivalent to at least one (1) month pay for every year of service. Book VI. 1994]. 06. 2004). (See also RCPI vs. chanrobles virtual law library 38. No. NLRC. Philtread Tire & Rubber Corporation vs. chanrobles virtual law library 2. No. 70615. Non-existence of the employee¶s former position at the time of reinstatement for reasons not attributable to the fault of the employer. in lieu of reinstatement and in addition to the three-year back salaries. unless such position no longer exists at the time of his reinstatement. (Callanta vs. No. Pizza Inn vs. Leogardo. 3. Jan. Oct. 142759. Carnation Philippines. No. July 27. private respondent-employer has to pay. 4. 8. Declaration of insolvency by the court. Take over of the business of the employer by another company and there is no agreement regarding assumption of liability by the acquiring company. 28.1996. 210 SCRA 222. 435). chanrobles virtual law library Reinstatement rendered moot and academic by supervening events. (Bagong Bayan Corporation vs. 74531. he should be given a substantially equivalent position in the same establishment without loss of seniority rights. vs. in the event that the previous positions of petitioners may no longer be open or available. G. Meris. R. in which case. Rules to Implement the Labor Code. Reinstatement should no longer be ordered when it is rendered moot and academic by reason of supervening events such as: 1. G. 147031. G. No. Rule I. R. Dec. G. (Section 4. Rules to Implement the Labor Code. Dec. R. G. 255 SCRA 430. No. R. 197 SCRA 471). Book VI. R. 1986).. Rule I. 70361. 73334. (Section 4[b]. 1986). 2004). NLRC. (Section 4[b]. 1986). 5. G. Book VI. No. Torillo vs. 73352. Rules to Implement the Labor Code. 10. Vicente. Pedroso vs. chanrobles virtual law library Reinstatement when position no longer exists.

No. a. Feb. Tolentino. 82511. R. chanrobles virtual law library . Sept. R. 139847.. No. 39. G. R. 2004). the Supreme Court ruled that the existence of strained relations is a factual issue which must be raised before the Labor Arbiter for the proper reception of evidence. R.R. while the grant of backwages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. 2004). [292 SCRA 109 (1998)]. CA. if the strained relations engendered as a result of litigation are sufficient to rule out reinstatement. What is the doctrine of ³Strained Relations´? In a plethora of cases. supra). then. an employee who asserts his right could be easily separated from the service by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. reinstatement would thus become the exception rather than the rule in cases of illegal dismissal. otherwise. In Quijano vs. No. R. 1992). Buat. G. (Cabatulan vs.backwages? Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed. (Globe-Mackay Cable and Radio Corporation v. the same may not be allowed. G. 143171. 21. Strained relations must be raised before the Labor Arbiter. NLRC. Aug. b. 28. March 3. NLRC. chanrobles virtual law library As a rule. Mercury Drug Corporation. May 26. No strained relations should arise from a va lid and legal act of asserting one¶s right. NLRC. No. 2005. Indeed. If the issue of strained relations is raised only in the appeal from the Labor Arbiter¶s decision. March 5. does not give rise to strained relations that may justify non-reinstatement. Bondesto. to his status quo ante dismissal. i. G. Litigation.e. the Supreme Court has been consistent in its holding that the existence of strained relations between the employer and the illegally dismissed employee may effectively bar reinstatement of the latter. 147142. 14. the filing of the complaint for illegal dismissal does not by itself justify the invocation of this doctrine. PLDT vs. (Procter and Gamble Philippines vs. 1998). No. (Sagum vs. G. 119500. No. 2005). 158759. G. Strained relations must be demonstrated as a fact. by itself. (Paguio Transport Corporation vs. (Paguio Transport Corporation vs.

material in determining validity of ³strained relations. Every labor dispute almost always results in strained relations and the phrase cannot be given an overarching interpretation. No. chanrobles virtual law library As held in the Quijano vs. where the employee was the Chief of Security of the hotel whose duty was to ³manage the operation of the security areas of the hotel to . this doctrine was not applied in the 2002 case of Abalos vs. 2005]. CA. NLRC. No. 152308 and Gonzales vs. 140374. Nature of position. in Acesite Corporation vs. chanrobles virtual law library Thus. vs. vs. 26. Inc. but not in every instance does such an atmosphere of antagonism exist as to adversely affect the efficiency and productivity of the employee concerned. No. 507 [1992]). helpers and mechanics of the respondent company.This doctrine should not be used so indiscriminately as to bar the reinstatement of illegally dismissed workers. Absent this circumstance. R. No. R. It is only normal to expect a certain degree of antipathy and hostility to arise from a litigation between parties. 2005). otherwise an unjustly dismissed employee can never be reinstated. 215 SCRA 501. Moldez. June 21. strained relations will justify nonreinstatement. R. 152321. If the nature of the position. c. miners. we emphasize that the doctrine of strained relations should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. the complainants are mere rank-and-file workers consisting of cooks. (Maranaw Hotels and Resorts Corp. therefore. Jan. G. 156893. especially when they themselves have not indicated any aversion to returning to work. R. R. Philex Mining Corporation. Daniel. requires the trust and confidence of the employer upon the employee occupying it as would make reinstatement adversely affect the efficiency. November 27. whatever antagonism occasioned by the litigation should not be taken as a bar to reinstatement. [G.´ It appears from the Supreme Court rulings involving the doctrine of ³strained relations´ that the common denominator which bars reinstatement is the nature of the position of the employee. Pheschem Industrial Corporation vs. (Coca -Cola Bottlers Phils.. Acesite [Philippines] Hotel Corporation. Mercury Drug case [supra]: ³To protect labor¶s security of tenure. Here. [G. No. May 9. G. then. 2002] to deprive the workers of their right to reinstatement. Hence. G. 2005. this doctrine should not be applied to a situation where the employee has no say in the operation of the employer¶s business. productivity and performance of the latter. 161158.´ chanrobles virtual law library In the same breadth.

(RDS Trucking. gives rise to no other conclusion than the categorical fact that antagonism already caused a severe strain in the relationship between them. No. the hotel is liable to pay separation pay of one (1) month for every year of servic e. indicate the existence of strained relations. 105758-59. exception. Refusal to be reinstated. clerk or other rank-and-file employee. the fact that the employee was charged by his employer with qualified theft and was even coerced into withdrawing the labor case filed by the former against the latter. chanrobles virtual law library g. 1994]. 21. vs. An officer in such a key posit ion can work effectively only if she enjoys the . f. No. Feb. chanrobles virtual law library As held in Cabatulan vs. R. he being in charge of the over-all security of said hotel. [G. it was held that the fact that for six years. [G. 14. Inc. 147142. by itself. there would be no problem in ordering her reinstatement with facility. 113290-91. Non-settlement of dispute after long period of time does not indicate strained relations. 122468. In Palmeria vs. Sept. 1995]. chanrobles virtual law library e. Long period of time that elapsed without any settlement of the case does not. Aug. 1998). in view of the strained relations between him and management. In lieu thereof. Inc. NLRC. NLRC.provide and ensure the safety and security of the hotel guests. R. G. the complainant and his employer failed to settle their dispute amicably does not prove that the relationship between them is already too strained as to be beyond redemption . R. No. 2005]. d. 1998). NLRC. 27. visitors. Aug. Criminal prosecution indicates strained relations. Non-reinstatement of a managerial employee. Feb. et al. NLRC. Buat. (Sentinel Security Agency.´ the Supreme Court ruled that such position is one of trust and confidence. The position of manager is an important consideration in determining the val idity of reinstatement. 3. indicates strained relations. vs. G. 3. No. But she was a Vice President for Marketing of the company. reinstatement is no longer possible. If the employee is a laborer. 123941. The refusal of the employees to be reinstated is indicative of strained relations. Nos. management. R. Hence. Criminal prosecution confirms the existence of ³strained relations´ which would render the employee¶s reinstatement highly undesirable. This was the holding in Golden Donuts. vs. A person holding a managerial position may not be ordered reinstated if strained relations exist. staff and their properties according to company policies and local laws. R. [G.

Hence. R. NLRC. reinstatement should be ordered. What is separation pay? The only instances under the Labor Code and pertinent jurisprudence where the employer is liable to pay separation pay are the following: chanrobles virtual law library 1. . G. in the case of EDI Staff Builders International. the Supreme Court. the latter must be reinstated. June 20. thereby making such award of separation pay appropriate. vs. No. vs. considered as additional ground for ordering payment of separation pay in lieu of reinstatement. the length of time respondent-employee has been out of petitioners¶ employ. No. i. when termination is due to closure of establishment or reduction of personnel under Article 283. Magsino. No. absent any competent evidence in the records to support the employer¶s assertion that a peaceful working relationship with the employee is no longer possible. (See also Asiaworld Publishing House. when ordered as substitute for reinstatement in illegal dismis sal cases. Tolentino. Inc. chanrobles virtual law library h. in Philippine Long Distance Telephone Company vs. L-56398. Inc. [G. in fact. This fact makes reinstatement feasible. 139430. 2001]. R. 40. July 23. Strained relations must be proven as a fact. 2004]. The new owner. (See also Jardine Davies. Thus. [G. September 21. 1987). Ople. Reinstatement is proper if strained relations existed wit h former owner but not with new owner. Length of time may prevent reinstatement. In the same case of PLDT [supra]. 143171. vs. 2. R. the Supreme Court ordered the reinstatement of the managerial employee despite allegation of existence of strained relations inasmuch as the same were not adequately proven by the employer which had the burden of doing so. In addition to existence of strained relations. chanrobles But if the alleged strained relations between a managerial employee and his employer was not adequately proven. While strained relations may have existed between the employee and the former owner of the company. has absolutely nothing to do with the controversy involved in the case. the alleged strained relations can no longer be invoked since there has been a change in the ownership and control of the company. 311 SCRA 289 [1999]). the same do not exist now between him and the new owner. Inc.virtual law library full trust and confidence of top management.

however. 2005). Abad. [433 Phil. No. 2 002] and was further expounded the 2005 decision in Philippine Commercial International Bank vs. when the employee has been dismissed for serious misconduct or some other causes reflecting on his moral character or person al integrity.. 6. when the employer terminates without just cause. when resignation pay or separation pay (or sometimes called ³financial assistance´) is required under a unilaterally promulgated voluntary policy or practice of the employer or under an agreement such as a Collective Bargaining Agreement. In Gustilo vs. Jan. chanrobles virtual law library 41.3. despite its finding that the dismissal was legal. R. he does not deserve such generosity if his offense is the misappropriation of the receipts of his sales. Jr. Sulpicio Lines. No. chanrobles virtual law library 5. the Supreme Court awards separation pay to a legally dismissed employee on the grounds of equity and social justice. In some cases. 2005]. vs. where the cause for the termination of employment cannot be considered as one of mere inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a palpable breach of trust reposed in him. 2004]. 158045. surely. when employment is deemed terminated after the lapse of six (6) months in cases involving bona -fide suspension of the operation of business or undertaking under Article 286. As stated in San Miguel. October 4. [G. 897. Lao. [164 SCRA 671]. the services of a househelper prior to the expiration of the fixed -term employment under Article 149. still .. 890. 17. 149629. (Etcuban. In PLDT vs. the grant of separation benefits is hardly justifiable. [G. 4. when termination is due to disease under Article 284. February 28. Inc. though. NLRC and Abucay. May separation pay be awarded despite lawful dismissal for cause? An employee who is dismissed for just cause is generally not entitled to separation pay. the Court of Appeals. chanrobles virtual law library This equitable principle was emphasized again lately in the 2002 case of San Miguel Corporation vs. R. Inc. A reading of Article 279 in relation to Article 282 of the Labor Code reveals that an employee who is dismissed for cause after appropriate proceedings in compliance with due process requirements is not entitled to an award of separation pay. it was declared that while it would be compassionate to give separation pay to a salesman if he were dismissed for his inability to fill his quota. This is not allowed. G. 148410. however. Wyeth Phils. July 11.. No. R.

466. however. Despite this holding. NLRC. 2005). If the answer is in the negative. It ruled that an employee who was legally dismissed from employment is not entitled to an award of separation pay. the Supreme Court was constrained not to disturb the award of separation pay in this case because respondent company did not interpose an appeal from said award. in the light of the plight of respondent who has spent the best years of his useful life with petitioner. A party in a case who did not appeal is not entitled to any affirmative relief. G. however. (Camua vs. Sept.awarded the complainant separation pay of P106. The Supreme Court. separation pay may ³exceptionally´ be awarded as a ³measure of social justice. an employee¶s lack of moral depravity could evoke compassion and thereby compel an award of separation pay. R. the High Court ³commiserate(d) with him but it can do no more than to appeal to an act of compassion by SMC and to ask it to see . Simply stated. Moreover. no affirmative relief can be extended to it. 28.890.´ provided that the dismissal does not fall under either of two circumstances: (1) there was serious misconduct. separation pay may be awarded to him. Feb. (PCIB vs. 460. There had been jurisprudence granting separation pay for dismissals based on this ground. chanrobles virtual law library The San Miguel test. it is now a matter of established rule that the question of whether separation pay should be awarded depends on the cause of the dismissal and the circumstances of each case.00 allegedly by reason of several mitigating factors mentioned in its assailed Decision. In line with the 2002 case of San Miguel [supra]. say loss of trust and confidence. Abad. or (2) the dismissal reflected on the employee¶s moral chara cter. if the dismissal does not fall under the first qualification (serious misconduct). 344 Phil. the High Court reversed the decision and resolution of the Court of Appeals insofar as it decreed the payment of retirement benefits or separation pay to respondent but. 158045. Consequently. reversed said award based on the aforementioned case of PLDT. the next query shifts to whether the alleged wrongful act was reflective of the moral character of the employee. separation pay may be awarded to the employee. No. if the employee is dismissed due to some grounds other than serious misconduct. notwithstanding a valid dismissal. chanrobles virtual law library Incidentally. Under the San Miguel test. 12. Abad. supra). (See also PCIB vs. 1997). in San Miguel. Hence.

R.´ Indeed. 21. chanrobles virtual law library Separation pay. What are backwages? Full Backwages have to be paid by an employer as part of the price or penalty he has to pay for illegally dismissing his employee. (Acesite Corporation vs. Aug. 1998. Soriano vs. Dec.its way clear to affording some form of financial assistance to respondent who has served it for almost three decades with no previous blemished record. 4. transportation and emergency allowances. 74214 . (St. holiday pay. in lieu of reinstatement. G. Louise College of Tuguegarao vs. should be taken into account in the computation of backwages. in addition to the basic salary. G. 1987. Oct. 1989. 27. If not regular. R. if applicable: 1. No. Inc. current wage level of the employee¶s position. What is the amount of separation pay in lieu of reinstatement? Separation pay is only proper to substitute for reinstatement (not for backwages)]. L-75510. vs. it reiterated its wish in the decretal portion of the decision when it said: ³It is hoped. Jan. 2005). NLRC. 2. shall include the amount equivalent at least to one (1) month salary or to one (1) month salary for every year of service. fringe benefits or their monetary equivalent. G. (Food Traders House. the sympathy of the Supreme Cour t towards the workingmen is best exemplified in this case. the following benefits. (Santos vs. a fraction of at least six (6) months being considered as one (1) whole year inc luding regular allowances. NLRC. 76721. G. chanrobles virtual law library Other benefits must be paid in addition to backwages. 21. NLRC. vacation and sick leaves and service incentive leaves. No. increases in compensation and other benefits. 31. Following several decisions of the Supreme Court. The computation should be based on the wage rate level at the time of the illegal dismissal and not in accordance with the latest. however. 120677. 42. No. not included. including 13th month pay. R. 26. 1987). 3. No. whichever is higher. . Sept. 300 SCRA 360). 43. 152308.´ While the Supreme Court did not mention any amount of such financial assistance. R. R. Other benefits must be paid in addition to backwages. No. NLRC. NLRC. that petitioner will heed the Court¶s call for compassion. G.

throughout his employment until his illegal transfer in 1997. Feb. 105892. NLRC. NLRC. [G. No.On service incentive leave. CA. 154072. 1996 up to February 17. (Maranaw Hotels & Resort Corporation vs. 2002]. No. hence. (Blue Dairy Corporation vs. supra). No. just share in the service charges. however. 1996 up to July 5.any other allowances and benefits or their monetary equivalent. in his favor. 129843. Jan. A classic case to illustrate this legal principle is the 2004 case of Tomas Claudio Memorial College. the presumption of innocence until his guilt is proved beyond reasonable doubt. R. in the interim. gasoline. car and representation allowances. R. 123880. NLRC. R. 1996. Petitioner based his right to the award of P384. The computation of said benefits should be up to the date of reinstatement as provided under Article 279 of the Labor Code. see Fernandez vs. December 3. Philippine Long Distance Telephone Co. Raised as an issue in Paguio vs. 2004]. The petitioner-employer took the position that it cannot be lawfully compelled to pay backwages for the period of time that the private respondent-employee was twice incarcerated in jail on account of his violation of the Dangerous Drugs Act. Inc. and from November 21. (Fernandez vs. vs. No. 285 SCRA 149). not covered by backwages. Jan. Sept. irrelevant in the award of backwages. 152568. [G.. G. earn any income.000. R. 5. No. 16. 7. Feb. The award of backwages is not conditioned on the employee¶s ability or inability to. Inc. 1999. is whether petitioner is entitled to an amount equal to 16% of his monthly salar y representing his salary increase during the period of his demotion. the employee has. 1997. R. 1999). 20. from June 10. NLRC. The Supreme Court.. G. 28. ruled that the illegally dismissed employee is entitled to backwages even during the period of his incarceration noting that the first criminal case was dismissed for lack of probable cause and the second has yet to be finally decided. he had been consistently given by the company annual salary increases on account of his above - . No. Inc. G.00 equivalent to 16% of his monthly salary increase starting from January 1997 on the fact that. 301 SCRA 223). R. (Consolidated Rural Bank [Cagayan Valley]. 123810. 23. 1998. vs. 1999). 6. Dismissed employee¶s ability to earn. chanrobles virtual law library Salary increase during period of demotion. NLRC. G. 14.

No. He claims that his contemporaries now occupy higher positions as they had been promoted several time s during the course of this case. therefore. however. however. 2004]. the mere fact that petitioner had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and. March 5. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. grant full backwages. while affirming the illegality of the dismissal of the employee. R. Petitioner claims that there is a high probability that he would have been granted the increase had he not been transferred from the Garnet Exchange of respondent PLDT. and thus he should not be moved to any other position where management would require his services. as evaluated according to a specified criteria. this contention is based merely on speculation. The Supreme Court was unconvinced. is based simply on expectancy or his assumption that. [G. Bondesto. Undeniably. In Procter and Gamble Philippines vs. He argued that justice and equity requires that he be given the monetary award deleted by the Court of Appeals from the decision of the NLRC. this particular award which petitioner is seeking is not based on any wage order or decree but on an employee¶s performance during a certain period. Furthermore. ³In contrast to a grant of backwages or an award of lucrum cessans in the civil law. Petitioner averred that this would not have taken place had he not been illegally tran sferred. the Supreme Court. When backwages should not only be for one (1) year. Thus. it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. even if he ranked higher and performed better than they during the past years. did not. As held by the Court of Appeals. he should be entitled to backwages which should be limited to one (1) year. . It ruled: ³Petitioner¶s claim. petitioner has now been left behind career-wise. Petitioner likens his claim to that for backwages in illegal dismissal cases.average or outstanding performance. What is more.´ chanrobles virtual law library When backwages should only be for one (1) year. however. qualify for the said increase later. 139847. It agreed with the findings of the NLRC and the Court of Appeals that in view of the respondent-employee¶s absences that were not wholly justified. his claim is tantamount to saying that he had a vested right to remain as Head of the Garnet Exchange and given salary increases simply because he had performed well in such position.

chanrobles virtual law library In Chronicle Securities Corporation vs. 255 SCRA 430. Full backwages. G. chanrobles virtual law library Full backwages. full backwages should be computed only up to the date of the closure. But in the 2001 case of St. Santos.the Manila Chronicle . in limiting to one (1) year the backwages awarded to petitioners. 157907. No. [G. 1993 when she reached 60 years of age cannot be subscribed. 28 June 1988. 60 years is the optional retirement age. March 29. No. No. April 4. Full backwages. 108405. No. an employer found guilty of unfair labor practice in dismissing his employee may not be ordered so to pay backwages beyond the date of closure of b usiness where such closure was due to legitimate business reasons and not merely an attempt to defeat the order of reinstatement. R. No. the Supreme Court. NLRC. how computed when company has already ceased operations. As held in the case of Pizza Inn/Consolidated Foods Corporation vs. Michael¶s Institute vs. chanrobles virtual law library Full backwages. how computed when valid retrenchment . tantamount to grave abuse of discretion on the part of the NLRC.had already permanently ceased its operations. Nov. the backwages should only cover the time when he was illegally dismissed up to the time when he reached 60 years. R. This rule holds true even if the employer is found guilty of unfair labor practice in dismissing the employee. 2004]. 145280. The view of the employer that payment of backwages to the illegally dismissed teacher should be computed only up to December 11. R.In Viernes vs. 2003]. (Espejo vs. L-74531. 4. [G. 162 SCRA 773]. 435). [G. To allow the computation of the backwages to be based on a period beyond that would be an injustice to the employer. If the dismissed employee has already reached sixty (60) years of age. 112678. following the mandate of Article 279 on the payment of full backwages to an illegally dismissed employee. how computed when dismissed employee has reached 65 years of age. where the dismissed employee has already reached the compulsory retirement age of 65. where the employer . how computed when dismissed employee has reached 60 years of age. Under Article 287. it was ruled that the award of backwages should be computed up to said age. 1996. 2001]. NLRC. R. NLRC.R. considered it patently erroneous. NLRC. [G. Dec. 25.

from May 13. R. chanrobles virtual law library In Acesite Corporation vs. inclusive. 119724. Pursuant to Article 283 of the Labor Code. R. 148738. NLRC. No. the Supreme Court considered th e date of effectivity of the retrenchment as the date when backwages should be reckoned. In the 2002 case of Buhain vs. No. or to at least one-half month pay for every year of service.´ chanrobles virtual law library Period of suspension. Inc. In Metro Transit Organization. petitioner should be . vs. his termination being illegal. respondent Paras should be paid full backwag es from the date of his illegal dismissal up to March 25. the computation of backwages was made subject to deduction for the three (3) days when the employee was under suspension. the Supreme Court ruled that the Court of Appeals committed a reversible error in merely fixing the backwages from the time he was placed under preventive suspension up to the time he was illegally dismissed. less backwages for three (3) months corresponding to the period of his suspension for the period March 29. Chrysler Philippines Labor Union. In Mitsubishi Motors Philippines Corporation vs. the illegally dismissed employee was no longer ordered reinstated because of the occurrence of a supervening event ± that of retrenchment which covered him because he was a newly regularized employee at the time of his termination. 143709. May 31. [G. Thus: ³Considering that notices of retrenchment were mailed on February 25. the Supreme Court directed the payment thereof from the time of his illegal dismissal on March 29. [G. 2004]. whichever is higher. the employee¶s dismissa l on the ground of abandonment was declared illegal but he was found guilty of absence without official leave (AWOL) for which he was ordered suspended for three (3) months. 1998. 152308. 1996. [G. 2002]. However. R. NLRC.supervened. Such formula runs counter to the letter and spirit of the Labor Code. 1996 to May 21. deductible from backwages. such non-reinstatement was not considered a sufficient ground to deny him his backwages. This period covers only a total of eight days. June 29. 2005]. Backwages should include period of preventive suspension. CA. No. July 2. he should be paid separation pay equivalent to one (1) month salary. and including allow ances and other benefits or their monetary equivalent. 1990. 1998 and made effective one month therefrom. No deductions therefrom were allowed for the earnings derived elsewhere by the employee during the period of his illegal dismissal. In reckoning the backwages. Jan. In computing the backwages. 1999]. The Hon. R. [G. No. 1990 to June 26. a fraction of at least six months to be considered as one (1) year. 1990 up to the time of his actual reinstatement. In conformity with Article 279. 26.

vs. Nos. G. 222 SCRA 707). G. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles him to paymen t of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution.given full backwages and all the benefits accruing to him from the first day of his preventive suspension. If the petitioner (employer) were sincere in its intention to reinstate the private respondent (dismissed employee). The petitioner should thus be held liable for the entire amount of backwages due the private respondent from the day he was illegally dismissed up to the date of his reinstatement. 1993. Only then could observance of labor laws be promoted and social justice upheld. (Phi lippine Rabbit Bus Lines. Mere offer to reinstate a dismissed employee. chanrobles virtual law library Employer¶s offer to reinstate does not forestall payment of full backwages. up to the date of the finality of this judgment. the payment of backwages by petitioner to respondent employee for the period he was not reinstated despite the alias writ of execution up to the time he opted for separation pay in lieu of reinstatement is equitable and justified under the law. In Condo Suite Club Travel. the Supreme Court ruled that this does not suffice to provide complete relief to the painful socio economic dislocation of the employee and his family. vs. (Medina vs. in light of the Voluntary Arbitrator¶s conclusion that reinstatement is no longer possible. 122078. 306 SCRA 155). 2000]. What are the distinctions between separation pay and backwages? Separation pay and backwages are two (2) different things. [G. As previously stated. R. May 13. R. No. chanrobles virtual law library Therefore. an employee who is unjustly dismissed is entitled to his full backwages computed from the time his compensation was withheld from him up to the time of his reinstatement. No. January 28. NLRC. 1996. 125671. 44. In reversing the NLRC. backwages were limited by the NLRC from the date of the employee¶s dismissal up to the time when the employer alleged ly offered to reinstate him. in case of refusal of employer to reinstate. 1999. May 28. Inc. Inc. Payment of . Full backwages. is not enough. 99054-56. NLRC. Consolidated Broadcasting System. R. can no longer be attributed to the fault of the employer. April 21. given the circumstances in this case. It explained that the failure of the employee to work. peti tioner should have at the very least reinstated him in its payroll right away. after the supposed offer was made.

4. Separation pay cannot be paid in lieu of backwages. In another 1998 case. The former is paid as a wherewithal during the period that an employee is looking for another employment. . nominal or exemplary damages may be adjudicated. if any. 2. whimsicality and oppression. The assessment of such damages is left to the discretion of the court. The two may be distinguished as follows: 1. 1998). 123421. including attorney's fees. 46. with twelve percent (12%) interest per annum from the date of promulgation of the decision until fully paid. even if not so claimed. until the fi nality of the decision. backwages were made subject to interest of 6% per annum for the period from the date the employee was illegally dismissed from service until the decision becomes final and executory. et al. G. the dismissed employee was awarded a se paration pay of 1/2 month salary for every year of service inclusive of allowances. while the latter is restoration of the past income lost. Normally. The former is oriented towards the immediate future. an award of attorney's fees equivalent to ten percent (10%) of the total award is legally and morally justifiable. 45. Separation pay is paid when reinstatement is not possible. (Magos vs. No. 5. . R. while the latter is paid for the loss of earnings during the period between illegal dismissal and reinstatement. the said damages are awarded. Award of attorney's fees when employee is forced to sue. Is legal interest allowed? In a 1998 case. according to the circumstances of each case. December 28. while backwages is paid for the compensation which otherwise the employee should have earned had he not been illegally dismissed. NLRC. What are damages and attorney¶s fees? No proof of pecuniary loss is necessary in orde r that moral. while the latter is normally computed until the employee is reinstated. or when reinstatement is no longer possible. if dismissal is attended with bad faith..It is settled that in actions for recovery of wages or where an employee was forced to litigate and has incurred expenses to protect his rights and interests. 3. The former is computed normally on the basis of the employee¶s length of service.separation pay is not inconsistent with payment of backwages.

et al. are not available to OFWs. R. [G. whichever is less. March 31. et al. (See Ravago vs. NLRC. 8042 and not Article 279 of the Labor Code. 158324. it was held that . 8042. Aug. G. the remedies provided for under Article 279 such as reinstatement. vs. (Gu-Miro vs. (Dela Cruz vs. the Supreme Court had already declared that a seafarer. TERMINATION OF EMPLOYMENT OF OVERSEAS FILIPINO WORKERS (OFWs). 113658. Esso Eastern Marine.. A. No. NLRC. Inc. This is so because the OFWs are contractual employees whose rights and obligations are gov erned primarily by the Rules and Regulations of the POEA and. 47. the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum. R. the interest rate shall be 12% per annum until the amounts due are actually paid or satisfied. No. March 14. NLRC. valid or authorized cause as defined by law or contract. November 20. MONETARY AWARDS. In a 1997 case. (De la Cruz vs. more importantly. 1998. Adorable. a. 1997). No. [392 SCRA 371 (2002)].after which time. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) provides: ³In case of termination of overseas employment without just. Ltd. 243 SCRA 190 (1995)]. G. No. G. is not entitled to separation or termination pay. No. February 17.R. with interest at 12% per annum from the date of promulgation of the decision until actually paid.. 15). plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term.. Monetary awards to illegally dismissed OFWs. No. the Supreme Court has imposed interest at the legal rate on the full backwages awarded to an illegally dismissed employee computed from the time she was temporarily laid off until she is fully paid her separation pay. 121288. Mira. OFWs are not entitled to the reliefs under Article 279. and separation pay at the rate of one (1) month's pay for every year of service computed from the date he was first employed until the finality of the decision. how reckoned.´ (Underscoring supplied) In Skippers Pacific. 20. Section 10 of Republic Act No. G. As early as the 1995 case of Coyoca vs. No. R. or separation pay in lieu of reinstatement or full backwages. chanrobles virtual law library b. 2005). 119536. The proper basis for the monetary awards of the overseas Filipino workers (OFWs) is Section 10 of R. 299 SCRA 1. A. 160952. R. Consequently. 2004). 1995. not being a regular employee. by R.

Employ Services and Resources. (Phil. Noteworthy is the holding of the Supreme Court in Olarte vs. vs. 144786. G.e. This is evident from the words ³for every year of the unexpired term´ which follows the words ³salaries xxx for three months. April 15. Paramio. it was ruled therein that the 3-month salary principle should be applied thereto. whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term. 144786. the Supreme Court explained when an OFW is entitled to the three (3) months salary mentioned in the aforequoted Section 10 of R. No. 2004). care should be taken that every part or word thereof be given effect since the lawmaking body is presumed to know the meaning of the words employed in the statute and to have used them advisedly.´ To follow petitioners¶ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. A. No. NLRC. which involves a one-year contract and yet. comes into play only when the employment contract concerned has a term of at least one (1) year or more.. Paramio. chanrobles In the earlier case of Marsaman Manning Agency. 8042. Ut res magis valeat quam pereat. vs. R.virtual law library an overseas Filipino worker who is illegally terminated shall be entitled to his salary equivalent to the unexpired portion of his employment contract if such contract is less than one year. This is contrary to the wellestablished rule in legal hermeneutics that interpreting a statute. R. i. whichever is less. . or three months¶ salary f or every year of the unexpired term. However. which is obviously less than her salaries for the unexpired portion of her one-year employment contract. [G. he is entitled to receive his salaries equivalent to the unexpired portion of his contract. Consequently. an illegally dismissed overseas Filipino worker whose actual employment was only for twenty one (21) days of her 1-year contract. whichever is lower. 148407. said the High Court. To reiterate. OFW who worked for only 21 days of her 1-year contract. No. Inc. 2004). It was ruled therein that a plain reading of said provision clearly reveals that the choice of which amo unt to award an illegally dismissed overseas contract worker. if his contract is for a period of at least one year. 2003]. Inc. April 15. G. a plain reading of the provision of Section 10 of Republic Act No. Employ Services and Resources. Inc. the OFW having worked for only 21 days of the 1-year period. is entitled only to an amount corresponding to her three (3) months salary. No. 8042 [supra] clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker comes into play only when the employment contract has a term of at least one (1) year or more. Nayona. [313 SCRA 88 (1999)]. (See also Phil. vs. R. November 12.

