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 further. 30 of the same law is also hereby repealed.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 . 29 of the same law is hereby repealed.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

The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. in accordance with Article VI. fourth. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. 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. In case . 213. composed of a Chairman and TWENTY-THREE (23) Members. fifth. The Chairman and the SEVEN (7) remaining members shall come from the public sector. second third. respectively. on temporary or emergency basis. . third. respectively: Provided. National Labor Relations Commission. and the SEVEN (7) other members from the public sector shall be the Presiding Commissioners of the second. AND EIGHT divisions. The Chairman shall be the Presiding Commissioner of the first division. 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. FIFTH AND SIXTH divisions shall handle cases coming from the National Capital Region and other parts of Luzon. FOURTH. Of the EIGHT (8) divisions. sixth. and a copy thereof attached to the record of the case and served upon the parties. with the latter to be chosen PREFERABLY from among the INCUMBENT LABOR ARBITERS. the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary. seventh and eight divisions. The Commission may sit en banc or in EIGHT (8) divisions. 2006. and duties through its divisions. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. each composed of three (3) members. chanrobles virtual law library Upon assumption into office. without the signature of the President. respective ly. the first. That the Commission sitting en banc may. 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. functions. Eight (8) members each shall be chosen ONLY from among the nominees of the workers and employers organizations. 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. A certification to this effect signed by the Presiding Commissioner of the division shall be issued.Lapsed into law on JULY 27.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. 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. cases from the Visayas and Mindanao. and the SEVENTH. The Commission shall exercise its adjudicatory and all other powers. Section 27 (1) of the Constitution) ART.

The Commission shall establish as many regional branches as there are regional offices of the Department of Labor and Employment. the Presiding Commissioner of the second division shall be the Acting Chairman. That the President of the R epublic of the Philippines . seventh and eight divisions. 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.The Commission and its first. shall have administrative supervision over the Commission and its regional branches and all its personnel. when acting thru its Divisions. with at least five (5) years experience or exposure in THE FIELD OF labor-management relations. 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. Provided. chanrobles virtual law library The Chairman. 214. and the seventh and eight divisions in the cities of Cebu and Cagayan de Oro. 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. There shall be as many Labor Arbiters as may be necessary for the effective and efficient operation of the Commission. and. 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. 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. shall be assisted by the same Executive Clerk. sub-regional branches or provincial extension units. including the Labor Arbiters. . aided by the Executive Clerk of the Commission. The Chairman. The Commission. Branches and Provincial Extension Units. 215. respectively. sixth. however. They shall receive annual salaries and shall be entitled to the same allowances and benefits as those falling under Salary Grade twentysix (SG 26).of the effective absence or incapacity of the Chairman. second. Headquarters. third. when sitting en banc. fourth fifth. and shall preferably be residents of the region where they SHALL hold office. with at least five (5) years experience or exposure in the field of labor-management relations. third. Appointment and Qualifications. by said Executive Clerk for its first division and SEVEN (7) other Deputy Executive Clerks for the second. 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. .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. ART. fourth. fifth and sixth divisions shall have their main offices in Metropolitan Manila. respectively. 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. unless sooner removed for cause as provided by law or become incapacitated to discharge the duties of their office. ART.

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

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

2. enlisting. Elements of illegal recruitment: a. Who has jurisdiction over claims for death and other benefits of OFWs? Labor Arbiters have jurisdiction over claims for death. That any such non-licensee or non-holder who. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.6. offers or promises for a fee employment abroad to two or more persons shall be deemed as engaged in such act. when undertaken by a non-licensee or non-holder of authority: Provided. contracting. What is illegal recruitment? 1. The reason for the ban is to ensure full regulation of employment in order to avoid exploitation. 11. whether for profit or not. utilizing. What is the nature of the liability of local recruitment agency and foreign principal? chanrobles virtual law library 1. 2. Employers cannot directly hire workers for overseas employment except through authorized entities (see enumeration above). or procuring workers and includes referring. Which has jurisdiction over disciplinary action cases of OFWs? The POEA retains jurisdiction over disciplinary action cases. transporting. 9. in any manner. Illegal recruitment under Article 38 applies to both local and overseas employment. promising or advertising for employment abroad. Any act of canvassing. First element: Recruitment and placement activities. 7. Work-connection is required. 8. 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. 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). Local Agency is solidarily liable with foreign principal. Is direct-hiring of OFWs allowed? Why? No. hiring. 10. chanrobles virtual law library . disability and other benefits arising from employment of OFWs. Illegal recruitment may be committed by any person whether licensees or non-licensees or holders or non-holders of authority. contract services. 3.

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

and chanrobles virtual law library d. Who is an apprentice? An ³apprentice´ is a worker who is covered by a written apprenticeship agreement with an employer. 19. Ratio of theoretical instructions and on-the-job training . 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.100 hours of theoretical instructions for every 2. 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. What are the important principles related to apprenticeship? a. 18.75% of the statutory minimum wage. b.15. possess vocational aptitude and capacity for the particular occupation as established through appropriate tests.000 hours of practical training on-the-job. LEARNERS: 20. be physically fit for the occupation in which he desires to be trained. Apprentices become regular employees if program is not approved by DOLE. TRAINING AND EMPLOYMENT OF SPECIAL WORKERS APPRENTICE: 16. the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. whether or not such practical training is supplemented by theoretical instructions. . Wage rate of apprentices . What are the qualifications of an apprentice? a. 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. possess the ability to comprehend and follow oral and written instructions. 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. b. c. 17. c.

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

and (d) Power of control (the most important test). inclusion in payroll. I. Members of the family of the employer. and g. Employees covered . card. 24. 26. Government employees. What is meant by ³normal hours of work´? 1. 2.g. Without this relationship. 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.applicable to all employees in all establishments whether operated for profit or not. 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.Service charges. Workers paid by results.Right to service incentive leave. Other officers or members of a managerial staff. b. . "Work day" means 24 consecutive-hour period which commences from the time the employee regularly starts to work. 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. (b) Payment of wages. 2. "Normal" hours of work of employees -eight (8) hours per day. e.. Non-agricultural field personnel. Who are covered (and not covered) by the said provisions on working conditions? 1. 25. d. and Article 96 . NORMAL HOURS OF WORK: 28. (c) Power of dismissal. Cash Vouchers for salaries. D.Article 95 . reporting to SSS). Domestic servants and persons in the personal service of another. 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. 27. c. chanrobles virtual law library f. Employees not covered: a. Managerial employees. the Labor Code does not apply.

dismissal and recall of workers. to 4:30 P. [G. et al. there is no diminution in pay. No. et al. vs. Inc. (Sime Darby Pilipinas. 28. 118647. place and manner of work. time. and only on temporary duration. lay-off of workers and the discipline. The regular working hours for the Company shall be from 7:30 A. transfer of employees. In the 2001 case of Interphil Laboratories Employees Union-FFW vs. Shortening of work week .. work assignments. The employees are deemed to have waived the eight-hour schedule . supervision of workers.allowed provided employees voluntarily agree thereto. Nov. 289 SCRA 86). No. 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.´ (Article VI of the CBA). processes to be followed. 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. December 19. NLRC. chanrobles virtual law library According to the Supreme Court. chanrobles virtual law library 7. R. 23. 119205. G. Reduction of eight-hour working day . the parties to the CBA stipulated: ³Section 1. Prerogative to change working hours. to change the working hours of its employees. 126383. Hours of work of hospital and clinic personnel . working regulations. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours. NLRC (G. Consequently. The schedule of shift work shall be maintained. 1999). Hours of work of part-time workers . Well-settled is the rule that management retains the prerogative.M. The employer has the prerogative to control all aspects of employment in his business organization such as hiring. and that the employees shall observe such rules as have been laid down by the company.A normal workday shall consist of not more than eight (8) hours. 142824..3. work supervision. vs. G. working methods. R. 6. No. however the company may change the prevailing work time at its discretion. Interphil Laboratories. Regular Working Hours . In the instant case. 5. 2001]. It was established that the employees adhered to the said work schedule since 1988. at the discretion of the company. 54 in San Juan de Dios Hospital Employees Association vs. whenever exigencies of the service so require. Inc. (Consolidated Food Corporation. "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.The Supreme Court has voided Policy Instructions No. 1997). 15 April 1998.R. tools to be used. NLRC. No. should such change be necessary for its operations.M.payment of wage should be in proportion only to the hours worked. Sept. it is evident from the foregoing provision that the working hours may be changed. R.not prohibited by law provided there is no reduction in pay of workers. should such change be necessary in the operations of the Company. chanrobles virtual law library 4.

(Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23. Proof of this is the case undisputedly filed by the union for and in behalf of its members. to 10:00 P. his name appeared but without his signatures. to 6:00 A.M. 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.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. union Director Enrico C. to 6:00 P. without any question or complaint. and 6:00 P.M. What is the effect of reduction of workdays on wages/living allowances? In situations where there is valid reduction of workdays.M. of the following day that has been going on since 1988. and when on the 6 to 6 shifts. dated March 1. while in the overtime permits. and 6:00 A. 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. his schedule was sometime at 6:00 A. which were passed around daily for the employees to sign..M. at 2:00 P. 1993. the two-shift schedule while their CBA was still in force and even prior thereto. 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.´ Furthermore.M. What is meant by ³hours worked´? . 31. shift. The two-shift schedule effectively changed the working hours stipulated in the CBA. since the reduction of workdays is resorted to as a costsaving measure. 6. to 6:00 A. Gonzales. 1985). As the employees assented by practice to this arrangement. the employer may deduct the wages and living allowances corresponding to the days taken off from the workweek. such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. (Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23. Even their own witness. xxx In fact. 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. he. 30. the union Vice-President Carmelo C. Likewise. This view is consistent with the principle of ³no-work-no-pay. it has become a habit to them to sign the overtime schedule weekly xxx.M. however. 9 to 12. to 2:00 P.M.M. Santos. 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. and sometime at 6:00 P. 8. they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours. 1985).. sometime at 6:00 A.since they followed.´ 29.M. he received the commensurate pay xxx.M.M.M.M. to 6:00 A. of the 6:00 P. had rendered overtime during those dates and was paid because unlike in other departments.. 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. to 6:00 P.M. testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company.

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

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

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

or in the course of the trial or other proceedings in the same case are conclusive. 204 [1992]). 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. UNDERTIME NOT OFFSET BY OVERTIME: 35. ³Premium pay´ refers to the additional compensation required by law for work performed within eight (8) hours on non-working days. [G. 115755. (No. no further evidence being required to prove the same. 2. No. III. the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation. Sweet Lines Inc. effect. such as rest days and special days. Ibid. and cannot be contradicted unless previously shown to have been made through palpable mistake or that no such admission was made. No further proof is required. The Supreme Court ruled that in view of the employer¶s formal admission that the employee worked beyond eight hours daily. However. Judicial admissions made by parties in the pleadings.. chanrobles virtual law library Premium and overtime pay. Judicial admission by employer of overtime work. except holidays and Sundays. In the 2000 case of Damasco vs. December 4. 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. distinguished. What is meant by ³undertime not offset by overtime´? 1.00 a day is more than enough to cover the ³one hour excess work´ which is the compensation they allegedly agreed upon. vs. NLRC. the employer claims that the employee¶s basic sala ry of P140. For overtime work performed on a rest day which falls on a regular holiday. the latter is entitled to overtime compensation. The employer already admitted she worked an extra hour daily. ³Overtime pay´ refers to the additional compensation for work performed beyond eight (8) hours a day. (Citing Philippine American General Insurance Inc. 2000]. R. EMERGENCY OVERTIME WORK: . (No.e. Undertime work on any particular day shall not be offset by overtime on any other day. DOLE Handbook on Workers Statutory Monetary Benefits). Every employee who is entitled to premium pay is likewise entitled to the benefit of overtime pay. 212 SCRA 194. IV.).

WEEKLY REST PERIOD: 38. typhoons. 37. 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. Exceptions when employee may be compelled to render overtime work: a. chanrobles virtual law library d.36. 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. installations or equipment. epidemic or other disasters or calamities. he may be dismissed on the ground of insubor dination or willful disobedience of the lawful order of the employer. What is ³weekly rest period´? . c. 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. When the work is necessary to prevent loss or damage to perishable goods. When may an employee be compelled to perform overtime work? 1. 2. b. 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. floods. and f. e. fire. or in order to avoid serious loss or damage to the employer or some other causes of similar nature. The general rule remains that no employee may be compelled to render overtime work against his will. 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. When there is urgent work to be performed on machines. earthquake.

4. e. chanrobles virtual law library b. If business is open on Sundays/holidays. to prevent loss of life and property. In case of urgent work to be performed on machineries. 39. Preference of employee as to his rest day should be respected if based on religious grounds. In case of actual or impending emergencies caused by serious accident. When may an employer compel his employees to render work on a rest day? Under any of the following circumstances: a. fire. c. and chanrobles virtual law library f. Sunday or holiday? a.1. to avoid serious loss which the employer would otherwise suffer. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more. epidemic or oth er disaster or calamity. Premium pay for work on scheduled rest day. earthquake. d. Every employer shall give his employees a rest period of not less than 24 consecutive hours after every 6 consecutive normal w ork days. where the employer cannot ordinarily be expected to resort to other measures. as in the case of the crew members of a vessel to complete a voyage and in other similar cases. When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. rest day may be scheduled on another day. Waiver of compensation for work on rest days and holidays is not valid. flood. In the event of abnormal pressure of work due to special circumstances. How is premium computed for work rendered on a rest day. 3. SUNDAY OR HOLIDAY: 40. 2. COMPENSATION FOR WORK ON REST DAY. . To prevent serious loss of perishable goods. equipment. or installations. or in case of force majeure or imminent danger to public safety. typhoon.

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

Rule IV of Book III of the Omnibus Rules Implementing the Labor Code. L 44717. October 23. However. 1985). 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. [supra]. Rule IV. 1984. R. R. L-52415. they in effect amended them by enlarging the scope of their exclusion. including its implementing rules. No. counsel for both parties failed to consider this. 629 (1984)]. whether worked or not. Book III of the said rules. said the Supreme Court. Oct.. (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. 147420. Rule IV of Book III of the Omnibus Rules Implementing the Labor Code.The Labor Code does not exclude monthly -paid employees from the benefits of holiday pay. No. it is deplorable. Aug. 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. Inciong. we ruled as follows: µSection 2. (Insular Bank of Asia and America Employees Union [IBAAEU] vs. R. et al. NLRC. The High Court declared: chanrobles virtual law library ³We have long ago declared void Section 2. No. 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. No. 9. the implementing rules on holiday pay excluded monthly-paid employees from the said benefits by inserting under Rule IV. 217 Phil. This does not speak well of the quality of representation they rendered to their clients. Book III of the Implementing Rules and Policy Instructions No. (The Chartered Bank Employees Association vs. Moreover. . This controversy should have ended long ago had either counsel first checked the validity of the implementing rule on which they based their contentions. Inciong. Ople. L-52415. both the petitioners and respondent firm anchored their respective arguments on the validity of Section 2. R. Section 2 which provides that monthly-paid employees are presumed to be paid for all days in the month. In Insular Bank of Asia v. shall be resolved in favor of labor. 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. 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. June 10. G. But in the 2004 case of Odango vs. G. 1984). et al. And yet.. [G. Inciong. Indeed. In Policy Instructions No. 23. 28. This case is cited prominently in basic commentaries. 2004).

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

BOOK I OF EXECUTIVE ORDER NO. What are the regular holidays and special days? REPUBLIC ACT NO. 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 . No CBA exists in this case. No. 292. June 10. 2007] Regular Holidays and Nationwide Special Days. et al. CHAPTER 7. OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 [APPROVED ON JULY 25.´ (Odango vs. ³ (1) Unless otherwise modified by law.bargaining agreement that prescribed the divisor. the employer was liable for underpayment because the divisor it used was 251 days. a figure that clearly fails to account for the ten legal holidays the law requires to be paid. 147420.. NLRC. R. 9492 . the divisor ANTECO uses is 304 days. 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. In Chartered Bank. G. 2004). Here. and or proclamation. 42. AS AMENDED.

A. no pay´ to entitlement to holiday pay? . at least six (6) months prior to the holiday concerned. the holiday will be observed on the Monday of the week. What are the distinctions between ³regular holidays´ and ³special days´? The following are the distinctions between ³regular holidays´ and ³special days´: a. 1987]). What is the application of the principle of ³no work.´ b. The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao. 203 [June 30. If the holiday falls on a Sunday. the President shall issue a proclamation. chanrobles virtual law library 43. the specific date that shall be declared as a nonworking day: Provided. if the worker is permitted or suffered to work on special days which fall on his scheduled rest day.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. A covered employee who does not work during regular holidays is paid 100% of his regular daily wage. 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. ³Special holidays´ are now known as ³special days. That for movable holidays. chanrobles virtual law library 44. the holiday will be observed on the Monday that follows: Provided. What is the distinction between ³special holidays´ and ³special days´? There is none. 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%. A covered employee who works during regular holidays is paid 200% of his regular daily wage. no pay.´ (NOTE: R. 45. however. while a covered employee who does not work during a special day does not receive any compensation under the principle of ³no work.

Premium pay for work performed during special days . Employees on leave while on SSS or employee's compensation benefits.The principle of ³no work. What are the premium pay for working on holidays? 1. he shall be entitled to the regular holiday pay if he worked on the day immediately preceding the non-working day or rest day. Premium pay for work performed during special days falling on scheduled rest day . if they are not reporting for work while on such benefits.50% over and above the basic pay. 47. 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. chanrobles virtual law library 2. Employees on leave of absence with pay .Employee shall not be deemed to be on leave of absence on that day. 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. chanrobles virtual law library b.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.30% on top of basic pay. Employees on leave of absence without pay on the day immediately preceding a regular holiday . unless he works on the first holiday. 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. he is entitled to his holiday pay on the second holiday. chanrobles virtual law library c. in which case. chanrobles virtual law library 46.entitled to regular holiday pay. in which case. whichever is higher. 48.may not be paid the required holiday pay if he has not worked on such regular holiday. . When the day preceding regular holiday is a non -working day or scheduled rest day . chanrobles virtual law library d.

Araw ng Kagitingan and Good Friday enunciated the following rule in case of two regular holidays falling on the same day (e.R. The Hon. 132 SCRA 663. ruled that Article 94 of the Labor Code. If employee worked: 300% of basic pay. 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. 144664. Araw ng Kagitingan and Good Friday falling on April 9. Unlike a bonus. (Insular Bank of Asia and America Employees Union (IBAAEU) vs. In the 2004 case of Asian Transmission Corporation vs. January 30. No. Petitioner SMC asserts that Article 3(3) of Presidential Decree No. Oct. 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. Said bulletin dated March 11. 2004]. under the rules of statutory construction. If employee did not work: 200% of basic pay. The Supreme Court. holiday pay is a statutory benefit demandable under the law. No. G. when April 9. 2002]. regardless of whether an employee is paid on a monthly or daily basis. It is elementary. 2. March 15. The provision is mandatory. a routine inspection conducted by the Department of Labor and Employment in the premises of San Miguel Corporation (SMC) in Sta. that when the language of the law is clear and unequivocal. which is a management prerogative. the law must be taken to mean exactly what it says. Iligan City revealed that there was underpayment by SMC of regular Muslim holiday pay to its employees. R. [ G. the petitioner sought the nullification of the said March 11.. CA. 1998. 23. L-52415. Since a worker is entitled to the enjoyment of ten paid regular holidays.49. In the case at bar. Filomena.g. was reproduced on January 23. 1083 . 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. 1993. No. in affirming the validity thereof. as amended. including the manner of computing the holiday pay. 1993 Explanatory Bulletin. affords a worker the enjoyment of ten paid regular holidays. 1984. R. 1998 was both Maundy Thursday and Araw ng Kagitingan. 1993): 1. chanrobles virtual law library 50. 673). Inciong. [G. CA. What is the rule in case of regular Muslim holidays? In the 2002 case of San Miguel Corporation vs. 146775.

whether continuous or broken.service within twelve (12) months. ruled that there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays.´ At any rate. 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. chanrobles virtual l aw library 4. is less than twelve (12) months. 5. unless the number of working days in the establishment as a matter of practice or policy. then by the same token.provides that ³(t)he provisions of this Code shall be applicable only to Muslims x x x. or that provided in the employment contract. The basis of computation of service incentive leave is the salary rate at the date of commutation. 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. reckoned from the date the employee started working. What are the basic principles governing the grant of service incentive leave? 1. Grant of vacation leave or sick leave may be considered substitute for service incentive leave. Article 3(3) of Presidential Decree No. . said period shall be considered as one (1) year for the purpose of determining entitlement to the service incentive leave. (Note: there is no provision in the Labor Code granting vacation or sick leave). 2. 3. in which case.´ The Supreme Court. however. including authorized absences and paid regular holidays. 1083 also declares that ³x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim. 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.´ SERVICE INCENTIVE LEAVE: 51. Service incentive leave is commutable to cash if unused at the end of the year. Meaning of "one year of service" . Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law as regular holidays.

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

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

fifteen percent (15%) for the management to answer for losses and breakages and distribution to managerial employees.] such is in the nature of share from service charges charged by the hotel. 104.000. 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. Profits are realized after expenses are deducted from the gross income. Also. Service charge is not profit share and may thus not be deducted from wage. In the 2005 case of Mayon Hotel & Restaurant vs. rollo). vol. and b. 157634. [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. 93. 2005]. 94. to wit: ³While complainants. who were employed in the hotel. It quoted with approval the Labor Arbiter on this matter. [G.´ WAGES: 54. R. 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. II. eighty-five percent (85%) for the employees to be distributed equally among them.Service charges are distributed in accordance with the following percentage of sharing: a. ‡ The P2. 55. No.00 salary ceiling for entitlement thereto is no longer applicable. Further. the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. receive[d] various amounts as profit share. 103. Attributes of wage: . ‡ 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. Although called profit share[. What are the attributes of wage? 1. May 16. Adana. The Supreme Court was not persuaded. 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.

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

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

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

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

night differ ential and holiday pay and cost-of-living allowances. 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. (Traders Royal Bank vs. No. No. [G. R. the same are treated as part of the basic salary of the employees. 24.. (No. company practice or policy. R. 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. but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. 751 (1999)] and similar cases. such as the cash equivalent of unused vacation and sick leave credits. 220 (1998)]. night differentials. [103 SCRA 139 (1981)]. Consolidated Food Corporation vs.the Labor Code. 4 [a]. NLRC. G. 491 (1998)]. [354 Phil. 1990. 145561. NLRC. St.. Its fiscal condition having declined. Inc. 88168. [349 Phil. Premium pay is not included in the computation of the 13th -month pay. ³basic salary´ has been interpreted to mean. 1993. In the 2005 case of Honda Phils.. et al. Michael Academy vs. Associated Labor Union. in effect. However. NLRC. G. Thus. 189 SCRA 274). 225 SCRA 562). premium. et al. R. be penalized for its past generosity to its employees. Aug. 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. 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. excluded from the computation of ³basic salary´ are payments for sick. X [C]. it was ruled that for employees receiving regular wage. [373 Phil. NLRC. vacation and maternity leaves. vs. the bank may not be forced to distribute bonuses which it can no long er afford to pay and. (Davao Fruits Corporation vs. Samahan ng Malayang Manggagawa sa Honda. Revised Guidelines on the Implementation of the 13th-Month Pay Law. 2005]. June 15. not the amount actually received by an employee. 13th MONTH PAY: 63. No. 30. In Hagonoy Rural Bank vs. Inciong. 85073. DOLE Handbook on Workers Statutory Monetary Benefits). the 13th . Aug. overtime. No. 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.

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

vs. provided that they have worked for at least one (1) month during a calendar year. despite the clarity of statute and jurisprudence at that time. (No. (Sevilla Trading Company vs. 2005]. DOLE Handbook on Workers Statutory Monetary Benefits. if he worked only from January up to September.250. et al. X [G]. 1994. Thus. June 27. NLRC. 6.. April 28. 2. 152456. G. 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. Inc. International School of Speech vs. 236 SCRA 280). et al.00 The payment of the 13th-month pay may be demanded by the employee upon the cessation of employer-employee relationship.. A. 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 (P6.00 x 6) / 12 = P3. Revised Guidelines on the Implementation of the 13th-Month Pay Law. R. so can the employee demand the payment of all benefits due him upon the . G.³corrected´ computation of the thirteenth month pay. No.500. R. Sept. et al. No. an employee who was receiving P6.500. chanrobles virtual law library In the 2005 case of Clarion Printing House. No. [G. 148372. 13th-month pay of resigned or separated employee. 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. 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. March 18. V. No. reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. G.. 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. 64. No. NLRC.00 in monthly salary and who had worked for at least six (6) months at the time of her retrenchment. and irrespective of the method by which their wages are paid. 106341. R. 112658. A. Villarama vs. his proportionate 13th-month pay should be the equivalent of 1/12 of his total basic salary which he earned during that period. 1995. R. 2004). Semana. NLRC.

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. 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. a full month basic pay computation was the ³present practice´ intended to be maintained in the CBA. Inc. vs. No. 2005]. aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997. and after they have exhausted all their leave credits and were no longer receiving their monthly salary from . Honda did not adduce evidence to show that the 13th month. 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. Both attested that when they were absent from work due to motorcycle accidents. 1999 which Honda issued shows that it was the first time a pro-rating scheme was to be implemented in the company. The Court of Appeals thus held that: ³Considering the foregoing. 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. 145561. (No. 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. 6. there being no gap in the service of the workers during the calendar year in question. 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. the computation of the 13th month pay should not be pro-rated but should be given in full. June 15. the Supreme Court in Honda Phils. 114M in 1998 and 215M lost of sales in 1999 due to strike. 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. (Section 6 thereof).´ The memorandum dated November 22. R. As the rules state. Regarding pro-ration of the 13th month pay. Samahan ng Malayang Manggagawa sa Honda. In the present case.´ (Emphasis supplied) chanrobles virtual law library More importantly. This is an implicit acceptance that prior to the strike. Revised Guidelines on the Implementation of the 13th-Month Pay Law). under these circumstances. an employee is entitled to a pay in proportion to the length of time he worked during the year. reckoned from the time he started working during the calendar year.. [G. it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case.termination of the relationship.

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

A case in point is JPL Marketing Promotions vs. Inc. June 15. in such a case. 145561. R. Samahan ng Malayang Manggagawa sa Honda.. Employers of those who are paid on purely commission. What is meant by the phrase ³its equivalent´ in the 13th month pay law? The term ³its equivalent´ shall include Christmas bonus. chanrobles virtual law library d. Employers already paying their employees 13th -month pay or more in a calendar year or its equivalent at the time of this issuance.deterrent. [G. 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. Who are exempted employers from the coverage of 13th month pay? The following are exempted employers: a. Article XIII-Social Justice and Human Rights. 2005). for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law. 66. and those who are paid a fixed amount for performing a specific work. as well as non -monetary benefits. G. 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. cost of living allowances and all other allowances regularly enjoyed by the employee. except those corporations operating essentially as private subsidiaries of the government. where the Supreme Court ruled that. . CA. or task basis. Employers of household helpers and persons in the personal service of another in relation to such workers. No. No. 65. the employer shall be covered by the 13th month pay law insofar as such workers are concerned. except where the workers are paid on piecerate basis in which case. Where an employer pays less than 1/12th of the employee¶s basic salary. Philippine Constitution. irrespective of the time consumed in the performance thereof. vs. (Section 3. This benefit is given by law on the basis of the service actually rendered by the employee. July 8. 2005]. the employer shall pay the difference. boundary. The government and any of its political subdivisions. R. including government-owned and controlled corporations. Honda Phils. mid -year bonus. b. c. chanrobles virtual law library But the rule is different if an employee was never paid his 13th month pay during his employment. 151966.

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

It is.Yes j.No i. Framanlis Farms. R. individual agreements or collective bargaining agreements between workers and employers or voluntary employer practice or policy. 73. No. 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. It is a gratuity to which the recipient has no right to make a demand. 75. 177 SCRA 160). NLRC. supplements or payments as provided in existing laws. (Kamaya Point Hotel vs. What is a 14th month pay? There is no law mandating the payment of 14th-month pay. FEU Employees Labor Union vs. case . FEU case (involving transportation allowance which was treated as compliance with 13th month pay) h. et al. UST Faculty Union vs. et al. in the nature of a bonus which may not be imposed upon the employer. August 31. et al. MINIMUM WAGE: 72.. Inc.g. case . is not allowed. chanrobles virtual law library 74.No 14th MONTH PAY: 71. 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. NLRC. Kamaya Point Hotel vs. G. Minister of Labor. et al. 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. NLRC. case . 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. 1989. therefore. vs. 75289. .

79. 77. 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. 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. 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. (e) The need to induce industries to invest in the countryside. . (f) Improvements in standards of living. (d) The needs of workers and their families. 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. 80. (b) Wage adjustment vis-à-vis the consumer price index. When is a ³Wage Order´ necessary? Whenever conditions in a particular region so warrant. chanrobles virtual law library 78.76. shall proceed to determine whether a Wage Order should be issued. an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase. in the event such order is affirmed. (c) The cost of living and changes or increases therein. the Regional Board shall. among other relevant factors. consider the following: (a) The demand for living wages. the RTWPB shall investigate and study all pertinent facts and based on the standards and criteria herein prescribed. What are the standards/criteria for minimum wage fixing? In the determination of regional minimum wages.

wages shall be paid in legal tender and the use of tokens.(g) The prevailing wage levels. promissory notes. Under the Labor Code and its imple menting rules. shall be considered compensable hours worked. the ATM system of payment is with the written consent of the employees concerned. (h) Fair return of the capital invested and capacity to pay of employers. 3. Exceptions : A. and (j) The equitable distribution of income and wealth along the imperatives of economic and social development. (i) Effects on employment generation and family income. if done during working hours. coupons or any other form alleged to represent legal tender is prohibited even when expressly requested by the employee. it is mandated that the laborer¶s wages shall be paid in legal currency. vouchers. Under the Civil Code. Payment through automated teller machine (ATM) of banks provided the following conditions are met: 1. 2. The employees are given reasonable time to withdraw their wag es from the bank facility which time. 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 system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code. as a general rule. What are the forms of payment of wages? 1. 2. or other logical bases of differentiation. 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. length of service. chanrobles virtual law library . PAYMENT OF WAGES: 82. as amended. 81.

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

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

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

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

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

NLRC. 17. ³These circumstances. Bataan. et al. Respondents directed the petitioner. etc. 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. c. to the Court¶s mind. showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon. 3rd drop. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as. Respondents determined how. No.3. likewise. for example. 2005). 2nd drop. the words µtomorrow morning¶ was written on slip no. Moreover. G. as in this case. Indeed. he did not possess substantial capitaliza tion or investment in the form of tools. and chanrobles virtual law library 4. the facts clearly show otherwise. 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. the factual circumstances earlier discussed indubitably establish the existence of an employer-employee relationship between the respondent company and the petitioner. a. the employment status of a person is defined and prescribed by law and not by what the parties say it should be. Jan. The routing slips indicated on the col umn REMARKS. b. On the other hand. . 146530. to wit: at its office in Metro Manila at 2320 Osmeña Street. R. Mariveles.. the chronological order and priority of delivery such as 1st drop. after completion of each delivery. where and when the petitioner would perform his task by issuing to him gate passes and routing slips. to park the truck in either of two specific places only. The routing slips. 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.´ (Chavez vs. machinery and work premises. the petitioner performed the delivery services exclusively for the respondent company for a continuous and uninterrupted period of ten years. Makati City or at BEPZ. ³The contract of service to the contrary notwithstanding. Evidently. 2776. This meant that the petitioner had to deliver the same according to the order of priority indicated therein.

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

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

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

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

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

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. ABS-CBN engaged Sonza¶s services specifically to co-host the ³Mel & Jay´ programs.´ Applying the control test. WIPR could not assign the actress work in addition to filming ³Desde Mi Pueblo. the Agreement prohibited Sonza from criticizing in his shows ABS-CBN or its interests. 2 March 2004] that a television program host is an independent contractor. recently held in Alberty -Vélez vs. the actress provided the ³tools and instrumentalities´ necessary for her to perform. However. appeared on television. Sonza only needed his skills and talent. First. ABS-CBN could not dictate the contents of Sonza¶s script. and sounded on radio were outside ABS-CBN¶s control. To perform his work. [361 F. as well as preand post-production staff meetings. The Agreement required Sonza to attend only rehearsals and tapings of the shows. Sonza is not an employee bu t an independent contractor. 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. This test is based on the extent of control the hirer exercises over a worker. a television actress is a skilled position requiring talent and training not available on-the-job. ABS-CBN was not involved in the actual performance that produced the finished product of Sonza¶s work. the more likely the worker is deemed an employee. First Circuit. thus: First. How Sonza delivered his lines. The greater the supervision and control the hirer exercises. ABS-CBN did not instruct Sonza how to .the less control the hirer exercises. Moreover. Second. Sonza contends that ABS-CBN exercised control over the means and methods of his work. chanrobles virtual law library Third. The United States Court of Appeals. Sonza¶s argument is misplaced. reference to foreign case law in analyzing the present case is necessary. Sonza did not have to render eight hours of work per day. the more likely the worker is considered an independent contractor.circumstance indicates an independent contractual relationship between Sonza and ABS-CBN. ABS-CBN did not assign any other work to Sonza. The control test is the most important test the courts apply in distinguishing an employee from an independent contractor. Corporación De Puerto Rico Para La Difusión Pública (³WIPR´).3d 1. D. The converse holds true as well .

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

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.
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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,

(No. In summary. No. Effects of a labor-only contracting arrangement. (f) Contracting out of a job. vs. the following are the effects of a labor-only contracting arrangement: a. DOLE Primer on Contracting and Subcontracting. Labor Code. 2004). The subcontractor will be treated as the agent or intermediary of the principal. work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. Manila Water Co. (Article 106. 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. The principal will become the employer as if it directly employed the workers engaged to undertake the subcontracted job or service. work or service to be performed and the employees recruited. Series of 2001. . and (g) Contracting out of a job. 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. What is labor-only contracting? Labor-only contracting is hereby declared prohibited. 91. supplies or plac es workers to perform a job. Since the act of an agent is the act of the principal. (e) Contracting out of a job. 3. b. For this purpose. G.. Pena. work or service through an in-house agency as defined herein. 9. July 8.. work or service for a principal. supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. representations made by the subcontractor to the employees will bind the principal. Effects of Department Order No.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. et al. labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits. Inc. R. 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. 158255.