Note that the fraction of nine months and twenty-eight days is considered as one whole year following the Labor Code. 10 months and 28 days. Inc. the unexpired portion of his contract is admittedly one year. [G. however. He was. ten months and twenty-eight days. Thus. No. the repatriation of the worker and the transport of his personal belongings are the primary responsibilities of the agency which recruited or deployed the overseas contract worker. chanrobles virtual law library As held in Athenna International Manpower Services.000 on the agreement that the balance of P64. with the qualification.000 in placement fee. Likewise.). R. hence it is what is due the respondent. for the computation of the lump-sum salary due an illegally dismissed overseas employee. . (Ibid. No. respondent¶s lumpsum salary should be computed as follows: 3 months x 2 (years)= 6 months worth of salary 6 months x (NT$) 15. Inc. But the applicable clause is not the first but the second: three months salary for every year of the unexpired term.840 = NT$95. however. [G. as the lesser amount. he paid only P30. there are two clauses as points of reckoning: first is the c umulative salary for the unexpired portion of his employment. The OFW in Athenna was contracted to render work in Taiwan for one year.040. whichever is lesser. 151303. that while respondent was assessed P94. the Supreme Court. Villanos. No. Paramio. vs. April 15. Consequently. 2005]. in addition to the monetary award.000 would be paid on a monthly salary deduction upon his deployment. in Athenna [supra]. and the other is the grant of three months salary for every year of the unexpired term. 8042. Employ Services and Resources. since respondent was dismissed after only one month of service. had granted full reimbursement of the placement fee with 12% interest per annum. 144786. Under Section 15 of R. terminated after only a month of service. A. subject to proper conversion to Philippine currency by Labor Arbiter Cresencio Iniego. R. April 15. OFW¶s monetary awards include reimbursement of placement fee. 2004]. vs. nine months and twenty -eight days.OFW who worked for only a month of his contract for 1 year. In Phil. the same award of full reimbursement of the OFW¶s placement fee with interest at twelve percent (12%) per annum was ordered by the Supreme Court. All the costs attendant thereto should be borne by the agency concerned and/or its principal.

respondent cannot be granted reimbursement of the entire assessed amount of P94. The High Court ruled: chanrobles virtual law library ³In order to give substance to the constitutional right of labor to security of tenure. allowed the refund for the repatriation plane ticket of the OFW. private respondents are entitled to separation pay. The case of Sevillana vs. In the case of ATCI Overseas Corporation vs. chanrobles virtual law library ³The award of backwages is intended to restore to the employee the earnings which he lost due to his illegal dismissal. August 9. We concur for this is the amount which private respondents would have received had they not been unlawfully dismissed.. which is the P30. [International] Corp. 2001]. upheld. Considering that private respondents herein have only . any order of reinstatement issued by this Court will be difficult for private respondents to enforce against the Ministry of Public Health of Kuwait. inclusive of allowances. But more significantly. No. as an alternative to reinstatement. 99047. Therefore. ³As to the second remedy granted by Article 279. 2001]. The illegally dismissed employee is granted separation pay in order to provide him with µthe wherewithal during the period that he is looking for another employment.Hence. or from 17 October 1991 to 19 August 1993.000 he gave as downpayment plus interest at twelve percent (12%) per annum. April 16. I. nowhere in the records does it appear that private respondents desire to be reinstated to their former employment.¶ Prevailing jurisprudence dictates that the employee be given one month pay for every year of service. Article 279 provides that the illegally dismissed employee shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. where the two (2) private respondent-OFWs were declared as regular employees.000. chanrobles virtual law library Reimbursement of repatriation expenses such as return airfare.T. [G. [G. He is only entitled to the reimbursement of the amount of placement fee he actually paid. and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. R. R. 143949. CA. This was by reason of the illegality of his dismissal. the Supreme Court awarded them backwages and separation pay in lieu of reinstatement. in lieu of reinstatement. The POEA held that the backwages to be awarded to private respondents should be computed from the time they were illegally dismissed until the expiration of their contract of employment. Award of backwages and separation pay to OFWs. No.

how paid. G. Asia World Recruitment. However. the award of P50. 113363. and not its officers. PERSONAL LIABILITY OF STOCKHOLDERS OR CORPORATE OFFICERS FOR CLAIMS OF EMPLOYEES.´ (Republic Act No. the award of attorney¶s fees equivalent to ten percent (10%) of the total award was held legally and morally justified as the OFWs were compelled to litigate and thus incur expenses to protect their rights and interests. for all claims filed by recruited workers which may arise in connection with the recruitment agreements or employment contracts. chanrobles virtual law library Monetary awards in foreign currency. must be sustained. 1999). In the same 2005 case of Athenna [supra].. 8183 which provides in its Section 1 that ³[a]ll monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines. Inc. US Dollars) as in the case of OFWs. vs. the monetary award equivalent to the salary for the unexpired portion should be paid at its prevailing peso equivalent at the time of payment in accordance with Republic Act No. R. 24. Empire Insurance Company vs. NLRC.worked for two months. 8183 entitled ³An Act Repealing Republic Act Numbered Five Hundred Twenty-Nine Entitled µAn Act to Assure the Uniform Value of Philippine Coin and Currency¶´. No. supra. association or any other entity.000 in moral damages and P50. Likewise. 294 SCRA 263). (Sevillana vs. As a general rule. the foreign-based employer. in addition to attorney¶s fees of ten percent (10%) of the aggregate monetary awards. the High Tribunal ruled that because of the breach of contract and bad faith alleged against the employer and the petitioner recruitment agency. Concept and legal basis. NLRC. 48. Aug. Private employment or recruitment agencies are jointly and se verally liable with its principal. only the employer-corporation. partnership. in the case of ATCI Overseas [supra].T. a. they are entitled to a separation pay equivalent to one-sixth of their monthly salary. the parties may agree that the obligation or transaction shall be settled in any other currency at the time of payment.´ Entitlement to moral and exemplary damages and attorney¶s fees. [International] Corp. In case the salary of an illegally dismissed employee is in foreign currency (say. which may be held liable for . I. Joint and solidary obligation of local agency and foreign principal.000 as exemplary damages.

No. 1997). there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees or a showing that the officers indiscriminately stopped its business to perpetrate an illegal act as a vehicle for the evasion of existing obligations. vs. . [G. 1994). Jan. Ramos. responsibility for the payment of separation pay in lieu of reinstatement. No. 26. chanrobles virtual law library Hence. 88795. G. (Brent Hospital. (Seaborne Carriers Corporation vs. R. 187 SCRA 777). To justify solidary liability. No. it was held in Malayang Samahan ng mga Manggagawa sa M. R. 2001]: ³Petitioners¶ claim that the jobs intended for the respondent company¶s regular employees were diverted to its satellite companies where the respondent company officers are holding key positions is not substantiated and was raised for the first time in this motion for reconsideration. in circumvention of statutes. NLRC. G. NLRC. Even assuming that the respondent company officials are also officers and incorporators of the satellite companies. 2005]. [G. NLRC. 1989 and that these corporations have different sets of incorporators aside from the respondent officers and are holding their principal offices at different locations. (Citing Del Rosario vs. backwages. Inc. April 15. Greenfield [MSMG-UWP] vs. April 20. The documents attached to petitioners¶ motion for reconsideration show that these satellite companies were established prior to the filing of petitioners¶ complaint against private respondents with the Department of Labor and Employment on September 6. In such a case. 1998).´ The Supreme Court disagreed and reversed the said finding of the NLRC considering that the ³records of the case do not show any inhuman treatment of the (illegally dismissed employee) and the allegation of bad faith or malice was not proven. 117473. Oct. 04. moral and exemplary damages. such circumstance does not in itself amount to fraud. 113907. NLRC. That the superiors just happened to be foreigners is of no moment. the NLRC declared the corporate officers of a hotel solidarily liable in order ³to deter other foreign employer[s] from repeating the inhuman treatment of their Filipino employees who should be treated with equal respect especially in their own land and prevent further violation of their human rights as employees. attorney¶s fees and other monetary awards in an illegal dismissal case devolves upon the employer-corporation. Substantial identity of incorporators between respondent company and these satellite companies does not necessarily imply fraud. Thus. R. No. and to confuse legitimate issues. R.illegal dismissal of employees or for other wrongful acts. (Reahs vs. 117593. respondent company¶s corporate personality remains inviolable. G. R.´ chanrobles virtual law library In Acesite Corporation vs. NLRC. 152308. No. July 10.

´ according to Article 212 [e] of the Labor Code. [G. that the President of the corporation should be considered as the ³officer´ who should be held liable. G. may be held liable for the payment of the employee¶s claims. Absence of clear identification of officer directly responsible. C. there must be a natural person who should be acting for its interest. 142 SCRA 269]. CA. NLRC. NLRC. 1997. No. 2001). the officers. it was ruled that a corporation is the employer only in its technical sense. 1986. Pursuant to prevailing jurisprudence. Aug. c. No. vs. Being an artificial person. chanrobles virtual law library In the absence of a clear identification of the officer directly responsible for failure to pay backwages or other monetary claims. NLRC. G. The term ³employer. No. No. R. R. When the company ceased to operate. C. chanrobles virtual law library The reason is simple: as held in Kay Products. [L-69494. The corporate officer must be identified as suc h to hold him liable. the Supreme Court. 273 SCRA 352]. 9. March 22. 102467. 1990). (Gudez vs. particularly the president.b. 144089. the manager cannot be exonerated from her joint and several liability in the payment of monetary award to the illegally dismissed employee in her capacity as manager and responsible officer of the company. CA. R. chanrobles virtual law library d. . [G. No. A person cannot be held jointly and severally liable for the obligations of the company arising from illegal dismissal if the dismissed employee failed to establish that such person is a stockholder or an officer thereof. the President or highest officer should be held liable. chanrobles virtual law library In NYK International Knitwear Corporation Philippines vs. Ransom Labor Union-CCLU vs. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Ransom [supra]. e. 183023. February 17. conformably with its ruling in A. ³includes any person acting in the interest of an employer. NLRC. 2003]. it was held in Equitable Banking Corporation vs. 146267.´ If not so included. June 10. Inc. When officers are solidarily liable. the employees will have no recourse if corporate employers will evade the payment of their lawful claims. [G. June 13. chanrobles virtual law library In A. directly or indirectly. R. (Concorde Hotel vs. The rule is clear. held the manager as falling within the meaning of an ³employer´ as contemplated under Article 212 [e] of the Labor Code. R. Rule when company ceased operations.

. falls within the meaning of an ³employer´ as contemplated by the Labor Code. R. NLRC. is different if it was the President who was dismissed and who filed the claim for unpaid wages. No. when the law so provides or when the nature of the obligation so requires. had already become final and executory. vs. There is a solidary liability on ly when the obligation expressly so states. citing Naguiat vs. chanrobles virtual law library g.. for the monetary award in favor of the employee. none of them may be compelled to satisfy in full said judgment. July 28. Corporate officers cannot be held liable absent any finding in the decision to that effect. It appears that the only reason they were impleaded was the fact that they were officers and/or agents of petitioner company. 116123. In this situation. NLRC. of course. Timbal. 257 SCRA 578 [1996]). July 14. for failure of the parties to appeal therefrom.162472. and plant security officer were impleaded in the case does not make them solidarily liable absent any showing . No. vs. chanrobles virtual law library The rule. No. 156893.as in this case . [G. R. 2005]. Decision must state in its fallo that the obligation is solidary. vs. . [G. Tan vs. Inc. More so in a case where the decision of the Labor Arbiter. chanrobles virtual law library In the dispositive portion of the Labor Arbiter¶s decision in the 2000 case of Industrial Management International Development Corp. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. 2004]. 141926. CA. 1997. chanrobles virtual law library f. March 13. declares that the mere fact that the president and chief exec utive officer. says that if the Labor Arbiter neither made any finding in his decision that the corporate officer acted with malice or bad faith in ordering the suspension or dismissal of the employee nor did he hold the said corporate officer liable.that the dismissal was attended with malice or bad faith. 2005]. 269 SCRA 564]. [G. (Inciong. R. the corporate officer cannot be held liable for the said monetary awards. Jr. assistant vice-president and general manager. Equitable [supra] pronounced that it is the Vice-President of the company who should be held liable being the highest and most ranking official of the corporation next to the complaining President. Jr. Daniel. either jointly or severally with the corporation. the president of the company who actively manages the business. chanrobles virtual law library Coca-Cola Bottlers Phils. chanrobles virtual law library When it is not provided in a judgment that the defendants are liable to pay jointly and severally a certain sum of money. June 21. [G.

Moreover. 2000]. Once a decision or order becomes final and executory. the word ³solidary´ does not appear. their liability sho uld merely be joint. whether such service is continuous or not. it is removed from the power or jurisdiction of the court which rendered it to further alter or amend it. shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. notwithstanding any written or oral agreement between the employer and the employee to the contrary: a. project or seasonal employment as these kinds of employment are defined under Article 280 of the Labor Code. ³Casual employment´ which is not in the nature of a regular. chanrobles virtual law library b. 4. There is casual employment where an employee is engaged to perform a job. 101723. chanrobles virtual law librar y REGULAR EMPLOYMENT 49. ³Seasonal employment´ where the work or service to be performed by the employee is seasonal in nature and the employment is for the duration of the season. No.which is substantial .can no longer be allowed because the judgment has already become final and executory. the correction . provided. with respect to the activity in which he is employed and his employment shall continue while such activity exists. ³Regular employment´ where. The fallo expressly states the parties liable without mentioning therein that their liability is solidary. 2. whether such service is continuous or broken. 3.R. chanrobles virtual law library . c. work or service is for a definite period made known to the employee at the time of engagement. the employee is allowed to work after a probationary period. ³Project employment´ where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. that any employee who has rendered at least one year of service. and such job. the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. work or service which is merely incidental to the business of the employer. even granting that the Labor Arbiter has committed a mistake in failing to indicate in the dispositive portion that the liability of respondents therein is solidary. the employee has rendered at least one year of service. What are the kinds of employment? 1. May 11. In this case.

may acquire the status of a regular employee when the following factors concur: . 6. The status of regular employment attaches to the casual worker on the day immediately after the end of the first year of service. "Part-time employment´ is a single. the employment is also considered regular but only with respect to such activity and while such activity exists. NLRC. even if the performance is not continuous or merely intermittent. 15. (Tan vs. 2005). effect. G. 51. CA. (Kay Products. R. Hence. Repeated rehiring. They also include contracts to which the parties by free choice. 2002). according to Maraguinot.5. seasonal or for specific projects with pre-determined dates of completion provided under the Labor Code. ³Fixed-period employment´ contracts are not limited to those by nature. Aug. G. vs. 162472. 556 (1998)]. July 28. If the employee has been performing the job for at least one year. chanrobles virtual law library 50. No. Casual employee becomes regular after one year of service by operation of law. vs. 52. chanrobles virtual law library b. 7. Inc. [284 SCRA 539. ³Probationary employment´ where the employee is on trial by an employer during which the employer determines the qualification of the employee for regular employment. When does a casual employee become a regular employee? a. No. regular or voluntary form of employment with hours of work substantially shorter than those considered as normal in the establishment. 151228. R. there is no more need to dwell further on the question of whether or not they had rendered one (1) year of service (regularity of employment by period of service) under the second paragraph thereof which applies only to casual employees. What is the concept of regular and casual employment? Once it is established that the employees are regular under the first paragraph of Article 280 (regularity of employment by nature of work). the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Lagrama. Jr. When may a project employee become regular employee? A project employee. have assigned a specific date of termination.

not separated from service but merely on leave of absence without pay until they are reemployed in another project. Court of Appeals. 5. [345 Phil. chanrobles virtual law library Project employment is akin to seasonal employment. There must also be a determination of. The term ³project employee´ has also been equated to seasonal employee where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. 2004]. G. (Maraguinot. (Magcalas vs. March 31. 1998).(1) There is a continuous (as opposed to intermittent) rehiring of project employees even after cessation of a project for the same tasks or nature of tasks. No. carpenters and fine graders in petitioner¶s various construction projects. to be exempted from the presumption of regularity of employment. (Mercado vs. the employment of project employees is not severed but merely suspended after the completion of the project. No. As held in Violeta vs. The employees are. NLRC. Sept. [G. In Chua vs. 1991. It is not enough that an employee is hired for a specific project or phase of work. 114734. the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved. Like regular seasonal employees. R. Jan. R. NLRC. March 13. The facts. Article 280 states that regular employees are those whose work is necessary or desirable to the usual business of the employer. Regular employees cannot certainly be at the same time project employees. R. NLRC. 762 (1997)]. 2000). show that as masons. R. 1997. 201 SCRA 332). 468). October 6. strictly speaking. 269 SCRA 453. 125837. 100333. and (2) The tasks performed by the alleged ³project employee´ are vital. (See also Imbuido vs. No. Regular employment is inconsistent with project employment. they performed work which was usually necessary and desirable to petitioner¶s business which involves construction of roads and bridges. 120969. 22. the petitioner-employer insisted that the employees were project employees . G. G. or a clear agreement on. R. NLRC. vs. The two exceptions mentioned therein following the general description of regular employees refer to either project or seasonal employees. 79869. NLRC. G. the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. however. necessary and indispensab le to the usual business or trade of the employer. Jr. No. No. .

vs. 2000]. did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code. R. 114290. C. or legally dissolve. (Raycor Aircontrol Systems. 1992]. Sept. 156748. 447.[a] and [b].M. R. No. not to project employees. The practice was dictated by the practical consideration that experienced construction workers are more preferred. [348 SCRA 441. (See also Millares vs. 385 SCRA 306 [2002]). Some phases of the project are completed ahead of others. . Series of 1993. in the construction industry. however. Inc. the last day of service with the employer in the preceding project should be indicated in the employment agreement. In such a case. the Supreme Court ruled that ³the length of service of a project employee is not the controlling test of employment tenure but whether or not µthe employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. The second paragraph of Article 280 of the Labor Code providing that an employee who has served for at least one (1) year shall be considered a regular employee. 8. not determinant of regularity of employment. NLRC. Consunji. 9. Series of 1993).¶´ In Cioco vs. the project employee may be re-hired for another undertaking provided. No. For this reason. makes specific exception with respect to projec t employment. Inc. January 9. NLRC. E. Meanwhile. vs. those employed in a particular phase of a construction project are also not separated at the same time. 19. the completion of a phase of the project is considered the completion of the project for an employee employed in s uch phase. citing Rada vs. Department Order No. less and less employees are required as the phase draws closer to completion. it was emphasized that the fact that the workers have been employed with the company for several years on various projects. their status as project employees. NLRC. NLRC. the employees of a particular project are not separated from work at the same time. Sept. Normally. [205 SCRA 69. Length of service. The simple fact that the employment as project emplo yees has gone beyond one (1) year does not detract from. G. December 18. In D. Construction Corporation. that such rehiring conforms with the provisions of law and Department Order No. relates to casual employees. 2004]. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. Upon completion of the project or a phase thereof. 19.3.Moreover. (Section 2. the longest being nine (9) years. It did not change their status as project employees. 1996). [G.

are legally entitled to remain in the service of their employer until that service is terminated by one or . the employees are removed from the scope of project employees and they shall be considered regular employees. [G. NLRC. G. NLRC. [G. vs. vs.The same holding was made in Filipinas Pre -Fabricated Building Systems [Filsystems]. it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital. private respondent had been a project employee several times over. Consequently. is extended long after the supposed project had been finished. 104444-49. 27. Regular employees. 1997). however. R. NLRC. Nos. Where the employment of project employees. Puente. 116781. in contrast. 2005] where the employee involved was employed with the company for ten (10) years in various projects. The Supreme Court said that such length of time did not ipso facto make him a regular employee or change his status as a project employee. 2005]. (Phesco. R. When length of service of project employee indicates regularity of employment. (Tomas Lao Construction. chanrobles virtual law library Termination of employment of project and regular employees. his employment was held to have ceased to be coterminous with specific projects when he was repeatedly re-hired due to the demands of petitioner¶s business. No. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee. Inc. No. 1994). 153832. For while length of time may not be a controlling test for project employment. morals. 5. No. distinguished. vs. 152427. vs. they should be struck down as contrary to public policy. The services of project employees are coterminous with the project and may be terminated upon the end or completion of the project for which they were hired. August 9. R. in Integrated Contractor and Plumbing Works. necessary and indispensable to the usual business or trade of the employer as when the employees had already gone through the status of project employees and their employments became non-coterminous with specific projects when they started to be continuously re-hired due to the demands of the employer¶s bus iness and were re-engaged for many more projects without interruption. Repeated extensions of the employment contracts long after the completion of the project for which they were allegedly hired will make them regular employees. March 18. Thus. Sept. good customs or public order. G. Inc. Inc. Dec. R.

Policy Instructions No. 1993] which superseded said Policy Instructions. the law merely requires that the employer should render a report to the DOLE on the termination of the employment. Nov. No. G. Inc.or the phase of work therein to which respondent had been assigned . R. their employment legally ends upon completion of said project. vs. Reinstatement with full back wages. Department Order No.computed from the . 24. 2005]. in which one is employed. inclusive of allowances and other benefits or their monetary equivalents . 153832. There is no allegation or proof. 234 SCRA 678). E. 1999). R. NLRC. E. 24. Sept. 2004). R. however. No. (Association of Trade Unions [ATU] vs. 8. hence. 156748. did not eradicate the notice requirement but. ALU-TUCP vs. instead. Notice of termination. March 18. No. 1999. R. The legal effects of termination of project employees is best exemplified by the 2005 case of Filipinas Pre-Fabricated Building Systems [Filsystems]. 114671. No. the date when he was dismissed. (Salinas vs. 156748. the termination was illegal. (Cioco vs. 8. 2000). [G. petitioners claim that respondent-employee¶s services were terminated due to the completion of the project. The termination of their employment could not be regarded as illegal dismissal.was already completed by October 1. The inescapable presumption is that his services were terminated for no valid cause prior to the expiration of the period of his employment. that the World Finance Plaza project . (Cioco vs. G. 100518. Being project employees whose nature of employment they were fully informed about at the time of their engagement. Jan. [April 1. NLRC. Puente. Abella. C. 19. C. report to DOLE necessary. G. NLRC. Legal consequences of termination of project employment. Here. Sept. This is because completion of the work or project automatically terminates the employment. Construction Corporation. Accordingly. 2004). 20 required the employer-company to report to the nearest Public Employment Office the fact of termination of project employees as a result of the completion of the project or any phase thereof. enshrined it as one of the ³indicators´ that a worker is a project employee. (Magcalas vs. R. instead of the notice of termination to the affected project employees upon completion of the project.another of the recognized modes of termination of service under the Labor Code. Construction Corporation. G. supra. No. not required. No prior notice of termination is required if the termination is brought about by completion of the contract or phase thereof for which the worker has been engaged.

et al. petitioner was preferred because of practical considerations ± namely. March 14.is thus in order. August 20. specifically from the time of the termination of his employment on October 1. R. Clearly. supra). Adorable. 2002). even if the contract provides for an unlimited period. That overseas Filipino workers cannot acquire regularity of employment was reiterated in the 2004 case of Gu-Miro vs. vs. this does not alter the status of his employment from being contractual. [G. 2004] and in the 2005 case of Ravago vs. 160952. as clearly expounded in the above-mentioned cases. 158324. R. chanrobles virtual law library . (Millares. 110524. vs. 2002. 53. the same is not valid as it contravenes the explicit provision of the said POEA Rules and Regulations on fixed period employment. 2000). 1999. However. July 27. G. Ltd. until the date of the completion of the World Finance Plaza project. they can never become regular employees because their employment contract is for a fixed term.can no longer be reinstated. May OFWs acquire regularity of employment? No. R. No. (Gu -Miro vs. an OFW cannot be considered a regular employee notwithstanding the fact that the work he performs is necessary and desirable in the business of the company. No. And as held in Pentagon International Shipping. [G. 2004]. The exigencies of their work necessitates that they be employed on a contractual basis. then respondent . Adelantar. NLRC. Esso Eastern Marine. In the same Gu-Miro case [supra]. the Supreme Court ruled that OFWs can become regular employees]. Adorable. [Note: in the first decision in the same case (March 14.being a project employee . chanrobles virtual law library OFWs do not become regular employees by reason of nature of work. R. No.date of his dismissal until his reinstatement . this should be interpreted not as a basis for regularization but rather as a series of contract renewals sanctioned under the doctrine set down by the second Millares case [supra] rendered on July 29. his experience and qualifications. [G. July 29. Instead. it was stated that even with the continued re-hiring by the company of the OFW to serve as Radio Offic er on board the employer¶s different vessels. If at all. However. if indeed the World Finance Plaza project has already been completed during the pendency of this suit. he shall be entitled to the payment of his salary and other benefits corresponding to the unexpired portion of his employment. Inc. No.. 157373. 2005].

the decision to use the vessel for coastwise shipping was made by petitioner only and did not bear the written conformity of private respondent. For respondent-workers to be excluded from those classified as regular employees. condition. January 28. 149440. A contract cannot be novated by the will of only one party. it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. which was the rendition of service by private respondent on board the vessel. No. then. becaus e its object was allegedly absent. Petitioner cannot use its own misfeasance to defeat his claim. [G. Millares vs.Food and General Trade. R. the petitioner does not deny hiring private respondent Guerrero as master mariner. but are merely considered on leave until re-employed. Not being considered regular or permanent employees under Article 280. 2003) The 2003 case of Hacienda Fatima vs. National Federation of Sugarcane Workers -Food and General Trade (G. 138193. Contrary to petitioner¶s contention. 2003]. What is regular seasonal employment? Is it valid? Yes. NLRC. effect. OFWs¶ employment automatically cease upon the expiration of their contracts. the contract had an object. R. supra. Hiring of seaman for overseas employment but assigning him to local vessel. Petitioner contends that using the vessel in coastwise trade and subsequently chartering it to another principal had the effect of novating the employment contract. NLRC. Esso Eastern Marine. (Hacienda Fatima vs. National Federation of Sugarcane Workers . reiterated this rule. If the evidence proves the existence of the first. [G. chanrobles virtual law library In OSM Shipping Philippines. the workers . his employment contract became ineffective. supra). Inc. The validity of regular seasonal employment has been affirmed by the Supreme Court in a plethora of cases. vs. March 5. No. After all . 149440. R. The Supreme Court was not persuaded by this argument. The claim of petitioner that it processed the con tract of private respondent with the POEA only after he had started working is also without merit. 2003]. January 28. it argues that since he was not deployed overseas. However. but not of the second. No. Ltd. chanrobles virtual law library Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from the service in said period.The contracts of OFWs cease upon expiration thereof.. 54. (Ravago vs. The non -deployment of the ship overseas did not affect the validity of the perfected employment contract.

April 15. Inc. chanrobles virtual law library Failure to re-hire regular seasonal employee for next season amounts to illegal dismissal. G. Fadriquela. No. Where there is no showing of cl ear. (Hacienda Fatima vs.not seasonal . 2004). R.]. without any force. 1993]. 141717. (Philips Semiconductors [Phils. supra). Inc. No. The refusal of the employer to furnish work to regular seasonal workers would amount to illegal dismissal. 97747. they are regular . No. Therefore. What are the criteria for fixed conracts of employment? In the case of Philippine National Oil Company -Energy Development Corporation vs. 2005. Pancho. R. R. 151827. April 29. This is so because alt hough the employer had shown that the employees performed work that was seasonal in nature. the Supreme Court set down two (2) criteria under which fixed contracts of employment cannot be said to be in circumvention of security of tenure. G. In Philips Semiconductors [Phils. The fact that the employees repeatedly worked as sugarcane workers for petitioner-employer for several years is not denied by the petitioners. Cuenca. duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent. Fadriquela. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. 141717. the employer does not deny that the workers have served for several years already. valid and legal cause for the termination of employment. or 2. Benares vs. the former failed to prove that the latter worked only for the duration of one particular season. No. (See also Hacienda Bino/Hortencia Starke. vs. . vs. April 14. In fact. the contract should be struck down for being illegal.have become regular employees. petitioners employed respondents for more than one season. The fixed period of employment was knowingly and voluntarily agreed upon by the parties. R. [G. National Feder ation of Sugarcane Workers ± Food and General Trade. to wit: 1.employees. chanrobles virtual law library If the foregoing criteria are not present. the general rule of regular employment is applicable. the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause. Inc./Hortencia L. [G. NLRC. March 31.]. chanrobles virtual law library 55. [G. Evidently. 2005). No. Starke vs. 150478. Hence. R.