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

etc. Nos. [G. and has sufficient capital and resources to undertake its principal business. Moreover. chanrobles virtual law library In another similar case. 1996]. R. [G. 4. 92777-78. is an independent contractor. chanrobles virtual law library If the intention was to require the contractor to prove that he has both capital and the requisite investment. the Supreme Court ruled that there is indubitable evidence showing that Business Staffing and Management. they are not necessary in its operation. 195 SCRA 224. Nos. 1991.. Moreover. as opposed to being integral. et al. 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. July 23. functions. 470). 224 SCRA 7171).6 Million. 1991. cannot be considered as engaged in labor -only contracting being a highly capitalized venture. 202 SCRA 465.000 of which is actually subsc ribed. chanrobles virtual law library On the contrary. No... The law does not require both substantial capital and investment in such tools. 113347. Its Articles of Incorporation proves its sufficient capitalization. Federation of Free Workers (FFW)-Byron Jackson Services Employees . R. equipment. Labor Secretary Bienvenido Laguesma. No. (See also Baguio vs. then the conjunction ³and´ should have been used. R. engaged in the management of projects. 223). without which production and company sales will suffer. NLRC. Filipinas Synthetic Fiber Corporation [FILSYN] vs. In the 2005 case of Wack Wack Golf & Country Club vs. NLRC. work premises. But having established that it has substantial capit al. 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. Oct. NLRC. It had provided management services to various industrial and commercial business establishments. (Neri vs. equipment. June 14. G. R. 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. et al. 149793. This is clear from the use of the conjunction ³or´ in the provision of fourth paragraph of Article 106 of the Labor Code. Inc. business operations. a corporation engaged in the business as Management Service Consultant. April 15. G. machineries. among others. nevertheless. G. March 13. 1993. 79004-08.investments in the form of tools. Nos. R. in December 1993. 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). 9700809. 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. et al. NLRC. they are merely incidental thereto. NLRC. (BSMI). (Ecal vs. P400. jobs and other kinds of business ventures. 2005].

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

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

work premises. [G. Maerc Integrated Services. February 2. further explained the principles of labor-only contracting. but not necessarily confined to. whether the contractor was carrying on an independent business. 1993. 126586. 144672. equipment. the term and duration of the relationship. in Vinoya vs. et al. 1996).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. July 23. machinery and work premises. The phrase ³substantial capital and investment in the form of tools. equipment. No.608. In fact. the skill required. NLRC. March 5. 97008-09. machinery and equipment. The Supreme Court said: ³Petitioner also ascribes as error the failure of the Court of Appeals to apply the ruling in Neri vs. July 10. No. ³Accordingly.. to be considered a job contractor. NLRC.080.. etc. among others.. chanrobles virtual law library ³However. 111501. 224 SCRA 717]... machinery. the nature and extent of the work. such as. [G. 2000. to be considered an independent contractor. The 2003 case of San Miguel Corporation vs. 2003]. G. NLRC.R. where the contractor was adjudged to have engaged in labor-only contracting. several factors may be considered. Nos. which are directly related to the service it is being contracted to render. 324 SCRA 469]. No. What it did was simply to supply manpower to Fuji Xerox. equipment. we clarified that it was not enough to show substantial capitalization or investment in the form of tools. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. Inc. R. et al. jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship. In that case. work premises and other materials which are necessary in the conduct of his business´ in the Implementing Rules. [G. 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. R. The second condition to establish permissible job contracting was sufficiently met if one possessed either attribute. vs. the right to . clearly contemplates tools. machineries.00 consisting of buildings. it was held that the law did not require one to possess both substantial capital and investment in the form of tools.R. (Philippine Fuji Xerox Corporation. etc. equipment. The fact is that the contractor did not have copying machines of its own.

Naturally. et al. displayed the characteristics of a labor-only contractor. effect. July 30. 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 control and supervision of the workers. manner and terms of payment. firing and payment of the workers of the contractor. a big local bank. none of its workers was also ever assigned to any other establishment. (Citing Ponce v.. 144672. an international bank. appliances. 124643. the power of the employer with respect to the hiring. the duty to supply premises. 293 SCRA 366).¶ Furthermore. and the mode. G. Inc. MAERC. 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. tools. Moreover. the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers. with the severance of relationship between MAERC and SMC followed MAERC¶s cessation of operations.assign the performance of specified pieces of work. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division. Maerc Integrated Services. R. 1998.. ³In Neri. ³In comparison. Stipulation in the contract.R. Nor do we believe MAERC to have an independent business. Any liability shall devolve upon the . 2003). while MAERC¶s investments in the form of buildings. The ³labor only´ contractor is considered merely an agent of the employer. 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. the control of the premises. etc. No. No. free from the control and supervision of its principal in all matters except as to the results thereof. 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. as earlier discussed. July 10. tools and equipment amounted to more than P4 Million. G. NLRC. a university. government agencies. thus convincing us that it was created solely to service the needs of SMC. The existence of employer -employee relationship cannot be made subject of an agreement or contract. The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for their principal. materials and labor. a hospital center.

as if Livi had served as its [California¶s] promotions or sales arm or agents..¶ 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. We hold that it is one notwithstanding its vehement claims to the contrary. an integral part of the manufacturing business.. and notwithstanding the provision of the contract that it is µan independent contractor. California Marketing Co. . [G.e. the character of its business. i. R.¶ California¶s purported µprincipal operation activity. we do not agree that the petitioners had been made to perform activities µwhich are not directly related to the general business of manufacturing. [169 SCRA 497 (1989)].¶ an activity that is doubtless. by the mere expedient of a unilateral declaration in a contract. NLRC. 121327. (Tabas vs.. 169 SCRA 497). in any manner and under any circumstances. or job contractor.¶ 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. had simply supplied it with the manpower necessary to carry out its [California¶s] merchandising activities. it contracts out labor in favor of clients. In this connection. 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. No. The Court cited the analogous case of Tabas vs. It is not. ³xxx. Livi performs µmanpower services. then. 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. chanrobles virtual law library Thus. or otherwise. rendered a piece of work it [California] could not have itself done. whether as ³labor-only´ contractor. be considered employees of the Company. December 20. Inc. thus: ³There is no doubt that in the case at bar. Livi as a placement agency. Inc. using its [California¶s] premises and equipment..³labor only´ contractor and the employer.¶ meaning to say. jointly and severally. California Manufacturing Company. the parties cannot dictate. This was the holding of the Supreme Court in the case of Philippine Fuji Xerox Corporation [supra]. 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. 2001]. 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. As held in the 2001 case of De los Santos vs.

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

2003). Singson. G. Inc. No. rather. materials and equipment to service its clients. It owned several motor vehicles and other tools. It then had current assets amounting to P6 million and is therefore a highly capitalized venture.. No.00. It paid rentals of P30. In the 2003 case of San Miguel Corporation vs. PLDT.020 for the office space it occupied. It ratiocinated. head of the Mandaue Container Service of SMC. 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. Maerc Integrated Services. the language of the contract is not determinative of the parties' relationship. SMC maintained a constant presence in the workplace through its own checkers. there are indicia that it actively supervised the complainants. June 8. 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. 144672.. the responsibility of watching over the MAERC workers by MAERC personnel became superfluous w ith the presence of additional checkers from SMC. In the June 2005 decision in the case of Abella vs.4) It had its own capital assets to carry out its promotion business. [G. Maerc Integrated Services. thus: chanrobles virtual law library ³In deciding the question of control. 144672. [G. July 10. in any manner and under any circumstances. however.000. 2003]. It had an authorized capital stock of P500.´ chanrobles virtual law library The Supreme Court. According to Singson. 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. July 10. the Supreme Court ruled that the security guards .´ (San Miguel Corporation vs. Inc. ³Despite SMC¶s disclaimer. it is the totality of the facts and surrounding circumstances of each case. 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. 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. R. be considered employees of the Company. R.´ disregarded the said stipulation in the contract. 2005].. R. 159469. No.¶ 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. et al.

et al. NLRC. 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. 138051. 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. In a labor-only contract.´ chanrobles virtual law library Nature of liability of employer and labor-only contractor. (2) the employee who is ostensibly under the employ of the ³labor-only´ contractor. In holding that PSI is a legitimate job contractor. 112661. No.. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. equipment. No. Book II of the Omnibus Rules Implementing the Labor Code. 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. R. Industrial Timber Corporation vs. Inc. communication equipments. photocopying machines. 2004. there are three parties involved: (1) the ³laboronly´ contractor. 126586. (PSI) to PLDT are the employees of PSI and not of PLDT. work premises and other materials. et al. 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. June 10. it is servicing clients other than PLDT like PCIBank. (Sonza vs. etc. No. and (3) the principal who is deemed the real employer. ammunitions. (Vinoya vs. 2001]. 169 SCRA 341). vs.. et al. 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. It has substantial capital and investment in the form of guns. typewriters. R. R.R. G. vs. the workers supplied by him are employees of the owner of the project to whom said labor was supplied. chanrobles virtual law library . June 25. Inc. Feb. 143428. Pepito... the ³labor-only´ contractor is the agent of the principal. et al. May 30. Under this scheme. among others. Sandoval Shipyards. G. Crown Triumph. 2001). et al. NLRC. and Philippine Cable. 2. office equipments like computer. [G. ABS-CBN Broadcasting Corporation. 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. No.supplied by People¶s Security. machineries. vehicle s.. G. Here. 2000. NLRC and Fortune Tobacco Corporation. and above all. Rule VII. et al. Therefore.

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

G. the principal should be held liable for the separation pay of said workers. 2003). including the fines imposed for violations of the notice requirement. The principal employer. a mere agent of the petitioner-employer.. a. Maerc Integrated Services. R. b. is a labor-only contractor and. No. An employee who hires dispatchers for the operator of a transportation company. it is clear that if there is a finding of labor only contracting. (San Miguel Corporation vs. G. et al. Resultantly. et al. Inc. No. 95845. No. therefore.. chanrobles virtual law library Having made the distinction between the liability of a job contractor and that of a labor-only contractor. On the other hand. In a case involving retrenchment of workers effected by the labor -only contractor consequent to the termination of the labor-only contract.employees. July 10. Duty to comply with legal requirements for valid termination in labor-only contracting situations.. G. 2003). Inc. Illustrative cases of labor-only contracting. machineries. gardeners. 1996). 21. et al. work premises and other materials. janitors.. the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. R. R. Maerc Integrated Services. No. 144672. in labor-only contracting. 2003).... firemen and grasscutters to a garment manufacturer. R. 144672. 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. . becomes solidarily liable with the labor -only contractor for all the rightful claims of the employees. Hence. (San Miguel Corporation vs. direct employer. July 10. Moreover. Maerc Integrated Services. NLRC. (San Miguel Corporation vs. July 10. 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. 144672. 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. 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. equipment. et al. G. (Tiu vs. Inc. Feb. was declared a labor-only contractor for its failure to prove that it had substantial capital or investment in the fo rm of tools. therefore. in solidum with the labor-only contractor. A company which supplies a considerable workforce totaling 120 mechanics.

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

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

No. R. 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. 94. For purposes of determining the extent of their civil liability for the payment of wages. managing. 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. 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. July 14. chanrobles virtual law library . managed or controlled by the principal. MERALCO as principal becomes jointly and severally liable for the individual respondents¶ wages. The best illustration of these principles is the 2005 case of Manila El ectric Company vs. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it. and (ii) operates solely for the principal owning. or controlling it. under Articles 106 and 109 of the Labor Code. chanrobles virtual law library 93. 2005] where it was held. MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code.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. [G. 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. Labor Code). xxx ³When ASDAI as contractor failed to pay the individual respondents. the indirect employer shall be considered as direct employer. 145271. (Article 109.

as held in Mariveles Shipyard Corp. 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. the creditor may choose which offer to accept.xxx ³ASDAI is held liable by virtue of its status as direct employer. 1217. which provides: µART. vs. 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. with the interest for the payment already made. ³However. 144134. November 11. 415 SCRA 573]. Payment made by one of the solidary debtors extinguishes the obligation. no interest for the intervening period may be demanded. 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. To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position . in proportion to the debt of each. reimburse his share to the debtor paying the obligation. If two or more solidary debtors offer to pay. 3. [G.´ 95. 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. As an employer.R. If the payment is made before the debt is due. µWhen one of the solidary debtors cannot. because of his insolvency.¶ ³ASDAI may not seek exculpation by claiming that MERALCO¶s payments to it were inadequate for the individual respondents¶ lawful compensation. 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. No. Judicial proceedings in rem is required for creditors¶ claims against debtors to become operative. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. Court of Appeals. 2003. such share shall be borne by all his co -debtors. Article 110 applies only in case of bankruptcy or judicial liquidation of the employer. 2.

NO. R. (G. 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. 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. VS. 1999) where the same issue is discussed and further . ET AL. VS. number 3: ³claims of laborers and other workers engaged in the construction. JANUARY 19. 7. reconstruction or repair of buildings. therefore. 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. ET AL. Claims for unpaid wages do not. JULY 26. NO. 128003. except to the extent that such claims for unpaid wages are already covered by Article 2241. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. 2000) (SEE ALSO RUBBERWORLD (PHILS. In one case.).than the State which could only assert its own prior preference in case of a judicial proceeding. R. number 6: ³claims for labor er¶s wages.). fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code. (G.´ To the extent that claims for unpaid wages fall outside the scope of Article 2241. chanrobles virtual law library 4. Preference of taxes. INC. 2000) ALEMAR¶S SIBAL AND SONS. (G. R. INC. NLRC. . number 6 and 2242. on the goods manufactured or the work done. number 3. NLRC. What is the effect of rehabilitation receivership on monetary claims of employees? RUBBERWORLD (PHILS. 6. canals or other works. 5. APRIL 14. INC. 114761. Mortgage credit. NLRC. 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. upon said buildings.´ or by Article 2242. VS.A mortgage credit is a special preferred credit under Article 2241 of the Civil Code while workers¶ preference is an ordinary preferred credit. NO. 126773. REHABILITATION RECEIVERSHIP: 96.. they would come within the ambit of the category of ordinary preferred credits under Article 2244. canals and other works..

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?

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. and (2) all time during which a child is suffered or permitted to work. when the child is below eighteen (18) years of age. or (ii)in public entertainment or information. (f) ³Public entertainment or information´ refers to artistic. EMPLOYMENT OF CHILDREN: 122. cinema or film. radio program.Any woman who is permitted or suffered to work. cocktail lounge. Where there is no fixed or definite workplace. . to include households employing children. and chanrobles virtual law library ii. 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. mental or psychosocial development. Rest periods of short duration during working hours shall be counted as hours worked. in any night club. they may come and go as they please. (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. chanrobles virtual law library (e) ³Workplace´ refers to the office. (c) ³Working Child´ refers to any child engaged as follows: i. the term shall include the place where th e child actually performs work to render service or to take an assignment. in work or economic activity that is not child labor as defined in the immediately preceding sub-paragraph. and cultural performances for television show. massage clinic. (d) ³Hours of work´ include (1) all time during which a child is required to be at a prescribed workplace. having no fixed hours of work. with or without compensation. premises or worksite where a child is temporarily or habitually assigned. when the child below fifteen (15) years of age. What are the relevant terms defined in the law? (a) ³Child´ refers to any person under 18 years of age. (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. shall be considered as an employee of such establishment for purposes of labor and social legislation. literary.

including deprivation of freedom. a continui ng program for training and skills acquisition of the child. with the express agreement of the child concerned. That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection. (b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration. commercial advertisement. and the approval of the Department of Labor and Employment: Provided. (g) ³Forced labor and slavery´ refers to the extraction of work or services from any person by means of enticement. television or other forms of media is essential: Provided.theater. print materials. nor impairs his/her normal development: Provided. health. and other media. debt bondage or deception. public relations activities or campaigns. 123. the employer shall first secure. subject to the approval and supervision of competent authorities. That his/her employment neither endangers his/her life. That the employment contract is concluded by the child's parents or legal guardian. a work permit . (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 morals. safety. or chanrobles virtual law library (2) Where a child's employment or participation in public entertainment or information through cinema. if possible. intimidation or threat. violence. internet. further. morals and normal development of the child. That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education. health. abuse of authority or moral ascendancy. use of force or coercion. safety. further. radio. In the above exceptional cases where any such child may be employed. and chanrobles virtual law library (c) The employer shall formulate and implement. however. theater. and the duration and arrangement of working time. before engaging such child. 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.

the order of preference on parental authority as provided for under the Family Code shall apply. [NOTE: The term "child" shall apply to all persons under eighteen (18) years of age. as amended by R.000. 2003). 125. No. (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. December 19. education or skills acquisition and secondarily to the collective needs of the family: Provided. as amended by R. That not more than twenty percent (20%) of the child's income may be used for the collective needs of the family. No. (Section 12-A. 2003). salaries.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. No.from the Department of Labor and Employment which shall ensure observance of the above requirements.A.00) annually. 9231. The child shall have full control over the trust fund upo n . In the absence or incapacity of either of the parents. 7610. Trust Fund to Preserve Part of the Working Child's Income. 7610. 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. R. 7610. the other parent shall administer the same. No. That the work shall not be more than four (4) hours at any given day. (Section 12-B. 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. R. 9231.] 124. (Section 12.A. in compliance with the provisions of this Act. December 19. 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. A. The income of the working child and/or the property acquired through the work of the child shall be administered by both parents. How is the working child¶s income be used or administered? The wages. and in no case beyond forty (40) hours a week. No. . 9231. In case both parents are absent or incapacitated. 2003). as amended by R. A.A. December 19. for which he/she shall render a semi-annual accounting of the fund to the Department of Labor and Employment. No. A.

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

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

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

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

chanrobles virtual law library (e) Monthly salary credit . international organization or their wholly-owned . (f) Monthly . not gainfully employed. however. That this exemption notwithstanding.All actual remuneration for employment.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. chanrobles virtual law library (4) Service performed in the employ of a foreign government or international organization. (h) Employment . daily or weekly basis. if on any other basis. and illegitimate child who is unmarried.The dependents shall be the following: (1) The legal spouse entitled by law to receive support from the member.The amount paid to the SSS by and on behalf of the members in accordance with Section Eighteen of this Act. (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof. (d) Compensation . or if over twenty-one (21) years of age. physically or mentally. legitimated or legally adopted. and has not reached twenty-one (21) years of age.The compensation base for contributions and benefits as indicated in the schedule in 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. and (3) The parent who is receiving regular support from the member. including the mandated cost-of-living allowance. or their wholly-owned instrumentality: Provided. 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. he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support. (g) Contribution . µmonthly¶ shall mean a period of one (1) month. any foreign government. (2) The legitimate.(c) Dependents .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.

Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the service of said contra ctors. 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. who shall be the primary beneficiaries of the member: Provided. death. and (5) Such other services performed by temporary and other employees which may be excluded by regulation of the Commission. In their absence.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). further. legitimated or legally adopted. 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. whichever is greater: Provided. 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. finally.The retirement.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 . disability. (m) Credited years of service . (i) Beneficiaries . any other person designated by the member as h is/her secondary beneficiary. 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. injury or sickness and maternity of the member. legitimated children of the member. and illegitimate children. his/her dependent illegitimate children shall be entitled to one hundred percent (100%) of the benefits. (l) Average daily salary credit . In the absence of all the foregoing. That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate. legitimated or legally adopted children: 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). further. (k) Average monthly salary credit . That the provisions of this Act shall be supplementary to any such agreement. the dependent legitimate. That in the absence of the dependent legitimate.instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines. the dependent parents who shall be the secondary beneficiaries of the member.The dependent spouse until he or she remarries. chanrobles virtual law library (j) Contingency .

eliminations or improvements in the benefits to be available under the remaining private plan. further. as well as those workers enumerated in Section Nine-A hereof. For a member covered in or after January nineteen hundred and eighty five (1985). which may be necessary to adopt by reason of the reduced contributions thereto as a r esult of the integration. 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. 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. 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. reduced or otherwise impaired: Provided. adjustments. 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. (o) Self-employed . 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.contributions have been paid from January nineteen hundred and eighty five (1985) up to the calendar year containing the semester prior to the contingency. That nothing in this Act shall be construed as a limitation on the right of employers and employees to . That any changes. 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. their monthly income shall not be less than One thousand pesos (P1. further. as defined under this Act.Any person whose income is not derived from employment. 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.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. modifications. chanrobles virtual law library (n) Member .000. (p) Net earnings . 140. shall be subject to agreements between the employers and employees concerned: Provided. finally. further. further. That in the case of domestic helpers.00) a month: Provided.

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

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

Any productive activity that provided the member with income at least equal to the minimum compensation of government employees.The basic monthly pension multiplied by sixty (60). overtime pay. (o) Disability. honoraria. That initially the average monthly compensation shall not exceed Ten thousand pesos (P10. chanrobles virtual law library (k) Revalued average monthly compensation .An amount equal to one hundred seventy percent (170%) of the first One thousand pesos (P1. (l) Lump sum.00). (n) Gainful Occupation. pursuant to his election/appointment. (j) Average Monthly Compensation (AMC).The basic pay or salary received by an employee.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. allowances and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws. further. (m) Pensioner. bonuses.000. 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.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. excluding per diems. or by the number of months he received such compensation if he has less than thirty -six (36) months of service: Provided.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).000.00).(g) Compensation.00) of the average monthly compensation plus one hundred percent (100%) of the average monthly compensation in excess of One thousand pesos (P1. 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.The amount payable to the GSIS by the member and the employer in accordance with Section 5 of this Act.000. (i) Current Daily Compensation.Any loss or impairment of the normal functions of the physical and/or mental faculty of a member which reduces or eliminates . (h) Contribution.

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

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

the hearing of one or both ears. maternity cases or sanitarial care. or other health care professional or practitioner duly licensed to practice in the Philippines and accredited by the Corporation. midwife.The process to be determined by the Corporation in order to enlist individuals as members or dependents covered by the Program.Refers to: (1) a health care institution.A natural or juridical person who employs the services of an employee. drug addiction or in need of obstetrical or other medical and nursing care. injury. injuries. deformities. or one or two limbs at or above the ankle or wrist. (k) Enrollment . (m) Global Budget . (j) Employer . It shall also be construed as any institution. or chanrobles virtual law library . or deformity.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. prevention.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. or abnormal physical and mental states. building. who is any doctor of medicine. (n) Health Care Provider . or infirmaries. or place where there are installed beds. dispensaries. disability. 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. (l) Fee for Service .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.(h) Emergency . or (2) a health care professional. or bassinets for twenty-four hour use or longer by patients in the treatment of diseases. cribs. diagnosis. where there is an employeremployee relationship.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. dentist. which is duly licensed and accredited devoted primarily to the maintenance and operation of facilities for health promotion. rehabilitation centers and such other similar names by which they may be designated. chanrobles virtual law library (i) Employee . nurseries. nurse.

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

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

Provided. A. as evidenced in his health insurance ID card: and Provided. further. and (c) Enrolled indigents.refers to that part of labor law which regulates the relations between employers and workers. which shall be defined by the Corporation. What is the distinction between ³labor relations´ and ³labor standards´? Labor relations . . 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. 155. collective bargaining. such actuarial studies must be done within a period of three (3) years. Example: Book V of the Labor Code which deals with labor organizations.(f) cost-ineffective procedures. to determine the financial sustainability of including the foregoing personal health services in the benefit package. 7875. That. grievance machinery. That he is not currently subject to legal penalties as provided for in Section 44 of the law. voluntary arbitration. and then periodically reviewed. 156.III LABOR RELATIONS LAW 1. That such member can show that he contributes thereto with sufficient regularity. 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. 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. shall be entitled to the benefits of the Program: Provided. conciliation and mediation. chanrobles virtual law library LABOR LAWS OF THE PHILIPPINES PART .

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

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

INC. No. Do Labor Arbiters have jurisdiction over wage distortion cases? Labor Arbiters have jurisdiction over wage distortion cases only in unorganized establishments. exemplary and other forms of damages. No. Thus. 114761. VS. ET AL. R. jurisdiction is vested with Voluntary Arbitrators. INC. To proceed with the labor proceedings is grave abuse of discretion. What is the effect of rehabilitation receivership on monetary claims of workers? RUBBERWORLD (PHILS. NLRC. VS. The NLRC may not proceed with hearing of monetary claims. (G. the SEC order becomes functus officio. chanrobles virtual law library [See also RUBBERWORLD (PHILS. Only when there is liquidation that the monetary claims may be asserted. 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.. Once the receivership proceedings have ceased and the receiver/liquidator is given the imprimatur to proceed with corporate liquidation. ET AL. 1999)]. INC. rules and regulations. involving or arising out of recruitment laws. 126773.under receivership or liquidation. the monetary awards cannot be executed. If already decided.). VS. NLRC. In organized establishments. . (ALEMAR¶S SIBAL AND SONS. No. April 14. including claims for actual. (G. 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. 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. 2000) Rehabilitation receivership of a company issued by the SEC has the effect of suspending all proceedings in all judicial or quasi -judicial bodies.. G. chanrobles virtual law library (NOTE: The POEA continues to have jurisdiction over recruitment or pre-employment cases which are administrative in nature. 128003.). 9. ET AL. subject to the rules on preference of credits. 8. moral. R. July 26. R. January 19. NLRC. 7.

These matters are still within the province of the Regional Trial Courts. 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). 12. NLRC. it must be noted that according to the 2003 case of Land Bank of the Philippines vs. Mira. In the same Atlas Farms case. hence. except in strikes and lockouts in industries indispensable to the national interest. [G. 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. it was categorically ruled . Not only this. vs. 11. How should the monetary claims of OFWs be computed? Skippers Pacific. 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. In Atlas Farms. Do Labor Arbiters have contempt powers? Yes. 10. the Supreme Court affirmed the earlier rulings to this effect. 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. either NLRC (in certified cases) or DOLE Secretary (in assumed cases) has jurisdiction. Labor Arbiters have jurisdiction thereover. 144314. 152611. et al. Inc.including money claims arising therefrom or violation of the conditions for issuance of license to recruit workers). R. It is not within their jurisdiction and competence to decide the indirect contempt cases.. (G. Inc. No. 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. 8042. Sr. R. November 18. vs.. Republic Act No. [G. 2003]. However. November 21. 2002]. 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. R. 13. 142244. 2002) Under Section 10. No. in which case. August 5. 14. Listana. No.

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

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. Intercontinental Broadcasting Corporation. such appointment was subsequently approved by the Board of Directors of the IBC. 1995 by the IBC¶s General Manager.´ (Union Motors vs. 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. trustees. contended that his dismissal was a controversy falling within the jurisdiction of the labor courts. 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. NLRC. It held that even assuming that he was in fact appointed by the General Manager. Consequently. No. officers. chanrobles virtual law library The Supreme Court considered petitioner¶s argument untenable.Who are corporate officers?There are specifically three (3) officer s which a corporation must have under the statute: president. 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. secretary. Section 25 of the Corporation Code gives corporations the widest latitude to provide for such other offices. He points out that he had actually been appointed as such on January 11. A. the law does not limit corporate officers to these three. the Board of Directors may also be empowered . as petitioner¶s appointment as comptroller required the approval and formal action of the IBC¶s Board of Directors to become valid. vice president. 2002].D. cashier.g. In support of his argument. R. e. [G. 144767. petitioner underscores the fact that the IBC¶s By-Laws does not even include the position of comptroller in its roster of corporate officers. therefore. That the position of Comptroller is not expressly mentioned among the officers of the IBC in the by-laws is of no moment. and general manager. and treasurer. March 21. therefore. the ³by-laws may and usually do provide for such other officers. and managers. auditor. He. It must be noted that the Supreme Court has held that in most cases. No. 8799) which includes controversies involving both election and appointment of corporate directors. 902-A (now by the RTC under R. 314 SCRA 531. 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. 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. such board action would not have been required.. as they may deem necessary. The by-laws may and usually do provide for such other officers. Had petitioner been an ordinary emplo yee. However. Consequently. it is clear.

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

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

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

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

Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995). Neither are they ³doing business in the Philippines. NLRC. The NLRC is not a convenient forum given that all the incidents of the case ± from the time of recruitment. Sanchez. or has no reasonable causal connection with. (Article 264. No. 187 SCRA 694. Insular Life vs. Henk are nonresidents of the Philippines. (Pepsi-Cola Distributors vs. (Bulletin Publishing Corporation vs. vs. NLRC.felonies committed in the course of strikes and lockouts. to dismissal . 144 SCRA 678). employer -employee relationship. 201 SCRA 695. (Section 1. 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. 120077. Insolvency proceedings in the enforcement of the worker preference ordained under Article 110 of the Labor Code. Review of recruitment violation cases and other related cases decided by the POEA. The inconvenience is compounded by the fact that the proper defendants ± the Palace Hotel and MHICL . R.´ Likewise. Rules and Regulations Governing Overseas Employment). Maalat. 2000). Rule IV. Galang. Labor Code). (G. to employment. (Section 12. Cosmopolitan Funeral Homes vs. 179 SCRA 459). 13. The Secretary of Labor and Employment has exclusive jurisdiction over these cases. Book VI. . 187 SCRA 773. Administrative action against the licensee or holder of authority cognizable by the POEA which could proceed independently from the criminal action. 15.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. chanrobles virtual law library 17. the Supreme Court ruled that under the international law doctrine of forum non conveniens. 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. 14. Exercise of equity jurisdiction to enjoin activities for purposes of compelling an employer to ignore a clear mandate of the law. Mr. the main witnesses. Cases involving issues which do not arise from. Grepalife Assurance Corporation vs. In this case. Schmidt and Mr. chanrobles virtual law library 17. October13. 16. NLRC.are not nationals of the Philippines.

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

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

b. 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. the NLRC cannot have appellate jurisdiction thereover. a. Cases decided by the DOLE Regional Directors or his duly authorized Hearing Officers (under Article 129) involving recovery of wages.JURISDICTION OF THE NLRC 18. If a claim does not fall within the exclusive original jurisdiction of the Labor Arbiter. and 2.000 and not accompanied by claim for reinstatemen t. may cause grave or irreparable damage to any party. if not restrained or performed forthwith. 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. c. exclusive appellate jurisdiction. The NLRC does not have original jurisdiction on the cases over which Labor Arbiters have original and exclusive jurisdiction (see above enumeration). 1. certified to it by the Secretary of Labor and Employment for compulsory arbitration. Injunction in strikes or lockouts under Article 264 of the Labor Code. 2. original jurisdiction. . All cases decided by the Labor Arbiters including contempt cases. b. 19. Exclusive appellate jurisdiction. a. Original jurisdiction. What are the two kinds of jurisdiction of the NLRC? The National Labor Relations Commission exercises two (2) kinds of jurisdiction: 1. Certified labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest. simple money claims and other benefits not exceeding P5.

Power to inspect employer¶s records and premises at any time of the day or night whenever work is being undertaken therein. 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. 3. Denial of application for union registration or cancellation of union registration originally rendered by the Bureau of Labor Relations (BLR) . and the right to copy therefrom. What are the cases falling under the DOLE Secretary¶s appellate power? a. wage order or rules and regulations issued pursuant thereto. (Article 263 [g]. What is the power to assume jurisdiction or certify ³national interest´ labor disputes to NLRC? When. 21. Labor Code). 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.POWERS OF THE DOLE SECRETARY AND HIS DULY AUTHORIZED REPRESENTATIVES 20. 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. 128). chanrobles virtual law library 4. (Art. Power to issue writs of execution to the appropriate authority for the enforcement of their orders. to question any employee and investigate any fact. 2. 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. What is the visitorial and enforcement power of the DOLE Secretary and his duly authorized representatives under Article 128 of the Labor Code? 1. 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. 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. in his opinion. there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the nationa l interest. chanrobles virtual law library b. 22.

provided that: 1. (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. 259).000. What are the cases falling under the jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators? . the aggregate money claim of each employee does not exceed P5. simple money claims and other benefits. JURISDICTION OF THE DOLE REGIONAL DIRECTORS / DULY AUTHORIZED HEARING OFFICERS. Decisions of the Med -Arbiter in certification election cases are appealable to the DOLE Secretary. and 2.may be appealed to the Secretary of Labor and Employment. 23. the claim must arise from employer-employee relationship. the Regional Director or any of the duly authorized hearing officers of DOLE have jurisdictio n over claims for recovery of wages. c. and 3. appeal should be made to the BLR). (NOTE: Decisions of MedArbiters in intra-union disputes are appealable to the BLR). the claimant does not seek reinstatement. the interpretation or enforcement of company personnel policies. What are the cases falling under the jurisdiction of the Grievance Machinery? Any grievance arising from: 1. JURISDICTION OF GRIEVANCE MACHINERY IN THE CBA 24. What are the money claims falling under the jurisdiction of DOLE Regional Directors? Under Article 129.00. (Art. 2.the interpretation or implementation of the Collective Bargaining Agreement (CBA). (NOTE: If originally rendered by the Regional Office.

Labor Arbiter or Voluntary Arbitrator? ATLAS FARMS. 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 . all other labor disputes including unfair labor practices and bargaining deadlocks. upon agreement of the parties.. (Article 261). 3. the Voluntary Arbitrator may assume jurisdiction only when agreed upon by the parties. 2000) .R. JURISDICTION OF THE (BLR)/MED-ARBITERS BUREAU OF LABOR RELATIONS 28. Nov. all unresolved grievances arising from the implementation or interpretation of company personnel policies. 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. (1998)]. 27. and 2.The Voluntary Arbitrator (or panel of Voluntary Arbitrators) has original and exclusive jurisdiction over the following: 1. 2002) Jurisdiction over termination disputes belongs to Labor Arbiters and NOT with Grievance Machinery nor Voluntary Arbitrator [cited Maneja vs. COURT OF APPEALS. 616. NLRC. 138938. 18. (G. 142244. It reiterated the ruling that dismissal is not a grievable issue. OCTOBER 24. What are the cases falling under the jurisdiction of the BLR? The BLR has original and exclusive jurisdiction over the following: 1. NO.Under Article 262. 26. In case of conflict. HAMMONIA MARINE SERVICES. who has jurisdiction over termination disputes. all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement after exhaustion of the grievance procedure. 290 SCRA 603. ET AL. INC. NLRC (G. VS. (Article 262). 56 issued by DOLE Secretary Confesor clarifying the jurisdiction of Labor Arbiters and Voluntary Arbitrations does not apply. Policy Instructions No. R. NO. chanrobles virtual law library CELESTINO VIVERO VS.