While the petitioners¶ employment as chicken dressers is necess ary and desirable in the usual business of the respondent. the petitioners were hired as ³emergency workers´ and assigned as chicken dressers. No. General Milling Corporation. depending upon the needs of its customers. As such. 149329. there was no illegal dismissal when the petitioners¶ services were terminated by reason of the expiration of their contracts. No. R. [G. (Pangilinan vs. 612 dated June 7. it may hire and retire workers on fixed terms. 2000]. domestic and international. General Milling Corporation. Philippine Veterans Bank. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee¶s duties. chanrobles virtual law library In the 2000 case of Medenilla vs. 2004]. 1985. 2004). they cannot be said to be regular employees. and is a distributor of dressed chicken. G. 1985. 149329. all of them were required to sign employment contracts which provided that ³[t]he employment shall be on a strictly tempo rary basis and only for the duration of the particular undertaking for which you are hired and only for the particular days during which actual work is available as determined by the Liquidator or his representatives since the work requirements of the liquidation process merely demand intermittent and temporary rendition . On the same day of their termination. but are merely ³contractual employees. the Supreme Court rejected petitioner¶s submission that it resorted to hiring employees for fixed terms to augment or supplement its regular employment ³for the duration of peak loads´ during short -term surges to respond to cyclical demands. effect if duties are usually necessary or desirable in the employer¶s usual business. Under the petitioner¶s submission. No. chanrobles virtual law library In the 2004 case of Pangilinan vs. July 12. Fixed-term employment.April 14. July 12.´ Consequently. R. any worker hired by it for fixed terms of months or years can never attain regular employment status. the petitioners were employees of the Philippine Veterans Bank (PVB). On June 15. The respondent GMC is a domestic corporation engaged in the production and sale of livestock and poultry. 127673. 2004]. However. It should be noted that it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer. R. March 13. hence. their services were terminated as a result of the liquidation of PVB pursuant to the order of the Monetary Board of the Central Bank embodied in MB Resolutio n No. [G. since their employment was limited to a fixed period. they were employed on a mere temporary basis. packers and helpers at the Cainta Processing Plant of General Milling Corporation (GMC). the parties are forbidden from agreeing on a period of time for the performance of such activities. ad infinitum. petitioners were re-hired through PVB¶s Bank Liquidator.

the petitioner-employees were initially employed on a fixed -term basis as their employment contracts were only for October 8 to 31. No. he figured in a vehicular mishap. December 16. NLRC. [G. he filed against the company a comp laint for illegal dismissal. Furthermore. R. was re-hired on a fixed-term contractual basis of one (1) month. he was dismissed and his contract was no longer renewed. NLRC. 1990. [G. Fifteen (15) years later. 108405. 106654. (Pangilinan vs. dismissed by the bus company for cause. 2003]. Inc. Fifteen days into his one-month employment. a bus driver was. long time ago. did not in any way impair the validity of the contractual nature of private respondents¶ contracts of employment which specifically stipulated that their employment was only for one month. supra. 1992. chanrobles virtual law library Employees allowed to work beyond fixed term become regular employees. it is evident from the records that the subsequent re-hiring of petitioners which was to continue during the period of liquidation and the process of liquidation ended prior to the enactment of RA 7169 entitled. lack of notice of termination is of no consequence because when the contract specifies the period of its duration. February 28. A contract for employment for a definite period terminates by its own term at the end of such period. claiming that he was constructively dismissed because of the refusal of the latter to renew his contract. In the 2004 case of Viernes vs. 218 SCRA 366 [1993]). it terminates on the expiration of such period.of services. [G. No. 105033. R. NLRC. chanrobles virtual law library In the case of Pantranco North Express. vs. holding that his termination was justified and that the one-month fixed-term contract was valid following the consistent rulings in the cases of Brent School. In the case of Philippine Village Hotel vs. 1994]. In a fixed-period employment. General Milling Corporation. After October 31. Notice to terminate not necessary in fixed-term employment. No. The Supreme Court ruled against the complainant. April 4. ³An Act to Rehabilitate Philippine Veterans Bank´. however. he reappeared and out of generosity. R. After investigation. PNOC and Philippine Village Hotel [supra]. Blancaflor vs. 1994]. the Supreme Court ruled that the fact that the private respondents therein were required to render services necessary or desirable in the operation of the petitioner¶s business for the durat ion of the one month dry-run operation period. Later.´ The Supreme Court interpreted this stipulation as a valid form of fixed-term employment. they were allowed to continue working in the . which was promulgated on January 2. NLRC. 1990.

Work rendered for more than one year. April 14. Reinstatement means restoration to a state or condition from which one had been removed or separated. is definitely a regular employee. helpers and maintenance workers. 2004]. By operation of law. Inc. the employment of the employees should no longer be treated as being on a fixed -term basis. the private respondent-workers were hired as gardeners. 1990.]. [G. had been converted into regular employees by the sheer length of service they had rendered for the employer by virtue of the proviso in the second paragraph of Article 280. 274 SCRA 147. petitioner whose business is contracting out general services. R. she had attained the regular status of her employment and is thus entitled to security of tenure . since petitioners are already regular employees at the time of their illeg al dismissal from employment. The Supreme Court ruled that after October 31. [G. effect. In resolving the issue of whether they had become regular employees. In the 2004 case of Philips Semiconductors [Phils. The complexion of the employment relationship of the employees and private respondent-employer is thereby totally changed. June 19. NLRC. vs. The continuing need for her services is sufficient evidence of the necessity and indispensability of her services to the company¶s business. No. Successive renewal of fixed-period contracts. In Megascope General Services vs. 1997. they are entitled to be reinstated to their former position as regular employees. Fadriquela. then. In hiring laborers. not merely as probationary employees (since they never were engaged on probationary basis). not only an employmen t relationship is deemed to exist between them but the workers. 109224. No. if the worker has worked for more than a year and there is a reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. 156]. Petitioner employees have attained the status of regular employees. although hired initially as contractual employees. Such re-employment was but a catch-all excuse to prevent her regularization.same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. R. would give them work from 5 to 10 days as the need arose and there were periodical gaps in the hiring of employees. 141717. the Supreme Court pronounced that even if there was a contrary agreement between the parties. effect. it was ruled that an employee who has been engaged to perform work which is necessary or desirable in the business or trade of the company and whose original contract of employment had been extended or renewed for four (4) times ranging from two to three months over a period of one year and twenty-eight days to the same position. with the same chores and who remained in the employ of the company without any interruption. Hence.

respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work.O. he became a regular employee. by operation of law. After five months. the workers would then be paid their wages at the end of the day. R. engaged the services of respondent workers as ³sales route helpers´ for a limited period of five months. R. 2003]. 70705. According to petitioner company. 122653. In declaring that the workers have become regular employees. 1997. Owing to the worker¶s length of service with the company and considering that the nature of his work is usually necessary or desirable in the usual trade or business of the company. on e year after he was employed. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company. sick leave.´ A contract which states that the employment of the worker ³shall be on a day-to-day basis for a temporary period´ and that the same may be terminated at any time without liability to the employer other than for salary actually earned up to and including the date of last service. R.). In Pure Foods Corporation vs. Ultimately. [G. 21. No. G. Inc. (Baguio Country Club Corporation vs. vs.. In the 2003 case of Magsalin & Coca-Cola Bottlers Phils. NLRC. the scheme of the employer in hiring workers on a uniformly fixed contract basis of 5 months and replacing them upon the expiration of their contracts with other workers with the same employment status was found to have been designed to prevent the ³casual´ employees from attaining the status of a regular employee. No. 283 SCRA 133]. If thus hired. NLRC. May 9. 1992. No. and 13th month pay. respondent workers were employed by petitioner co mpany on a day-to-day basis. holiday pay.as provided for in Article 279 of the Labor Code. It was a clear circumvention of the employee¶s right to security of tenure and to other benefits like minimum wage. NLRC G. No. chanrobles virtual law library Hiring of employees on a 5-month period basis. National Organization of Working Men (N. cost-of-living allowance.W. the Supreme Court reasoned that the repeated rehiring of respondent workers and the .M.. 28. Inc. The court rigorously disapproves such contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection sanctioned by the Labor Code. R. De Leon vs. 148492. Coca-Cola Bottlers Phils. Aug. 1989). Employment on a ³day-to-day basis for a temporary period. 71664. [G. 12. Feb. is a contract which has the purpose of circumventing the employee¶s security of tenure. respondent workers asked petitioner company to extend to them regular appointments. Dec.. Petitioner company refused.

continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. More so here where the Court of Appeals has found each of respondents to have worked for at least one year with petitioner company. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness between labor and capital. chanrobles virtual law library Employment on ³as the need arises´ basis. In the same 2004 case of Philips Semicond uctors [supra], the employer¶s general and catch-all submission that its policy for a specific and limited period on an ³as the need arises´ basis is not prohibited by law or abhorred by the Constitution; and that there is nothing essentially contradictory between a definite period of employment and the nature of the employee¶s duties, was rejected and struck down by the Supreme Court for being contrary to law. Illegal dismissal of fixed-term employee, liability is only for salary for unexpired portion. As held in the case of Medenilla vs. Philippine Veterans Bank, [G. R. No. 127673, March 13, 2000], if the contract is for a fixed term and the employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unex pired portion of the employment contract. 56. May part-time workers attain regularity of employment? Yes. Probationary employment of part-time employees. Using the legal principles enunciated in Article 281 of the Labor Code on probationary employment vis-à-vis Article 13 of the Civil Code on the proper reckoning of periods, a part-time employee shall become regular in status after working for such number of hours or days which equates to or completes a six-month probationary period in the same establishment doing the same job under the employment contract.

Once a part-time employee becomes a regular employee, he is entitled to security of tenure under the law and he can only be separated for a just or authorized cause and after due process. Indicators of regular employment of part-time employees. One may know if a part-time worker is a regular employee if any of the following conditions exist: a.the terms of his employment show that he is engaged as regular or permanent employee; b.the terms of his employment indicate that he is employed for an indefinite period; chanrobles virtual law library c.he has been engaged for a probationary period and has continued in his employment even after the expiration of the probationary period; or d.the employee performs activities which are usually necessary or desirable in the usual business or trade of the employer. On the other hand, where the employment contract is fixed or for a definite period only as contemplated by law, part-time employees are likewise entitled to tenurial rights during the entire period of their fixed employment. In other words, they cannot be separated from work without just or authorized cause. In the 2003 case of Philippine Airlines, Inc. vs. Pascua, [G. R. No. 143258, August 15, 2003], involving the regularization of part-time workers to full-time workers, the Supreme Court ruled that although the respondent-employees were initially hired as part -time employees for one year, thereafter the over-all circumstances with respect to duties assigned to them, number of hours they were permitted to work including overtime, and the extension of employment beyond two years can only lead to one conclusion: that they should be declared full -time employees. PROBATIONARY EMPLOYMENT 57. Who is a probationary employee? A probationary employee is one who, for a given period of time, is on observation, evaluation and trial by an employer during which the employer determines whether or not he is qualified for permanent employment. During the probationary period, the employer is given the opportunity to observe the skill, competence, attitude and fitness of the employee while the latter seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. (De la Cruz, Jr. vs. NLRC, G. R. No. 145417, Dec. 11,

2003). The word ³probationary´ is appropriately used to underscore the objective or purpose of the period, and not its length which is immaterial. (International Catholic Migration Commission vs. NLRC, G. R. No. 72222, Jan. 30, 1989). The length of time is immaterial in determining the correlative rights of both the employer and the employee in dealing with each other during said period. (Escorpizo vs. University of Baguio, 306 SCRA 497, 507 [1999]). 58. What is the period of probationary employment? General rule. - Probationary period should not exceed six (6) months from the date the employee started working. One becomes a regular employee upon completion of his six-month period of probation. Exceptions. - The six (6) months period provided in the law admits of certain exceptions such as: 1. when the employer and the employee mutually agree on a shorter or longer period; chanrobles virtual law library 2. when the nature of work to be performed by the employee requires a longer period; 3. when a longer period is required and established by company policy. In Buiser vs. Leogardo, (G. R. No. L-63316, July 13, 1984), the Supreme Court considered the probationary period of employmen t of eighteen (18) months as valid since it was shown that the company needs at least 18 months to determine the character and selling capabilities of the employees as sales representatives. 59. May probationary employment be extended? Extension of probationary period. - Probationary period of employment may be extended provided there is mutual consent thereto by the employer and the employee. Employer¶s act of rehiring a probationary employee, effect. The act of the employer in repetitively rehir ing a probationary employee negates the former¶s claim that the latter failed to qualify as a regular employee. As held in Octaviano, vs. NLRC, [G. R. No. 88636, Oct. 3, 1991], these successive hirings and firings are a ploy to avoid the obligations imposed by law on employers for the protection and benefit of

probationary employees who, more often than not, are kept in the bondage, so to speak, of unending probationary employment without any complaint due to the serious unemployment problem besetting the country. If no stipulation on probationary period, employment is deemed regular. In the case of ATCI Overseas Corporation vs. CA, [G. R. No. 143949, August 9, 2001], it was ruled that in the absence of any evidence that there is a provision in the employ ment contract providing for a probationary period, or that the employees were apprised of the fact that they were to be placed on probationary status and the requirements that they should comply with in order to qualify as regular employees, no other conclusion can be drawn but that they were regular employees at the time they were dismissed. Probationary employment cannot be ad infinitum. In the 2005 case of Voyeur Visage Studio, Inc. vs. CA, [G. R. No. 144939, March 18, 2005], the Supreme Court had occasion to reiterate its earlier ruling in Bernardo vs. NLRC, [310 SCRA 186 (1999)] that ³Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum. The contract signed by petitioners is akin to a probationary employment during which the bank determined the employees¶ fitness for the job. When the bank renewed the contract after the lapse of the six -month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees.´ (Emphasis supplied) 60. How should the six-month probationary period be computed? The computation of the 6-month probationary period should be reckoned from the date of appointment up to the same calendar date of the 6th month following. (Cals Poultry Supply Corp. vs. Roco G.R. No.150660. July 30, 2002). However, in the 2004 case of Mitsubishi Motors Ph ilippines Corporation vs. Chrysler Philippines Labor Union, [G. R. No. 148738, June 29, 2004], the Supreme Court, in reckoning the probationary period, applied to the letter, Article 13 of the Civil Code which basically states: chanrobles virtual law libra ry ³Article 13. When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty -five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise.

³If months are designated by their name, they shall be computed by the number of days which they respectively have. chanrobles virtual law library ³In computing a period, the first day shall be excluded, and the last day included.´ In this case, the respondent employee (Paras) was employed as a management trainee on a probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996. As per the company¶s policy, the probationary period was from three (3) months to a maximum of six (6) months. Applying said Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days. chanrobles virtual law library As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded an d the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. Consequently, when the termination letter dated November 25, 1996 was served on respondent Paras at 3:00 a.m. of November 26, 1996, he was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code. chanrobles virtual law library But in the earlier case of Cebu Royal vs. Deputy Minister of Labor, [153 SCRA 38 (1987)], the 6-month probationary period was reckoned from the date of appointment up to the same calendar date of the 6th month following. The 2002 case of Cals Poultry Supply Corporation vs. Roco, [G. R. No. 150660, July 30, 2002], followed the said reckoning/computation enunciated in the Cebu Royal case [supra]. In this case, the probationary employee was hired on May 16, 1995 and her services were terminated on November 15, 1995. The Court of Appeals set aside the NLRC ruling on the ground that at the time the probationary employee¶s serv ices were terminated, she had attained the status of a regular employee as the termination on November 15, 1995 was effected four (4) days after the 6-month probationary period had expired, hence, she is entitled to security of tenure in accordance with Article 281 of the Labor Code.

Petitioner Cals argues that the Court of Appeals¶ computation of the 6 month probationary period is erroneous as the termination of the probationary employee¶s services on November 15, 1995 was exactly on the last day of the 6-month period. Citing Cebu Royal [supra], the Supreme Court agreed with petitioner Cals¶ contention as upheld by both the Labor Arbiter and the NLRC that the probationary employee¶s services were terminated within and not beyond the 6-month probationary period. 61. Standards should be made known to employee at start of engagement. The rudiments of due process demand that an employee should be apprised beforehand of the conditions of his employment and the basis for his advancement. (Servidad vs. NLRC, G. R. No. 128682, March 18, 1999; Orient Express Philippines, vs. NLRC, G. R. No. 113713, June 11, 1997). If standards are not made known to the employee at start of employment, he is deemed a regular employee from day one. According to the Rules to Implement the Labor Code, in all cases of probationary employment, the employer should make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he should be deemed a regular employee. (Section 6 [d], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article V, Department Order No. 10, Series of 1997). This rule was applied in the 2005 case of Clarion Printing House, In c. vs. NLRC, [G. R. No. 148372, June 27, 2005], where it was held that since at the time the employee was hired on probationary basis she was not informed of the standards that would qualify her as a regular employee, she was deemed to have been hired from day one as a regular employee. (See also Cielo vs. NLRC, 193 SCRA 410, 418 [1991]). However, in the case of Aberdeen Court, Inc. vs. Agustin, Jr., [G. R. No. 149371, April 13, 2005], the Supreme Court cautioned that the above rule should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met. In this case, the electrical engineer undergoing probationary employment was dismissed because he failed in the performance of his task as such. Quoting with approval the findings of the NLRC, the Supreme Court ruled: ³It bears stressing that even if technically the reading of air exhaust balancing is not within the realm of expertise of the complainant, still it ought not to be missed that prudence and due diligence imposed upon

him not to readily accept the report handed to him by the workers of Centigrade Industries. Required of the complainant was that he himself proceed to the work area, inquire from the workers as to any difficulties encountered, problems fixed and otherwise observe for himself the progress and/or condition/quality of the work performed. chanrobles virtual law library ³As it is, We find it hard to believe that complainant would just have been made to sign the report to signify his presence. By saying so, complainant is inadvertently degrading himself from an electrical engineer to a mere watchdog. It is in this regard that We concur with the respondents that by his omission, lack of concern and grasp of basic knowledge and common sense, complainant has shown himself to be undeserving of continued employment from probationary employee to regular employee.´ 62. What is the effect of allowing an employee to work beyond the probationary period? An employee who is allowed to work after a probationary period is considered a regular employee. (Article 281, Labor Code; Philippine National Bank vs. Cabansag, G. R. No. 157010, June 21, 2005). chanrobles virtual
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An employee who is allowed to work after a probationary period shall be considered a regular employee. Thus, in one case, an employee was considered already on permanent status when he was dismissed four (4) days after he ceased to be a probationer. (Cals Poultry Supply Corp. vs. Roco G.R. No.150660. July 30, 2002). 63. What are the grounds to terminate probationary employment? Under Article 281, a probationary employee may be terminated on two (2) grounds, to wit: (a) for a just cause; or (b)when employee fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the start of the employment. (Aberdeen Court, Inc. vs. Agustin, Jr., G. R. No. 149371, April 13, 2005). Assignment to a job different from that applied for. In the 3005 case of Athenna International Manpower Services, Inc. vs. Villanos, [G. R. No. 151303, April 15, 2005], the OFW was terminated while, as alleged by petitioner, still undergoing probationary employment for a period of forty (40) days. In declaring the termination as illegal, the

Supreme Court ruled that even assuming respondent was a mere probationary employee as claimed by petitioner, respondent could only be terminated for a pertinent and just cause, such as when he fails to qualify as a regular employee in accordance with reasonable standards of employment made known to him by his employer at the time of his engagement. Here, it appears that the petitioner failed to prove that, at the time of respondent¶s engagement, the employer¶s reasonable standards for the job were made known to respondent. Moreover, in this case, respondent was assigned to a job different from the one he applied and was hired for. Termination due to poor performance; effect of high performance rating after temporary reinstatement. A probationary employee was dismissed in Lucero vs. CA, [G. R. No. 152032, July 3, 2003], for unsatisfactory performance prior to the expiration of his probationary employment. He was ordered reinstated by the NLRC while the case was pending appeal. During the period of his reinstatement, he was given a high rating of ³very satisfactory´ in his work performance. The Supreme Court, however, did not give any weight to said high rating. It ruled: ³It would be difficult to sustain the stand taken by petitioner that the Court of Appeals erred in ignoring his subsequent high performance rating. The high rating of ³very satisfactory´ obtained by petitioner after his reinstatement, in compliance with the order of the NLRC, was not controlling, the point in question being his performance during the probationary period of the employment.´ Peremptory termination of probationary employment. In the 2003 case of Cebu Marine Beach Resort vs. NLRC, [G. R. No. 143252, October 23, 2003], the respondents-probationary employees, while undergoing special training in Japanese customs, traditions, discipline as well as hotel and resort services of the newly opened resort, were suddenly scolded by the Japanese conducting the training and hurled brooms, floor maps, iron trays, fire hoses and other things at them. In protest, respondents staged a walk-out and gathered in front of the resort. Immediately, the Japanese reacted by shouting at them to go home and never to report back to work. Heeding his directive, respondents left the premises. Eventually, they filed a complaint for illegal dismissal and other monetary claims against petitioners. chanrobles virtual
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The Supreme Court, in holding that the dismissal of the probationary employees were illegal, ruled that the respondents could not have failed to qualify for their positions since at the time they were dismissed, they were still in a ³trial period´ or probationary period. Being in the nature of a ³trial period,´ the essence of a probationary period of employment

and (e) Other causes analogous to the foregoing. 158693. NLRC. on the other hand. Agustin. 2004]. the doctrinal ruling in the leading case of Agabon vs..R. Inc.fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment which obviously were made known to him. the probationer. TERMINATION OF EMPLOYMENT BY THE EMPLOYER JUST CAUSES FOR TERMINATION OF EMPLOYMENT 64. G. November 17. No. the employer is liable for nominal damages in the amount of P30. Jr. 65. R. in the case at bar. [G. it was held that if a probationary employee was dismissed for just cause but without affording him the required notice. petitioners peremptorily dismissed them fro m the service. propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment. Consequently. No. far from allowing the respondents to prove that they possessed the qualifications to meet the reasonable standards for their permanent employment. shall apply. 149371. Agabon doctrine applies if dismissal of probationary employee is without due process. (b) Gross and habitual neglect by the employee of his duties. To reiterate. (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives. What is serious misconduct? . vs. April 13. 2005]. In the 2005 case of Aberdeen Court.000. What are the just causes for termination of employment under Article 282 of the Labor Code? 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. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. While the employer observes the fitness.

the Supreme Court ruled in a 2000 case that the act of the employee in throwing a stapler and uttering abusive language upon the person of the plant manager may be considered from a layman¶s perspective as a serious misconduct. 1987. [G.Requisites. Inc. However. a series of irregularities when put together may constitute serious misconduct. may constitute serious misconduct. Wyeth Phils. (Piedad vs. a valid ground to termi nate employment. Aug. 149629. 31. April 8. No.. An employee¶s fitness for continued employment cannot be compartmentalized or taken in isolation from one act to another. 158232. it must have been done in relation to the performance of her duties as would show her to be unfit to continue . Applying the foregoing standards. There is no showing that the sending of such e-mail message had any bearing or relation on respondent¶s competence and proficiency in his job. the respondent¶s act of sending an e-mail message as an expression of sympathy for the plight of a superior can hardly be characterized as serious misconduct as to merit the penalty of dismissal. the Supreme Court ruled that his dismissal from the service is in order. No. Lanao del Norte Electric Cooperative. G. in order to consider it a serious misconduct that would justify dismissal under the law. Oct. 2005]. may constitute serious misconduct. R. when put together. in order to consider it a serious misconduct that would justify dismissal under the law. (Gustilo vs. G. A series of irregularities. the act must have been done in relation to the performance of his duties as would show him to be unfit to continue working for his employer.. 2004). 73735.. (b) it must relate to the performance of the employee¶s duties. To reiterate. chanrobles virtual law library In a 2004 case where the employee was shown to have committed various violations of the company¶s rules and regulations. CA. when considered together or in their entirety. R. and (c) it must show that the employee has become unfit to continue working for the employer. 153 SCRA 500). Inc.For misconduct or improper behavior to be a just cause for dismissal: (a) it must be serious. R. Indeed.. Throwing a stapler and uttering invectives against a plant manager. In the 2005 case of Fujitsu Computer Products Corporation of the Philippines vs. chanrobles virtual law library Series of irregularities. No. 4.

R. For instance. even if he was instigated to take drugs he has no right to be reinstated to his position. 152329. No. Inc. G. It cannot be used as a shield against dismissal fro m employment especially when the position involves the safety of human lives. In the 2003 case of Roquero vs. she cannot be held in violation therefor. (Philippine Aeolus Automotive United Corporation vs. immorality was defined as a course of conduct which offends the morals of the community and is a bad example to the youth whose ideals a teacher is supposed to foster . Instigation is only a defense against criminal liability. April 28. Use of shabu. His failure to do his job can mean great loss of lives and properties. the Supreme Court affirmed the validity of the dismissal of petitioner who was caught red -handed possessing and using methampethamine hydrochloride or shabu in a raid conducted inside the company premises by PAL security officers and NARCOM personnel. did not in any way pertain to her duties as a nurse. 2000). under the circumstances they were done. The standard to be used to determine whether the immoral conduct adversely affects the interest of the employer is whether the immoral act is of such nature which may be considered calculated to undermine or injure such interest or which would make the worker incapable of performing his work. Hence. As a general rule. The acts complained of. [G. Hence.. He cannot discharge that duty if he is a drug user. R.´ Immorality. Said the Supreme Court: ³It is of public knowledge that drugs can damage the mental faculties of the user. the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse. NLRC. Philippine Air Lines. No. Roquero was tasked with the repair and maintenance of PAL¶s airplanes. in a case involving a teacher.working for her employer. April 22. immorality is not a just ground to terminate employment. He took the drugs fully knowing that he was on duty and more so that it is prohibited by company rules. Also. valid ground to terminate employment. 2003]. Her employment identification card discloses the nature of her employment as a nurse and no other. There is no question that the possession and use by an employee of methampethamine hydrochloride or shabu is a just cause to terminate employment as it constitutes s erious misconduct under Article 282 of the Labor Code. 124617. The exception is when such immoral conduct is prejudicial or detrimental to the interest of the employer.

NLRC. the gravity and seriousness of the charges against the teacher stem from his being a married man and at the same time a teacher. he failed to set a good example to the several personnel under him. (Stanford Microsystems. 115795. G. In another case. such behavior amounts to immorality. The school utterly failed to show that petitioner took advantage of her position to court her student. A security coordinator committed serious breaches of company rules when he caused the introduction of intoxicating liquor into the premises which he drank with another guard on duty. 287 SCRA 117). the same including sexual misconduct. justifying his termination from employment. 1988). No. July 14. NLRC. The act of a 30-year old lady teacher. and allowed two female security guards to come inside the Security Office and had sexual intercourse with one of them on top of the desk of the Security Head. Jan. when a teacher engages in extra-marital relationship. But. L-74187. 1998. vs. of falling in love with her student whose age is 16. No. Thus. yielding to this gentle and universal emotion is not to be so casually equated with . 1995). Sexual intercourse inside company premises constitutes serious misconduct. The act of sexually harassing a co -employee within the company premises (ladies¶ dormitory) even after office hours is a work -related matter considering that the peace of the company is thereby affected. March 6. the dismissal of the supervisor who maintained a concubine and practically drove his family away because of his illicit relationship was held legal. The act of a lady teacher in falling in love with a student. (Santos. Inc. Therefore. especially when the parties are both married. G. Damasco. 101875. R. not immoral. G. is not an immoral act which would justify the termination of her employment. R. this only lends substance to the truism that the heart has reasons of its own which reason does not know.and to elevate. Ang Tibay. As supervisor. (Navarro III vs. The Code of Employee Discipline is very clear that immoral conduct ³within the company premises regardless of whether or not [it is] committed during working time´ is punishable. definitely. vs. (Sanchez vs. G. 28. Jr. chanrobles virtual law library Immoral act committed beyond office hours. R. 4515). No. If the two eventually fell in love despite the disparity of t heir ages and academic levels. while the other guard pretended to be asleep during all the time that the lustful act was commenced until consummated. 54 O.

NLRC. insulting or offensive language against his superior is not only destructive of the morale of his co employees and a violation of the company rules and regulations. NLRC. 296 SCRA 432. No. Such act adversely affects the employer¶s interests for it distracts employees. 25. R. within company premises in which an employee is involved would warrant his dismissal. The fact that an employee filed a criminal case against the other employee involved in a fight while the latter did not. Not every fight. Sept. vs. (Chua-Qua vs. 1998). does not necessa rily mean that the former was the aggrieved party. This is especially true when the employee concerned did not instigate the fight and was in fact the victim who was constrained to defend himself. 25. No. (Autobus Workers¶ . Utterance of obscene. 3. R. R. the dismissal of the employee w ho figured in the fight was considered too harsh a penalty. considering the length of service and the surrounding circumstances of the incident. L-49549. Aug. No. 125548. G. vs. 75436. disrupts operations and creates a hostile work atmosphere. vs. NLRC. 30. Barreda. Sept. And in another case where the fight occurred outside the work premises and did not lead to any disruption of work or any hostile environment in the work premises. This attitude towards a supervisor amounted to insubordination and conduct unbecoming of an employee which should merit the penalty of dismissal.. G. the Supreme Court ruled that the penalty of dismissal was not commensurate with the misconduct. Fighting within work premises may be deemed a valid ground for the dismissal of an employee. Clave. No. G. (Flores vs. 1998. R. 1999). G. R. Aug. 1990). Sept. Inc. No. 21. but also constitutes gross misconduct which is one of the grounds prov ided for by law to terminate the services of an employee. 441). NLRC.immorality. (Garcia vs. (Solvic Industrial Corp. G. The deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores. insulting or offensive words constitutes serious misconduct. The act of an employee in hurling obscene. (Solvic Industrial Corp. 1996. 109362. 125548. (North Camarines Lumber Co. chanrobles virtual law library In one case where the fisticuffs between an employee and a security guard occurred in a store within the company auxiliary compound. G. 256 SCRA 735). about 15 meters from the gate. 1987). 116568. No. R. chanrobles virtual law library Fighting as ground for termination. May 15. however.

1997. Eslava.´ ³anti-Filipino. patawa tawa ka pa. R.´ ± ³Sige lang. 1989. In De la Cruz vs. [G. 117453. the act of the employee in calling his supervisor ³gago ka´ and taunting the latter by saying ³bakit anong gusto mo. one-man rule. eh bilang na bilang na ang araw mo. bullshit yan´ while making the ³dirty finger´ gesture. were not held to be sufficient to merit the dismissal of the . G. bilang na ang araw mo. 103209. [G. the dismissed employee made false and malicious statements against the f oreman (his superior) by telling his coemployees: ³If you don¶t give a goat to the foreman. NLRC. 117453. In Asian Design and Manufacturing Corporation vs. bullshit yan.Union vs. 1998. R. 2000].´ was held to constitute insubordination and conduct unbecoming an employee which should warrant his dismissal. In Bondoc vs. If you want to remain in this company. utterances on different occasions towards a co -employee of the following: -´Di bale bilang na naman ang araw mo. No. petty favoritism. 228]. the dismissed employee circulated several letters to the members of the company¶s board of directors calling the executive vice -president and general manager a ³big fool. No. Mag-ingat ka sa paglabas mo sa Silahis Hotel. General Manager and President of the company). July 28. Titong. R. September 15. said employee¶s dismissal was held legal in view of these utterances. you must give anything to your foreman.´ The Supreme Court declared the dismissal of said e mployee based on these malicious statements valid and legal. R. [142 SCRA 79 (1986)]. April 12. NLRC. you will be terminated. [137 SCRA 259 (1985)].´ Further.´ As a r esult of this. Failure to do so will be terminated ± Alice 80. In Autobus Workers¶ Union vs. 228). NLRC. the following utterances: ³Si EDT (referring to Epitacio D. 121035. Deputy Minister of Labor. R. you have to give a goat. June 26.´ ³sabihin mo kay EDT yan. µtang ina mo´ was held sufficient ground to dismiss the former.´ ± ³Matakot ka sa Diyos. 177 SCRA 626]. June 26. But in Samson vs. 1998. 291 SCRA 219. the dismissed employee therein likewise posted a notice in the comfort room of the company premises which read: ³Notice to all Sander ± Those who want to remain in this company. 82703. [G. anti-Filipino utterances and activities. .´ and accusing him of ³mismanagement. 291 SCRA 219. No. the act of an employee in hurling invectives at a company physician such as ³sayang ang pagka -professional mo´ and ³putang ina mo. No. NLRC.´ and ³sabihin mo kay EDT. dictatorial policies. NLRC. 276 SCRA 288]. contemptuous attitude to labor. inefficiency. In Reynolds Philippine Corporation vs. lack of planning and foresight.Unggoy xxx ulol´ were held unquestionably as partaking the form of grave threat or coercion which justified the dismissal of the offender. [G. No.