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

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

. 130866. September 16. October 6. From the decision of the NLRC. APPEALS 36. of unfair labor practices cases. No. both crim inal and civil liabilities arising from violations of the rights and conditions of membership in a labor organization enumerated in said Article. 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. et al. 3. 1995). If the denial is issued by the Regional Office. 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. Labor Code). R.. JURISDICTION OVER CRIMINAL AND CIVIL LIABILITIES 35. 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. 2. (Article 247. G. (St. there is no appeal. G. 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.‡ 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. Which has jurisdiction over criminal and civil aspects of labor cases? By express provision of Article 241 of the Labor Code. the case may be elevated to the Supreme Court by way of ordinary appeal under the same Rule 45. R. Association of Luzon Development Bank Employees. If the denial is originally made by the BLR. et al. appeal may be had to . including damages. shall continue to be under the jurisdiction of ordinary courts. it may be elevated to the Supreme Court by way of ordinary appeal under Rule 45 of the Rules of Civil Procedure. Denial of application for registration of a union. (Luzon Development Bank vs. NLRC. 1998). From the Court of Appeals. What are the modes of appeal from the decisions of the various labor tribunals? 1. Martin Funeral Home vs. No. DECISION OF THE BLR: A. it may be appealed to the BLR. over the civil aspects. 120319. From the ruling of the Court of the Appeals. This provision should be distinguished from Article 247 of the Labor Code which vests jurisdiction upon the Labor Arbiters. attorney¶s fees and other affirmative relief.

No. (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. G. INC. to wit: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter. R. 5. 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. If the cancellation is done by the BLR in a petition filed directly therewith. the BLR¶s decision is appealable to the Secretary of Labor and Employment by ordinary appeal. 131374. 4. (Abbott Laboratories Philippines. 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. If the cancellation of union registration is ordered by the Regional Office.000 AND NOT ACCOMPANIED BY CLAIM FOR REINSTATEMENT . DECISION OF THE MED-ARBITER IN CERTIFICATION ELECTION CASES ± The decision is appealable to the DOLE Secretary of Labor and Employment. the same may be appealed to the BLR. JUNE 28. 2000). DECISION OF THE DOLE REGIONAL DIRECTORS OR HIS DULY AUTHORIZED HEARING OFFICERS UNDER ARTICLE 129 INVOLVING RECOVERY OF WAGES. vs.. SIMPLE MONEY CLAIMS AND OTHER BENEFITS NOT EXCEEDING P5. (b) If the decision. G. January 26. et al. COURT OF APPEALS. Cancellation of registration of a union. R.The decision is appealable to the NLRC and not to the DOLE Secretary. order or award was secured through fraud or coercion. VS. including graft and corruption. NO. Abbott Laboratories Employees Union. B. and . What are the grounds for appeal? There are four (4) grounds.the Secretary of Labor and Employment. ET AL. Inc.. chanrobles virtual law library (c) If made purely on questions of law. 138270. 2001) APPEAL TO THE NLRC FROM DECISIONS OF LABOR ARBITERS 37.

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

In the case of Pioneer Texturizing Corporation vs. m.Labor Arbiter loses jurisdiction. it is immediately executory even pending appeal. chanrobles virtual law library Options of the employer.. Date of mailing (by registered mail) is date of filing. not fatal to the validity of appeal. et al. 10 calendar-day period is counted from receipt of decision by counsel of party. i. e. NLRC. The employee ordered reinstated need not secure a writ of execution from the Labor Arbiter. the employee may file a motion to cite the former in contempt.c. . 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. g. Such award does not require a writ of execution. Effect of perfection of appeal . Motion for reconsideration of Labor Arbiter¶s decision is not allowed. j. The 10-calendar day reglementary period to appeal is not extendible. 280 SCRA 806 [1997]. Lack of verification of the memorandum of appeal is not fatal nor jurisdictional. What is the reinstatement aspect of the Labor Arbiter's decision? If reinstatement is ordered by the Labor Arbiter in an illegal dismissal case. k. If employer refuses to reinstate. chanrobles virtual law library f. Receipt by one of two counsels is receipt by the party. 40. Failure to pay appeal docketing fee. d. Submission of new or additional evidence on appeal may be allowed. l.Raising new issues or changing theory on appeal is not allowed. The posting of bond does not stay reinstatement. at the option of the employer). Failure to appeal or perfect appeal within 10-calendar day reglementary period will make the Labor Arbiter's decision final and executory. h.

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

No. The Court of Appeals reversed the ruling of the NLRC but. The case was remanded later from the Supreme Court to the Court of Appeals pursuant to the ruling in St. April 22. 2006]. No. NLRC and Bienvenido Aricayos. April 10. On appeal to the NLRC. 7. it ordered petitioner APC to pay Zamora his . 148247. NLRC. 2003]. Aug. R. 113592. 1989. See also Industrial and Transport Equipment. 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. (Christian Literature Crusade vs. [G. 130866. the dismissal of the employee was held not to be illegal.R. took place for it was Zamora himself who voluntarily terminated his employment by not reporting for work and by joining a competitor . Employer must pay for the salary of employee. the dismissed employee was ordered reinstated. [G. the dismissal of the employee was held valid. 1998]. In the 2003 case of Roquero vs. vs. Jan. the Labor Arbiter granted the motion and issued a writ of execution directing petitioner APC to reinstate complainant to his former position. the dismissal of the employee was held valid by the Labor Arbiter. What. Inc. 1998). NLRC. R.serve as damages but to file a motion to cite the employer for contempt. Inc. Philippine Air Lines. Zamora. if any. 171 SCRA 712. chanrobles virtual law library In the 2006 case of Air Philippines Corp. 152329. 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. constructive or otherwise. 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..R. the Labor Arbiter¶s decision was reversed and consequently. No. Thereafter. However. 15. On appeal. 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. G. on appeal to the Supreme Court. vs. September 16. [G. as if he was reinstated. Zamora filed a Motion for Reconsideration but the NLRC denied it. the NLRC reversed the ruling of the Labor Arbiter and held that no dismissal.Grand Air. No.

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

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

September 8. 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. 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. Inc. and following Roquero. In the same 2007 case of Panuncillo. the decision of the NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by the parties. 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. 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. 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. thus: ³It does not appear that a writ of execution was issued for the implementation of the NLRC order for reinstatement. chanrobles virtual law library If reinstatement order of Labor Arbiter is not executed and the finding of illegal dismissal is later reversed. It ratiocinated. 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. 378-379]. became final and executory due to the failure of the . 1994. No. [G. vs. 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. Ortega. the payment of separation pay. 2006]. 106370. While under the sixth paragraph of Article 223 of the Labor Code. Inc v. he could probably be merely observing judicial courtesy. 6.´ In such a case.´ chanrobles virtual law library But in the 2006 case of Triad Security & Allied Servic es. employer is not liable to pay backwages. Had one been issued.the issuance of a writ of execution of the NLRC decision to implement its order of reinstatement.R. Feb. NLRC.R. 160871. 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. No. 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. 236 SCRA 371. [G. it is as if a temporary restraining order was issued. petitioner would not have been obliged to reimburse respondent for whatever salary she received in the interim. In this case. 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.

Surely. If the former position is already filled up. 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. the emplo yer should not be allowed to remain unpunished for the delay. and other benefits subsists. Reinstatement when position already filled up. In the meantime. In Sevilla vs. 13th month pay. 108878. 1994]. Until the payment of separation pay is carried out. continues to accumulate. The second dismissal gave rise to a new cause of action. On the issue of whether backwages should continue to run even after the payment of separation pay. their obligation to the dismissed employees. 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. chanrobles virtual law library Employment elsewhere does not affect reinstatement order and obligation to pay backwages. 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. [G. NLRC. No. the Labor Arbiter could not have ruled on the legality of the second dismissal. In not giving credence to this claim. if not outright refusal. Reinstatement in case of two successive dismissals. Sept. insofar as accrued backwages and other benefits are concerned. 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. 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. shall apply only to the first case and shall not affect the second dismissal. 20. R. until the employer continuously fails to actually implement the reinstatement aspect of the decision of the Labor Arbiter. the Supreme Court ruled in the affirmative. In the same case of Triad Security [supra]. the employee ordered reinstated under Article 223 should be admitted back to work in a s ubstantially . a case involving two (2) successive dismissals. Inasmuch as no new complaint was filed. Thus. the illegally dismissed employee¶s entitlement to backwages. the petitioners claimed that they could not reinstate respondents as the latter had already found jobs elsewhere. to immediately execute the reinstatement aspect of the labor arbiter¶s decision.petitioner-employer to seasonably appeal the same. it was held that the order of reinstatement pending appeal under Article 223 issued in the first case.

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

the Supreme Court has allowed tardy appeals in judicious cases. Velarde. 289 SCRA 407 [1998]) or by filing a motion for reduction of bond (See Rosewood Processing Inc.3. But. mistake or excusable negligence. Inc. No. 254 SCRA 211]. Thus. this rule will not apply. 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. 140294. 290 SCRA 408 [1998]. NLRC. 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.g. vs. NLRC. e. April 30. chanrobles virtual law library Moreover. R. technical consid erations had to give way to considerations of equity and justice. accident. R. 236 SCRA 580 [1994]) within the 10-day period provided by law. that is. CA. such is a reckless conclusion since there was no circumstance which would have warranted such a belief. vs. the failure to pay was due to the excusable oversight or error of a third party. in the cases where belated posting of a bond was allowed. March 4. The failure to post the bond must be caused by a third party. if the petitioner¶s failure to post a bond was due to his own negligent and mistaken belief that he was exempt. 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. such as fraud. 2005. NLRC. No. it was held that in the cases where delayed payment of the bond was allowed. May 9. NLRC. 91935. vs. a belated appeal was allowed as the questioned decision was served directly upon petitioner instead of her . at the very least. [G. also Star Angel Handicraft vs. The eventual posting of the bond cannot be considered as substantial compliance warranting the relaxation of the rules in the interest of justice. there was substantial compliance with the rule. In Mary Abigail¶s Food Services. In the instances where the Supreme Court acknowledged substantial compliance. Furthermore. according to Santos vs. not by the appellant himself. 2003]. where the presence of any justifying circumstance recognized by law. [G. or where on equitable grounds. No. G. in the case of Quiambao vs. 140753. properly vested the judge with discretion to approve or admit an appeal filed out of time.. exhibited willingness to pay by posting a partial bond (See Teofilo Gensoli & Co. R. the Supreme Court pointed out that. the appellants. 1996. a reasonable amount of bond in relation to the monetary award should be posted together with said motion.

2000. No. resolution or decision of the NLRC to forestall the finality of such order.´ Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond. Court of Appeals. even if it runs into millions.O Enterprises vs. (Catubay vs. 235 (1996)]. NLRC. 226. resolution or decision. 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. No. No. 286 SCRA 729 [1998]). NLRC. In the case of Ong vs.´ Alternative remedy is to pay partial appeal bond while motion to reduce bond is pending with the NLRC. However. when not proper. Kathy . The fact that the NLRC took 102 days to resolve the motion will not help petitioner¶s case. Rule VI of the NLRC New Rules of Procedure allows the Commission to reduce the amount of the bond . it was held that ³a substantial monetary award.´ The NLRC denied the motion and consequently dismissed the appeal for non-perfection.´ Petitioner should have seasonably filed the appeal bond within the tenday reglementary period following the receipt of the order. 329 Phil. April 12. In Calabash Garments. 152494. Petitioner contends that he was deprived of the chance to post bond because the NLRC took 102 days t o decide his motion. the Supreme Court declared that while Section 6. 110827. R. G. 1996.427. August 8. the petitioner filed his memorandum of appeal and paid the corresponding appeal fees on the last day for filing the appeal. vs. chanrobles virtual law library Motion to reduce bond. the result would have been the same since he failed to post cash or surety bond within the prescribed period. R.counsel of record who at the time was already dead. After careful scrutiny of the motion to reduce appeal bond. 2004]. 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. [G. September 22. chanrobles virtual law library In holding that the petitioner¶s argument is unavailing. R. 260 SCRA 441. in lieu of the required cash or surety bond.04 as bond is ³unjustified and prohibitive´ and prayed that the same be reduced to a ³reasonable level. 119289. does not necessarily give the employer-appellant a µmeritorious case¶ and does not automatically warrant a reduction of the appeal bond. [G. Inc. 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. NLRC.802. . he filed a motion to reduce bond alleging that the amount of P1.

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

May 9. 150147.after the filing of the motion for reconsideration. [G. In Mary Abigail¶s Food Services. the reason given by the petitioners to justify their late posting of the bond. 372 Phil. 1998. 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. Lim King Guan. No. Inc. a long holiday (Christmas) season followed. but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. No. In Buenaobra vs. 661 [1999]). 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. 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. vs. Financial difficulties. it has unnecessarily prolonged the period of appeal. An appellant cannot invoke financial difficulties as a gro und in support of a Motion to Reduce Bond. i. within which to post cash or surety bond. was considered simply unacceptable by the . The Supreme Court reasoned that if only to achieve substantial justice. NLRC. (Times Transportation Company. 140294. 2004]. CA. What appellant has to pay is a moderate and reasonable sum for the premium for such bond. By delaying the resolution of appellants¶ motion for reconsideration. 319 Phil. [G. Effect when NLRC grants additional time to post bond after denial of motion to reduce bond. Suffice it to say that the law does not require outright payment of the total monetary award. 653. strict observance of the reglementary periods may be relaxed if warranted. not an excuse. supra citing Biogenerics Marketing and Research Corporation vs. not sufficient ground.. Inc. 531. January 20. Sotelo. R. 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. the cash or surety bond was actually posted four (4) months after the filing of their memorandum on appeal. 537 [1995]). In this case. vs. 2005]. R. We have held that to extend the period of appeal is to prolong the resolution of the case.e. NLRC. Long Christmas holiday.´ (See also Globe General Services and Security Agency vs. 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. the NLRC reversed its previous order and granted the motion for reduction of bond.

(1) (2) Employer (Article 248. and Labor Organization (Article 249. Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code. Labor Code). Name the parties which may commit unfair labor practice. Labor Arbiters shall have jurisdiction over the civil aspect of all cases involving unfair labor practices. which may include claims for actual. 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. namely: (1) Civil. and (2) Criminal. What is the concept of unfair labor practice? An unfair labor practice act violates the right of workers to self organization. exemplary and other forms of damages. at torney¶s fees and other affirmative relief. and . Pursuing petitioners¶ excuse. as the case may be. Labor Code). 46. the following ingredients must both concur: chanrobles virtual law library 1. is inimical to the legitimate interests of both labor and management. may be said to have committed unfair labor practices acts. no bond would ever be posted on time whenever the reglementary period to file the same falls on such a season. Surely. including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect. 44. disrupts industrial peace and hinders the promotion of healthy and stable labor-management relations. Parties who may commit ULP.Supreme Court. moral. What are the elements of ULP? Before an employer or labor organization. there should exist an employer-employee relationship between the offended party and the offender. UNFAIR LABOR PRACTICES 43. 45. What are the aspects of unfair labor practice? There are two (2) aspects. the occurrence of the holiday season did not at all make impossible petitioners¶ fulfillment of their responsibility to post the required bond.

there is no ULP. the act complained of must be expressly mentioned and defined in the Labor Code as constitutive of unfair labor practice. chanrobles virtual law library (c) To contract out services or functions being performed by union members when such will interfere with. . [Feb. (e) To discriminate in regard to wages. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent. If not mentioned. restrain or coerce employees in the exercise of their rights to self-organization. that the individual authorization required under Article 242. 2002])]. COMPANY UNION). dominate. including the giving of financial or other support to it or its organizers or supporters (a.a. (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. Department Order No. except those employees who are already members of another union at the time of the signing of the collective bargaining agreement.k. (Article 248 [c]. 18-02.k. Section 6 [f]. paragraph (o) o f this Code shall not apply to the non-members of the recognized collective bargaining agent. (d) To initiate. It is only when the contracting out of a job.2. if such non -union members accept the benefits under the collective bargaining agreement: Provided. Absent one of the elements above will not make the act an unfair labor practice act. What are the ULPs of the employer? (a) To interfere with. 21. [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. assist or otherwise interfere with the formation or administration of any labor organization. 47.a. YELLOW DOG CONTRACT). restrain or coerce employees in the exercise of their right to self -organization that it shall be unlawful and shall constitute unfair labor practice. Labor Code. work or service being performed by union members will interfere with. hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. restrain or coerce employees in the exercise of their right to self-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. Series of 2002.