Asian Design and Reynolds cases [supra]. May 24. NLRC. failing which. No. Secretary of Labor. 296 SCRA 283). It is well-settled by jurisprudence that serious misconduct in the form of drunkenness and disorderly or violent behavior is a just cause for the dismissal of an employee. R. was the penalty held to be appropriate under . 2. 2. Inc. in that the said offensive utterances were not made in the presence of the employee¶s superior. 1992. As a general rule. Oct. (Philippine Airlines. of forcing two co -pilots with the rank of First Officers. NLRC. For instance. to drink one evening at the coffee shop of a hotel in Cebu City. Gambling within company premises. 1998. vs. vs. intoxication of an employee which interferes with his work. However. The act of a pilot with the rank of captain. July 23. 121449. No. 1989). 1997. must be taken into account. it being a prohibited act carrying the penalty of termination under the Company Rules. R. 83854. (Dimalanta vs. the nature of the employee¶s work. the lesser penalty of 30 -day suspension.employee. G. six bottles of beer each. In another case involving two (2) security guards who. he ordered them to stand erect and were hit on the stomach. 25. the act of a managerial employee of reporting for work under the influence of liquor and sleeping while on duty reflect his unworthiness of the trust and confidence reposed on him. not dismissal. No. the next day and as late as 12:00 p. chanrobles virtual law library Intoxication as ground for termination. Sebastian. was held as constitutive of serious misconduct. Inc. constitutes serious misconduct. NLRC. 1983). joined a drinking spree at a birthday party of a co-guard in a sari-sari store near the FTI security office. the dignity of his position and the surrounding circumstances of the intoxication. (Del Val vs. Sept. L-62961. The Supreme Court justified said finding by distinguishing this case from the De la Cruz. and that the penalty of dismissal was unduly harsh considering his 11 years of service to the company. G. G. 211 SCRA 717). Autobus. R. In one case. G. a serious misconduct. that the company¶s rules and regulations merely provide for ³verbal reminder´ for first offenders. Sept. No. 121806. R. The incident occurred with his full knowledge that his co-pilots have flight duties as early as 7:10 a.m. R. (Sanyo Travel Corporation vs. No. while off -duty. 85490. an employee was validly t erminated when he was caught gambling within the company premises.m. G. Club Filipino. within thirty minutes.

it was pronounced that to cite that sleeping on the job is always a valid ground for dismissal is misplaced not only because the same was not substantiated by any convincing evidence other than the bare allegation of the employer but most sig nificantly. [G. July 14. R. the act of an employee of sleeping in his post. No. where more than fifty employees were alleged to have slept at the same time. No. Inc. Eating while at work. 2004]. dereliction of duty and challenging superiors to a fight. Urinating in the workplace. 1995). 73352. (Padilla vs. constitute serious misconduct. 31. (Qui ones vs.´ If indeed the Night Manager chanced upon respondent-employees sleeping on the job. R. in the 2000 case of VH Manufacturing. No. because the authorities cited. NLRC. 105763. R. 273 SCRA 457). CIR. 06. G. . as well as his misrepresentation that the student is his nephew. R. the Supreme Court found it ³highly unlikely and contrary to human experience that all fifty-five employees including respondents were at the same time sleeping. In Luzon Stevedoring Corporation vs. the doctrine laid down in those cases is not applicable to the case at bar. G. [G. No. (Tanduay Distillery Labor Union vs. Jan. NLRC. July 27. 114764. under the attendant circumstances of the case. [G. G. L-18683.´ Accordingly. 130957. No. 2000]. 1995). NLRC. R. The pressure and influence exerted by a teacher on his colleague to change a failing grade of a student to a passing one.the circumstances. In the 2004 case of Electruck Asia. Sleeping while on duty as a ground for termination. Dismissal is too harsh a penalty for the offense of eating while at work. vs. The reason cited was the fact that the company rules and regulations merely provided for suspension for first offenders. and A¶ Prime Security Services. Pressure exerted by a teacher upon a colleague to change a failing grade of a student. vs. No. R. coupled with gross insubordination. [220 SCRA 142 (1993)]. NLRC. Inc. Luzon Stevedoring [supra] and A¶ Prime [supra]. 19. However. Dec. Meris. which is a valid ground for dismissing an employee. June 13. Dec. are not applicable in this case since the function involved in said cases was ³to protect the company from pilferage or loss. 147031. vs. Inc. 1965]. 1997. why he did not at least rouse some or all of them to put them on notice that they were caught in flagrante defies understanding. was held as serious misconduct. NLRC.

Republic Act No.In a 2002 case. Ibid. request or requirement for submission is ac cepted by the object of said act. 15. 282 [1] of the Labor Code for purposes of terminating employment. shall also be held liable under the law. he provides a justifiable ground for . education or training-related sexual harassment is committed by any employer. Ibid. training-related. manager. And when such moral perversity is perpetrated against his subordinate. 7877 punishes sexual harassment if the same is: 1. Sexual Harassment. Who may be liable for sexual harassment. influence or moral ascendancy over another in a work or training or education environment. (Tan vs. approved on February 14. Ibid. He failed to live up to this higher standard of responsibility when he succumbed to his moral perversity. chanrobles virtual law library Any person who directs or induces another to commit any act of sexual harassment as defined in the law. demands. teacher. or any other person who. 2002). or 3. requests or otherwise requires any sexual favor from another. 1995. or 2. Aug. trainor. regardless of whether the demand. Lagrama. G. but the same must be shown by evidence. coach.). In a sexual harassment case involving a manager.). petitioner is bound by a more exacting work ethics. instructor. work-related. employee. chanrobles virtual law library R. 66. education or training environment. otherwise known as the ³Anti-Sexual Harassment Act of 1995´ declares sexua l harassment unlawful in the employment. (Section 3. Work. agent of the employer. or who cooperates in the commission thereof by another without which it would not have been committed. No. An employee cannot be terminated based on this ground if there is no evidence that he did urinate in a place other than a rest room in the premises of his work. (Section 3. education-related. professor. having authority. 7877. A. supervisor.). (Section 3. the Supreme Court said: ³As a managerial employee. No. it was held that urinating in a workplace other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to pr omote a healthy environment under Art. R. 151228.

Moreover. Likewise. chanrobles virtual law library In another case. 7877). NLRC and Golden Donuts. It is the right. According to Libres vs. People of the Philippines. in the amount of P30. Rico Jacutin y Salcedo guilty of the crime of Sexual Harassment defined and punished under Republic Act No. Delay in filing the case for sexual harassment. No. the narration of the respondent even corroborated the subordinate¶s assertion in several material points. supra). and penaliz ing him with imprisonment of six (6) months and to pay a fine of Twenty Thousand (P20. are all realities that the subordinate had to contend with. March 6. The gravamen of the offense in sexual . he was ordered to indemnify the offended party. (Libres vs. respectively. He only raised issue on the complaint¶s protracted filing. nay. Any action arising from sexual harassment shall prescribe in three (3) years. The delay could be expected since the respondent was the subordinate¶s immediate superior. the act of the manager in ³touching a female subordinate¶s hand and shoulder.000.00 by way of.000. R. with subsidiary imprisonment in case of insolvency. caressing her nape and telling other people that the subordinate was the one who hugged and kissed or that she responded to the sexual advances´ was considered act of sexual harassment for which he was penalized by the comp any with a 30-day suspension which the Supreme Court affirmed. NLRC. 2002] where the Supreme Court affirmed the Sandiganbayan¶s decision finding Dr. not to forget the social humiliation and embarrassment that victims of this human frailty usually suffer. May 28. Republic Act No.his dismissal for lack of trust and confid ence. 2000]. An illustrative criminal case involving sexual harassment is the 2002 case of Dr. Inc.´ (Villarama vs. Additionally. People. R. (Section 7. Jacutin vs. in the 2002 case of Philippine Aeolus Automotive United Corporation vs.00) Pesos. 140604. [G. Rico S. Juliet Yee. April 28. No.000. [G. Prescription of action. it was held that the delay of more than four (4) years to expose the manager¶s sexual harassment is of no moment. moral damages and exemplary damages. 124617. R.. [G. NLRC. 1999].00 and P20. 123737. In fact. No. Fear of retaliation and backlash. a delay of one (1) year in instituting the complaint for sexual harassment is not an indicium of afterthought. the duty of every employer to protect its employees from over -sexed superiors. NLRC. the delay did not detract from the truth derived from the facts. supra). 7877. particularly Sections 3 and 7 thereof. Jacutin vs.

regulations. fraud. regulations or instructions of the employer may constitute a just cause for terminating his employment. there is no time period within which he or she is expected to complain through the proper channels.For the ground of ³willful disobedience´ to be considered a just cause for termination of employment. in connection with the duties which the employee has been engaged to discharge.). may rightfully cry ³foul´ provided the claim is well substantiated. the emotional threshold of the employee. or instru ctions must be: 1. .harassment is not the violation of the employee¶s sexuality but the abuse of power by the employer. we could only speculate how much longer she would keep her silence. few persons are privileged indeed to transfer from one employer to another. Strictly speaking. the willfulness being characterized by a µwrongful and perverse attitude.¶ and . 2. the employee¶s assailed conduct must have been willful or intentional. willful breach of trust and confidence. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent. male or female. scandal. namely: chanrobles virtual law library 1. lawful and reasonable. What are the requisites to validly invoke willful disobedience of lawful orders as a just ground to terminate employment? In order that the willful disobedience by the employee of the orders. said orders. The dearth of quality employment has become a daily ³monster´ roaming the streets that one may not be expected to give up one¶s employment easily but to hang on to it. chanrobles virtual law library Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer¶s sexual impositions. even corporate. chanrobles virtual law library 68. sufficiently known to the employee. (Ibid. especially in this country. Any employee. Requisites of lawful dismissal on the ground of willful disobedience. What legal ground/s may be cited for acts of dishonesty? An act of dishonesty may constitute either of the following grounds: serious misconduct. The time to do so may vary depending upon the needs. by all tolerable means. so to speak. the following requisites must concur. and more importantly. 67. and 3. are made of the stuff that can endure the agony and trauma of a public. Not many women. circumstances. Moreover.

discrimination afforded all women workers by our labor laws and by no less than the Constitution. 2004]. 20. and the right against. Sept. when valid. . (See also Section 13 [e]. Clearly.. or that upon getting married. the order violated must have been reasonable and lawful and made known to the employee and must pertain to the duties which he had been engaged to discharge. Gualberto vs. No. his act should be deemed in good faith. 1997). discriminate or otherwise prej udice a woman employee merely by reason of her marriage. (PT&T vs. (Zialcita vs.-G. Rules to Implement the Labor Code. decided by the Office of the President). cannot be enforced for being contrary to Article 136 of the Labor Code and the protection-to-labor clause in the Constitution. discharge. Inc. Marinduque Mining Industrial Corporation. 1978). Rule against marriage. May 23. Case No. Rule against marriage. 118978. Philippine Airlines. Where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. Rule where violation of the rules was tolerated by employer. his dismissal from the service on the ground of willfu l disobedience or violation of company rules and regulations is not justified.2. Feb. The provision in a contract between an airline company and a flight attendant which states that ³flight attendant-applicants must be single and that they shall be automatically separated from employment in the event they subsequently get married´ is a null and void provision. that a woman employee shall not get married. if an employee was merely following the instructions of his supervisor. G. [G. Rule XII. Book III. No. when not valid. vs. 13. the same could not serve as a basis for termination. C. 154384. R. R. Inc. It is likewise an unlawful act of the employer. No. A company policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of. Article 136 of the Labor Code considers as an unlawful act of the employer to stipulate. as a condition of employment or continuation o f employment. a woman employee shall be deemed resigned or separated. 1977. Vital. NLR C. 52753-R. hence. RO4-3-398-76. R. A. June 28. As held in the 2004 case of Coca-Cola Bottlers Philippines. to actually dismiss.

Maxim¶s Tea House. In laying down the assailed company policy. The prohibition against personal or marital relationships with employees of competitor -companies upon its employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. [G. Inc. 2003]. the contract of employment expressly prohibited an employee from having a relationship with an employee of a competitor company. 162994. petitioner exerted reasonable effort . Still. No. you agree to resign voluntarily from the Company as a matter of Company policy. According to the Supreme Court in the 2003 case of Reyes vs. 69. ‡ Element of habituality may be disregarded if totality of evidence justifies dismissal. ‡ Element of actual loss or damage. either by consanguinity or affinity with co employees or employees of competing drug companies. It provides: ³10. 2004]. Should it pose a possible conflict of interest in management discretion. You agree to disclose to management any existing or future relationship you may have. Glaxo Welcome Philippines. the test to determine the existence of negligence is as follows: Did the employee. September 17. use that reasonable care and caution which an ordinarily prudent person would use in the same situation? chanrobles virtual law library In this case involving a vehicular collision leading to the dismissal of the petitioner-employee on the ground of gross negligence. the employer only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. notwithstanding the green light in his lane. [G. petitioner did not insist on his right of way. the Supreme Court found that the petitioner tried to turn left to avoid a collision. 140853. February 27. No. not an essential requisite. ‡ Habitual tardiness or habitual absenteeism may be a ground for termination. Clearly.In the 2004 case of Duncan Association of Detailman -PTGWO vs. in doing the alleged negligent act.´ The Supreme Court ruled that this stipulation is a valid exercise of management prerogative. the collision took place as the ten -wheeler careened on the wrong lane. Test to determine negligence. R. What constitutes the ground of gross and habitual neglect of duties? ‡ Element of habituality may be disregarded where loss is substantial. R. To put it otherwise..

subsequent notice to inform him of the employer¶s decision to dismiss him. No.R. while the validity of the dismissal based on abandonment was upheld.The notice required consists of two (2) parts to be separately served on the employee in his last known address. chanrobles virtual law library 70. 2000). to wit: chanrobles virtual law library 1. Unfortunately for the employer. Notices in abandonment cases. the failure to report for work or absence without valid or justifiable reason.under the circumstances to avoid injury not only to himself but also to his passengers and the van he was driving.Abandonment of work is a valid ground to terminate an employment. To hold that petitioner was grossly negligent under the circumstances goes against the factual circumstances shown. There being no clear showing that petitioner was culpable for gross negligence. two (2) elements must concur. G. It appears that he was more a victim of a vehicular accident rather than its cause. Nov. In case of abandonment of work. 17. Requirement of notice before declaring abandonment. R. the employer was deemed to have violated due process when it did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. This is the more determinative factor being manifested by some overt acts. What are the requisites to validly invoke abandonment of work? Requisites. and 2. In the 2004 case of Agabon vs. 2004]. petitioner¶s dismissal is illegal. (Icawat vs. [G. where sent. NLRC. NLRC. notice to apprise the employee of the particular acts or omissions for which his dismissal is sought. . 133573. this is . . To constitute abandonment. No. namely: chanrobles virtual law library 1. the notices should be served at the worker¶s last known address. however. June 20. a clear intention to sever the employer-employee relationship. 158693. and 2. This notice requirement is not a mere technicality but a requirement of due process to which every employee is entitled to insure that the employer¶s prerogative to dismiss or lay -off is not abused or exercised in an arbitrary manner.

Nov. negates the finding of abandonment. NLRC. (Hodieng Concrete Products vs. 2004). R.not a valid excuse because the law mandates the twin notice requirements be sent to the employee¶s last known address. vs. G. G. No. 4. being the alternative remedy to reinstatement. by any reasoning. R. In a 2004 case. NLRC. For instance. vs. thus negating the employer¶s charge of abandonment. NLRC. No. 1999). R. vs. Feb. No. R. G. No. 1995). (Unicorn Safety Glass. An employee who had truly forsaken his job would not have bothered to file a complaint for illegal dismissal. R. consequence of failure to pray for reinstatement. 16. 106916. R. 1994) or six (6) months before filing the complaints for illegal dismissal as an indication of abandonment. R. 63185. Dante Emilia. (Jo vs. R. 128957. It goes without saying that the prayer for separation pay. 154689. Thus. No. 14. Under the law. When filing of complaint does not negate abandonment. is an indication that they have not abandoned their work. 110388. Sept. That he was illegally dismissed is belied by his own pleadings as well as contemporaneous conduct. the employee has four (4) years within which to institute his action for illegal dismissal. 149180. vs. G. Immediate filing of complaint negates abandonment. G. Feb. NLRC. 110452-54. 141608. The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable to a case wher e the complainant does not pray for reinstatement and just asks for separation pay instead. 14. 2005). it was ruled that the immediate filing of complaint for illegal dismissal by the employees praying for their reinstatement. 24. Bolanio. (Artemio Labor vs. G. for as the Supreme Court had consistently ruled. Sept. Nov. G. 1989) or six (6) days (Masagana Concrete Products vs. 1999) or four (4) days from the time the employees were prevented from entering their workplace. . it should be held liable for non-compliance with the procedural requirements of due process. be said to have abandoned their work. Nov. Inc. 2002) or two (2) days after receiving the termination letter (EgyptAir. (Pare vs. No. The Supreme Court did not likewise consider the lapse of nine (9) months (Kingsize Manufacturing Corp. the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return to work. 25. 27. NLRC. Basarte. the filing of such complaint the very next day after the employee was removed (Anflo Management & Investment Corp. 3. Oct. G. Nos. contradicts private respondent-employee¶s stance. No. They cannot. NLRC.

for reinstatement. When refusal to return to work does not constitute abandonment. [G.. However. The two requisites for abandonment are not present here. R. chanrobles virtual law library The Supreme Court. vs. Abandonment has recently been ruled to be incompatible with constructive dismissal. 2000). September 27. among others. For the employer to anticipate the employee to report for work after the latter already filed a case for illegal dismissal before the NLRC. accused of abandoning his work. the petitioners extended the offer in its position paper filed with the Labor Arbiter but was likewise rejected by the respondent. It considered the refusal to be reinstated as more of a symptom of strained relations between the parties. Feb. he was asking for reinstatement. but he ³defiantly´ refused the offer despite the fact that in his complaint. but were not given any. Again. However.G. Gramaje. 3. effect. R. Offer of reinstatement during proceedings before Labor Arbiter. she had already filed a case for illegal dismissal against her employer. No. 148241. In fact. But in Sentinel Security Agency. No. ruled otherwise. the fact that complainants did not pray for reinstatement was considered by the Supreme Court as not sufficient proof of abandonment. No. the petitioners made an offer to reinstate him to his former position. The petitioners consequently asserted that these circumstances are clear indications of respondent¶s lack of further interest to work and effectively negate his claim of illegal dismissal. the Supreme Court ruled that the there could not have been an abandonment since at the time she was being asked to report to her new assignment. [G. She did not comply leading to her being declared as having abandoned her work. A strong indication of the intention of the complainants to resume work is their allegation that on several dates. 2. 1998]. CA. NLRC. 11. No. 2002]. R. Sept. during the initial hearing before the Labor Arbiter. R. There was no abandonment as the latter is not compatible with constructive dismissal. While the respondent desires to have his job . vs. vs. filed a complaint and prayed therein. 121605. rather than an indicium of abandonment of work as obstinately insisted by petitioners. In the 2004 case of The Philippine American Life and General Insurance Co. the Assistant VicePresident was directed to report to her new assignment and submit to a medical examination. would be absurd. 156963. The respondent-employee in the 2002 case of Hantex Trading Co. Inc. they reported to the Security Agency for reassignment. however. the contention of complainants was that the Agency constructively dismissed them. Nov. Inc. 2004]. [G. 122468.

it must have later dawned on him that the filing of the complaint for illegal dismissal and the bitter incidents that followed have sundered the erstwhile harmonious relationship between the parties. Notably. [G. NLRC. In such instance.back. Chang¶s sincerity is suspect. the offer may very well be ³a tacit admission of petitioners that they erred in dismissing him verbally and without observance of both substantive and procedural due process. in a belated gesture of good will.´ In the 2001 case of Suan vs. 2001]. June 19. In contrast. He found refuge in the above case of Ranara. their intentions in making the offer are immaterial. As observed by the Court of Appeals. to detect every small shortcoming of his as a ground for vindictive disciplinary action. petitioners¶ offer of reinstatement was made only after more than one (1) month from the date of the filing of the illegal dismissal case. their watchful eyes would thereafter be focused on him. reinstatement would no longer be beneficial to him. chanrobles virtual law library Neither does the fact that petitioners made offers to reinstate respondent legally disproves illegal dismissal. 141441. he will find it uncomfortable to continue working under the hostile eyes of the petitioners who had been forced to reinstate him. sincere or not. NLRC. for the offer to reemploy respondent could not have the effect of validating an otherwise arbitrary dismissal. The private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed and the liability did not abate as a result of Chang¶s repentance. The Supreme Court. petitioner Jose Suan in the latter case who suffered a stroke. was not dismissed but was only asked to go on exten ded leave . At any rate. If petitioners were indeed sincere in inviting respondent back to work in the company. In any case. they could have made the offer much sooner. We doubt if his offer would have been made if Ranara had not complained against him.´ Curiously. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. He had every reason to fear that if he accepted petitioners¶ offer. however. The wrong had been committed and the wrong done. the Supreme Court stated: ³The fact that his employer later made an offer to re-employ him did not cure the vice of his early arbitrary dismissal. did not find any analogy between the two cases as the factual backdrop of Ranara [supra] is not the same as Suan. [212 SCRA 631]. a letter was sent to the petitioner almost one (1) month after the filing of the complaint for illegal dismissal which required him to explain his absence without leave (AWOL). to which the Supreme Court was in full agreement. it was only after the complaint had been filed that it occurred to Chang. Their belated gesture of goodwill is highly suspect. R. In Ranara vs. to invite Ranara back to work in his store. No. He must have surely realized that even if reinstated. where the employer offered to reemploy the illegally dismissed employee.

. a driver. 1997 because when petitioner reported for work on July 10. His position required the full trust and confidence of his employer. Proof of loss is not required under this ground. thus confirming his dismissal without proper notice. In Agabon vs. 2004]. Petition er failed to present any persuasive evidence or argument to prove otherwise. Jr. While petitioner could exercise some discretion. 1997. wherein petitioner Ranara. vs. In the 2003 case of De la Cruz. Hence. G. NLRC. 2003]. this obviously did not cover acts for his own personal benefit. upon reporting for work. 71. Subcontracting for another company indicates abandonment. As found by the court a quo. [G. 158693. thus Oripaypay could readily see that petitioner was not yet ready and physically well to perform his usual assignment as master fisherman. he committed a transgression that betrayed the trust and confidence of his employer . [December 11. The said letter clearly shows that respondent Oripaypay was waiting for the return of petitioner unlike in Ranara. was surprised to find some other person who replaced him in handling the vehicle previously assigned to him. November 17. 145417. R. the petitioner was holding a managerial position in which he was tasked to perform key functions in accordance with an exacting work ethic. Lack of damage or losses not necessary in fraud cases. NLRC.from July 10 to August 10. His act amounted to fraud or deceit which led to the loss of trust and confidence of his employer.R. What constitutes the ground of fraud? Commission of fraud by an employee against the employer will necessarily result in the latter's loss o f trust and confidence in the former. No. after petitioner¶s extended leave expired. Commission of fraud or deceit leading to loss of trust and confidence. he did not return to work which prompted private respondent Oripaypay to send him a letter dated August 16. the Supreme Court held that the act of the petitioners who were frequently absent to engage in subcontracting work for another company clearly shows the intention to sever the employer-employee relationship with their employer. respondent Oripaypay noticed that petitioner¶s left arm down to his left limb was paralyzed. No. they are guilty of abandonment. after more than six months of sick leave.reimbursing his family¶s personal travel expenses out of company funds. However. 1997 requiring him to explain why no disciplinary action should be taken against him for his absence without official leave.

2003] and in the earlier case of Philippine Airlines. No. 2001]. No. March 14. 1.´ The basic premise for dismis sal on the ground of loss of confidence is that the employees concerned hold positions of trust. Inc. 2003]. They are entrusted with a considerable amount of . [G. (See also San Miguel Corporation vs. [G. 131653. NLRC. The betrayal of this trust is the essence of the offence for which an employee is penalized. In Diamond Motors Corporation vs. vs. G. 2003]. March 16. immaterial. [G.. R. The respondents here held positions of utmost trust and confidence. nor incur any shortage relative to the funds in their possession. San Miguel Corporation. it was held that the fact that the employer ultimately suffered no monetary damage as the employee subsequently settled his account is of no moment. R. March 26. (Villanueva vs. As teller and cashier. NLRC. 126805. In Gonzales vs. Where there was a series of unauthorized encashments of personal checks. Deputy Minister of Labor and Employment. R. 129413. January 22. R. R.The fact that the employer did not suffer losses from the dishonesty of the dismissed employee because of its timely discovery does not excuse the latter from any culpability. 145800. [G. The Supreme Court has reiterated this rule in Santos vs. No. 149416. July 27. Macaraeg. Dec. 203-204 [1986]). Lack of misappropriation or shortage.. R. No. it was ruled that the fact that the employer failed to show it suffered losses in revenue as a consequence of the employee¶s act is immaterial. Inc. That the dismissed employee attempted to deprive the employer of its lawful revenue is already tantamount to fraud against the company which warrants dismissal from the service. Hence. Phils. 2000] involving the commission of fraud against the company. Inc. Restitution does not have absolutory effect. ruled that it is not material that the teller and cashier did not ³misappropriate any amount of money. 145 SCRA 196. they are expected to possess a high degree of fidelity. the Supreme Court in Central Pangasinan Electric Cooperative. This was not the reason for the termination of his employment in the company but t he anomalous scheme he engineered to cover up his past due account which constitutes a clear betrayal of trust and confidence. 1998). It must be stressed that actual defraudation is not necessary in order that an employee may be held liable under the company rule against fraud. No. 151981. the fact that the employee has misappropriated company funds is a valid ground to terminate the services of an employee of the company for loss of trust and confidence. CA. vs. No. even if the shortages have been fully restituted. [G. NLRC and Pepsi-Cola Products.

G. No. 2005]. the position of project controller . The loss of confidence must not be simulated. Breach must be work-related. Feb. The employee involved holds a position of trust and confidence. not a mere afterthought. It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. Matias. In fact. 4. the questioned act pertained to an unlawful scheme deliberately engaged in by petitioner in order to evade a constitutional and legal . No. and 5.required trust and confidence. vs. 160404. (Tolentino vs.R. his act allegedly constituting breach of trust and confidence (referring to the unlawful scheme by PNCC of using its employees as µdummies¶ for the acquisition of vast tract of land in Bukidnon and thereafter compelling them to assign all rights over same properties in favor of PNCC ± a scheme by PNCC which is a flagrant violation of the Constitution as regards the maximum area of real property which a corporation can acquire under the CARP Law) was not in any way related to his official functions and responsibilities as controller. R. They did not live up to their duties and obligations. for it related to the handling of business expenditures or finances. in the 2005 case of Philippine National Construction Corporation vs. 72. 156283. It must be genuine. 22. 3. Inc. Respondent de Vera accepted payments from petitioner¶s consumers while respondent Macaraeg received remittances for deposit at petitioner¶s bank. 2004]. No.cash. For instance. June 29. R. June 8. undeniably. 149930. to justify earlier action taken in bad faith.the position of respondent at the time of his dismissal . [G. 2. What are the requisites for the ground of willful breach of trust? In the 2004 case of Charles Joseph U. Ramos vs. the following guidelines must be followed: 1. [G. No. Gulde. However. PLDT. the Supreme Court held that. (Sulpicio Lines. R. The Honorable Court of Appeals and Union Bank of the Philippines. the act complained of should be ³work-related´ and must show that the employee concerned is unfit to continue to work for the employer. improper or unjustified. It should not be used as a subterfuge for causes which are illegal. in order to validly dismiss an employee on the ground of loss of trust and confidence under Article 282. In order to constitute a just cause for dismissal. 2002). G. 2005). May 6. 145405.

2002). 149416. Inc. NLRC. caprices or suspicion. Farolan. whims. (Asia Pacific Chartering [Phils.. 1998). 122033. R. G. 165586. May 21. Loss of trust and confidence must be based on a willful breach and founded on clearly established facts. 151370. 4. No. Dec. R. June 15. G. The betrayal of this trust is the essence of the offense for which an employee is penalized.mandate. No. illegal or unjustified. nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for causes which are improper. or care and prot ection of the employer¶s property. Inc. handling. G. No. however. Coca -Cola Bottlers Phils. No. R. the employee would eternally remain at the mercy of the employer. vs. (Santos vs. have some basis. As firmly entrenched in our jurisprudence. It is sufficient that there must only be some basis for such loss of confidence or that there is reasonable ground to believe if not to entertain the moral conviction that the concerned employee is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. 2005). otherwise. Proof beyond reasonable doubt is not required. (Atlas Consolidated Mining & Development Corporation vs. It should be genuine and not simulated. (Central . R. G. 2005). It has never been intended to afford an occasion for abuse because of its subjective nature. R. This includes managerial personnel entrusted with confidence on delicate matters. While it is true that loss of trust and confidence is one of the just causes for termination. loss of trust and confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. G. This situation also holds in the case of supervisory personnel occupying positions of responsibility.. 2003). NLRC. Employee¶s position must be reposed with trust and confidence. such loss of trust and confidence must. It must rest on substantial grounds and not on the employer¶s arbitrariness.]. March 14. San Miguel Corporation. (Caingat vs. 154308. March 10. (Cruz vs. such as the custody. Breach must be willful and without justifiable excuse. There must be ³some basis´ for the loss of trust and confidence. No.

Petitioners failed to prove the existence of a valid cause for the dismissal of respondent. 2005]. 2003]. and. 112230. No. chanrobles virtual law library Prolonged practice. March 14. when deemed inconsequential. the amount involved is miniscule. second. No. vs. Inc. Jr. She. The Supreme Court ruled that not only is petitioners¶ logic flawed. NLRC. harsh and is not commensurate to his misdeeds. Petitioner¶s willful and deliberate acts were in gross violation of respondent company¶s policy against encashment of personal checks of its personnel. Macaraeg. G. as Finance Director. [G. he had no previous derogatory record. In Limketkai Sons Milling. July 12. vs. the High Tribunal said that these are negated by the fact that the evidence shows that the employee received several promotions since his employment in 1986 and was given bonuses for his collection efforts and a compensation adjustment for his excellent performance. Inc. R. R. In Santos vs. [G. In Norkis Distributors. In Etcuban. Inc. Therefore. 2003). No. it is an instance of arguing non sequitur. no loss or damages was suffered by the company since the tickets were unissued. the dismissal must be deemed contrary to the provisions of the Labor Code. 22. could not and did not suffice as a basis for a finding of willful breach of trust.. where the employer alleged inefficiency and loss of trust and confidence as grounds for termination of employment. R. R. without proven facts to back it up. 152514. it was held that prolonged practice of encashing personal checks among payroll personnel does not excuse or justify petitioner¶s misdeeds. petitioners simply allege that respondent¶s failure to report to the quality control head the batch that did not meet the minimum standard showed connivance to sabotage petitioners¶ business. considering the following: first. lastly. [G. 2005]. 148410. Inc. 149416. absence of derogatory record and small amount involved. Jan. Said allegation alone.Pangasinan Electric Cooperative. R. vs. the petitioner theorizes that even assuming that there was evidence to support the charges against him. Grant of promotions and bonuses negates loss of trust and confidence. chanrobles virtual law library Long years of service. Sulpicio Lines. 145800. he . vs. No. [G. Llamera. not an excuse for wrongful act. July 17. 1995]. his 16 long years of service with the company. Citing jurisprudence. cannot feign ignorance of such policy as she is duty -bound to keep abreast of company policies related to financial matters within the corporation. hence illegal. third. his dismissal from the service is unwarranted. January 17. San Miguel Corporation. No.