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. authorized or ratified unfair labor practices shall be held criminally liable. or (f) To violate a collective bargaining agreement. What are the ULPs of labor organizations? (a) To restrain or coerce employees in the exercise of their right to self organization. Who may be held criminally liable for ULPs of employer? On the part of the employer. (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. or refuse to bargain collectively with the employer. for services which are not performed or not to be performed. 48. only the officers and agents of corporations. associations or partnerships who have actually participated in. . discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code.(f) To dismiss. FEATHERBEDDING). or chanrobles virtual l aw library (i) To violate a collective bargaining agreement (but only if gross in character). provided it is the representative of the employees. However. a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership. (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. (c) To violate the duty. (but o nly if gross in character).a. (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.k. in the nature of an exaction. 49. chanrobles virtual law library (b) To cause or attempt to cause an employer to discriminate against an employee. including the demand for fee for union negotiations (a. (g) To violate the duty to bargain collectively as prescribed by this Code.

though innocent in themselves. 2. What is totality of conduct doctrine? The ³totality of conduct doctrine´ means that expressions of opinion by an employer. The obvious purpose is to safeguard and ensure the continued existence of the union. 52. 51. or attempt to organize one. be deemed improper and consequently actionable as an unfair labor practice. What is ³yellow-dog contract´? A ³yellow dog contract´ is an agreement which exacts from workers as a condition of employment. and 3. he will quit his employment. might. a promise by the employee that he will not join a union. What are the types of union security clause? . chanrobles virtual law library 54.50. 53. An expression which might be permissibly uttered by one employer. in the mouth of a more hostile employer. in case they are already members of a labor organization. that they shall not join or belong to a labor organization. may be held to be constitutive of unfair labor practice because of the circumstances under which they were uttered. 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. The typical yellow dog contract embodies the following stipulations: 1. during their period of employment or that they shall withdraw therefrom. members of governing boards. only the officers. Who may be held criminally liable for ULPs of a labor organization? On the part of the union. a representation by the employee that he is not a member of a labor organization. representatives or agents or members of labor associations or organizations who have actually participated in. a promise by the employee that upon joining a labor organization. authorized or ratified the unfair labor practices shall be held criminally liable. 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.

is bound to dismiss any employee expelled by the union for disloyalty upon its written request. No. May 8. In Malayang Samahan ng mga Manggagawa sa M. (2) Maintenance of membership agreement. this does not erode the fundamental requirement of due process. . (7) Agency shop agreement. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing. NLRC. under a maintenance of membership provision of the CBA. Upon demand of the federation. 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. cannot override one¶s right to due process. [G. [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. 2000]. 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. employer should still afford due process to the expelled unionists. (6) Bargaining for members only agreement. 55. the Supreme Court pronounced that while the company.(1) Closed shop agreement. (5) Exclusive bargaining agreement. R. 113907. this undertaking should not be done hastily and summarily. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts. 91086. What are the legal principles pertinent to union security clause arrangements? To validly dismiss an employee based on violation of union security clause. 185 SCRA 177]. Respondent company¶s allegation that petitioners were accorded due . R. Greenfield (MSMGUWP) vs. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. 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. 1990. February 28. In the case of Cariño vs. Ramos. (8) Preferential hiring agreement. the company terminated the petitioners without conducting a separate and independent investigation.Classification. (3) Union shop agreement. Relying merely upon the federation¶s allegations. 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. No. (4) Modified union shop agreement.

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

L-25246.An employee may not be compelled to join a union if it is based on religious objection. 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.´ chanrobles virtual law library In 1992. 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. Trajano. June 20. Considering that they are not members of any union and they refused to participate in the previous certification election. No. [G. (Ibid. the Supreme Court rendered a decision in the case of Kapatiran sa Meat and Canning Division [Tupas Local Chapter No. the plainly discernible intendment of the law is to grant the right to vote to all bona-fide employees in the bargaining unit. 1988] where it ruled that the decision in Benjamin Victoriano vs. 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. Cresenciano B. the Supreme Court. in the case of Alexander Reyes vs. ruled on the issue of whether members of the Iglesia ni Kristo may be allowed to vote in a certification election. as held in Airtime Specialists. [180 SCRA 749]. administrative rule nor jurisprudence requires that only employees affiliated with any labor organization may take part in a certification election. The Honorable BLR Director Pura Ferrer-Calleja. from joining or forming any labor organization.). whether they are members of a labor organization or not. 1027] vs. 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. 56.´ is specious. September 12. No law. join or assist labor organizations. 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. and ³hence. L-82914. administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections. Inc. 1992]. R. R. June 2. regardless of religious affiliation. On the contrary. Ferrer-Calleja. does not bar the members of that sect from forming their own union.´ Payment of agency fee to the bargaining union/agent which negotiated the CBA is but a reasonable . not one of the unions which vied for certification as sole and exclusive bargaining representative. In 1988. [G. No. Elizalde Rope Workers¶ Union.´ persuade acceptance. on religious grounds. 84433. No. [G. R. vs. Neither law.

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

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

and the employer¶s statement. (Oceanic Pharmacal Employees Union vs. Philippine Steam Navigation Co. which hampers their exercise of free choice. 19 SCRA 426. (Cromwell Commercial Employees and Laborers Union vs. L -50568. Progressive Federation of Labor. employer¶s promise of benefits in return for the striking employees¶ abandonment of their strike. 15 SCRA 174). Philippine Marine Officers Guild. chanrobles virtual law library . CIR. new benefits such as hospitalization. profit sharing and a new building to work in. made about six (6) weeks after the strike started. 7. Offer of reinstatement and attempt to ³bribe´ the strikers with ³comfortable cots. 689). (Visayan Stevedores vs. (Velez vs. Offer of a Christmas bonus to all ³loyal´ employees of a company shortly after the making of a request by the union to bargain. Sept. R. 30.2. G. 7. PAV Watchmen¶s Union.´ ³overtime pay´ for work performed in excess of eight hours and ³arrangements´ for their families. constitute strike-breaking and union-busting which is unfair labor practice. L19778. will be given to them.). to a group of strikers in a restaurant that if the strikers returned to work. wage increase given for the purpose of mollifying employees after the employer has refused to bargain with the union. Withdrawal by the employer of holiday pay benefits stipulated under a supplementary agreement with the union. The act of the employer in interrogating its employees in connection with their membership in the union or their union activities. (Scoty¶s Department Store vs. 107 Phil. or to induce strikers to return to work. (Ibid. Nov. CIR. chanrobles virtual law library 8. 6. The act of the employer in asking the union¶s recruiter to surrender the union affiliation forms and threatening him with bodily harm. R. 1979). (Ibid. 1964). accident insurance. (Macleod vs. The act of the employer in indirectly forcing its employees to join another union. Micaller.). chanrobles virtual law library 9. National Fastener Corporation vs. 97 Phil. No. G. Inciong. 762. 1 SCRA 17). so they would abandon the strike and return to work. No.´ ³free coffee and occasional movies. 4. 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. The act of the employer in instructing an employee not to affiliate or join a union. 3. 205). CIR. vs. 99 Phil. 5.

Sept. The act of the employer in conducting espionage or surveillance of the meetings and activities of the union. Surveillance is illegal since it shows the opposition of the employer to the existence of the union. Exchange Parts Co. (Litex Employees Association. Nos. When an employer engages in surveillance or takes steps leading his employees to believe it is going on. That would be taking of property without due process of law which the employer . 173 NLRB No.10. 11. R. G. L-31276. G. (AHS/Philippine Employees Union vs. The act of the employer in suspending union officers who attended the hearing in the petition for certification election they filed. 375 U. The act of the employer in ceasing its operation due to establishment of the union. G. 73721. NLRB. July 16. vs. p. 1982). 1982. (CLLC E. 1988). March 30. chanrobles virtual law library 12. No. The Association of Sweepstakes Staff Personnel. Refusal of the employer to reinstate an employee who was illegally dismissed based on the union security clause. G. May 30. No. L -27546. 321 F 2d 00). vs. (51A CJS Sec. R. CIR. 1987). R. 382. NLRB vs. 116 SCRA 459). G. 15. No. The grant of concessions and privileges d uring the pendency of certification election case to members of one of the unions participating therein. S.. (Re Louisiana Plastics. intended to induce the employees to vote against the union. 405). and the furtive nature of his activity tends to demonstrate spectacularly the state of his anxiety. 16. NLRC. vs. 17. R. R. 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. Inc. 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. a violation results because the employees come under threat of economic coercion or retaliation for their union activities. Gochangco Workers Union. NLRC. chanrobles virtual law library 13. vs. (Henriz Manufacturing Co. 1982). 218. 9. unless the latter admits his guilt. (Philippine Charity Sweepstakes Office. 67158-62. 14. L-39154. Sept. 278). G. 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. 9. No. (National Labor Union vs. The announcement by the employer of benefits prior to the conduct of a certification election. CIR.

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

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

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

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

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. all aspects of employment. No. 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. NLRC. Management has the prerogative to regulate. driven to desperation. it could not have altered the fact that the proceedings violated the rule of fair play. supervisors and all rank-and-file employees not covered by the CBA is not discriminatory but a valid exercise of management prerogative. 1988]. Petitioners had no idea that they were charged with disloyalty. Employees are entitled to due process before they may be expelled from the union on charge of disloyalty. [G. They are entitled to reinstatement to their positions without reduction in rank. found shelter in the other federation who took the cudgels for them. it was an act of self-preservation of workers who. provided no basis for the union¶s accusation of disloyalty. nor timely notices of the hearing on the sa me. Even if the petitioners appeared in the supposed investigation proceedings to answer the charge of disloyalty against them. the private respondents. The grant of profit-sharing benefits to managers. according to its discretion and judgment. The following cases do not involve unfair labor practice: 1. June 30. 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. Such . The Board of Directors of the union acted as prosecutor. are guilty of unfair labor practice. 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. The proceedings would have been a farce. In Rance vs. payment of three-year backwages and payment of exemplary damages. chanrobles virtual law library Consequently. in vestigator and judge at the same time. chanrobles virtual law library CASES NOT INVOLVING UNFAIR LABOR PRACTICES. R.shop agreement and in a manner characterized by arbitrariness and whimsicality. 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. It is evident that private respondents were in bad faith in dismissing petitioners. The absence of a full blown investigation of the expelled members of the union by an impartial body. 68147. At most.

5. R. R. (National Union of Restaurant Workers [PTUC] vs. 1987). 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. R. G. No. Oct. it does not constitute an unfair labor practice that would justify the staging of a strike.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. (AHS/Philippine Employees Union vs. vindictive nor wanton manner. In the absence of a showing that the illegal dismissal was dictated by anti-union motives. (Rubber world [Phils. R. June 29. The dismissal of an employee due to loss of confidence is not unfair labor practice. In the absence of any evidence which directly reflects interference by the company with the employee¶s right to self-organization. where the workers were paid while on leave but the same was charged against their respective earned leaves. The transfer of employees is a prerogative of management such as in one case where the employee who was transferred to a lower position. 166 SCRA 118). 7. April 30. G. vs. The promotion of employees to managerial positions is a prerogative of management. No. 2. NLRC. It is a valid exercise of management prerogative. L-21510. G. harsh.. harsh. 1986). No. vs. Sanchez. vs. Oct. No. (Philippine Graphic Arts. 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. vs. R. oppressive. 7. G. vindictive or wanton manner or out of malice or spite. Inc. Inc. oppressive. 3. L-20044. CIR. 74425. Inc. 73721. Wise and Co. the transfer of the employee should be considered legal. NLRC. 4. 87677. No. 1968).. Mandatory or forced vacation leaves imposed by the employer due to economic crisis and not in a malicious. July 19. 13. NLRC. 75704. 1964). is not an unfair labor practice act. retained his original rank and salary. 1989). March 30. G. . Inc. (Bulletin Publishing Co. The remedy is an action for reinstatement with prayer for backwages and damages. (Nevans vs. 1989). CIR. G.]. No. Employees Union. 6. (Wise and Co. R.

102 Phil.8. 38258. VictoriasManapla Workers. Bacolod-Murcia Milling vs. 1982. No. (Great Pacific Life Employees Union vs. L-33015. 12. 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. 130 SCRA 472). 10. R. No. (Lakas ng Manggagawang Makabayan vs. Ramos. 1999). 118 SCRA 422). 9. An error in the interpretation of a provision of the CBA. G. Feb. CIR. 2000. absent any malice or bad faith. 11. As a consequence of the two strikes which were both attended by widespread violence and vandalism. chanrobles virtual law library . No. G. 669. Honest differences in construction may arise in the actual application o f contractual provisions. Nov. R. Great Pacific Life Assurance Corporation. Dismissal of a supervisor who organized a labor union composed of men under his supervision is not unfair labor practice. (Fortich vs. is not an unfair labor practice act. 113907. 1979). 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. Ang Tibay. Feb. (Samahan ng mga Manggagawa sa M. 12. R. G. is not unfair labor practice.chanrobles virtual law library 14. (GOP-OCP Workers Union vs. 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. 9 SCRA 154). (Singapore Airlines Local Employees Association vs. The act of the employer in refusing to re-admit striking workers after the strike was declared illegal. 13. 126717. 93 SCRA 1). 127 SCRA 580). Ople. Malayang Manggagawa vs. No. NLRC. Sept. G. Dismissal of workers pursuant to the union security clause in the CBA. 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. the business of the employer was completely paralyzed. R. There is no ULP if this is not proven by evidence. after affording them due process. Marcelo Enterprises. is not unfair labor practice. (Arrastre Security Associatio n vs. Greenfield (MSMG-UWP) vs. There were machines that were not in operating conditions because of long disuse during the strikes. CIR. chanrobles virtual law library 11. 28. 10.

(Rural Bank of Alaminos Employees Union [RBAEU] vs. 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. In a case involving the mass ³protest retirement/resignation´ of pilots. [G. 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. June 16. in this case. R. 2004]. 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. Confesor. 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. 17. Zamora. with the inclusion of the federation president in the union¶s negotiating panel. 29. 51382. G.15. NLRC. (Associated Watchmen and Security Union vs. If at all. The records show that after the initiation of the collective bargaining process. 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. Nos. Oct. R. However. 275). 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. (Enriquez vs. 114974. chanrobles virtual law library . 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. In the case of Standard Chartered Bank Employees Union [NUBE] vs. 107 Phil. 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. 16. No unfair labor practice is co mmitted by their employer when it accepted their said retirement/resignation from the company. Such refusal is legitimate exercise of the right to protect its own interests. 1986). No. R. What are the latest cases involving the issue of ULP? Interference in the choice of union¶s bargaining panel. 1999). No. 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. Lanting. ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. the negotiations pushed through. It cannot be said that they were dismissed. 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. Dec. 60. 100342-44. G. 29.

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. No. 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. and the dismissal of union officials and members. 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. 2003].its main factory plant. the employer is guilty of unfair labor practice. the use of armed guards to prevent the organizers to come in. 112661. Thus. it is guilty of unfair labor practice for interfering with the right of its employees to self-organization. 2004]. [G. 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. [G. 2001]. No. R. 149440. R. chanrobles virtual law library In De Leon vs. In Hacienda Fatima vs. February 11. Hence. The records s how that the two corporations had identical stockholders and the same business address. On February 1. It appears from the records that FISI. tasked to provide protection and security in the company premises. the stockholders of FISI sold all their participations in the corporation to a new set of stockholders which renamed the corporation . CA. 146728. 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. [G. To enforce their rightful benefits under the laws on labor standards. No. (FISI) since the 1980¶s and have since been posted at the premises of Fortune Tobacco Corporation (FTC) . May 30. one cannot but conclude that the employer did not want a union in its hacienda .a clear interference in the right of the workers to self-organization. FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of companies. the early payslips of petitioners show that their salaries were initially paid by FTC. Inc. the Supreme Court held that based on the facts. Petitioner-security guards have been employed with Fortune Integrated Services. The records show that the employer presented these letters to prove that the union no longer enjoyed the support of the workers. its tobacco redrying plant and warehouse. National Federation of Sugarcane Workers ± Food and General Trade. Moreover.Interference in the employees¶ right to self-organization. 1991. R. was a mere instrumentality of FTC. In General Milling Corporation vs. NLRC and Fortune Tobacco Corporation. while having its own corporate identity. January 28. petitioners formed a union which was later certified as bargaining agent of all the security guards.

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

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

-NAFLU vs. 123276. 142506. 2004). however. R. Feb. The eventual signing of the CBA does not operate to estop the parties from raising ULP charges against each other. 18. (Tiu vs. Schering Plough Corporation. 277 SCRA 680. While the refusal to furnish requested information is in itself an unfair labor practice and also supports the inference of surface bargaining. Samahang Manggagawa sa Sulpicio Lines. NLRC. Consequently. No. Who has the burden of proof in ULP cases? In unfair labor practice cases. Inc. as held by the High Court in Standard Chartered Bank [supra]. Hence. 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. Signing of CBA does not estop a party from raising issue of ULP. LABOR ORGANIZATIONS COVERAGE OF RIGHT TO SELFORGANIZATION 62. Sulpicio Lines. March 25.R. In the same 2004 case of Standard Chartered Bank [supra]. G. Who may exercise the right to self-organization? . management cannot be held liable for ULP. 17. 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. R. while the signing bonus was included in the CBA itself. No. there must be proof that the demands made by the union were exaggerated or unreasonable. if the union failed to put its request in writing as required in Article 242 [c] of the Labor Code. 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.In order to be considered as unfair labor practice. it cannot be said that the union was guilty of ULP for blue-sky bargaining. 2005. 687. See also Schering Employees Labor Union [SELU] vs. (Standard Chartered Bank Employees Union [NUBE] vs. G. After all. 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. Confesor. Refusal to furnish financial information is ULP.. G. 1997. the conclusion of the CBA was included in the order of the Secretary of Labor and Employment. 61. exception. Inc. Aug. 140992. supra). No.

Rank-and-file employees.All persons employed in commercial. b. if they are nationals of a country which grants the same or similar rights to Filipino workers.. See also Article 277 [c]. What are the three categories of employees? a. 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. Labor Code. whether operating for profit or not. medical. 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. self-employed people. A. Basic Amendments under R. rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. and c. natural or juridical. Ambulant. Managerial employees. 6715. shall have the right to self-organization and to form. intermittent and itinerant workers. (Ibid. What are the three types of managerial employees? The three (3) types of managerial employees are as follows: . May aliens exercise the right to self-organization? General rule: All aliens. No. chanrobles virtual law library Any employee. Supervisory employees. prepared by Members of the Senate-House Conference Committee of Congress). charitable. whether employed for a definite period or not. 66. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. be eligible for membership in any labor organization. 65. as certified by the Department of Foreign Affairs. shall beginning on the first day of his/her service. 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. or educational institutions. 10. 64. industrial and agricultural enterprises and in religious. join. chanrobles virtual law library 63.

only top and middle managers are not allowed to join any labor organization.Top management. 2. In fact. 2000) 67. Laguesma. chanrobles virtual law library 70. and 3. they can join a union. if these two conditions do not concur. determine. It cannot exercise the rights of a legitimate labor organization. 288 SCRA 15 and Paper Industries Corp. if the confidential information to which an . A union with such mixed membership is no union at all. No. Simply put. of the Philippines vs. said affiliation with one and the same federation is allowed. 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. What is the ³confidential employee´ doctrine? Under the ³confidential employee rule´. R. Are managerial employees allowed to unionize? How about supervisory employees? As a general rule. G. the law does not allow mixed membership of both supervisory and rank-and-file employees in one union. (2) to persons who formulate. hiring or dismissal of employees and the like. chanrobles virtual law library 69. 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. April 12. Laguesma.First-line management. Otherwise. If not. (See United Pepsi0Cola Supervisors Union vs. 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.Middle management. and effectuate management policies specifically in the field of labor relations. 68. 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. while the latter have the power only to recommend managerial acts such as laying down policy. 101738.1.

2003). 73. 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. What are the purposes of a labor organization? (1) Collective bargaining. R. January 22. What is the significance of issuance of Certificate of Registration to a union? In Tagaytay Highlands International Golf Club. 142000. 74. . How is a labor organization registered? The application for registration must be supported by at least 20% of the members of the bargaining unit. What is the distinction between a labor organization and a workers¶ association? A labor organization is established principally for collective bargaining purposes.employee has access has nothing to do with labor relations. 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. vs. 72. Inc. while a workers' association is organized for the mutual aid and protection of its members but not for collective barg aining purposes. and (2) Dealing with employers regarding the terms and conditions of the employment relationship. Registration with DOLE makes it legitimate. LABOR ORGANIZATIONS 71. It is considered "legitimate" if duly registered with DOLE. 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. such employee cannot be considered a confidential employee under this rule. 76. 75. Tagaytay Highlands Employees Union -PGTWO (G. No..

a local chapter which was subsequently granted independent registration but did not disaffiliate from its federation. Are local chapters required to acquire independent registration in order to have legal personality? In Laguna Autoparts Manufacturing Corporation vs. it was held that a local or chapter need not be independently registered to acquire legal personality. 2005].77. this is known simply as ³local´ or ³chapter. chanrobles virtual law library CHARTERING AND AFFILIATION 78. 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. Office of the Secretary. registered with the Bureau of Labor Relations. 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. . 79. [G. standards and programs. DOLE. April 29. chanrobles virtual law library 80. 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. No. an independent union affiliated with a federation. or 2. within the employer¶s establishment. R. What is an affiliate? ³Affiliate´ refers to: 1. Under the old rule.´ 81. 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. 157146. 82. national union.

An independently-registered union does not lose its independent legal personality when it affiliates with a federation or national union. 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. What is the proof of affiliation with a federation? The proof of affiliation depends on the nature of the affiliation.Charter certificate issued by the federation or national union. The federation is the principal and the local union. it is provided. 234-A. the agent.Under Article 234-A of the Labor Code. Local chapter. if: 1. chanrobles virtual law library 2.contract of affiliation between federation and the union. A. thus: ART. Chartering and Creation of a Local Chapter. Thus. Appending the name of the federation to the local union's name does not mean that the federation absorbed the latter. and the principal office of the chapter. Which one is liable for damages in case of illegal strike ± the local union or federation? . and (b) The chapter¶s constitution and by-laws: Provided. No. 2008]. Independently-registered union. 85. . 83. . 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. . 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. The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president.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. 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. as amended by R. chanrobles virtual law library 84. their addresses. 9481 [June 14.

Disaffiliation should always carry the will of the majority. 1999). (G. [No. 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. in one case. NLRC. 1975. vs. 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. No. is a constitutionally -guaranteed right which may be invoked by the former at any time. L-33987. a local union may sever its relationship with its parent union. Absent any enforceable provisions in the federation¶s constitution expressly forbidding disaffiliation of a local union. (G. instead. Inciong. Inc. 66 SCRA 512]. Thus. 121 SCRA 444). (Villar vs. 86. Inc. by disaffiliating from the old federation to join a new federation. 115180. The local union. to the will of their members. In the absence of specific provisions in the federation¶s constitution prohibiting disaffiliation or the declaration of autonomy of a local union. R. by collective action. January 31. Once the fact of disaffiliation has been manifested beyond doubt. September 4. 2002). that the right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law.In Filipino Pipe and Foundry Corporation vs. it was held that it is the local union and not the federation which is liable to pay damages in case of illegal strike. the Supreme Court upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations. What is disaffiliation? The right to disaffiliate by the local union from its mother union or federation. It was held in Philippine Skylanders. November 16. the common bargaining power of local unions for the effective . In the landmark case of Liberty Cotton Mills Workers Union Vs. It cannot be effected by a mere minority group of union members. local unions do not owe their creation and existence to the national federation to which they are affiliated but. a local may dissociate with its parent union. NLRC. 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. R. The sole essence of affiliation is to increase. Liberty Cotton Mills. No. is merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. 127374. a certification election is the most expeditious way of determining which labor organization is to be treated as the exclusive bargaining agent.

there are times when without succor and support local unions may find it hard. distinguished.enhancement and protection of their interests. 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. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union. the impropriety of the questioned Decisions becomes clearly apparent. but it is a case where almost all loca1 union members decided to disaffiliate. Does the act of the union in disaffiliating and entering into a CBA with the employer constitute unfair labor practice? .5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. chanrobles virtual law library It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. Inciong. it ceases to be entitled to the rights and privileges granted to a legitimate labor organization. 121 SCRA 444. It cannot file a petition for certification election. However. Admittedly. Disaffiliation of independently-registered union and chartered local. Yet the local unions remain the basic units of association. free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation. Upon an application of the afore-cited principle to the issue at hand. the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. and free also to renounce the affiliation upon the terms laid down in the agreement which brought suc h affi1iation into existence. this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation. 88. As PSEA had validly severed itself from PAFLU. to secure justice for themselves. As such. (Villar vs. 87. the same thing may not be said of a union which is not independently -registered (chartered local). Such dictum has been punctiliously followed since then. April 20. 1983). Surely. unaided by other support groups. Once a chartered local disaffiliates from the federation. 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. The disaffiliation of an independently -registered union does not affect its legitimate status as a labor organization. or an equivalent of 92.

2002]. should have been dismissed at the first instance for failure to state a cause of action. 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.In Philippine Skylanders. The complaint for unfair labor practice lodged by the federation against the employer. L-43495-99. as . However. 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. Inc. 89. 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. The Supreme Court ruled that there was no such unfair labor practice committed. the disaffiliation was held valid and. it is entirely reasonable for it to enter into a CBA with the local union which is now affiliated with a new federation. the local union and their respective officers. there can be no violation of the union security clause i n the CBA. 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. 1990]. the federation ceases to have any personality to represent the local union in the CBA negotiation. Book V. 127374. vs.CGW. As the local union had validly severed itself from the old federation. having been filed by a party which has no legal personality to institute the complaint. 90. (Section 1 [g]. and consequently. 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. In the first place. No. [G. In the second place. Jan. there exists no sufficient basis to terminate the employment of said employees. [G. 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). 31.. 20. Rules to Implement the Labor Code. 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. Rule I. No. R. As far as the employer is concerned. NLRC. R. vs. Is disaffiliation a violation of union security clause? In Tropical Hut Employees Union . Tropical Hut Food Market. Jan. 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. Inc. therefore.

chanrobles virtual law libr ary Subject to the requirements of notice and due process. or in the case of federations. In case of cancellation. Series of 2003. 2007]. 24 SCRA 873). 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. upon the filing of an independent complaint or petition for cancellation. it loses . R. G. A. (Samahan ng Manggagawa sa Pacific Plastic vs. Rule XIV. 9481 [June 14. 31.). For without such registration. 238-A. March 11. Sangilo-Itogon Workers Union. 91. 92. No. 1996). Book V. Ibid. For as long as there is no final order of cancellation.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. No. [94 SCRA 707. by the Bureau Director. Effect of a Petition for Cancellation of Registration. as amended by R. Aguilizan. The pendency alone of cancellation proceedings does not affect the right of a labor organization to sue. 1979)]. 713-714 (December 14. chartered local and workers' association may be cancelled by the Regional Director. nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts. 1997). it is provided as follows: ART. it was held that a decision rendered without any hearing is null and void. No. national or industry unions and trade union centers.as a rule . The cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. 108625. Laguesma. the labor organization whose registration is sought to be cancelled shall continue to enjoy said rights. (Section 1. The union is indisputably entitled to be heard before a judgment could be rendered canceling its certificate of registration. Jan. (Itogon-Suyoc Mines vs. Such pendency cannot also bar the conduct of a certification election. What is the effect of cancellation during the pendency of a case? . In David vs. the registration of any legitimate independent labor union.. . 17. 40-03. G. R. chanrobles virtual law librar y Under Article 238-A of the Labor Code.amended by Department Order No. 111245. (Alliance of Democratic Free Labor Organization [ADFLO] vs.its rights under the Labor Code. [Feb. 2003]). Laguesma.

Rule XV.In case cancellation of a union registration is made during the pendency of a case. 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]. 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. for five (5) consecutive years despite notices for compliance sent by the Labor Relations Division or the Bureau of Labor Relations. however. the labor organization whose registration is cancelled may still continue to be a party to the case without necessity for substitution. Series of 2003. 40-03. Inc. Sangilo-Itogon Workers Union. as amended by Department Order No. 47). however. (Section 1. What is meant by ³sole and exclusive bargaining agent´? . 93. 93 Phil. Rule XV. chanrobles virtual law library CERTIFICATION ELECTION & REPRESENTATION ISSUES 94. The reason is that. vs. Whatever decision. 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. Rules to Implement the Labor Code. No registration of labor organization. [Feb. Ibid. CIR. Book V of the Rules to Implement the Labor Code. Inc. (Philippine Land-Air-Sea Labor Union [PLASLU]. (b) the procedures laid down in the Implementing Rules were complied with. 2003]). Book V. Book V.). or its notices were returned unclaimed. (Itogon-Suyoc Mines. it has juridical personality and the respondent court had validly acquired jurisdiction over the case. the latter may cause the institution of the administrative process for cancellation of its registration. 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. upon its own initiative or upon complaint filed by any party -in-interest. vs. (Section 5. at the time of the filing of the case. 24 SCRA 873). as amended. 17. and (c) the labor organization concerned has not responded to any of the notices sent by the Bureau.

that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast.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. how determined. run-off election. for purposes of collective bargaining. Definition of terms. or 3.refers to the process of determining through secret ballot the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit. to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. Four (4) ways of determining a bargaining agent: 1. provided. chanrobles virtual law library Run-off election.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. for purposes of collective bargaining.refers to the election voluntarily agreed upon by the parties. 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 . Exclusive bargaining representative. chanrobles virtual law library Certification election. . . Consent election. Voluntary recognition of union. with or without the intervention of the Department of Labor and Employment. This is allowed when there is only one union operating in the bargaining unit. chanrobles virtual law library 97. 96. . voluntary recognition in cases where there is only one legitimate labor organization operating within the bargaining unit. . 95. or 2.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. or 4. consent election. certification election.

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

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. employees in the administrative. engineering and maintenance departments. 1997. 20. [G. Bureau of Labor Relations. Pan dacan. 100485. 110399. Laguesma. and in San Fernando. The adage µthere is strength in number¶ is the very rationale underlying the formation of a labor union. 85343. No. Laguna. contrary to the position taken by the company that each sales office consists of one bargaining unit. in Otis. L-13573. the fact that the three plants comprising the bargaining unit are located in three different places. San Miguel Corporatio n Supervisors and Exempt Employees Union vs. Surely. cigar. Alhambra Employees Association -PAFLU. [G. packing. cigarette. No. Padre Faura. Laguna and the Visayas were allowed to participate in a certification election. But in the case of employees of two (2) companies. R. Laguesma. G. Los Banos. hence. June 28. it would not be for the best interests of these employees if they would further be fractionalized. Quezon City. [G. 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. 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. R. vs. [211 SCRA 451 (1992)]. Ferrer-Calleja. Manila. a different legal principle applies. No. chanrobles virtual law library In the case of San Miguel Corporation vs. namely. where all non-academic rank-and-file employees of the University of the Philippines in Diliman. Pampanga was declared immaterial. 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. . 277 SCRA 370. In Alhambra Cigar and Cigarette Manufacturing Co. sales and dispensary departments perform work which have nothing to do with production and maintenance. Neither are there regional differences that are likely to impede the operations of a single bargaining representative.Service Enterprises vs. No. R. 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. R. 1969]. 380-381]. in Cabuyao.´ In another case involving the same company.. Feb. Although the businesses of two companies are related and the employees of one were originally the employees of the other. 1989). The distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. August 15. Metro Manila. September 21. the employees of both companies cannot be treated a s one bargaining unit because they are employed by two separate and distinct entities. 1994].

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

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. R. in defining the appropriate bargaining unit. In the case of International School Alliance of Educators [ISAE] vs.. a certification election sho uld be held separately to choose which representative union will be chosen by the workers. CIR. Dec. [G. 100485. (See also Mechanical Department Labor Union sa Philippine National Railways vs. Sept. 1994]. Quisumbing. the collective bargaining history of the school also shows that these groups were always treated separately. despite the collective bargaining history of having a separate bargaining unit for each sales office.The Globe doctrine [will of the employees] is was enunciated in the United States case of Globe Machine and Stamping Co. No. [3 NLRB 294 (1937)] where it was ruled. No. 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. L-28223. R. No. 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. This. the determining factor is the desire of the workers themselves. the Supreme Court in National Association of Free Trade Unions vs. 1990]. despite the history of said two divisions being treated as separate units and notwithstanding their geographical distance. San Miguel Corporation vs. (San Miguel Corporation vs. chanrobles virtual law library For instance. G. 2000]. Consequently. 79526. 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. infra). June 1. [G. Laguesma. National Association of Free Trade Unions vs. 30. infra. 1968). Laguesma. 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. as three (3) separate and distinct bargaining units. And in another case. Aug. Mainit Lumber Development Company Workers Union. [G. However. 128845. 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. Mainit Lumber Development Company Workers Union. 21. R. Moreover. No. R. EMPLOYMENT STATUS DOCTRINE: . 21.

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

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

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

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

had taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively. What is certification year-bar rule? Under the certification year-bar rule. What is bargaining deadlock-bar rule? Under the bargaining deadlock-bar rule. chanrobles virtual law library In the case of Kaisahan ng Manggagawang Pilipino [KAMPIL -KATIPUNAN] vs. [G. hence. thus: ³This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case. consent or run-off election. respondent union. Laguesma. 110. before the filing of a petition for certification election. R. a certification election petition may not be filed within one (1) year: (1) from the date of a valid certification. contract-bar rule. the bargaining deadlock -bar rule was applied. 75810. no CBA was executed. No. 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. neither may a representation question be entertained if: 1. But in the case of Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers vs.e. 201 SCRA 453 (1991)]. 109. 1991. R. bargaining deadlock-bar rule. a certification election may be validly held. i. for more than four (4) years. The Supreme Court ratiocinated. 1997. Under the circumstances. [G. consent or run-off election or from the date of voluntary recognition. take any action to legally compel the employer to comply with its duty to bargain collectively. Trajano. nor did it file any unfair labor practice suit against the employer or initiate a strike against the latter. whose factual milieu is similar to said case of Kaisahan. February 4. or 2. charging the employer with unfair labor practice and conducting a strike in protest against the employer¶s . the bargaining deadlock-bar rule was not applied because the duly certified exclusive bargaining agent of all rank -and-file employees did not. or 3. there was proof that the certified bargaining agent. No. or (2) from the date of voluntary recognition. the duly recognized or certified union has commenced negotiations with the employer within the one-year period from the date of a valid certification.. September 9.2. 118915. 267 SCRA 503].

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. 3. Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance. Rule V.g. Section 3. COLLECTIVE BARGAINING AGREEMENT (CBA) 113.. when the CBA is not registered with the BLR or DOLE Regional Offices. What is a contract-bar rule? Under the contract-bar rule. when the collective bargaining agreement was entered into prior to the 60-day freedom period. What are the exceptions to the contract-bar rule? The exceptions to the contract -bar rule are as follows: 1. when there is a schism in the union resulting in an industrial dispute wherein the collective bargaining agreement can no longer foster industrial peace. What is a Collective Bargaining Agreement (CBA)? . chanrobles virtual law library 7. 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. Thus. e. 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. The reasons are: 112. 2. fraudulent or tainted with misrepresentation. although registered. 6. when the CBA. contains provisions lower than the standards fixed by law.when the collective bargaining agreement is not comp lete as it does not contain any of the requisite provisions which the law requires.refusal to bargain.´ 111. during the 60-day freedom period. 4. where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively. chanrobles virtual law library 5. when the documents supporting its registration are falsified.