Inc. (Citing Flores vs. vs. Central Pangasinan Electric Cooperative. chanrobles virtual law library ³xxx ³It cannot be over-emphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. or at the very least. January 22. Unlike other just causes for dismissal. ³The fact that the petitioner has worked with the respondent for more than 16 years. penalties for infractions. The Supreme Court. It would be oppressive and unjust to order the respondent to take him back. (Citing Salvador vs. There can be no doubt that the petitioner¶s continuance in the extremely sensitive fiduciary position of Chief Purser would be patently inimical to the respondent¶s interests. reflects a regrettable lack of loyalty. given separation pay for his length of service. i s difficult.appeals for compassion and requests that he be merely suspended. are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer¶s trust and confidence. Employers. 219 SCRA 350 [1993]). As pointed out earlier. [G. vis-à-vis his long years of service with the company. 2003]. however. the Court is convinced that the petitione r¶s reliance thereon is misplaced. 395 SCRA 729 [2003]). once lost. the employees involved were all rank -and-file or ordinary workers. 145800. in protecting the rights of the employee. No. to regain. the teller and cashier (who were charged and dismissed for unauthorized encashments of . found no merit in the petitioner¶s contention: ³We are not unmindful of the foregoing doctrine. (Citing Gonzales vs. than in the case of ordinary rank-and-file employees. it will actually become a prize for disloyalty. Loyalty that he should have strengthened instead of betrayed. should be taken against him. Philippine Mining Service Corporation. if not impossible. R.´ (San Miguel Corporation vs. NLRC. It must be stressed that in all of the cases cited. authorizes neither oppression nor self-destruction of the employer. but after a careful scrutiny of the cited cases. trust in an employee. The infraction that he committed. 355 SCRA 195 [2001]). NLRC. In another case. NLRC. for the law. Macaraeg. Fairness dictates that the respondent should not be allowed to continue with the employment of the petitioner who has breached the confidence reposed on him. the rules on termination of employment. If an employee¶s length of service is to be regarded as a justification for moderating the penalty of dismissal. 115 SCRA 329 [1982]). if it is to be considered at all. perverting the meaning of social justice and unde rmining the efforts of labor to cleanse its ranks of all undesirables. insofar as fiduciary employees are concerned. generally. are not necessarily the same as those applicable to the termination of employment of ordinary employees.

148766. R. if to be considered at all. respectively. Nonetheless. He occupied a high position of responsibility. In Salvador vs. their reinstatement is neither sound in reason nor just in principle. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. however. instead of betrayed. should be taken against him. Considering that they have mishandled the funds of the cooperative and the danger they have posed to its members. his dismissal from service is unwarranted. R. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. ³In the case at bar. the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of discipline in the company. The Supreme Court. 2005]. the fact that petitioner has been employed with the respondent for a long time. once lost is difficult. 165586.´ In Cruz vs. 355 SCRA 195 [2001]). considering his long years of service with the company. June 15. the case at bar involves dishonesty and pilferage by petitioner which resulted in respondent¶s loss of confidence in him. 219 SCRA 350 [1993]). Well to emphasize. Indeed. [G. (Citing Flores vs. January 22. Moreover. 2003]. trust in an employee. Coca-Cola Bottlers Phils. respondent has every right to dismiss petitioner. It cannot be over-emphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. However. NLRC. It is irreconcilable with trust and confidence that has been irretrieva bly lost. (Citing Galsim vs. a managerial employee. Philippine Mining Service Corporation.checks) have been employed with the petitioner-electric cooperative for 22 and 19 years of continuous service. length of service is taken into consideration in imposing the penalty to be meted an erring employee.. No. Fairness dictates that respondent should not be allowed to continue with the employment of petitioner who has breached the confidence reposed on him. employers are allowed wider latitude of discretion in terminating the employment of managerial employees as they perform functions which require the employer¶s full trust and confidence. thusly: ³To be sure. the longer an employee stays in the service of the company. Inc. petitioner was not an ordinary rank-and-file employee. and this is the first time that either of them has been administratively charged. 29 SCRA 293 [1969]). Philippine National Bank. supervision and operations of respondent¶s entire plant. harsh and grossly disproportionate to his act.. their dismissal was held justified consider ing the breach of trust they have committed. involving the spiriting out of thirty (30) cases of canned soft drinks . NLRC. disagreed. he had over-all control of the care. Unlike other just causes for dismissal. As a general rule. (Citing Gonzales vs. to regain. [G. if not impossible. No. petitioner argues that assuming there was evidence to support the charges against him. As foreman and shift boss. in cases of this nature.

with respect to rank -and-file personnel. It is thus important that in termination based on this ground. R.loaded on petitioner¶s truck without the required documentation. 121348. 2001). proof beyond reasonable doubt is not required. No. No. and that mere uncorrobo rated assertions and accusations by the employer will not be sufficient. (De los Santos vs. Dec. NLRC. Rules on termination of managerial employee. 2000). G. R. This distinction has been underscored by the Supreme Court in recent decisions involving the application of the doctrine of loss of trust and confidence. 2005). (Etcuban. the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Inc. If what is involved in a case is a rank -and-file employee. it being sufficient that there is some basis for such loss of confidence. 148410. (Deles.. Thus. As a managerial employee. NLRC. Sulpicio Lines. 131653. 20. the Supreme Court took his long years of service as militating against his claim of good faith. NLRC and Pepsi -Cola Products. 121327. such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct. the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of discipline in the company. The rules on termination of managerial employees are different from those applicable to rank-and-file employees. a managerial employee is tasked to perform key and sensitive functions. does not fall squarely under this category.. G. Inc. it has long been held that the longer an employee stays in the service of the company. G. Hence. Phils. . Obviously. For instance. The reason is. But as regards a managerial employee. R.. the doctrine of loss of trust and confidence may not be appropriately applied. the task of a janitor. Jan. March 26. vs. it must be shown that the employee is a managerial employee since the term ³trust and confidence´ is restricted to said class of employees. works against his favor in this case. different from rank-and-file. March 9. No. any transgression on her part gives the employer a wide r latitude of discretion in terminating her services. 17. (Gonzales vs. No. and thus he is bound by more exacting work ethics. Jr. said the Supreme Court. G. 2001). in the case of managerial employees. and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. Jr. loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question. R. which spans almost fifteen (15) years. Petitioner¶s length of service (as driver/helper). vs.

Bungabong. by reason of the nature of their positions. the Supreme Court. he cannot be dismissed based on loss of trust and confidence. vs. 1995]. NLRC. Inc. R. of some of the duties of a route salesman on orders of his e mployer. 154315. Phils. when respondent drank stolen beer from the dispenser of Pizza Hut-Ermita on Decem¬ber 6. said employee remained a driver-helper of the petitioner. vs.When rank-and-file employees may be dismissed based on loss of trust and confidence. July 17. Coca -Cola Bottlers. While generally. No. Inc. did not automatically make him an employee holding a position of trust and confidence. as held in Coca -Cola Bottlers Philippines. For example. [172 SCRA 751 (1989)]. for only three days. 2005]. in Philippine Pizza. it was pronounced that the temporary assignment as route salesman for a period of three (3) days of an employee who was employed as driver-helper does not automatically make him an employee on whom his employer reposed trust and confidence. In holding that the dismissal of the food attendant was valid. No. for breach of which he shall be meted the penalty of dismissal. 109809. deal with customers and are entrusted with large assets and funds and property of the employer. ruled that where the employee has access to the employer¶s property in the form of merchandise and articles for sale. 28. Kapisanan ng Malayang Manggagawa sa Coca -Cola-FFW. [G. The assumption by said employee. it was held that a non-managerial position such as a bus driver does not . vs. NLRC. are reposed with trust and confidence. Thus. Despite his additional duties. the doctrine of loss of trust and confidence may only be invoked against managerial employees. and when such confidence is breached. 2005].. R. Feb. Examples of cases where rank-and-file employees may not be dismissed based on loss of trust and confidence. No. 148205. route salesmen are rank-and-file employees but they are highly individualistic personnel who roam around selling products. [G. [G. 1997. May 9. the relationship of the employer and the employee necessarily involves trust and confidence. But in another case involving the same company. there are instances when the doctrine may also be successfully invoked against rank -and-file employees who. Inc. In Vallacar Transit. the employer may take proper disciplinary action on them. he gave cause for his termination and his termination was within the ambit of Article 282 of the Labor Code. There is a high degree of trust and confidence reposed on them. Inc. Hence. vs. R.

1.hold a position of trust and confidence. What constitutes the ground of commission of crime or offense? The commission of a crime or offense by the employee may justify the termination of his employment. his employer. retrenchment. What are other analogous causes under Article 282 of the Labor Code? Instances considered analogous causes.The grounds cited in Articles 283 and 284 are technically calle d the authorized causes for termination of employment. What are the requisites for the ground of installation of laborsaving devices? In order to validly invoke this ground. 2. 75. and disease. They are: chanrobles virtual law library 1. 5. 4.. any immediate member of his employer¶s family. if such crime or offense is commi tted against any of the following persons: chanrobles virtual law library 1. Ban on one¶s employees imposed by another company. 4. That he figured in several accidents prejudicial to petitioner cannot se rve as basis for the loss of trust and confidence. installation of labor-saving devices. What are the authorized causes for termination of employment? Grounds. redundancy. his employer¶s duly authorized representative. 74. closure or cessation of business. AUTHORIZED CAUSES FOR TERMINATION OF EMPLOYMENT. 2. 3. The ground of inefficiency. 2. 73. or 3. Violation of safety rules. 3. Violation of the company code of conduct or company rules and regulations. the following requisites must concur: . 76.

30. Installation of machines for more economy and efficiency. the company (San Miguel Corporation) conducted a viability study of its business operations and adopted a modernization program. What are the requisites for the ground of redundancy? . R. temporary or regular). there is no other option available to the employer than the introduction of the machinery. [G. 433]. equipment or other devices must be done in good faith. must be paid to the affected employees. CIR. The Supreme Court held that the installation of labor-saving devices at its Mandaue plant was a proper ground for terminating employment. In Philippine Sheet Metal Workers Union vs. there is no need for the employer to show proof of losses or imminent losses. the 30-day notice requirement under Article 283 should be complied with. [83 Phil.1. the introduction of the machinery. the purpose for such introduction must be valid such as to save on cost. efficiency rating and seniority. enhance efficiency and other justifiable economic reasons. status of the employee (whether casual. not required. in installation of labor -saving devices. 142405. Sept. and 6. It then brought into its Mandaue plant high-speed machines to be used in the manufacture of its beer. Proof of losses. 5. experience. among other considerations. CA. equipment or device and the consequent termination of employment of those affected thereby. was decl ared valid. chanrobles virtual law library 3. chanrobles virtual law library Modernization program through introduction of machines. 77. 2. when appropriate. In the 2004 case of Abapo vs. there should be reasonable and fair standards or criteria in selecting who to terminate such as nature of work. No. separation pay under the law or company policy or Collective Bargaining Agreement or similar contract. 4. the termination of employment of the affected employees due to the introduction of machinery in the manufacture of its products for purposes of effecting more economy and efficiency. 2004]. As earlier mentioned.

Pepsi-Cola Products Phils. whichever is higher.. . written notice served on both the affected employees and the Department of Labor and Employment at least one (1) month prior to the intended date of termination.. not subject to review. No. The only exception is when there is a showing that the same was done in violation of law or attended with arbitrary and malicious action. Sept.´ ³abusers´ and ³worst performers´ as another indicia of petitioner¶s bad faith. 2001]. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. Inc. g. (b) efficiency. 2. NLRC. payment of separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service. R. ruled that it is not too keen on attaching such a sinister significance to these allusions. the following requisites must be present: 1. It is not enough. Inc. CA. not an indication of bad faith. As a general rule. 120009.For redundancy to be a valid ground to terminate employment. The Supreme Court. and (c) seniority]. the private respondent-employees point to references in petitioner¶s studies of the redundancy program to the elimination of ³undesirables. Characterization of service as redundant by employer. the characterization of the services of the employee who was terminated for redundancy is an exercise of business judgment of the employer.. fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished [such as less preferred status [e. R. 13. however. In the 2001 case of Santos vs. The wisdom or soundness of such characterization or decision is not subjec t to discretionary review by the Labor Arbiter or the NLRC and the Court of Appeals. vs. 3. In Dole Philippines. It may be argued that the elimination of the so-called ³undesirables´ was merely incidental to the redundancy program or that past transgressions could have been part of the criteria in determining who among the redundant employees is to be dismissed. temporary employee]. exception. Elimination of undesirables. therefore. good faith in abolishing the redundant positions. [G. and 4. abusers and worst performers through redundancy. for a company to merely declare that it has become overmanned. [G.

Clearly there was here no abolition of position to achieve a reduction in the number of electricians employed by the UIC. 144702. and that in order to achieve a reduction in personnel. 141947. vs. July 31. under the guise of invoking its prerogative. Rather. was an exercise of business judgment on the part of petitioner company. it was held that the characterization of private respondent¶s services as no longer necessary or sustainable and. the facts show that there was only one position for electrician which was occupied by respondent.No. properly terminable. respondent Pepsi. however. No. said that this argument cannot be accepted. sales quotas. There is no showing that there were two (2) positions for school electricians.C. Similarly. That there is need for an electrician is shown by the fact that his work is being performed by the student-scholar. NLRC. and other policies aimed at improving the performance of the division rather than to reduce the number of employees and create new positions.I. [G. July 5. Petitioners do not claim that the position of school electrician has become useless or redundant such that it had to be abolished. the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown. While it is true that management may not. R. based on the fact that its Metro Manila Sales Operations were not meeting its sales targets. 193 SCRA 665]. arguing tha t it is more logical to implement new procedures in physical distribution. 1991. Teaching and Non-Teaching Personnel and Employees Union. ease out employees and defeat their constitutional right to security of tenure. 82249. therefore. the studenttrainee merely replaced respondent as school electrician because petitioners found it to their advantage to let the work be done by the student for free. wanted to restructure its organization in order to include more complex positions that would either absorb or render completely unnecessary the positions it had previously declared redundant. [G. In that case. February 7..R. petitioner company effected some changes in its organization by abolishing the posit ion of Sales Manager and simply adding the duties previously discharged by it to the duties of the General Manager to whom the Sales Manager used to report. The Supreme Court. When the time came that the student-trainee became capable of performing his functions. vs. in Wiltshire File Co. In other words. . 2001]. 2001]. The soundness of this business judgment of Pepsi has been assailed by petitioners. Inc. the latter¶s employment was terminated and the student-trainee took the vacated position. But the above rule was not applied in the 2001 case of University of the Immaculate Concepcion. U. No. and on the fact that new positions were subsequently created. one position for electrician was abolished resultin g in one position for school electrician and the consequent termination of the employment of the person occupying the position.

1997). valid. Contracting out of abolished position to independent contractors held valid. An employer is not precluded from adopting a new policy conducive to a more economical and effective management. Inc. 149 SCRA 641 [1987]). distinguished. No. (International Harvester Macleod. NLRC. 1999). ³Redundancy´ exists when the services of an employee are in excess of what is required by an enterprise. ³Retrenchment. vs. 118432. R. 99266. 127516. chanrobles virtual law library Reorganization through redundancy. NLRC. [AG & P]. is more precisely termed ³retrenchment´ if it was primarily intended to prevent serious business losses.´ while denominated as such. G. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business lo sses. In valid abolition of positions. vs. 1999). not required. it is presumed that it acted in good faith. G. R. March 2. Jr. Abolition of position or department. Reorganization as a cost -saving device effected through redundancy is acknowledged as valid by jurisprudence. May 23. IAC. (Dole Philippines.´ on the other hand. vs. (Atlantic Gulf and Pacific Company of Manila. It is the burden of the employer to prove the factual and legal basis for the dismissal of its employees on the ground of redundancy. Redundancy and retrenchment are not synonymous but distinct and separate grounds under Article 283. . May 28. R. Inc. No. NLRC. Redundancy and retrenchment. The abolition of departments or positions in the company is one of the recognized management prerogatives. the Supreme Court cannot erase that initiative simply to protect the person holding the position. G. Just like installation of labor-saving devices. (Cosico. the ground of redundancy does not require the exhibition of proof of losses or imminent losses. Evidence of losses. In the absence of proof that the act of the employer was ill-motivated. vs. (San Miguel Corporation vs. No. Inc. NLRC. ³Redundancy Program.Burden of proof in redundancy rests on the employer. supra).

[213 SCRA 652 (1992)]. While there should be mutual consultation. R. Petitioner further asserts that the number of casuals remained relatively constant after the implementation of the redundancy program. January 27. Private respondent-employees in Dole Philippines. NLRC. the management of a company cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. vs. . Hiring of casuals after redundancy. NLRC. (Serrano vs. that it has always hired casuals to augment the company¶s manpower requirements in accordance with the demands o f the industry.In Serrano vs. NLRC. NLRC. however. the Supreme Court will not interfere with the exercise of judgment by an employer. No. 120009. R. NLRC. 1999]. No. Indeed. The Court finds the foregoing explanation sufficient to negate the allegations of bad faith by its former employees. the Supreme Court upheld the termination of employment of water pump tenders and their replacement by independent contractors. chanrobles virtual law library Duplication of work. 117040. [G. No. held valid. as shown by the graph appended as Annex ³J´ of its supplement to the motion for reconsideration before the NLRC. Petitioner explains. the act of the employer of phasing-out its security section and the hiring of an independent security agency to perform its task constitutes a legitimate business decision. Petitioner company does not deny that they hired casual employees after the implementation of the redundancy program. It ruled that an employer¶s good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and efficiency. [G. Consequently. 2000]. absent proof that management acted in a malicious or arbitrary manner. R. 131108. supra). March 25. Inc. 2001] submit that the subsequent hiring of casual employees to replace the dismissed regular employees on the ground of redundancy is an indication of bad faith. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. In De Ocampo vs. September 13. eventually deference is to be made to what management decides. the Supreme Court upheld the termination of employment of three mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. [G. In Asian Alcohol Corporation vs.

one of the issues raised was the validity of application of the ³Last In. Article III. supra). . the last one employed will necessarily be the first to go. 1994]. LIFO RULE.In all cases of lay-off or retrenchment resulting in termination of employment in the line of work. exception. what is contemplated in the LIFO rule is that when there are two or more employees occupying the same position in the company affected by the retrenchment program.. The LIFO rule under the CBA is explicit. Redundancy in an employer¶s personnel force. First Out [LIFO]´ rule embodied in the CBA which states: ³Section 2. First Out´ [LIFO] rule. Since there ought to be a reduction in the number of personnel in such positions. does not show that his position had not become redundant. the employee who was employed on the latest date must be the first one to go. (Wiltshire File Co. [G. the Last-In-First-Out (LIFO) Rule must always be strictly observed. The provision speaks of termination in the line of work. in any well-organized business enterprise. however. No. This contemplates a situation where employees occupying the same position in the company are to be affected by the retrenchment program. In holding that the employer did not violate said rule. NLRC. such that the employee who has a longer period of employment will be retained. it would be surprising to find duplication of work and two (2) or more people doing the work of one person. ³Last In. December 28. 106256.´ (Section 2. the reason why there was no violation of the LIFO rule was amply explained by public respondent in this wise: µxxx. vs. .¶´ LIFO rule. ³Moreover.Where two or more persons are performing the same work which may be effectively accomplished by only one. Verily. That no other person was holding the same position that private respondent held prior to the termination of his services. does not necessarily or even ordinarily refer to duplication of work. In the case of Maya Farms Employees Organization vs. the Supreme Court declared: ³It is not disputed that the LIFO rule applies to termination of employment in the line of work. CBA). R. Inc. involving termination due to redundancy. the employer may terminate the excess personnel and retain only one. It is ordained that in cases of retrenchment resulting in termination of employment in line of work. NLRC. Indeed. the length of service of each employee is the determining factor.

In the 2000 case of De la Salle University vs. 2000].¶ The nature of work of each assistant superintendent as well as experience were taken into account by management. there were 3 Asst. No. Superintendent for meat processing. R. However. termination due to retrenchment and transfer of employees. the union proposed the use of the "last-in-first-out" method in case of lay-off. the petitioners contended that the LIFO rule was violated by management in the case of two (2) employees. Superintendent for packing and Asst. NLRC. It is indeed true that Roberta Cabrera was employed earlier (January 28. LIFO or FILO rule. And the reason is simple enough. 1994). and both were Assistant Superintendents. no basis in law. as employer has prerogative to choose who to terminate.´ (Maya Farms Employees Organization vs. especially where the exercise of this prerogative might result in the loss of employment. NLRC. First out´ [LIFO] or ³First in. No law mandates the so-called rule of ³Last in. G. thus: ³We cannot sustain the union¶s argument. No. Such criteria was not shown to be whimsical nor capricious. In determining these issues. The union further insists that its proposal is ³«in keeping with the avowed State policy µ(q) To ensure the participation of workers in . The union pointed out that the employee who was retained by management was employed on a much later date than the other employee. 28. [G. respectively. De la Salle University Employees Association. management has to enjoy a pre-eminent role. the nature of work and experience were correctly taken into account by management. (Asian Alcohol Corporation vs. The union relied on social justice and equity to support its proposition. Superintendents assigned as head of the 3 sections thereat. A host of relevant factors come into play in determining cost efficient measures and in choosing the employees who will be retained or separated to save the company from closing shop. supra). not controlling. The Supreme Court affirmed the ruling of the NLRC which declared that despite the LIFO rule. she could µalready take care of the operations of the other sections. Superintendent for meat processing. 1966). chanrobles virtual law library LIFO rule. it is maintained that in the meat processing department. April 12. either by law or agreement. 1961) and [sic] Lydia Bandong (July 9. the Asst.In the same case of Maya Farms [supra]. Dec. The reason advanced by the company in retaining Bandong was that as Asst. 106256. 109002. Last out´ [FILO]. R. and submitted that the University¶s prerogative to select and/or choose the employees it will hire is limited.

an employer is free to regulate. be retrenched with benefits or be dismissed without receiving any benefit at all. San Miguel Corporation. work supervision. the University asserted its management prerogative and countered that ³[w]hile it is recognized that this right of employees and workers to µparticipate in policy and decision -making processes affecting their rights and benefits as may be provided by law¶ has been enshrined in the Constitution (Article III. duties and welfare¶ (Art.´ The Supreme Court ruled as follows: ³We agree with the voluntary arbitrator that as an exercise of management prerogative. of offering only the horse nearest the stable door. March 10. Jr. The employer still retains the prerogative to determine the reasonable basis for selecting such employees. or limited by special laws. 2). 211. be retrenched or dismissed. [291 SCRA 219 (1998)]. the University has the right to adopt valid and equitable grounds as basis for terminating or transferring employees. covers: work assignment. 2004]. does not automatically entitle the union to dictate as to how an employer should choose the employees to be affected by a retrenchment program. working methods. This principle was applied in the 2004 case of Asufrin. said participation. In short. All that the employees were offered was a choice on the means or method of terminating their services but never as to the status of their employment. they were never asked if they wanted to work for petitioner-company. an English stable-owner in the 17th century. Except as provided for. It refers to the practice of Tobias Hobson.decision and policy-making processes affecting their rights. all aspects of employme nt. they were forced to swallow the bitter pill of dismissal but afforded a chance to sweeten their separation from employment. were m ade to understand that they had no choice but to leave the company. par. dismissal and recall of workers. supervision of workers. Hobson¶s choice means no choice at all. Labor Code. 156658. vs. National Labor Relations Commission. µ[a] valid exercise of management prerogative is one which. however. [G. where the employees.¶´ (emphasis supplied) Hobson¶s choice. R. according to his own discretion and judgment. and the discipline. transfer of employees. even if given the option to retire. Section 3. chanrobles virtual law library . time. [should be Article XIII]. a choice between accepting what is offered or having nothing at all.´ On the other hand. No. As we ruled in the case of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. among others. More bluntly stated. as amended). They either had to voluntarily retire.

after all. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. as such imminence can be perceived objectively and in good faith by the employer. efficiency. in other words. whether they are temporary. The general standards in terms of which the act of an employer in retrenching or reducing the number of its employees must be appraised are as follows: Firstly. casual. the losses expected should be substantial and not merely de minimis in extent. (2) that the employer serves a written notice both to the employees and to the Department of Labor and Employment at least one (1) month prior to the intended date of retrenchment.. seniority. serious. and (5) that the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the emplo yees. regular or managerial employees). are reasonably imminent as perceived objectively and in good faith by the employer. physical fitness. .e. are not merely de minimis but substantial. if already incurred. if only expected. the substantial loss apprehended must be reasonably imminent. a drastic recourse with serious consequences f or the livelihood of the employees retrenched or otherwise laid off. the bona-fide nature of the retrenchment would appear to be seriously in question. What are the requisites for the ground of retrenchment? Under Article 283.78. There should. the following are the requisites for a valid retrenchment which must be proved by clear and convincing evidence: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. be a certain degree of urgency for the retrenchment which is. whichever is higher. Standards to be observed in retrenchment. actual and real or. and financial hardship for certain workers. age. (3) that the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month's pay for every year of service. such as status (i. Secondly. (4) 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.

the alleged losses. [G. The fact that these employees had accumulated seniority credits indicates that they had been retained in the employ of the employer because of loyal and efficient service. modified. discipline. April 8. Petitioner claims that the retrenchment was based on a numbe r of criteria. but certainly not the least important. See also Clarion Printing House. that certain employees were selected for retrenchment because they did not meet these criteria. No. 147756. based on the formula provided in the rank-and-file¶s . 152039. while respondent Philex had complied with some of the requisites for retrenchment.. In the case of Philippine Tuberculosis Society. The system in the supervisors¶ MOA for computing demerits points. if already realized.Thirdly. August 9. flexibility. G. While an employer may be justified in ordering retrenchment because it actually suffered financial distress. to wit: (1) whether the positions of the employees are to be retained or abolished. Here. the Supreme Court invalidated the retrenchment program for its improper implementation despite proof of financial losses. or created. must be reasonably necessary and likely to effectively prevent the expected losses. R. [G. No. vs. cut other costs than labor costs. The Honorable Second Division NLRC. F. and the expected imminent losses sought to be forestalled. Petitioner has not shown. Marine Corporation vs. and (3) the attitude. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. R. what it failed to do was to implement its retrenchment program in a just and proper manner. Its failure to use a reasonable and fair standard in the computation of the supervisors¶ demerits points is not merely a procedural but a substantive defect which invalidates petitioners¶ dismissal. and trainability of the employees. retrenchment. (2) the qualifications required by the positions to be retained. vs. 2005). one of the criteria for retrenchment in the supervisors¶ MOA was held inconsistent with Article XVIII of the CBA. (F. 25. chanrobles virtual law library Failure to follow fair criteria in selection. Inc. NLRC. because of its consequential nature. In the 2005 case of Ariola vs. No. G. efficiency. 2005]. i. The burden of proving the contrary is on petitioner. NLRC. must be proved by sufficient and convincing evidence. effect. however. R. 2005. any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. 148372. Aug. however. its manner of implementing the scheme of selecting the employees to be retrenched may render the retrenchment invalid. June 27. Inc. It has not explained why said employees had to be laid off without considering their many years o f service. Philex Mining Corporation.e. No. 115414. The reason for requiring this quantum of proof is apparent. 1998]. Lastly. R.

the MOA cannot prevail over the CBA. vs. No. April 14. chanrobles virtual law library Cost reduction measures prior to retrenchment. G. if the CBA governs instead of the MOA. it was held that the employer is required to take other measures prior or parallel to retrenchment to forestall losses. The Honorable Second Division NLRC. petitioners may not fall under those to be retrenched. petitioners and their co-supervisors will not get demerits points for sanctions of reprimands and warnings of separation. evaluates the employee¶s disciplinary record over a three -year period. Inc. such as cost reduction. An employer who. (F. Aug. regardless of the penalty involved. Retrenchment is only a measure of last resort when other less drastic means have been tried and found to be wanting.g. Since the supervisors¶ union did not ratify the MOA. etc. 12. lays off substantial number of workers while continuing to dispense fat executive bonuses and perquisites or so -called ³golden parachutes´. Under Article XVIII of the CBA. 118973. reduction of both management and rankand-file bonuses and salaries. F. R. Cost reduction measures should first be taken prior to retrenchment. improving manufacturing efficiencies. the Supreme Court noted that it did not try other measures. 2005). (Polymart Paper Industries. 1998). can scarcely claim to be retrenching in good faith to avoid losses. This is not true under the supervisors¶ MOA. R. R. Thus. G. To impart operational meaning to the cons titutional policy of providing ³full protection´ to labor. the use of the MOA instead of the CBA becomes a substantive defect.. i. trimming of marketing and advertising costs. going on reduced time.e. This contravenes Article XVIII of the CBA which provides that offenses punishable by ³reprimands and warnings of separation´ will be stricken-off the record every February 1st of each year.have been tried and found wanting. In short. reduction of the bonuses and salaries of both management and rank-and-file. lesser investment on raw materials. The inconsistency between the supervisors¶ MOA and the CBA is a substantive defect because what the CBA removes from petitioners¶ record the supervisors¶ MOA treats as a factor in evaluating petitioners¶ demerits points. chanrobles virtual law library In the 2004 case of Emco Plywood Corporation vs. trimming of . April 8. . 152039.MOA. after less drastic means . cut other costs than labor costs. NLRC. improvement of manufacturing efficiency. Abelgas. for ins tance. where the only less drastic measure that the company undertook was the rotation work scheme: the three-day-work per employee per week schedule. Marine Corporation vs. 2004]. 148532.e. inadequate or insufficient. [G. adjustment of the work routine to avoid the scheduled power failure. necessary. No. chanrobles virtual law library In a 2005 case. the employer¶s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort.. No.

110740. August 9. The Supreme Court ruled that in the context of the submitted financial statements prepared by COA itemizing and explaining the losses suffered by petitioner companies. G. involving the retrenchment of workers in government-controlled corporations. (Asian Alcohol Corporation vs. The fact that the company did not resort to other such measures seriously belies its claim that retrenchment was done in good faith to avoid losses. [G.marketing and advertising costs. chanrobles virtual law library Best evidence of losses in a government-controlled corporation financial statements audited by COA. 148372.´ Article 283 uses the phrase ³retrenchment to prevent losses. 131108. chanrobles virtual law library Meaning of the phrase ³retrenchment to prevent losses. R. Inc. Second Division NLRC. the financial statements submitted as evidence to prove losses were duly audited by the Commission on Audit (COA). 2005). has interpreted the law to mean that the employer need not keep all his employees until after his losses shall have materialized. And yet. R. the financial statements can be assailed as self -serving documents. chanrobles virtual law library In the 2001 case of NDC-Guthrie Plantations. Marine Corporation vs. 1999. vs. supra). These financial documents duly audited by COA constitute the normal and reliable method of proof of the profit and loss performance of a government-controlled corporation. vs.. the law could be vulnerable to attack as undue taking of property for the benefit of another. the Labor Arbiter and the NLRC rejected them. (Danzas Intercontinental. The Hon. 154368. NLRC. Inc. Inc. [G. In the 2005 case of Clarion Printing House. NLRC. No. 2005]. (F. Daguman. F. March 25. The Supreme Court. No. NLRC.´ In its ordinary connotation. The Supreme Court has consistently ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company.audited financial statements. No. 305 SCRA 416). chanrobles virtual law library Best evidence of losses . G. vs. No. this phrase means that retrenchment must be undertaken by the employer before losses are actually sustained. however. it was held that the appointment of a receiver or management committee by the SEC (now RTC under the Securities . Otherwise. June 27. and so on. April 15. the Court is unable to understand the rationale behind the NLRC¶s challenged judgment. R. Unless duly audited by independent auditors. 2001]. chanrobles virtual law library Rehabilitation receivership presupposes existence of losses. R.

´ shows that Clarion. were prepared only by petitioners¶ accountant and approved by the manager. Inc. It was only before the Court of Appeals that the financial statements for the years 1996 and 1997 as audited by an independent external auditor .072.Regulation Code. . 2005).96. 152039. the retrenchment of its employees.316. In contrast. was suffering business reverses justifying. No. evidence of bus iness losses to justify the retrenchment of workers.08. it was declared that pursuant to the policy that technical rules of procedure are not strictly applied in labor cases. G.´ That the SEC appointed an interim receiver for the EYCO Group of Companies on its petition in light of ³factors beyond the control and anticipation of the management´ rendering it unable to meet its obligation as they fall due. 148372. R.79 and P155.005. to arise that would impair and affect [its] operations . effect. chanrobles virtual law library Audited financial statements belatedly filed in the CA. delay in the submission of evidence should be clearly explained and should adequately prove the employer¶s allegation of the cause for termination. . No. 155278. . the 1996 and 1997 Financial Statements showed loss es of P18.339. The financial statements show that in 1994 and 1995. April 8. However. loss. Philippine Postal Savings Ban k. The Honorable Second Division NLRC. vs. NLRC. respectively. inter alia. F. June 27. [G. R. even on appeal. petitioner corporation earned an income of only P77. Evidence of losses in a retrenchment case may be presented for the first time on appeal with the NLRC. among other things. be allowed to present. In the 2003 case of Tanjuan vs. R. They wer e not audited by an independent external auditor. No. 8799) presupposes a finding that. and P21. on cogent grounds. Marine Corporation vs. 2005]. employers may. . wastage or destruction of assets of other properties or paralyzation of business operations. September 16. petitioners adduced before the Labor Arbiter the 1994 and 1995 Financial Statements.89. Inc. R. (See also Clarion Printing House. petitioners seek to justify the retrenchment on the ground of serious business losses brought about by the Asian economic crisis. A.609. however. a company possesses sufficient property to cover all its debts but ³foresees the impossibility of meeting them when they respectively fall due´ and ³there is imminent danger of dissipation. To prove their claim. 2003].918. and thus resulting to ³complications and problems . However. delay in the submission of evidence should be clearly explained and should adequately prove the employer¶s allegation of the cause for termination. respectively. No.. [G. In the 2005 case of F. together with the other member-companies of the EYCO Group of Companies. Said Financial Statements.

This Court has ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. while sufficient evidence of the company¶s business losses was submitted by the petitioner company. [320 Phil. 2003 (supra)]. [320 Phil. Inc. In Taggat Industries. 155278. Indeed. Distinguishing the Cañete from the F. 120971.were introduced. NLRC. That was why this Court in Cañete ratiocinated that the petitioner therein had the opportunity to rebut the truth of the additional documents. No. the Supreme Court did not allow the presentation of evidence of losses for the first time before the Court of Appeals. 1987. more than four (4) years since the company declared losses in 1987. September 16. F.´ Retrenchment effected long after business losses. unlike in this case where the new financial statements were submitted for the first time before the Court of Appeals. 1991. Inc. NLRC. several months prior to the filing of the complaint for illegal dismissal on 12 January 1999. if there was any truth that the company . F. R. No. Marine [supra]. Even this. vs. In Cañete vs. however. [G. But in F. They were not presented before the Labor Arbiter and the NLRC although they were executed on 30 March 1998. the same is belied by the fact that the private respondent-employees remained employed by petitioner c ompany until October 15. NLRC. Marine cases.´ Evidence of losses may be allowed to be presented for the first time on appeal with NLRC but not with CA. R. [G. The same cannot be said of the private respondent in this case. March 10. A careful examination of financial statements may be resorted to especially if on their face relevant facts appear to have been ignored that will warrant a contrary conclusion. the Supreme Court ruled in the latter case: chanrobles virtual law library ³Petitioners cite Cañete vs. The holding is clearly not apropos since the documents were presented to the NLRC. 1999]. the Supreme Court allowed the presentation of documentary evidence for the first time on appeal with the NLRC. is not a hard and fast rule as the norm does not compel this Court to accept the contents of the said documents blindly and without thinking. 313 (1995)] where the Court upheld the NLRC¶s consideration of documents submitted to it by the respondent therein for the first time on appeal. 313 (1995)] as in Tanjuan vs. per its financial statements for the period 1986 to December 31.. Philippine Postal Savings Bank. The Supreme Court ruled: ³Petitioners¶ failure to adduce financial statements duly audited by independent external auditor casts doubt on their claim of losses for financial statements are easy prey to manipulation and concoction.

whether or not the closure or cessation of operations is due to serious business losses or financial reverses. No. The rehiring or re-employment does not negate the imminence of losses. this requisite becomes relevant. while it is true that the company re-hired or re-employed some of the dismissed workers. cannot stand in the fact of evidence of substantial losses suffered by the company. 4. chanrobles virtual law library 79. May 28. R. In Atlantic Gulf and Pacific Company of Manila. [G. What are the requisites for the ground of closure or cessation of business operations? The requisites for the valid invocation of this statutory ground are as follows: 1. NLRC.was reeling from business reverses. the decision to close or cease operations should be made in good faith. it has been shown that such action was made only as company projects became available and that it was done in pursuance of the company¶s policy of giving preference to its former workers in the rehiring of project employees. there is no other option available to the employer except to close or cease operations. there should be clear proof thereof since no separation pay to the employees is required to be paid under the law. when appropriate. the notice requirement under Article 283 should be complied with. it should have retrenched the private respondent-employees as soon as th e business losses became evident. if such is the cause invoked. . 1999].] 3. 127516. Moreover. separation pay under the law (when not due to serious business losses) or company policy or Collective Bargaining Agreement or similar contract. chanrobles virtual law library Re-hiring of retrenched employees. This contention. however. If not due to serious business losses. [NOTE: If the ground is serious business losses or financial reverses. effect. which prompted private respondents to retrench. Inc. the purpose should not be to circumvent the provisions of Titl e I of Book Six of the Labor Code. [AG & P]. and 5. must be paid to the affected employees. it was contended that the ³redundancy program´ was actually a union-busting scheme of management. 2. aimed at removing union officers who had declared a strike. vs.

In Dangan vs. as long as he pays his employees their termination pay in the amount corresponding to their length of service.. said the Supreme Court. NLRC.A. No. Jan. the Supreme Court ruled as valid the closure of . Inc. departments or sections. thus implying that termination of employees other than closure of business due to losses may be valid. Said provision. R. (J. 2004).´ the Supreme Court ruled in Coca -Cola Bottlers [Phils. provides for the payment of separation pay to employees terminated because of closure of business not due to losses. court cannot order employer to continue its business. branches. the Supreme Court had occasion to reiterate management¶s prerogative to close or abolish a department or section of the employer¶s establishment for economic reasons. NLRC. that since the greater right to close the entire establishment and cease operations due to ad verse economic conditions is granted an employer. General Services vs.]. R. 1998]. We reasoned out. the Supreme Court held more emphatically that: chanrobles virtual law library ³In any case. It would. the closure of a part thereof to minimize expenses and reduce capitalization should similarly be recognized. NLRC. A careful examination of Article 283 indicates that closure or ces sation of business operation as a valid and authorized ground of terminating employment is not limited to those resulting from business losses or reverses. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. that said statutory provision applies to closure or cessation of an establishment or undertaking. 405 (1997)]. NLRC. March 11. be stretching the intent and spirit of the law if we were to unjustly interfere in management¶s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. R. 125887. Inc. in fact. 148340.´ Principle of closure under Article 283 applies in cases of both complete and partial cessation of business operation. chanrobles virtual law library Closure of outlets. March 10. G. [339 Phil. In the 2004 case of Cama vs. vs. No.Employer may close its business whether it is suffering from business losses or not. whether it be a complete or partial cessation or closure of business operation. [G. Joni¶s Food Services. 153021. 395. Although Article 283 uses the phrase ³closure or cessation of operation of an establishment or undertaking. 26. [127 SCRA 706].T. In Industrial Timber Corporation vs. indeed. 2004]. No. [G.

A. hence. the employees affected were not entitled to separation pay. April 15. thus: chanrobles virtual law library ³Broadly speaking. 154368. not necessarily the entire business operations. chanrobles virtual law library It is worth noting in this regard that the employer¶s prerogative to close or abolish a department or section of his establishment for economic reasons such as to minimize expenses and reduce capitalization is as much recognized as management¶s prerogative to close the entire establishment and cease operations due to adverse economic conditions. vs.outlets or branches.] Inc. February 17. The Supreme Court considered this contention without merit. April 15. Batangas is neither a closure nor retrenchment. Cheniver Deco Print Technics Corporation vs.T. R. vs.´ (Citing Coca -Cola Bottlers [Phils. separation pay should not be awarded to the private respondents. 2005]. According to the 2005 case of Danzas Intercontinental. R. In a 2000 case. The condition of business losses is normally shown by financial documents duly audited by independent auditors. No. No. 599 [1991]). 2005). Tomas. 2000]. No. 148340. [G. it held that since the closure was due to s erious losses duly proven by clear evidence. petitioner contends that the transfer of its business from its site in Makati to Sto. [G. It must be stressed that the phrase µclosure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses¶ under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company¶s business. G. NLRC. Jan. chanrobles virtual law library Burden of proof in case closure is due to losses. (J. in our view. Relocation of business amounts to cessation of operations. the same evidence is generally requ ired when the termination of employees is by reason of closure of the establishment or a division thereof for economic reasons. NLRC. General Services vs. NLRC. It is well settled that the burden of proving that the closure is bona -fide falls upon the employer. 2004). Moreover. although the more overriding consideration . vs. Audited financial statements necessary in closure due to losses. (Danzas Intercontinental. petitioner has to accord its employees some relief in the form of severance pay. No. Inc. Daguman. Daguman. It ruled that even though the transfer was due to a reason beyond its control. 26. 194 SCRA 592. Inc. R. G. 122876. 154368. R. there appears no complete dissolution of petitioner¶s business undertaking but the relocation of petitioner¶s plant to Batangas. amounts to cessation of petitioner¶s business operations in Makati.

2000]: ³(S)ince the closure was due to the act of the government to benefit the petitioners as members of the Patalon Estate Agrarian Reform Association by making them agrarian lot beneficiaries of said estate. [G. 156292. Me-Shurn Workers Union FSM. even on appeal with the NLRC. The termination of their employment was not caused by the private respondents. the right of affected employees to separation pay is lost for obvious reasons. who are in the position to evaluate evidence. R. if the business losses that justify the closure of the establishment are duly proved. In the 2005 case of Me-Shurn Corporation vs. ultimately to take over . chanrobles virtual law library Evidence of losses in a closure case should not be presented for the first time on appeal with the Court of Appeals or Supreme Court. private respondents¶ landed estate pursuant to R. occurred through no . No. Patalon Coconut Estate. 2005] and Danzas Intercontinental [supra]. The Supreme Court thus said in National Federation of Labor vs. PEARA.those that justify the closing of its business and show the losses in its operations . The resulting closure of the business establishment. [G. Matters regarding the financial condition of a company . the High Tribunal held that as the employer-petitioners have the burden of proving the existence of an authorized cause. good faith. 6657. No. under justifiable circumstances.are questions of fact that must be proven below. they should have presented the company¶s audited financial statements before the Labor Arbiter or. The employer must prove that 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. Article 283 does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees as in the case of closure of the employer¶s business because a large portion of its estate was acquired b y the Department of Agrarian Reform pursuant to the Comprehensive Agrarian Reform Program under Republic Act No. March 2. Parenthetically. for the termination of petitioners¶ employment can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a cooperative. A. January 11. The blame. Otherwise. as agrarian lot beneficiaries. if any. R. when it was placed under CARP. That they failed to do so and only presented these documents to the Court of Appeals on certiorari is lamentable considering that the admission of evidence is outside the sphere of the appellate court¶s certiorari jurisdiction. 127718. the employer closing his business is obligated to pay his employees their separation pay. the petitioners are not entitled to separation pay. Closure due to CARP.is. of course. NLRC. 6657.

in the case of Manaban vs. the Supreme Court said: ³Anent the legality of the Labor Arbiter¶s award of separation pay in favor of petitioners.´ chanrobles virtual law library Retrenchment and closure of business. No.A. distinguished. Such would be tantamount to dealing a DOUBLE WHAMMY against the landowner who was forced to relinquish or part with the ownership of his land by an act of the State.fault of the private respondents. R. [G.¶ (Emphasis supplied) ³The ruling in the parallel case of National Federation of Labor vs. respondent NLRC correctly ruled that the termination of employer-employee relationship as a result of the implementation of the Comprehensive Agrarian Reform Law does not make out a case for illegal dismissal or termination due to authorized cause under Article 283 of the Labor Code as to warrant the payment of separation pay. it was something forced upon them by an act o f law or the State. Sarphil Corporation. The closure of business operations contemplated under Article 283 refers to a voluntary act or decision on the part of the employer. primarily because dismissal presupposes a unilateral act by the employer in terminating the employment of its workers. 150915. No. Quoting the Court of Appeals¶ decision affirming the ruling of the NLRC. [G. . The resulting severance of employment relationship between the parties came about INVOLUNTARILY. NLRC. is apropos.T. General Services vs. If the landowners ceased their operation. it was not because they wanted to. April 11. the Supreme Court categorically held that former employees who became beneficiaries of the Comprehensive Agrarian Reform Program are not entitled to separation pay because the closure of the business of their employer is compelled by law and not by the decision of its management. R.´ chanrobles virtual law library In 2005. not one forced upon it. Rather. There. The 2004 case of J. NLRC. as in this case. xxx. Thus. viz: µx x x The resulting severance of employment relation between the parties does not make out a case of illegal dismissal nor of termination due to cessation of business operation or undertaking under Article 283 of the Labor Code warranting payment of separation pay. 2005]. the Supreme Court had occasion to re-affirm the ruling in the above 2000 case of National Federation of Labor [supra]. It would be the height of injustice and inequity if the workers who benefited from the takeover of the lands and becoming new owners in the process would still be allowed to exact payment from their former employer-landowner in the form of separation pay benefit. We quote with approval the following disquisitions of public respondent which We have found to be substantiated by the evidence. by an act of the Law or State to benefit petitioners by making them agrarian lot beneficiaries. 148340.

157611. 266 SCRA 24. Termination of an employment may be predicated on one without need of resorting to the other. Sept. 1997. On the other hand. they are actually two separate and independent authorized causes for termination of employment. the ground cited by petitioner in terminating its employees working in its Food and Beverage Department (F & B Department) was retrenchment. The reason is that when petitioner decided to cease operating its F & B Department and open the same to a concessionaire. it did not reduce the number of personnel assigned thereat. Inc. 24. August 9. [G. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. R. The Supreme Court. it cited jurisprudence relating to retrenchment to support its resolution and conclusion. While an employer may have a valid ground for implementing a retrenchment program. No. Article 283 requires that separate 30-day prior notices should be sent to the affected employees and to the Department of Labor and Employment. Pulp and Paper. NLRC. 2005]. found closure as the most appropriate ground. 1997). however. while the Court of Appeals defined the issue to be the validity of dismissal due to alleged closure of business. It is sometimes also referred to as d own-sizing. chanrobles virtual law library Closure of business. It terminated the employment of all personnel assigned at the department. No. In this case. G. it is not excused from complying with the required written notice served both to the employee concer ned and the DOLE at . This requirement is mandatory. Closure of business as an authorized cause for termination of employment aims to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. In this case. vs. 80. Notices required under Article 283. usually due to financial losses. 2. (Fuentes vs. is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment. NLRC. on one hand. 2004] discusses in clear terms the distinction between retrenchment and closure of business. retrenchment is reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. 116593. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. 32. Jan. R. Inc.January 26. NLRC. vs. mandatory. While the two are often used interchangeably and are interrelated. chanrobles virtual law library The foregoing distinction was reiterated in the 2005 case of Alabang Country Club.

The notice requirement is a substitute for the prior -clearance requirement in case of termination of employment. 2. G. G. However. (PT & T vs. Consequently. it was ruled that a notice served on the employee to be retrenched and to the DOLE three (3) days short of the 30 days required by law is procedurally defective. [G. effect per Agabon case. The notice to the employee is required to enable him to contest the factual bases of the management decision or good faith of the termination before the DOLE. Notice to the employee. the employer should be held liable in the amount of P20. No. April 14. The notice to the Department of Labor and Employment (DOLE) is necessary to enable it to ascertain the verity and truth of the cause of termination. The dismissal remains valid and legal but the employer is made to pay an indemnity in the form of nominal damages for non compliance with the procedural requirements of due process. rationale. Abelgas. 2005). 147002. In addition. R. No. R.00 as nominal damages for non-compliance with the procedural requirements of due process. In the 2005 case of Cajucom VII vs. Rationale for the notice requirement. Notice to DOLE. 148532. No. April 15. 2004]. In Agabon. G. 2005 Absence of notice does not render the dismissal ineffectual. NLRC. NLRC. 2004). [G. Cabinet Bill No. April 15. while this infirmity cannot be cured. R. . the Supreme Court ruled that dismissal for authorized cause but without complying with the notice requirement does not make the dismissal illegal or ineffectual. TPI Philippine Cement Corporation. NLRC. vs.least one month prior to the intended date of retrenchment. 45 which was later enacted into law as Batas Pambansa Bilang 130). February 11. R. (Explanatory Note. (Emco Plywood Corporation vs. 2005]. defective or illegal. 147002. rationale. 149090.000. No. R. (PT & T vs. Failure to observe 30-day prior notice rule. No. this notice requirement gives employees some time to prepare for the eventual loss of their jobs and their corresponding income. it should not invalidate the dismissal. 158693 November 17. 1.

according to the Supreme Court in Dole Philippines. Notice to DOLE need not be complied with in case of voluntary personnel reduction program. Petitioner accurately invoked the case of International Hardware . 2005]. the section heads. [176 SCRA 256 (1989)]. (Ibid. 147002. it. chanrobles virtual law library Notice to DOLE should state correct number of workers to be terminated.000. the Supreme Court held that while the employer¶s failure to comply with the one-month notice requirement prior to retrenchment does not render the termination illegal. A notice sent to the foremen. April 15.00. redundancy. 2001]. not on their supervisors. Based on prevailing jurisprudence. No. [G. R. Inc. 120009. NLRC. NLRC. vs. Such notice is defective if it stated that the company would terminate the services of 104 of its workers but had actually dismissed 250. however.. it was ruled that if an employee consented to the retrenchment or voluntarily applied for retrenchment with the employer due to the installation of labor-saving devices. The written notice should be served on the employees themselves.). NLRC. In International Hardware. Philippine Telegraph & Telephone Corporation vs. Well-settled is the rule that notice to the Department of Labor and Employment need not be complied with if the termination of employment under Article 283 was made voluntarily by the employees pursuant to a valid personnel reduction program. the lack of notice to the DOLE. the amount of indemnity is pegged at P30. supra). chanrobles virtual law library In a subsequent 2001 case.In another 2005 case. entitling the dismissed employee to payment of indemnity in the form of nominal damages. September 13. No. [G. Abelgas. renders the same defective. closure or cessation of operation or to prevent financial losses to the business of the employer. the supervisors and the department heads instructing them to retrench some of the workers based on certain guidelines is not the required notice contemplated by law. Inc. (Emco Plywood Corporation vs. vs. The notice required to be sent to the DOLE should state clearly the correct number of workers to be terminated based on the grounds cited in Article 283. the required previous notice to the Department of Labor and Employment is not necessary as the employee thereby acknowledged the existence of a valid cause for termination of his employment. does not render the voluntary redundancy program void. R. Notice should be served to employees themselves.

The law requires that the notice to the employee who will be terminated for authorized causes and notice to the Department of Labor and Employment (DOLE) must be served at least one (1) month before the intended date of effectivity thereof. there is no need to rule on this contention. had the occasion to reiterate the rule that .. May the employer validly pay in advance. Having established private respondent¶s good faith in undertaking the assailed redundancy program. 141947. 2001]. they would not have agreed to their termination.[supra]. [G. R. upon the service of notice to the employee and to the DOLE. the same ruling in International Hardware [supra] that the mandated one (1) month notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker himself. In other words. July 5. NLRC. not a substitute for written notice requirement. Santos vs. Pepsi-Cola Products Phils.. The employer paying the advance salaries should still comply with said notice requirement one month prior to the intended effectivity of the termination. it must be stressed that the service of separate notices to the employees affected and to the Department of Labor and Employment at least thirty (30) days from the effectivity of the termination for authorized cause s hould still be duly complied with. Advance payment of one month salary. Such advance payment cannot be treated as a replacement or substitute for the notices required under the law. CA. was cited. the salary of the employee equivalent to said one (1) month period but without requiring him to report for work within said period? This question may be answered in the affirmative considering that the law does not preclude such procedure and the same is more beneficial to the employee who will then have enough. Inc. in its Resolution on the Motion for Reconsideration. 117040. chanrobles virtual law library In another 2001 case. The case in point is the 2000 en banc case of Serrano vs. unimpeded time to look for a new job during the one (1) month period he is no longer required to work by his employer. nor would they have signed the corresponding releases and quitclaims. Petitioners assail the voluntariness of their consent by stating that had they known of PEPSI¶s bad faith. 2000]. most of the private respondents even filled up application forms to be considered for the redundancy program and thus acknowledged the existence that their services were redundant. [G. May 4. Here. No. No. where the Supreme Court. the advance payment of the salary for one month does not dispense with the requirement of the 1-month prior notice. However. R.

One-month notice requirement. 1998 to February 15. as the retrenc hment involved was merely temporary and not permanent. Such purpose would not be served by the simple expedient of paying thirty (30) days salary in lieu of notice of an employee¶s impending dismissal. chanrobles virtual law library This is the conclusion of the Supreme Court in the 2005 case of Philippine Telegraph & Telephone Corporation vs. Payment of thirty (30) days salary cannot compensate for the psychological effect or the stigma of immediately finding one¶s self laid off from work. This is so because Article 283 itself does not speak of temporary or permanent retrenchment. Indeed. They aver that this has been recognized by the Supreme Court. September 27. Besides.nothing in Article 283 of the Labor Code gives the employer the option to substitute the required prior written notice with payment of thirty (30) days salary. 248 SCRA 532]. which involves the temporary retrenchment of some employees dubbed as Temporar y Staff Reduction Program (TSRP) lasting for not more than five and a half (5½) months. as in this case. It is not for the employer to make substitutions for a right that a worker is legally entitled to. The petitioners insist that the one-month notice requirement does not apply in this situation. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. a job is more than the salary that it carries. we must not distinguish). R. the purpose of such previous notice is to give the employee some time to prepare for the eventual loss of his job as well as the DOLE the opportunity to ascertain the verity of the alleged authorized cause of termination. NLRC. as by then the loss of employment would have been a fait accompli. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish. [G. in this manner: ³Article 283 speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. 2005]. 1995. applies to both permanent and temporary-lay off. 1999. [G. and they quote Sebuguero vs. April 15. 147002. there is no need to qualify the term. 115394. to commence from September 1.R. It cannot be a fully effective substitute for the thirty (30) days written notice required by law especially when. continues the High Court. NLRC. hence. No. No.´ chanrobles virtual law library The petitioners¶ adherence to the above pronouncement of the Court is . t he fact is that no notice was given to the Department of Labor and Employment (DOLE). It must be stressed that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent.

the one-month notice rule was not complied with. 1998. Davide. Clearly then. . Separation pay under Article 283. On the contrary. Further. Hearing in termination of employment for authorized causes need not b e conducted by the employer. 1998. while the other two grounds of retrenchment and closure or cessation of operations not due to serious business losses or financial reverses are also separately grouped as one. Thus. the vicepresident of the COG. Hearing is not required in termination for authorized causes under Article 283 (and Article 284). on the business and financial circumstances compelling retrenchment and resulting in redundancy. speaking through Chief Justice Hilario G. to respondents Bayao and Castillo informing the latter that they were included in the TSRP to be implemented effective September 1. Jr.. 1998 was dated August 21. the Supreme Court. Amount of separation pay depends on the ground cited.misplaced. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. 81. The respondents had barely two weeks¶ notice of the intended retrenchment program. in the case at bar. The rationale behind this rule is that where the ground for the dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. there are no allegations which the employee should refute and defend himself from. allege any malfeasance or nonfeasance on the part of the employee. For purposes of reckoning the appropriate separation pay to be paid to terminated employees under Article 283. the petitioners never showed that any notice of the retrenchment was sent to the DOLE. and not the compliance with the one-month notice requirement. 1998 and Bayao on August 26. the memorandum of Del Rosario. emphasized the mandatory nature of the said notice. Nowhere can it be found in Sebuguero that the one-month notice may be dispensed with. 82. to begin with. to require the company to hold a hearing at which private respondent would have had a right to be present. The said memorandum was received by Castillo on August 24. The particular issue involved in the said decision was the duration of the period of temporary lay-off. the gro unds of installation of labor-saving devices and redundancy are grouped together. In such case. At the same time. there is no need for an investigation or hearing to be conducted by the employer who does not.

closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses. the respondent-employee who had rendered service from April 21. Rules to Implement the Labor Code). a fraction of at least six (6) months being considered as one (1) whole year where the termination of employment is due to either: a. while the latter will be paid if the ground is retrenchment or closure or cessation of business operations not due to serious business losses or financial reverses. By way of illustration. R. Book VI. NLRC. retrenchment to prevent losses. the minimum amount of separation pay under Article 283. (See also Section 9 [a]. in Clarion Printing House. (See also Section 9 [b]. a fraction of at least six (6) months being considered as one (1) whole year. Inc. chanrobles virtual law library ³One month´ pay. whichever is higher. Rule I. in case his termination is due to the installation of labor-saving devices or redundancy. vs. 1997 to October 22. 2005]. the former will be applied if the ground is installation of labor -saving device or redundancy. disease under Article 284. [G. An employee is entitled to termination pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service. June 27. or chanrobles virtual law library c. 148372.Separation pay in cases of installation of labor-saving devices or redundancy. Rule I. whichever is higher. (1) ³One month pay´ is the minimum amount an employee terminated under Article 283 should receive. irrespective of the period of service he has rendered for the employer since the law itself does not impose any such minimum period of service as requisite for entitlement thereto. Separation pay in cases of retrenchment or closure not due to serious business losses or disease. . (2) The employee should receive either ³one month pay for every year of service´ or ³one-half (½) month pay for every year of service´ depending on the ground invoked for the termination. Rules to Implement the Labor Code). No. The employee is entitled to separation pay equivalent to one (1) month pay or at least one-half (½) month pay for every year of service. Thus. Book VI. or b. 1997 was held to be entitled to a separation pay equivalent to one (1) month salary.

2004]. irrespective of the length of service of the affected employee. [G. [G.if the ground invoked is installation of labor-saving device or redundancy. his period of service shall be deemed at least two (2) years for purposes of computing his separation pay. No. Indeed. Inc. Payment of separation pay under Article 283 is justified only if the ³closure or cessation of operations´ is not due to serious business losses or financial rev erses. 153021. if an employee has served for 1 year and 5 mont hs. the employer is not liable to pay any separation pay. 112546. it is absurd to hold that affected employees who have serve d for less than six (6) months are not entitled to the minimum separation pay of one (1) month prescribed thereunder. the Supreme Court en banc categorically declared that when the closure or cessation of operations is due to seriou s business losses or financial reverses. grants the minimum amount of separation pay of one (1) month pay. March 13. By way of illustration. In the leading case of North Davao Mining Corporation vs. irrespective of the ground invoked for the termination under Article 283. if the ground invoked is retrenchment or closure or cessation of business operations not due to serious business losses or financial reverses. his period of service shall only be considered one (1) year. Joni¶s Food Services. as earlier posited. one cannot squeeze blood out of a dry stone. or chanrobles virtual law library b. requisite for entitlement to separation pay. the employees affected were not entitled to separation . No. he shall be entitled to a separation pay equivalent to two (2) months pay (1 month pay x 2 years). he shall be entitled to a separation pay equivalent to one (1) month pay (½ month pay x 2 years). Indeed. It must be noted that the phrase ³a fraction of at least six (6) months shall be considered one (1) whole year´ found in Article 283 refers only to the computation or reckoning of the separation pay of affected employees who have served for more than one (1) year. This ruling was reiterated in the 2004 case of Cama vs.. NLRC. It does not pertain to employees whose service is less than one (1) year as the law. (4) In case the employee has served for at least two (2) years: a. he shall be entitled to at least one month pay. 1996]. Closure or cessation of operations. no distinction should be made. where it was pronounced that since the closure was due to serious losses duly proven by clear evidence. R.(3) In case the employee has served for one (1) year. R. If he has served for 1 year and 6 months. When the law does not distinguish. Nor water out of parched land. March 10.

2004). In a 2004 case. (Emco Plywood Corporation vs. therefore. 1998). 2000]. April 14. debt-equity ratio. therefore. The Honorable Second Division NLRC. gross profit ratio and net profit (loss) ratio. 2005]. Inc. No. not a bar to question validity of termination under Article 283. 394. scrutini zed the balance sheets and income statements by using such basic accounting tools as the working capital ratio. The Labor Code prohibits such arrangement under Article 222 of the Labor Code. April 14. and in the earlier cases of Trendline Employees Association-Southern Philippines Federation of Labor (TEA-SPFL) vs. Separation pay not subject to deduction for attorney¶s fees or negotiation fees. Receipt of separation pay and execution of quitclaims by employees terminated under Article 283 do not bar them from instituting an action for illegal dismissal. 25. 97846. In the 2004 case of Emco Plywood Corporation vs. The obligation to pay attorney¶s fees belongs to the union and cannot be shunted to the individual workers as their direct responsibility. G. R. it was held that the separation pay mandated to be paid under Article 283 cannot be reduced by any deductions for attorney¶s fees that may have accrued as a result of the renegotiations for a new CBA. Accordingly. No. The law looks with disfavor upon qu itclaims and . Abelgas. NLRC. R. 681. Their consent was similarly vitiated by mistake or fraud. No. Marine Corporation vs. to determine the veracity of the claim of the company that it has suffered extreme losses. May 5. the Supreme Court. 152039. not voluntarily entered into by them. In this case. April 8. 148532. [G. the retrenchment was declared illegal and of no effect. Philippine Carpet Manufacturing Corporation. The quitclaims executed by retrenched employees in favor of petitioners were. it concluded that indeed. the employer is not obligated to pay separation benefits. F. The law has made clear that any agreement to the contrary shall be null and void ab initio. R. Considering that the ground for retrenchment availed of by petitioners was not sufficiently and convincingly established. [340 SCRA 383. R. The same holding was made by the Supreme Court in the 2005 case of F. vs. 148532. Quitclaim. 2004]. 1997] and Philippine Carpet Employees¶ Association vs. where the retrenchments were found to be illegal as the employers had failed to prove that they were actually suffering from poor financial conditions. No. September 14. Sept. the quitclaims were deemed illegal as the employees¶ consent had been vitiated by mistake or fraud. (Bogo -Medellin Sugarcane Planters Association. [G. G. NLRC. the company was suffering from serious losses and. [338 Phil. Abelgas.pay.

‡ New owner is not assignee of CBA in sale in good faith. (Martinez vs. ‡ Liability of buyer or transferee of business in good faith . ‡ Appointment of same directors and employees. What are the requisites for the ground of disease? The following requisites must be complied with before termination of employment due to disease may be justif ied: . The acceptance of those benefits would not amount to estoppel. ‡ Transfer of business due to death . What is the legal consequence of merger? In merger. 272 SCRA 793).. G. May 29.Not obligated to absorb employees except when this is specifically stipulated. ‡ Generous termination pay package indicates good fait h. not an authorized cause to terminate employment. chanrobles virtual law library ‡ Sale or transfer of business in bad faith . not indicative of bad faith.obligations of deceased not enforceable against the transferee. Thus. deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. NLRC. Rule 86 of the Rules of Court. 83. the employees of the merged companies or entities are deemed absorbed by the new company. claims f or unpaid benefits should be filed in the intestate proceedings involving the estate of the deceased in accordance with Section 5. 1997. What are the legal principles that may be invoked in cases of sale. As a rule. 85. 117495.releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities.Liable to the employees. The amounts already received by the retrenched employees as consideration for signing the quitclaims should. be deducted from their respective monetary awards. et al. The obligation of the new company involves not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former employers as well. 84. transfer or spin-off of business? ‡ Change of ownership of business. No. however. R.

and 6. 3. the competent physician in this case would be a cardiolo gist. No.´ the person referred to in the law. For instance. ‡Company physician is not a ³competent public health authority. 4. ³Competent public health authority´ refers to a government doctor whose medical specialization pertains to the disease being suffered by the employee. Medical certificate issued by company doctor. it having been issued not by a ³competent public health authority. 2. or b. whichever is greater.´ ‡Medical certificate issued by company doctor is not sufficient. there is a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within a period of six (6) months even with proper medical treatment. the Supreme Court has consistently ruled against the validity of . an employee who is sick of tuberculosis should consult a government-employed pulmonologist who is competent to make an opinion thereon. or c. prejudicial to his health. In the absence of the required certification by a competent public health authority. 12. ‡Burden of proof rests on the employer. his continued employment is either: a. 1987.1. Deputy Minister of Labor. a fraction of at least six (6) months being considered as one (1) whole year. notice of termination based on this ground should be served to the employee. If the employee has cardiac symptoms. Hon. prohibited by law. not acceptable. the employee is suffering from a disease. A medical certificate issued by a company¶s own physician is not an acceptable certificate for purposes of terminating an employment based on Article 284. Aug. 58639. an indispensable requisite. G. 153 SCRA 38 [1987]). (Cebu Royal Plant [San Miguel Corporation] vs. chanrobles virtual law library Medical certificate.separation pay shall be paid to him in the amount equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service. prejudicial to the health of his co-employees. R.

On the contrary. otherwise. No. they bear all the earmarks of regularity in their issuance and are entitled to full probative weight. R. Feb. August 2. 614 1998]. [G. No. Common sense dictates that an ordinary worker does not need to have these medical certificates to be notarized for proper presentation to his company to prove his ailment. 141702-03. Inc. It did not likewise show proof that the employee¶s asthma could not be cured in six (6) months even with proper medical treatment. NLRC. Book VI. had written their respective license numbers below their names and signatures. Ltd. NLRC. Here. February 27. 116384. Rule I. 142293. It has been said that verification of documents is not necessary in order that the said . the company doctor diagnosed her condition to have vastly improve d. vs. the nature and the duration of the procedures performed by the dentist on him. It is sufficient that the physician and the dentist who examined the employee. NLRC. 1995]. that the requirement for a medical certificate under Article 284 cannot be dispensed with. of the Rules to Implement the Labor Code. 7. 2001]. R. the dismissal of the employee based on a finding that she was suffering from asthma was declared illegal because of the absence of a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. NLRC. [299 SCRA 608. 2003]. G. (Cruz vs. Medical certificates presented by an employee to prove (a) his illness. chanrobles virtual law library In the 2001 case of Cathay Pacific Airways. [G. aside from their respective letterheads. when she returned to the company clinic five (5) days after her initial examination. No. vs. 2000). [G. the termination of the employee due to PTB sickness was declared not justified in the absence of medical certificate issued by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. April 4. 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. 102969. No. the employee was dismissed based only on the recommendation of its company doctors who concluded that she was afflicted with asthma. CA. and (b) the period during which he was incapacitated to work are admissible in evidence and have probative weight even if not notarized. hence. R. the High Court reiterated its earlier ruling in Triple Eight Integrated Services. vs. In the 2003 case of Sy vs. R.the employee¶s dismissal. Inc. a requirement under Section 8. chanrobles virtual law library Medical certificate as evidence of illness. In General Textile.

G. Rule I. it is only where there is such prior certification that the employee could be validly terminated from his job. petitioner presented a certification issued by the Phil ippine labor attache attesting to the fact that private respondents were subjected to a medical examination after their arrival in Kuwait and were found to be unfit for employment due to lung defects. Clearly. In the proceedings before the POEA. NLRC. petitioner did not present any certification whatsoever. even assuming that the letter from the Ministry complied with the Omnibus Rules. . ruled that there is nothing in the records to show that petitioner co mplied with Sec. No. the Supreme Court. (Union Motor Corporation vs. 9. yet grossly unsuccessful attempt at compliance with Philippine laws. 8. 2001]. Dec. Rather. 116807. Book VI of the Rules to Implement the Labor Code before private respondent-doctors were dismissed. April 14. R. (Tan vs. It devolves upon the employer the obligation to obtain a certificate from a competent public authority that the employee¶s disease is at such stage or of such nature that it cannot be cured within six (6) months even with prior medical treatment. R. not sufficient. petitioner has not proven that the same was presented to private respondents prior to their termination. [G. NLRC. In the 2001 case of ATCI Overseas Corporation vs. Book VI. a belated. there is no finding that the disease allegedly afflicting private respondents is of such nature or at such a stage that it cannot be cured within a period of six (6) months with proper medical treatment. 1997. 159738. See also Phil. It was only when the case was appealed to the NLRC that petitioner belatedly introduced in evidence a letter from the Ministry stating that private respondents were found to be positive for tuberculosis and heart disease. who has the burden of proof to justify that the termination was supported by said certificate. thus making private respondents¶ dismissal illegal. of the Omnibus Rules was not complied with. 8. Clearly. August 9. 271 SCRA 216. 2004) Medical certificate issued by Labor Attache and Ministry of Public Health of Kuwait. the letter appears to have been an afterthought. produced by petitioner after an adverse judgment was rendered against it by the POEA. In addition. Sec. involving two (2) overseas Filipino workers who were recruited by the Ministry of Public Health of Kuwait to work as dental hygienists in that country for a period of 2 years but who were terminated after working for only two months based on alleged tuberculosis and heart disease. No. 143949. It is the employer. in declaring the termination as illegal. CA. Rule I. The certificate should be procured by the employer. Secondly. and not the employee. R. First of all. The letter from the Ministry and the certification by t he Philippine labor attache fall short of the demands of the Omnibus Rules.documents could be considered as substantial evidence. G. No.

however. It did not make even a token offer for the employee to take a leave of absence as what it provided in its Cont ract of Service. (ATCI Overseas Corporation vs. NLRC. Notably. in effect. Tan vs. G. Aug. in accordance with the . Deputy Minister of Labor. burden of proof is on the employer. chanrobles virtual law library Existence of certificate. it was held that the award of moral and exemplary damages to the employee should be affirmed. Although Article 284 does not require the service of notice to the employee. In the same 2001 case of Cathay Pacific Airways [supra]. Cebu Royal Plant vs. CA. G. Sy vs. 2001. April 15. Notice to employee and the DOLE regarding termination due to disease. Employee dismissed without the medical certificate is entitled to moral and exemplary damages. Paramio. more importantly. The burden of proving the existence of such a medical certificate required under the law is upon the employer. and 2. Notice of termination in case the certification of the competent public health authority is to the effect that the sickness is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. CA. if only to document the procedure taken by the employer prior to terminating the employment: 1. necessary. Notice to the sick employee to submit himself for medical examination by a competent public health authority to determine not only his fitness for work but. the decision to dismiss the employee was reached after a single examinati on only. 9. R. supra). failing to observe the provision of the Labor Code which requires a certification by a competent public health authority. No.Employ Services and Resources. No. R. 143949. The employer¶s medical officers recommended the employee¶s dismissal even after having diagnosed her condition to have vastly improved. 144786. Inc. 271 SCRA 216 [1997]. it is necessary under the following circumstances. for the purpose of having his sickness certified that it is of such nature or at such a stage that it can be cured within a period of six (6) months with proper medical treatment. vs. supra). The employer is presumed to know the law and the stipulation in its Contract of Service with the employee. not the employee. because the employer summarily dismissed the employee from the service based only on the recommendation of its medical officers. 2004. The second notice above should be given not only to the employee but also to the Department of Labor and Employment.

158693. 153148. the employee no longer has any right to the . whichever is greater. (RESIGNATION) 86. No hearing require in case of termination due to disease. The separation pay of an employee terminated on the ground of disease is equivalent to at least one (1) month salary or to one-half (½) month salary for every year of service. NLRC. 07. Acceptance of the resignation tendered by an employee is necessary to make the resignation effective. [G. the acceptance of a resignation does not require the conformity of the resigning employee. 54223. as distinguished from just cause. What are the requisites for termination of employment by employee without just cause? In case of termination without just cause. National Federation of Labor. service of such notice to the employer at least one (1) month in advance. No. July 15. Being an authorized cause. (Shie Jie Corp. TERMINATION OF EMPLOYMENT BY EMPLOYEE. Feb. Labor Code. Separation pay in case of lawful dismissal based on disease. and 2. 1988). No. necessary. 2005). R. vs. (Rase vs. Minister of Labor. No. R. Such conformity only indicates that the employee was forced to resign for which reason her ³conformity´ was obtained to make it appear as voluntary or legal. the employer must give the employee and the Department of Labor and Employment written notices thirty (30) days prior to the effectivity of his s eparation. 1994). G. R. 26. vs.R. the following requisites must be complied with by the employee: 1. Baby Bus. where the Supreme Court opined that if the dismissal is based on authorized causes under Articles 283 and 284. 2004]. hearing is not necessary to be conducted by the employer prior to the termination of employment of the sick employee. 110637.ruling in the case of Agabon vs. November 17. (Article 284. G. G. written (not verbal or oral) notice of the termination (commonly known as resignation letter). a fraction of at least six (6) months being considered as one (1) whole year. However. No. Oct. Once resignation is accepted. Acceptance of resignation. NLRC. Inc.

643174. No. 1997. To say that the employee who has resigned is illegally dismissed is to encroach upon the right of the employers to hire persons who will be of service to them. The employee who resigned cannot un ilaterally withdraw his resignation. Inc. Oct. R. the employee retains the job. 2005). If the employer does not. G. may still be withdrawn anytime before its acceptance by the employer. In the 2005 case of Great Southern Maritime Services Corporation vs. was held as an unreasonable inference. 1991. 140189. chanrobles virtual law library Employment elsewhere during the pendency of case. His resignation is. the employee cannot claim illegal dismissal for the em ployer has the right to determine who his employees will be. the employer¶s submission that respondent-employees voluntarily resigned because of their desire to seek employment elsewhere. Feb. 1997. Inc. No. 267 SCRA 202). It will then be up to the employer to determine whether or not his services would be continued. however. The assumption of a new job by an employee prior to receiving his employer¶s acceptance of his resignation is clear ly inconsistent with any desire to remain in employment. June 19. that resignation terminates the employer-employee relationship. effect. the employee no longer has any right to the job. as if he were reapplying for the job. (Custodio vs. as accentuated by the concurrent fact that two of the respondents already have jobs in Singapore. Once accepted. 81087. (G. Acuña. therefore. withdrawal thereof can no longer be made by the resigning employee. G.job. 1990). therefore. Once accepted. R. effect. (Intertrod Maritime. If the employee later changes his mind. No. Assumption of new job by employee prior to employer¶s acceptance of resignation. vs. (Philippines Today. The fact that these two have already found employment elsewhere should not be weighed against their favor. Withdrawal of resignation. 280 SCRA 116). It should be expected that they would seek other means of income to tide them over during the time that the legality of their termination is under . NLRC. 198 SCRA 318). 112965. NLRC. Jan. G. R. No. vs. R. A resignation tendered by an employee. NLRC. except with the consent or agreement of the employer. It goes without saying. 2. he must ask for approval of the withdrawal of his resignation from his employer. If the employer accepts said withdrawal. G. (Philippine National Construction Corporation vs. July 19. R. 28. irrespective of whether it was made revocable or irrevocable. deemed effective. chanrobles virtual law library The acceptance of the withdrawal of resignation is the employer¶s sole prerogative. effect of acceptance thereof. 30. No. Ministry of Labor and Employment. 120961.

NLRC. supra). Such money claims may be given due course only when the voluntariness of the execution of the quitclaim or release is put in issue. No. (Philippines Today. To allow him to do so would be to deprive the employer of his basic right to choose whom to employ. and he shall have the status of a stranger who cannot unilaterally demand an appointment. inhumane and unbearable treatment accorded the employee by the employer or his representative. effect. chanrobles virtual law library 87. in protecting the rights of the laborer. The law. all aspects of employment including hiring. chanrobles virtual law library Resignation and execution of quitclaim. vs.litigation. and 4. 3. A resigned employee who desires to take his job back has to reapply therefor. according to his own discretion and judgment. NLRC. G. 2. He cannot arrogate unto himself the same position which he earlier decided to leave. What are the requisites for serious insult as a ground to terminate employment by employee? . other causes analogous to any of the foregoing. impels neither the oppression nor self-destruction of the employer. What are the just causes for termination of employment by employee with just cause? An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: 1. 88. Once an employee resigns and executes a quitclaim in favor of the employer. (Philippine National Construction Corporation vs. 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. serious insult by the employer or his representative on the honor and person of the employee. chanrobles virtual law library Re-employment after acceptance of resignation. or when it is established that there is an unwritten agreement between the employer and employee which would entitle the employee to other remuneration or benefits upon his or her resignation. 120961. 2. It has been held that an employer is free to regulate. Inc. R. 1997). They should not be faulted for seeking employment elsewhere for their economic survival. he is thereby estopped from filing any further money claims against the employer arising from his employment. Oct.

and 3. What are the requisites for commission of crime as a ground to terminate employment by employee? The requisites for this ground are as follows: 1. 2. it was perpetrated against the person of the employee or any of the immediate members of his family. chanrobles virtual law library 91. it must injure the honor and person of the employee. 92. a crime or offense is committed. it is perpetrated by the employer or his representative. and 3. it was committed by the employer or his representative. as distinguished from constructive dismissal. What are other analogous causes that may be invoked as a ground to terminate employment by employee? Other analogous causes that may be cited are: constructive dismissal or forced resignation. it must be committed by the employer or his representative.submission or tender of resignation . the insult must be serious in character.However. th e employee is made to do or perform an involuntary act . the following requisites must concur: 1. unreasonable or unlikely as in the case of an offer involving a demotion in rank and a diminution in pay. and 2. 2. in forced resignation. 89.meant to validate the action of management in inveigling. What are the requisites for serious inhumane and unbearable treatment as a ground to terminate employment by employee? This ground may be invoked if the following requisites concur: 1. 90. luring or influencing or .In order to be considered a just cause to warrant the valid termination of employment by the employee without notice. What are the distinctions between constructive dismissal and forced resignation? Both forced resignation and constructive dismissal consist in the act of quitting because continued employment is rendered impossible. the treatment is inhumane and unbearable in nature.

According to the 2000 case of A¶ Prime Security Services. to say the least. No. Hahn .´ Resignation letters similarly worded and of same tenor. December 17. [G. and Mrs. 2004]. the High Court agreed with the NLRC and the CA that the two resignation letters at issue are dubious. NLRC. Maghuyop. In the 2005 case of Great Southern Maritime Services Corporation vs. Inc. [G. [G. waiver or release. May 9. 107320. In the 2005 case of Willi Hahn Enterprises. instead of doing the termination himself. Acuña. R. effect. no weight should be given to the employee¶s resignation letter which appears to have been written and submitted at the instance of the petitioner -employer. R. 1998 ³Dear Mr. 140189. and the second one entirely copied by the private resp ondent with his own hand from the first resignation letter. Voluntariness of resignation may be inferred from the language thereof. Feb. No. entirely drafted by the petitioner Agency for the private respondent to merely affix his signature. R. vs. They were written in a language obviously not of respondent's and ³lopsidedly worded´ to free the employer from liabilities. The CA¶s ruling was upheld thus: ³[w]hen the first resignation letter was a pro forma one. January 19. 160348. R. 2005]. 93. effect. [G. They also constitute evidence of forced resignation or that they were summarily dismissed without just cause.practically forcing the employee to effectuate the termination of employment. Resignation letter written and prepared by employer. 28. In the 2005 case of Mobile Protective & Detective Agency vs. voluntariness is not attendant. 2000]. 2005]. the employee¶s resignation letter reads: ³July 22. 159195. Ompad. vs. Some principles on resignation. A bare reading of their content would reveal that they are in the nature of a quitclaim. No. No. More so when the supposed resignation was not acknowledged before a notary public.they are waivers or quitclaims which are not sufficient to show valid separation from work or bar the employees from assailing their termination. Its form is of the company¶s and its wordings are more of a waiver and quitclaim. it was held that resignation letters which were all prepared by the employer and were substantially similarly worded and of the same tenor would reveal the true nature of these documents .

120038. and consequently. assigned in Iligan City. 105083. Instead of defending himself against the adverse audit report. Although she started as nanny to the son of petitioner Willi Hahn. In rejecting his contention. July 22..´ chanrobles virtual law library Act of employer in giving the employee the choice between resignation or investigation. 23. 20 August 1993. Lanao del Sur and Lanao Del Norte. Dec. the Supreme Court ruled that the employer did not violate any law when it gave the employee the option to resign because there is nothing illegal with the practice of allowing an employee to resign instead of being separated for just cause. the Court ruled that a salesman -promoter could not have been confused. Inc. (Belaunzaran vs. I hope that in some way. He later filed an illegal dismissal case claiming that his consent to the resignation was vitiated as he signed the company¶s ready made resignation letter because the latter threatened to file a estafa case against him.49 in a µspot audit¶ conducted by the company. a national-promoter salesman of Distilleria Limtuaco Co. We find no merit in respondent¶s claim that being a mere clerk. G. [G. the em ployee immediately filed a complaint for illegal dismissal thereby preempting an investigation by the employer on the matter. No. R. In a case where the employer asked the employee to submit her resignation letter or. she has risen to being the manager and officer-in-charge of the Willi Hahn Enterprises in SM Cebu branch.005.. not illegal.³I am respectfully submitting my resignation from Willi Hahn Enterprises effective today. coerced or intimidated into signing the resignation letter.R. NLRC. 1996). I was of some help to you and your family. 225 SCRA 526]. National Labor Relations Commission. ³Thank you for your assistance during the past. the Supreme Court declared: ³The letter is simple. if not. resigned after he was found to have a shortage of P49. No. candid and direct to the point. The Court concluded that he affixed his signature in the said letter of his own free will with full knowledge of the consequences thereof. so as not to smear her employment record. . she did not realize the consequences of her resignation. ³Very truly yours. ³LILIA MAGHUYOP´ In holding that the afore-quoted letter was voluntarily tendered by the employee. he voluntarily signed the resignation letter though there is no urgency in signing the same. to submit her written explanation to the complaints against her. ³In Callanta vs. 1998.

No. vs. which act is wholly incompatible to petitioner¶s assertion that he voluntarily resigned. Moreover. Dec. It is a basic rule in evidence that the burden of proof is on the part of the party who makes the allegations. NLRC. it was held that the failure of the employer to pursue the termination proceedings against an employee who resigned and to make her pay for the shortage incurred did not cast doubt on the voluntary nature of her resignation. exception. [G. No. effect. Feb. Had the separation of respondent been for dismissal due to loss of trust and confidence. No. Maghuyop. November 24. 2005]. Employee who alleges that she was coerced into resigning should prove such claim. No. 330]. 122876. R. 2000). G. Such. 28. the resigning employee¶s unsubstantiated and self-serving claim that she was coerced into signin g the resignation letter was not given any credence. Feb. [G. R. It is not uncommon that an employee is permitted to resign to save face after the exposure of her malfeasance. National Federation of Labor.´ In Great Southern Maritime Services Corporation vs. NLRC. The general rule is that the filing of a complaint for illegal dismissal is inconsistent with resignation. private respondent clearly manifested that he has no intention of relinquishing his employment. No. [G. A decision to give a graceful exit to an employee rather than to file an action for redress is perfectly within the discretion of an employer. Under the circumstances. She failed to discharge this burden. held: ³By vigorously pursuing the litigation of his action against petitioner. is not the case here considering her voluntary resignation. 112909. 153148. Acuña.R. (Cheniver Deco Print Technics Corporation vs. it was ruled that the execution of the alleged .Failure of employer to criminally prosecute employee who resigned. 1995. In Willi Hahn Enterprises. 17. the Court of Appeals¶ finding that respondent had no motive to resign because the charges of dishonesty were not fully substantiated has no basis. 2004)]. substantial evidence of the shortages and non -remittances would have been indispensable. In the same case of Willi Hahn [supra]. [G. 2005]. Citing Molave Tours Corporation vs. 17. the Supreme Court in Shie Jie Corp. the failure of petitioner to file action against the employee should be considered as an act of compassion for one who used to be a trusted employee and a close member of the household. 160348. R. 140189. vs. 250 SCRA 325. Filing of complaint negates resignation. R. July 15.

R. 1998. (St. G. No. 2004). 2005). Expression of gratitude to employer. or 3. supra). 2. Article 286 applies only by analogy. chanrobles virtual law library However. . May 9. Ompad. Michael Academy vs. Hence. NLRC. What is bona-fide suspension of operations for a period not exceeding six months? ‡ No law on temporary retrenchment or lay-off.³resignation letters cum release and quitclaim´ to support the e mployer¶s claim that respondents voluntarily resigned is unavailing as the filing of the complaint for illegal dismissal is inconsistent with resignation. the following situations are contemplated therein: 1. R. TEMPORARY SUSPENSION OF OPERATION FOR SIX MONTHS UNDER ARTICLE 286 94. effect. 95. 159195. It was filed not because she wanted to return to work but to claim separation pay and backwages. R. It would have been illogical for the employee to resign and then file a complaint for illegal dismissal. Maghuyop. What are the situations contemplated under Article 286 of the Labor Code when employment not deemed terminated? Based on the provisions of Article 286. this rule does not apply to a case where the filing of an illegal dismissal case by the employee who resigned was evid ently a mere afterthought. A resignation letter which contains words of gratitude and appreciation to the employer can hardly come from employees who are forced to resign. fulfillment by the employee of a civic duty. (Willi Hahn Enterprises. July 13. No. Abelgas. 119512. vs. fulfillment by the employee of a military duty. 148532. (Emco Plywood Corporation vs. No. G. 292 SCRA 478). (Mobile Protective & Detective Agency vs. bona-fide suspension by the employer of th e operation of his business or undertaking for a period not exceeding six (6) months. G. the finding that the employee's resignation is involuntary is further strengthened by the fact that he filed an illegal dismissal case the day after the alleged tender of resignation. April 14.

2004]. Employees are not entitled to their wages and benefits during the 6 month period. R. chanrobles virtual law library Employer may suspend his business operation for less than six months but not more. 148340. chanrobles virtual law library Suspension of work exceeding 6 months. In the 2005 case of Mayon Hotel & Restaurant vs. [G. Compensation of employees during the six-month suspension. [G. within the said period. NLRC. Therefore. 2005]. the employer employee relationship is deemed suspende d.‡ Extent of suspension of operation . General Services vs. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. the employer may validly suspend his business operation for a period of less than six (6) months.T. The employment relationship being suspended. In the 2004 case of J. pursuant to Article 286. May 16. after a suspension of operation for several months precipitated by a slowdown in sales without any prospects of improving. among others. the High Court declared that Article 286 is clear there is termination of employment when an otherwise bona fide suspension of work exceeds six (6) months. Article 286 of the Labor Code and the Rules to Implement the Labor Code are clear in stating that the period of suspension of operation of the employer¶s business or undertaking shall not exceed six (6) months. 26. Moreover. The reason is.A. at least temporarily. And even assuming that the closure was due to a reason beyond the control of the employer. and on the part of the workers. ‡ Burden to prove bona-fide suspension of operation is on the employer. held as evidence of good faith. 157634.not necessarily the entire operations.may involve only a section or department of the company . even assuming arguendo that the cessation of employment on April 1997 was merely temporary when hotel operations were suspended due to the termination of the lease of the old premises. it was ruled that the closure of business operation was deemed not tainted with bad faith because the decision to permanently close business operations was arrived at. effect. No. Suspension of operation prior to closure. both the employer and the employees cease to be bound. it still has to accord . Jan. R. by the basic terms and conditions of their employment contract .the employer regarding his obligation to provide salary to his workers. to provide their services to the former. Adana. No.

In a 2005 case. 159195. chanrobles virtual law library ³Off-detailing´ is not equivalent to dismissal. 2000.´ Consequently. However. 2005). R. which is not the case in this instance. even on the ground of compassionate justice. This ruling is based on Article 286 of the Labor Code. 151966. It does not constitute constructive dismissal as their assignments primaril y depend on the contracts entered into by the security agency with third parties. (Agro Commercial Security Services Agency. such ³floating status´ .R. 797. G. May 9. 184 SCRA 74 [1990]). private respondents effectively terminated their employment with JPL. 17. 96. Superstar Security Agency. R. R. Effect of employment of the employee in other establishments during 6-month period. 2005].´ therefore. (See also Cheniver Deco Print Technics Corporation v. Inc. 122876. so long as such status does not continue beyond a reasonable time. 1989). the principle in the law which grants separation pay applies only when the employee is dismissed by the employer. And the mere fact that the transfer would be inconvenient for her does not by itself make her transfer illegal. they are not entitled to separation pay. No. They admitted that all three of them applied for and were employed by another establishment after they received the notice from JPL.´ as applied to security guards. No. No. Thus. (Mobile Protective & Detective Agency vs. 8. ³Floating status. Clearly. NLRC. (Philippine Industrial Security Agency Corporation vs. G. it means ³waiting to be posted. July 31.´ in security agency parlance. Ompad. 127421. NLRC. vs. In seeking and obtaining employment elsewhere. Consequently. Temporary ³off-detail´ or ³floating status´ of security guards. refer to the period of time they are made to wait until they are transferred or assigned to a new post or client. the Supreme Court said that when a security guard is placed on ³off detail´ or ³floating status. Temporary ³off-detail´ or ³floating status. 1999. G. NLRC. No. it was held that petitioner JPL cannot be said to have terminated their employment for it was they themselves who severed their relations with JPL. Inc. Dec. Dapiton. In the 2005 case of JPL Marketing Promotions vs. a relief and transfer order in itself does not sever employment relationship between a security guard and her agency. Feb. 175 SCRA 790. it was established that private respondent -employees sought employment from other establishments even before the expiration of the six (6)-month period provided by law. July 8. vs.its employees some relief in the form of severance pay. is lawful. 325 SCRA 758). [G. CA.

according to the Court. G. that is. they are deemed constructively dismissed . 2005]. CA. R. the merchandisers are deemed to have been placed under ³floating status´ for a period of not exceeding six (6) months under Article 286. 2003. Inc. the security guards placed on ³off detail´ or ³floating status´ are not recalled and given any assignment. For instance. they are entitled to the corresponding benefits for their separation and this would apply to the two (2) types of work suspension heretofore noted. CA. In the meantime that the dislocated employees are waiting for their next assignment. Legal consequence if off-detailed security guards are not reassigned after six months. The thirty (30)day notice rule under Article 283 does not. Security guards may be temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by the latter with third parties. Such notice. either of the entire business or of a specific component thereof. No. Consequently. NLRC. therefore. Ompad. If after said period. (Mobile Protective & Detective Agency vs. but a mere note informing them of the termination of the client¶s contract and their re-assignment to other clients. Although the application of this principle on temporary ³off detail´ or ³floating status´ is thus far confined to security guards. . Sept. No. 116593. they may be placed on ³off detail´ or ³floating status´ following the same concept applicable to security guards. July 8. [G. it is opined that it may also be made applicable to employees of contractors/subcontractors under a valid independent contracting/ subcontracting arrangement under Article 106 of the Labor Code. The same form of dislocation and displacement also affects their employees everytime contracts of service are terminated by their clients (principals). July 8. R. in the earlier cited case of JPL Marketing Pr omotions vs.should last only for a reasonable time. 152476. G. May 9. this principle was applied to merchandisers hired by petitioner which is engaged in the business of recruitment and placement of workers. R. Pulp and Paper. No. 1997. No. apply thereto. When the ³floating status´ or ³reserve status´ lasts for more than six (6) months. the sidelining should continue only for six (6) months. 24. (United Special Watchman Agency vs. the employee may be considered to have been constructively dismissed from his employment. 159195. Applicability of ³floating status´ rule to employees other than security guards. After they were notified of the cancellation of the contract of petitioner with a client where they were assigned and pending their re-assignment to other clients. 279 SCRA 408). 151966. G. should not be treated as a notice of termination. vs. However. R.

designation or status and irrespective of the method by which their wages are paid. It is a recognized fact that security guards employed in a security agency may be temporarily sidelined as their assignments primarily depend on the contracts entered into by the agency with third parties (Agro Commercial Security Agencies.2005). service and agricultural establishments or . except those specifically exempted.´ (See also Valdez vs. This question posed is not ne w.´ i. NLRC. Temporary µoff -detail¶ is not equivalent to dismissal. [184 SCRA 74]. Inc. if they are covered by the Civil Service Law and its regulations. In the 2002 case of Soliman Security Services. Employees of the National Government and its political subdivisions. employees of service and other job contractors and domestic helpers or persons in the personal service of another.e. vs. addressing a similar issue. Inc. chanrobles virtual law library Off-detail status for 29 days. In the case of Superstar Security Agency. 2002]. G. for a period of 29 days was answered in the negative. It also includes and covers part -time employees. What is the coverage of the Retirement Pay Law? The Retirement Pay Law applies to all employees in the private sector. [G. including government-owned and/or controlled corporations. CA. vs. July 11.. chanrobles virtual law library 98. it must be emphasized that such temporary inactivity should continue only for six months. 286 SCRA 87). No. 31 July 1989). it means waiting to be posted.¶ she readily filed a complaint against the petitioners on the presumption that her services were already terminated. However. Nos. with no reassignment. regardless of their position. R.R. NLRC. Otherwise. vs. Employees of retail. 2. has said: ³xxx The charge of illegal dismissal was prematurely filed. the issue of whether or not private respondent should be deemed constructively dismissed by petitioner for having been placed on ³floating status. 143215. RETIREMENT 97.. not constructive dismissal. the security agency concerned could be liable for constructive dismissal. 82823-24. the Supreme Court. NLRC. Who are the employees not covered by the Retirement Pay Law? The Retirement Pay Law does not apply to the following employees: 1. In security parlance. The records show that a month after Hermosa was placed on a temporary µoff-detail. Inc.

‡ ³Service establishment´ is one principally engaged in the sale o f service to individuals for their own or household use and is generally recognized as such. the employer shall pay the difference.Where there is no such retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. and any activities performed by a farmer or on a farm as an incident to. and (b) compulsory. such farming operations. production. an employee may retire upon reaching the age of sixty (60) years or more if he has served for at least five (5) years in said establishment. the cultivation and tillage of soil. Optional retirement. as amended by Republic Ac t No. ‡ ³Agricultural establishment/operation´ refers to an employer which is engaged in agriculture. May an employee retire under the CBA or employment contract? Any employee may retire or be retired by his employer upon reaching the retirement age established in the CBA or other applicable employment contract and he shall be entitled to the benefits thereunder. tobacco.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. growing and harvesting of any agricultural or horticultural commodities. This term refers to all farming activities in all branches and includes. or in conjunction with. raising of livestock or poultry. chanrobles virtual law library 2. 99. an employee shall be retired upon . . but does not include the manufacture and/or processing of sugar. the culture of fish and other aquatic products in farms or ponds. among others. . cultivation. aquatic or other farm products. abaca. If the amount is less than those provided under the law. dairying. 7641. What is the distinction between optional and compulsory retirement? Article 287 of the Labor Code. 1. pineapple. 100. As used in this sub-section: ‡ ³Retail establishment´ is one principally engaged in the sale of goods to end-users for personal or household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. provides for two (2) types of retirement: (a) optional. coconut. Compulsory retirement.operations regularly employing not more than ten (10) employees.

May an employee retire at an earlier or older age? The law recognizes as valid any retirement plan. regular holidays. in effect. Section 2 of the 1976 PAL-ALPAP Retirement Plan. Authorized absences. 103. No. 2002). 2.143686. he resolved a question which was outside of the issues raised. included.reaching the age of sixty-five (65) years. thereby depriving petitioner an opportunity to be heard on this point. vacations. Only actual service included. January 15.R. 104. on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots. (G. What are included in the minimum 5-year service requirement? The minimum 5-year service requirement includes the following. Hence. amended the terms of Article VII. is instructive: ³Finally. Due process only requires that notice be given to the pilot of petitioner's decision to r etire him. 101. It gives the pilot concerned an undue prerogative to assail the decision of management. . One-half (1/2) month salary. when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to retirement. ³Furthermore. ALPAP. 102. 1. agreement or management policy regarding retirement at an earlier or older age. we rule that this added requirement. 1. the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on petitioner the additional requirement of consulting each pilot prior to retiring him. The option of an employer to retire its employees is recognized as valid. What are included in the retirement benefits under the Retirement Pay Law? chanrobles virtual law library Retirement benefits. Is the option granted to the employer to retire an employee valid? Yes. ³Surely. the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees. The decision o f the Supreme Court in the case of PAL vs.

7742. (c) one-twelfth (1/12) of the 13th month pay due the employee. 2. and (d) all other benefits that the employer and employee may agree upon that should be included in the computation of the employee¶s retirement pay. One-half monthly salary of employees who are paid by results.In the absence of an applicable employment contract. A. . Thus. 7641. 7641. the basis for determination of the salary for fifteen (15) days shall be their average daily salary (ADS). May Pag-IBIG be considered as substitute retirement plan? As provided in R. the employer is liable to pay the difference. an employee who retires shall be entitled to retirement pay equivalent to at least one -half (1/2) month salary for every year of service. Consequently.For covered workers who are paid by results and do not have a fixed monthly rate. 7641 (Retirement Pay Law) is applicable to services rendered prior to January 7. A. a private employer shall have the option to treat the coverage of the Pag-IBIG Fund as a substitute retirement benefit for the employee concerned within the purview of the Labor Code as amended. 105. R. One-half (1/2) month salary. 106. No. 7641) shall be included. Does the Retirement Pay Law have any retroactive effect? Yes.For the purpose of determining the minimum retirement pay due an employee. 1993. . the term ³one-half month salary´ shall include all the following: (a) fifteen (15) days salary of the employee based on his latest salary rate. the period of employment with the same employer before the effectivity date of the law (Republic Act No. provided such option does not in any way contravene an existing collective bargaining agreement or other employment agreement. the Pag-IBIG Fund can be considered as a substitute retirement plan of the company for its employees provided that such scheme offers benefits which are more than or at least equal to the benefits under Republic Act No. 3. a fraction of at least six (6) months being considered as one (1) whole year. If said scheme provides for less than what the employee is entitled to under Republic Act No. . components. in reckoning the length of service. chanrobles virtual law library (b) the cash equivalent of five (5) days of service incentive leave.

refers to the unilateral act of the employer in terminating the services of an employee with or without cause. after reaching a certain age. Dismissal. No. a voluntary agreement between the employer and the employee whereby the latter.107. 2002]. upon acceptance of employment. vs. drifts. Jr. 141707. chanrobles virtual law library However. 1998. Hence. effect on entitlement to retirement benefits. [G. 2002). 8558 [An Act Amending Article 287 of Presidential Decree No. 1990. raises. R. July 11. (Gamogamo vs. winzes. 143136-37. as Amended. tunnels. No. 109. Dismissal for cause. May 7. 108. May 7. PNOC Shipping and Transport Corp. the dismissed employee is entitled to the retirement benefits provided thereunder. No. on the other hand. a proscription that binds the parties to it. R. 80502. R. crosscuts. agrees or consents to sever his employment with the former.. Management discretion may not be exercised arbitrarily or capriciously especially with regards to the implementation of the retirement plan. What is the latest amendment to the Retirement Pay Law (Article 287 of the Labor Code)? chanrobles virtual law library The latest amendment to Article 287 of the Labor Code was introduced by Republic Act No. [G. . working places whether abandoned or in use beneath the earth's surface for the purpose of searching for and extracting mineral deposits. Lao. an employee who was dismissed for cause was held not entitled to the retirement benefits under the company¶s retirement plan which concededly prohibits the award of retirement benefits to an employee dismissed for a just cause. 442. What is the distinction between retirement and dismissal? Retirement is the result of a bilateral act of the parties. 185 SCRA 44]. NLRC. As held in Razon. in the 2002 case of San Miguel Corporation vs. G. Otherwise Known as the Labor Code of the Philippines by Reducing the Retirement Age of Underground Mine Workers from Sixty (60) to Fifty (50)] which was approved on February 26. Who is an underground mine employee? An underground mine employee is a person employed to extract mineral deposits underground or to work in excavations or workings such as shafts. a contractual relationship is established giving the employee an enforceable vest ed interest in the retirement fund.

it should be enforced separately from the provision of the Labor Code. Retirement pay differs from separation pay in that the former is paid by reason of retirement. [G. a prerogative that obviously cannot be exercised arbitrarily or whimsically. entitled to retirement benefits and. the Supreme Court ordered . As a general rule. retiring employees are entitled only to retirement benefits. 74007. Separation pay. are not necessarily antagonistic to each other. Aquino vs. NLRC. But there are instances when separation pay and retirement pay must both be paid to the employee. It is also a form of reward for the employee¶s loyalty and service to the employer. July 31. therefore. the teachers were ordered paid for both retirement pay and separation pay. No. 71 SCRA 470 (1976)]. Minister of Labor. No. the school claimed that teachers who were terminated because of phased -out units cannot be considered retired and. Hon. 2. the employer¶s refusal to give the employee his retirement benefits is based on the provision of the retirement plan giving management wide discretion to grant or not to grant retirement benefits. In another case. What is the distinction between retirement pay and separation pay? 1. The Supreme Court. the retirement plan expressly prohibits the grant of retirement benefits in case of dismissal for cause. the employee is bound by such prohibition. retrenched. 1987]. Consequently. therefore. 110. This would be tantamount to enriching them at the expense of the school. the Supreme Court ruled that in Razon. however. [G. 87653. Hence. on the other hand. at the same time. the separation pay is mandated by law. is designed as a wherewithal during the period that an employee is looking for another employment after his termination. ruled that separation pay arising from a forced termination of employment and retirement benefits given as a contractual right to the teachers for many years of faithful service. while the latter is required in the cases enumerated in Articles 283 and 284 of the Labor Code.Distinguishing Razon from San Miguel. the retirement scheme has become part of the school¶s policy and. R. 1992. See also BLTB vs. The purpose for the grant of retirement pay is to help the employee enjoy the remaining years of his life thereby lessening the burden of worrying for his financial support. while retirement pay is required by contract. But in San Miguel. which would entitle them to separation pay. CA. In the case of University of the East vs. R. Moreover. Cases where both separation pay and retirement pay must be paid. February 11. The reason is.

Knowing this. 7641. 1976. on the one hand. 11. R. 1987]. ³We may presume that the counsel of the respondent company was aware of the prevailing doctrine embodied in the cases earlier cited. the Supreme Court in this case of Aquino opined that: ³The Court feels that if the private respondent (company) really intended to make the separation pay and the retirement benefits mutually exclusive. 71 SCRA 470). NLRC. 107234. Book VI of the Implementing Rules of the Labor Code. the Supreme Court ordered the payment not only of separation pay and backwages to an illegally dismissed teacher but additionally.R. the Supreme Court ruled that if it is provided in the Retirement Plan of the company that the retirement. In Ford Philippines Salaried Employees Association vs. of the retirement benefits ³pursuant to any collective bargaining agreement in the workplace or. In Bongar vs. 1998].´ (See also Batangas Laguna Tayabas Bus Co. collection of retirement benefits was prohibited if the employee had already received separation p ay. he should have made it a point to categorically provide in the Retirement Plan and the CBA that an employee who had received separation pay would no longer be entitled to retirement benefits. R. 75347. Or to put it more plainly.´ chanrobles virtual law library Case where separation pay was charged to retirement pay. it should have sought inclusion of the corresponding provision in the Retirement Plan and the Collective Bargaining Agreement so as to remove all possible ambiguity regarding this matter. No. [G. [G. The argument of the company that it has more than complied with the mandate of the law on retrenchment by paying separation pay double that required by the Labor Code (at the rate of one month pay instead of the one-half month pay per year of service) was not favorably taken into account by the Supreme Court because the employees were not pleading for generosity but demanding their rights embodied in the CBA which was the result of negotiations between the company and the employees. Dec. G. Court of Appeals. No L -38482. then the retirement fund may be validly used to pay such termination or separation pay because of closure of . as provided in Section 14 [Retirement Benefits]. in the absence thereof. death and disability benefits paid in the plan are considered integrated with and in lieu of termination benefits under the Labor Code. August 24. and the retirement benefits provided in the Retirement Plan. a case decided before the advent of Republic Act No. On the issue of mutual exclusivity of the CBA-mandated separation pay in case of retrenchment. vs. No. NLRC. on the other.the payment of both the separation pay for retrenchment embodied in the CBA as well as the retirement pay provided under a separate Retirement Plan to the retrenched employees. June 18.

141868. x x x.. [G. which ever is the greater amount. The employees in this case who were terminated due to closure of the company¶s branches. Association of International Shipping Lines. May 28.. Inc. in the event the Company is required under the law or by lawful order of competent authority to pay to the Member benefits or emoluments similar or analogous to those already provided in the Plan.x x x. August 21. whichever is higher. April 26. In the 2005 case of Salomon vs. Cases where employees are entitled only to one form of benefit. dissolution of a department/ conference/section and/or the whole ASSOCIATION. the employee cannot be entitled to bot h benefits. No. Said CBA provides. L-24774. petitioners who were duly paid separation pay when they were retrenched. R. 156317. [G. whichever is higher. No. the same being higher than what Article 283 provides. regardless of their length of service in the company or to the severance pay provided by law.. are entitled only to either the separation pay provided under Article 283 of the Labor Code. 1968]. entitled to retirement benefits under the CBA citing the Aquino case [supra] as basis. Philippine Global Communications. No. they were paid separation benefits computed under the Retirement Plan.´ (Section 6 (b). 2005]. but shall only be entitled to whichever is the greatest among them.¶ In the 2004 case of Cruz vs. Article XI of the Retirement Plan). a regular employee shall be entitled to a separation pay equivalent to his one (1) month basic pay for . or retirement benefits prescribed by the Retirement Plan. Inc.business. Article VIII hereof. Consequently. R. sickness or physical disability. the Member concerned shall not be entitled to both what the law or the lawful order of competent authority requires the Company to give and the benefits provided by the Plan. retrenchment. the Supreme Court reiterated the said rule in Cipriano [supra] under the following provision in the Retirement Plan which states: ³b)Adjustment of Benefits Payments. claimed that they are. Article X of said Retirement Plan reads: µRegular employees who are separated from the service of the company for any reason other than misconduct or voluntary resignation shall be entitled to either 100% of the benefits provided in Section 2. In Cipriano vs. as amended. in addition. 2004]. it was ruled that in case the Retirement Plan of the company provides that the employee shall be entitled to either the retirement benefit provided therein or to the separation pay provided by law. [G. In case of termination due to redundancy. R. San Miguel Corporation. thus: ³Section 1.

petitioners were separated from the service for cause.). if they rendered at least fifteen (15) years of continuous services. An employee shall be entitled to the following benefits. Inc. considering their Releases and Quitclaims. 20 years of service ± 100% of the monthly basic salary for every year of service. if the Retirement Plan says that the employees shall be entitled to either the separation pay under the said provision of the law or the retirement benefits under the Retirement Plan. they should not be allowed to claim both.´ According to the Supreme Court. As held in Cipriano [supra] and Aquino [supra]. are entitled only to either the separation pay. . if the Retirement Plan mandates that the employees who are separated under any of the authorized causes under Article 283 of the Labor Code are entitled to both the separation pay provided therein as well as the retirement benefits under the Retirement Plan. supra). Optional Retirement ± An employee shall have the option to retire regardless of age provided he/she has rendered at least 15 years of continuous service to the ASSOCIATION. a. Philippine Global Communications. or optional retirement benefits. Clearly. A fraction of at least six (6) months shall be considered as one (1) whole year and less than six (6) months shall be prorated accordingly. the right of the concerned employees to receive both retirement benefits and separation pay depends upon the provisions in the Retirement Plan. Otherwise. they shall be so paid. the emplo yees¶ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. In other words. what each actually received is a separation pay.. (Ibid. The provisions of the retirement plan are controlling. (Cruz vs. if they are terminated for cause. xxx xxx xxx ³Section 3. they are no longer entitled to retirement benefits. whichever is higher. under the above cases. chanrobles virtual law library b. then. as prescribed by the parties¶ CBA quoted above. then. 15 to less than 20 years of service ± 50% of the monthly basic salary for every year of service. it is obvious that petitioners. Accordingly.every year of service. Here. Hence. The provisions of the Retirement Plan are controlling in determining such entitlement. pursuant to the CBA.

the Supreme Court. [G. the employees were given the option to retire. August 20. allowances and other benefits for every year of service up to age sixty (60) which is the normal retirement age for him. 100 SCRA 691 [1980]). on ground of equity for his long years of service without any derogatory record. 90664. No. 2004 which declared as legal the termination of his employment as a consequence of an illegal strike. In the 2004 case of Piñero vs. 7. the private respondents had no choice but to sign the documents proffered to them. July 23. NLRC. was declared to be entitled to his full backwages. 1994 when he . The mere absence of actual physical force to compel private respondents to ink an application for retirement did not make their retirement voluntary. NLRC. awarded him financial assistance equivalent to one-half (½) month¶s pay for every year of service computed from his date of employment up to October 28. [G. 1991]. the petitioner employee who turned 60 years old and retired on March 1. It was in reality a Hobson¶s choice which means that they have no choice at all. In short. If the intention to retire is not clearly established or if the retirement is involuntary. 107693. NLRC. In Villena vs. NO. it is to be treated as a discharge. NLRC. At that time. allowances and other benefits for a period of three (3) years after his illegal dismissal from the service until he reached the compulsory retirement age. Confronted with the danger of being jobless. [G. R. R. 2004]. plus his retirement benefits equiv alent to his gross monthly pay. an employee whose age was 57 when he was illegally singled out for retirement. his employer refused to pay his retirement benefits pending the final resolution of the case. R. be retrenched or dismissed but they were made to understand that they had no choice but to leave the company. (De Leon vs. after serving the bus company since he was 25 years old. unable to provide their families even with the basic needs or necessities of life. Case of non-entitlement to retirement pay due to termination for cause. chanrobles virtual law library In San Miguel Corporation vs. No. 1996 after 29 years of service was declared not entitled to the payment of retirement benefits because he lost his employment status effective as of the date of the decision of the Labor Arbiter on October 28.Forced retirement. But neither their receipt of separation pay nor their negotiating for more monetary benefits estopped private respondents from questioning and challen ging the legality of the nature or cause of their separation from the service. All that the private respondents were offered was a choice on the means or method of terminating their services but never as to the status of their employment. they were never asked if they still wanted to work for petitioner. 149610. 1998]. Instead. Feb.

even if the petitioner has an existing valid retirement plan. in the third paragraph of Article 287. Its coverage applies to establishments with existing collective bargaining or other agreements or voluntary retirement plans whose benefits are less than those prescribed under the proviso in . The opening paragraph of Article 287 clearly enunciates the intent and application of the law.). otherwise known as the Social Security Act of 1997. Article 287 becomes relevant only in the matter of ensuring tha t the retirement benefits are not less than those provided therein. This explains why. it is further underscored that the retirement package provided therein is made applicable only ³in the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. the issue raised is whether respondent-teachers are entitled to the retirement benefits provided for under Republic Act No. October 17. the employer is obligated to pay the difference between the amount due the employee under the law and that provided under the CBA or other applicable employment contract. 7641. NLRC. In the event that such benefits are less.2. Ibid. Is the retirement pay under the SSS similar to or may be a substitute for the retirement pay under the Labor Code? The employee¶s retirement pay under Article 287 of the Labor Code or under a unilaterally promulgated retirement policy or plan of the employer or under a Collective Bargaining Agreement. it is not Article 287 that is controlling but the retirement plan under the CBA or other applicable employment contract. provided that such retirement benefits under the CBA or other agreements should not. be less than those provided under the law. chanrobles virtual law library 111.was declared to have lost his employment status. R. 7641 intends to give the minimum retirement benefits to employees not entitled thereto under collective bargaining and other agreements. (Sections 3. No. 141673. the employee is entitled to receive such retirement benefits as he may have earned under existing laws. is separate and distinct from the retirement benefits granted under Republic Act No. The Supreme Court ruled that they are so entitled. the CBA and other agreements. [G. 2001]. Concept of retirement under Article 287. in any way. Republic Act No. 112. Rule II. This is best illustrated in the 2001 case of Manuel L. It conveys in clear and unmistakable terms that once an employee retires.1 and 3. Other latest cases on retirement.´ In case of retirement under the CBA or other applicable employment contract. Quezon University vs. 8282.

entered into between petitioner and respondent on May 30. If after applying Article 287. company policy or practice provides for retirement benefits which are equal or superior to that which is provided in said law. chanrobles virtual law li brary In any event. No. Normal Retirement. however. Consequently.000 hours as a pilot for PAL. Quisumbing).000. The PAL Pilots¶ Retirement Benefit Plan is a retirement fund raised from .´ A pilot who retires after twenty years of service or after flying 20. (Labor Advisory on Retirement Pay Law dated Oct. The member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100. the parties provided for a special scheme of retirement different from that contemplated in the Labor Code. (a) Any member who completed twenty (20) years of service as a pilot for PAL or has flown 20. Inc. and are thus in need of financial assistance and reward for the years that they have rendered service. 1972.question. 7641 and the MLQU Retirement Plan) plus legal interest of six percent (6%) per annum from the date of filing of their complaints on March 27. the difference between the retirement pay under R. compared to one who retires at the age of 60 years old. where the Supreme Court had occasion to comment on the following pertinent provision of the 1967 PAL -ALPAP Retirement Plan: chanrobles virtual law library ³SECTION 1. petitioner contends that its pilots who retire below the retirement age of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of the retirement fund under the PAL Pilots¶ Retirement Benefit Plan. Based on this peculiar circumstance that PAL pilots are in. Airline Pilots Association of the Philippines. 24.000 hours would still be in the prime of his life and at the peak of his career. No. [G. should prevail and thus govern the computation of the benefits to be awarded. or on which he logs his 20. such retirement plan and not Article 287. The normal retirement date is the date on which he completes twenty (20) years of service.. it was intended for those who have no more plans of employment after retirement. whichever is the greater amount. petitioner University was ordered to pay the teachers their retirement differential pay (i. then. vs.00 or (b) to such termination pay benefits to which he may be entitled to under existing laws. 2002]. Conversely. The best case to exemplify this point is the 2002 case of Philippine Airlines. A. 1997 up to actual payment. 1996. issued by Secretary Leonardo A. the provisions of Article 287 of the Labor Code could not have contemplated the situation of PAL¶s pilots.e.000 hours for PAL shall be eligible for normal retirement. it is clear that the retirement plan under the CBA or other agreements. 143686. R. January 15. Rather.

Article 287 is clear: ³(a)ny employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.00 that he shall receive under the 1967 Retirement Plan. 1996. R. R. Inc. as amended by Republic Act No.). 1997. other employment contract. provided he has served at least five (5) years in the establishment concerned. R. (Ibid. 273 SCRA 576). June 17. Upon retirement. No. NLRC. NLRC. That prerogative is exclusively lodged in the employee. 120802. In sum. In the absence of any provision on optional retirement in a CBA. G. he could choose to retire upon reaching the age of 60 years. while optional retirement is primarily determined by the CBA or other employment contract or employer¶s retirement plan. No. June 17. 273 SCRA 576]. July 24.contributions exclusively from petitioner of amounts equivalent to 20% of each pilot¶s gross monthly pay. Indeed. provided it is before reaching 65 years which is the compulsory age of retirement. therefore. 259 SCRA 161). 95940. of course. in the affirmative. Who should exercise the option to retire? Compulsory retirement takes place at age 65. The law presumes that employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure their consent thereto. the retirement benefits that a pilot would get under the provisions of Article 287 of the Labor Code are less than those that he would get under the applicable retirement plans of petitioner. it was held that the act of accepting the retirement benefits is deemed an exercise of the option to retire under the third paragraph of Article 287. (Pantranco North Express. the option may be exercised by the employer in accordance therewith. No. NLRC. This is in addition to the amount of not less than P100.´ . G. chanrobles virtual law library Thus. If there is a provision on retirement in a CBA or any other agreement or if the employer has a retirement plan. 120802. 7641. (Capili vs. vs. or employer¶s retirement plan. May employers exercise the option to retire? The answer to this query is. 1997. Article 287 makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement. [G. each pilot stands to receive the full amount of the contribution. the pilot gets an amount equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. an employee may optionally retire upon reaching the age of 60 years or more. Thereunder. but not beyond 65 years. in Capili vs.000. In short.

[G. . NLRC. and such plan has an express provision that the company has the choice to retire an employee regar dless of age.00 for each completed year of service rendered as a pilot. the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees. 2002]. October 30. [G. Airline Pilots Association of the Philippines. the manner of computation of retirement benefits depends on the stipulation provided in the company retirement plan.000. may be retired at his option or at the option of the Company and shall be entitled to the following benefits x x x. R. Moreover.Any participant with twenty (20) years of service. 138826. to wit: ³Considering therefore the fact that your client¶s retirement plan now forms part of the employment contract since it is made known to the employees and accepted by them. R.In Philippine Airlines. Late Retirement. Any member who remains in the service of the Company after his normal retirement date may retire either at his option or at the option of the Company and when so retired he shall be entitled either (a) to a lump sum payment of P5. Section 2 of the 1976 PAL-ALPAP Retirement Plan which states: ³SECTION 2. with twenty (20) years of service. January 15.´ (Opinion of Director Augusto G. vs. 8. Department of Labor and Employment. in effect. It gives the pilot concerned an undue prerogative to assail the decision of management. Sanchez of the Bureau of Working Conditions.´ chanrobles virtual law library Surely. regardless of age. The Supreme Court ruled in the negative. Oct. said policy is within the bounds contemplated by the Labor Code. the Supreme Court ruled that the said retirement plan is valid for it forms part of the employment contract of petitioner company. Inc. an issue was raised on whether petitioner should consult the pilot concerned before exercising its option to retire pilots. 143686. amended the terms of Article VII. No. The following pronouncement made by no less than the DOLE was given substantial weight. whichever is the greater amount. Optional Retirement. . o r (b) to such termination pay benefits to which he may be entitled under existing laws. the optional retirement provision of the Employees¶ Non-Contributory Retirement Plan states: ³Section 3. 2000]. No. In the 2000 case of Progressive Development Corporation vs. It held that this constitutes an added requirement which.´ In upholding the validity of the decision of management to retire employees in accordance with the afore-quoted provision. Due process only requires that notice be given to the pilot of petitioner¶s decision to retire him.

effect. Sanchez. this assertion does not appear to have any factual basis. Catalina College in June 1955 as an elementary school teacher. in no uncertain terms. (Ibid. November 19. Catalina College vs. Inc. the teacher was hired by the Sta. the same is effective only upon the approval of management. that retirement of an employee may be done upon initiative and option of the management. In this case. No. she had not been heard from . 144483. The fact that there are some supervisory employees who have not yet been retired after 25 years with the company or have reached the age of sixty merely confirms that it is the singular prerogative of management. R. it was ruled that an employee who was compulsorily retired after rendering 25 years of service in accordance with the provision of the CBA cannot claim that he was illegally dismissed. The decision of the Supreme Court in the 2003 case of Sta. No. at its option. [144 SCRA 628 (1986)]. 2003] is instructive on the issue of interruption in the service. 95940. [G. 259 SCRA 161].´ Interruption in the service. 1996. NLRC. In Pantranco North Express. R. to retire supervisors or rank-and-file members when it deems fit.). In 1970. In the earlier case of Bulletin Publishing Corp. confirming the validity of The Plan. the Supreme Court held: ³The aforestated sections explicitly declare. July 24. There should be no unfair labor practice committed by management if the retirement of private respondents were made in accord with the agreed option. the undisputed fact that a number of employees of petitioner company had availed of The Plan since its effectivity only confirms that The Plan has already been part of the employment contract of petitioner company for a long time. particularly its provision on optional retirement). appears to be a fact which private respondents have not controverted. chanrobles virtual law library Moreover. she applied for and was granted a one-year leave of absence without pay on account of the illness of her mother. [G. vs. As above noted. vs. And where there are cases of voluntary retirement. That there were numerous instances wherein management exercised its option to retire employees pursuant to the aforementioned provisions. It seems only now when the question of the legality of a supervisors union has arisen that private respondents attempt to inject the dubious theory that the private respondents are entitled to form a union or go on strike because there is allegedly no retirement policy provided for their benefit. After the expiration in 1971 of her leave of absence. Providing in a CBA for compulsory retirement of employees after 25 years of service is legal and enforceable so long as the parties agree to be governed by such CBA. NLRC.1990.

it was held that since the retirement pay solely comes from respondent company¶s funds. In the meantime. However. Service in another firm. For. petitioner¶s creditable service must start from November 9. excluded in the computation of retirement benefits. petitioner¶s creditable service is 17. Thus. respondent PNOC Shipping and Transport Corporation (hereafter respondent) acquired and took over the shipping business of LUSTEVECO. 1977. her retirement benefits should thus be computed only on the basis of her years of service from 1982 to 1997. Ordinarily. at the Liceo de San Pedro. The threshold issue is whether the teacher¶s services for petitioner school during the period from 1955 to 1970 should be factored in the computation of her retirement benefits. R. On November 9. As the teacher was considered a new employee when she rejoined petitioner school upon re -applying in 1982. In the 2002 case of Gamogamo vs. Biñan. petitioner was among those who opted to be absorbed by the respondent. Laguna during school year 1981-1982.the San Pedro Parochial School during school year 1980 1981 and later.. Petitioner in Gamogamo was first employed with the Department of Health (DOH) and remained employed as dentist at the DOH for fourteen (14) years until he resigned on November 2. 2002]. Subsequently. since respondent took over the shipping business of LUSTEVECO and agreed to assume without interruption all the service credits of petitioner with LUSTEVECO. Thus. In 1982. it is but natural that respondent should disregard petitioner -employee¶s length of service in another company for the computation of his retirement benefits. . chanrobles virtual law library The Supreme Court ruled that she cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. she abandoned her teaching position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said period.3333 years. May 7. [G. he continued to work as company dentist. after her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with petitioner school. In 1997. petitioner was hired as company dentist b y Luzon Stevedoring Corporation (LUSTEVECO). and on August 1. she was employed as a teacher in another school . the teacher reached compulsory retirement age.by petitioner school. 1979. PNOC Shipping and Transport Corp. 1977. a private domestic corporation. she applied anew at petitioner school which hired her. his creditable service should be reckoned from such date. 141707. No. 1977 when he started working with LUSTEVECO until his day of retirement on April 1. 1995.

petitioner¶s fourteen years of service with the DOH may not remain uncompensated because it may be recognized by the GSIS pursuant to Section 12 of Presidential Decree No. 1146. No. In any case.5 days representing one-twelfth [1/12] of the 13th month pay and the five (5) days of service incentive leave should not be included as part of the retirement benefits. by reason of the nature of his work. vs.5 days´ but only the fifteen (15) days salary. R. ³One-half (½) month salary´ means 22.5 days representing one twelfth [1/12] of the 13th month pay plus 5 days of service incent ive leave. 2004]. February 13. and fall under the Civil Service Law. in addition to the salary equivalent to fifteen (15) days. the additional 2. Should 1/12 of 13th month pay and 5 days of service incentive leave be included if the employees are not entitled thereto? A question may be posed. was not entitled to 13th month pay or to the service incentive leave pay pursuant to the exceptions mentioned in the 13th-Month Pay Law and the Labor Code. otherwise known as the Government Service Insurance Act of 1977. November 13.Petitioner¶s contention cannot be upheld that his fourteen (14) years of service with the DOH should be considered because hi