Is the collective bargaining procedure in Article 250 mandatory? In National Union of Restaurant Workers vs. According to the pronouncement in General Milling Corporation vs. What are the legal principles applicable to Collective Bargaining Agreement (CBA)? ‡ A proposal not embodied in CBA is not part thereof. there has been a shift in the interpretation of the provision of Article 250. ‡ Adamant stance resulting in impasse. CA. ‡ Making a promise during the CBA negotiation is not considered bad faith. [G. [10 SCRA 843]. 146728. ‡ Minutes of CBA negotiation . R. No. not bad faith.´ Consequently. Recently. 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. The CBA is deemed the la w between the parties during its lifetime. it was held that failure to reply within ten (10) calendar days does not constitute refusal to bargain. ‡ Signing bonus. wiped out with signing of CBA. February 11.Collective Bargaining Agreement (CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages. chanrobles virtual law library 114. 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. Its excuse that it felt the union no longer represented the workers. 115. hours of work and all other terms and conditions of employment in a bargaining unit. however. ‡ Allegations of bad faith. ‡ The DOLE Secretary cannot order inclusion of terms and conditions in CBA which the law and the parties did not intend to reflect therein. CIR. 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. Its provisions are construed liberally. Consequently. 2004].no effect if its contents are not incorporated in the CBA. not demandable under the law. the employer in this case was . was mainly dilatory as it turned out to be utterly baseless. 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.

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

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. Rule XVI. either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. They a re free to take positions on anything. the duty to bargain in this situation still requires the performance of the obligation by the employer and the union to meet. (Section 5. specifically Article 250 thereof. chanrobles virtual law library 120. Accordingly. among other pertinent provisions. Ibid. Book V. majority status of the bargaining union and the demand to negotiate an agreement. without having to worry about possible past agreements affecting the current ones for discussion. convene and confer for coll ective bargaining purposes. 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.Multi-employer bargaining involves negotiation between and among several certified labor unions and employers. Any legitimate labor unions and employers may agree in writing to come together for the purpose of collective bargaining. 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. What is meant by ³duty to bargain collectively´ when there exists a CBA? When there is a collective bargaining agreement. provided: (a) only legitimate labor unions which are incumbent exclusive bargaining agents may participate and negotiate in multi -employer bargaining. the law itself mandates that the procedures in collective bargaining laid down in the Labor Code. It shall be the duty of both parties to keep the . (b) only employers with counterpart legitimate labor unions which are incumbent bargaining agents may participate and negotiate in multi-employer bargaining.). Essentially. 119. the duty to bargain collectively shall mean that neither party shall terminate nor modify such agreement during its lifetime. However. should likewise be fully satisfied before such negotiations may be validly held. should be followed by the employer and the representatives of the employees in their collective bargaining efforts. The basic requisites of collective bargaining such as the existence of employer-employee relationship.

Book V. No. June 20. No. R. Registration of CBA. Rule XVI. May 5. (Section 7. Book V. chanrobles virtual law library d. chanrobles virtual law library 121. [Feb. Ratification by majority of the members of the bargaining unit. 17. The CBA shall be registered with the Department of Labor and Employment in accordance with the Rules to Implement the Labor Code. e. In the case of multi-employer bargaining. Rules to Implement the Labor Code. Trajano. b. 1989).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. Rule XVI. (Section 7. 40-03. 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. Posting of CBA. What are the mandatory requisites of publication. Posting is mandatory. for a period of at least five (5) days prior to its ratification. 77282. 2003]). ratification and registration of the CBA? a. (Associated Trade Unions [ATU] vs. 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. Series of 2003. Said CBA shall affect only those employees in the bargaining units who have ratified it. Posting is responsibility of employer. Non-compliance therewith will render the CBA ineffective. 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. c. This requirement on the posting of the CBA as above-described is considered a mandatory requirement. as amended in 2003. G. The general rule is that the CBA is required to be posted in two (2) conspicuous places in the work premises. Rules to Implement . as amended by Department Order No. Ferrer-Calleja. G. (Associated Labor Union [ALU] vs. R. 1988). L-75321.

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

For. ³In this case. they still have the duty to negotiate a new collective bargaining agreement in good faith. the manner of computing the net incremental proceeds was yet to be agreed upon by the parties.¶ ³Considering the parties failed to reach an agreement regarding certain items of the CBA. R. [G. the DOLE Secretary. 1995 only was set to resolve the distribution of the salary increase of the covered employees. the Supreme Court ratiocinated.Appeals that there was still no new CBA because the parties had not reached a meeting of the minds. 11. 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. 1996. pursuant to the applicable provisions of the Labor Code. that while the employer cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified. the plain and natural presumption is that the employer would resume operations after six (6) months and. 1994 conference. 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. still no agreement was concluded by them because. neither can the employer evade its obligation to bargain with the union.´ 125. who assumed jurisdiction on January 23. 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. No. 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. as already indicated above. Oct. thusly: ³As in all other contracts. In the absence of any other information. among other reasons. Secretary of Labor. 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. there must be clear indications that the parties reached a meeting of the minds. it follows that a new CBA will be needed to govern the employment relations of the parties. the old one having already expired. 104624. 263 SCRA 98]. using the cessation of its business as reason therefor. therefore. it was held in San Pedro Hospital of Digos. illega l and invalid. Also. Consequently. the employer -employee relationship is merely . Inc. vs.

that neither party is guilty of bad faith. chanrobles virtual law library . 127. the DOLE Secretary. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. 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. stock and barrel on employer who refused to negotiate a CBA? The Supreme Court. a dep arture from the general rule is warranted. in the exercise of his powers under Article 263 [i] of the Labor Code to decide and resolve labor disputes. its provision shall continue to govern the relationship between the parties until a new one is agreed upon. has lately consistently ruled that the CBA. That is. 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. Hence. lock. imposed on the employer. The rule necessarily presupposes that all other things are equal. chanrobles virtual law library Under this situation. 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. properly granted the wage increase and imposed the union shop provision.suspended (and not terminated) for the duration of the temporary suspension. the proposals of the union may be adopted as the CBA and. 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. It shows abuse of this option and bad faith on the part of the employer. when one of the parties abuses this grace period by purposely delaying the bargaining process. However. the employer which violates the duty to bargain collectively. stock and barrel. 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. as proposed by the union. The general rule is that when a CBA already exists. Can a CBA proposed by the union be imposed lock. And since it refused to bargain without valid and sufficient cause. 126. loses its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. and that would be judicial tyranny on its part. consequently.

refused to submit any counter proposal to the CBA proposed by its employees¶ certified bargaining agent. 11. the High Tribunal upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. To rule otherwise. 146728. Divine Word University of Tacloban vs. In General Milling Corporation vs. L-54334. CA. [213 SCRA 759. stock and barrel. 128. It ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban. according to the Court. January 22.General Milling Corporation vs. 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. 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. Thus. 1992]. No. Thus. the High Court did not hesitate to impose on the erring company the CBA proposed by its employees¶ union . Sweden Ice Cream Plant. September 11. too. [G. 141 SCRA 179. would be to allow General Milling to have its cake and eat it. R. the Supreme Court found that petitioner therein. Likewise. in Divine Word University of Tacloban vs. 188]. As strictly distinguished from the facts of General Milling [supra]. disregarded. NLRC. NLRC. Secretary of Labor and Employment.lock. Nonetheless. Feb. 1986. alter or modify the existing agreement. Kiok Loy vs. chanrobles virtual law library . In the case of Kiok Loy vs. 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. [No. petitioner therein refused to perform its duty to bargain collectively. 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. Secretary of Labor and Employment. CA. 2004]. 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.

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. 28. Bureau of Labor Relations. Jan. Today¶s Knitting Free Workers Union vs. (ALU vs. 1977. March 31. 1997. R. 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. 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. R. What is ³automatic renewal clause´? ³Automatic renewal clause´ means that at the expiration of the freedom period. Secretary of Labor and Employment. (Samahan ng Manggagawa sa Pacific Plastic vs. 267 SCRA 303. No. It is well-settled that the sixty-day freedom period based on the original CBA shall not be affected by any amendment. with a pending petition for certification. 116751. Feb. (See also Oriental Tin Can Labor Union vs. 75 SCRA 450). Noriel. 179 SCRA 127 [1989]). Laguesma. 1978. In the case of Warren Manufacturing Workers Union [WMWU] vs. Estrella. 1998. 31. 111245. Calleja. 294 SCRA 640). the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. The reason is. 310). 82 SCRA 280. G. .129. [159 SCRA 387 (1988)]. 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. 130. (Vassar Industries Employees Union [VIEU] vs. 28. G. No. Aug. L-45057. 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. L-46562. 288. 131. No. extension or renewal of the CBA for purposes of certification election.

. includes the right to suspend it. including conciliation to foster industrial peace. said agreement satisfies the first purpose of Article 253-A. 133. The right to free collective bargaining. after all. Article 253-A has a two-fold purpose.R. Inasmuch as the agreement sough t to promote industrial peace at PAL during its rehabilitation. 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. (G. but preventing the latter's closure. prohibits the parties from waiving or suspecting the mandatory timetables and agreeing on the remedies to enforce the same. Espiritu. 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. The Supreme Court. One is to promote industrial stability and predictability .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. with the peculiar and unique intention of not merely promoting industrial peac e at PAL. 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. Rule involving CBAs concluded by the parties through negotiation (not concluded through arbitral award). promoted the shared responsibility between workers and employers. We find no conflict between said agreement and Article 253-A of the Labor Code.". chanrobles virtual law library ³In the instant case. 1. What is meant by ³retroactivity´ of CBA? a. 132. in the case of Rivera vs. and they exercised voluntary modes in settling disputes. Nothing in Article 253A. as the exclusive bargaining agent of PAL 's ground employees. No. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. ratiocinated. The agreement afforded full protection to labor. January 23. 2002). it was PALEA. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Either case was the union's exercise of its right to collective bargaining. that voluntarily entered into the CBA with PAL.135547. May CBA negotiations be suspended for 10 years? Yes.

DOLE. 2000 ruling in the same case which was rendered upon motion for reconsideration. [223 SCRA 779 (1993)]. the parties shall agree on the date of effectivity thereof. No. the Supreme Court ruled: chanrobles virtual law library In St. the effectivity date was made retroactive to the date of the expiration of the previous CBA. Quisumbing. .2. Inc. [241 SCRA 294. Luke's Medical Center. 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. R. Secretary of DOLE. [G. In Manila Electric Company vs.Conciliation and mediation by the NCMB. April 17. In Pier 8 Arrastre and Stevedoring Services. b. i. vs. 307 (1995)]. chanrobles virtual law library LATEST RULING: In the case of LMG Chemicals Corporation vs. January 27. the effectivity date was made prospective per its January 27.e.. 127422. Inc. the parties may exercise the following rights under the Labor Code: 1. What are the remedies in case of CBA deadlock? In case of a deadlock in the negotiation or renegotiation of the collective bargaining agreement. 1998. 1996 to May 31. NLRC or Voluntary Arbitrator (Jurisprudence varies). R. 2. No. 209]. Rule involving CBAs concluded through arbitral awards by DOLE Secretary. Thus. 1999. the effective date of the new CBA should be the date the Secretary of Labor and Employment has resolved the labor dispute. vs. 127598. In case of arbitral awards. But later. 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. 2000 ruling which was rendered after a Motion for Partial Reconsideration was filed by Meralco. If any such agreement is entered into beyond six (6) months. as the case may be. per its February 22. the retroactivity of the CBA provided under Article 253-A of the Labor Code (enumerated above) has no application. Roldan Confesor. the effectivity of the CBA was made retroactive. 1999 ruling. Referral of case to compulsory or voluntary arbitration. in its August 1.Declaration of a strike or lockout. 302 SCRA 173. 2001). from June 1. 3. the Supreme Court finally changed the effectivity date thereof. Later. (G.

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. 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. chanrobles virtual law library 136. It usually consists of successive steps starting at the level of the complainant and his immediate supervisor and ending. 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.GRIEVANCE AND VOLUNTARY ARBITRATION 135. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators. For this purpose. parties to a CBA shall name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators. or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators. What is voluntary arbitration? . It is part of the continuing process of collective bargaining. when necessary. the NCMB shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators. It refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement. pursuant to the selection procedure agreed upon in the CBA. which are intended to resolve all issues arising fr om the implementation and interpretation of their CBA. as may be necessary. at the level of the top union and company officials. 137. 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. 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. 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. 138. preferably from the listing of qualified Voluntary Arbitrators duly accredited by the NCMB.

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).

´ 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. No. January 23. The strike which the union mounted. thus: ³The NCMB had declared the notice of strike as µappropriate for preventive mediation. in view of the NCMB¶s conversion of the notice therein into a preventive mediation case. No-Lockout´ clause in the collective bargaining ag reement. A strike is illegal if staged by a minority union. In c. 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. 9. 88201. The Supreme Court reasoned.6. 1991. 148. Once a notice of strike/lockout is converted into a preventive mediation case.¶ 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.: Strike to compel dismissal of employee or to compel the employer to recognize the union or the so-called ³Union-Recognition Strike´) 10. 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. 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. A strike or lockout is illegal if staged in violation of the ³No -Strike. there is a remedy called ³preventive mediation. it will be dropped from the docket of notices of strikes/lockouts. A strike or lockout is illegal if conducted for unlawful purpose/s (e. chanrobles virtual law library 7. 193 SCRA 223] where the strike was declared illegal for lack of a valid notice of strike. Once dropped therefrom. a strike/lockout can no longer be legally staged based on the same notice. A case in point is Philippine Airlines. [G. Secretary of Labor and Employment. R. 8. The conversion has the effect of dismissing the notice. During the pendency of preventive mediation proceedings no strike could be legally declared. while preventive .. as provided in Rule 41 of the NCMB Rules. The local union and not the federation is liable to pay d amages in case of illegal strike. vs.g..

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

in Interphil Laboratories Employees Union -FFW vs. (Filcon Manufacturing Corporation vs. R. Inc. 2001]. Brillantes. 15. 151. as a result. an act in violation of the law and in defiance of authority. pursuant to the second p aragraph of Article 264 of the Labor Code. No. 119360. The loss of employment results from the striking employees¶ own act . 10. (Philippine Airlines. 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. People¶s Industrial and Commercial Employees and Workers Organization [FFW] vs. NLRC. G. vs. vs. Case law.an act which is illegal. Inc. December 19. Interphil Laboratories. especially when such terms provide for conclusive arbitration clause. [G. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMF-LMLC]. 4. 1997. 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. chanrobles virtual law library Thus. in fact. Inc. (National Federation of Labor vs. 142824. R. is illegal.In a situation where ULP is alleged. Oct. 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. 2004). No. (Panay Electric Company. 1995. People¶s Industrial and Commercial Corporation. 283 SCRA 275. 150166. having abandoned their employment. No. R. July 26. he is deemed to have abandoned his job. 102672. 112 SCRA 430). which is in violation of the terms of the CBA. 1997). 150. are deemed to have lost their employment status for having knowingly participated in an illegal strike. been committed. 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. The union officers and members.. Oct. provides that by staging a strike after the assumption or certification for arbitration. What is the effect of a strike conducted in violation of a temporary restraining order or injunction? . likewise. it is not essential that the unfair labor practice act has. from the moment a worker defies a return-to-work order. Stated differently. Dec. Brillantes. G. G. during the existence of the CBA. the workers forfeit their right to be readmitted to work. 287. NLRC. No. R. 254 SCRA 595). to stage a strike or engage in slowdown or interruption of work. Marcopper Mining Corporation vs.

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

If the majority status of a union is in doubt. under Article 248 [g] constitutes an unfair labor practice act. 1950. Union-recognition-strike. L-2660. G. the company agreed to recognize for membership in the Association the position titles mentioned in Annex ³B´ of said agreement. March 25. a strike staged for the purpose of unreasonably demanding the dismissal of a factory foreman is illegal. NLRC. A strike staged by a union to compel the employer to extend recognition to it as the bargaining representative is illegal. 120505. Even if the strike were really declared for the purpose of recognition. It is only when the union¶s majority status is established through appropriate certification election. the law will not sanction it and the court will declare it illegal. 507). c. [44 SCRA 351]. is calculated to compel the employer to recognize one¶s union.For instance. In Caltex Filipino Managers and Supervisors Association vs. the same may not be considered illegal. G. that the employer¶s refusal to the demand for collective bargaining negotiations becomes illegal. Hence. If a strike is declared for a trivial. A union -recognition-strike. Roldan. May 30. Rold an. 507). This goes to show that striking for recognition is productive of good result insofar as a union is concerned. 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. G. R. unjust or unreasonable purpose or if carried out through unlawful means. (Luzon Marine Department Union vs. 1950. illegal. . 86 Phil. R. No. R. as its legal designation implies. No. 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. 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. 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. May 30. 1999. in the voluntary return-to-work agreement entered into between the company and the Association thereby ending the strike. No. the union may lawfully stage a strike based on such refusal which. Trivial and puerile purpose. 305 SCRA 219). d. and not the other contending group. (Luzon Marine Department Union vs. 86 Phil. a strike cannot be declared by reason of non-recognition by management of said union for purposes of collective bargaining. Significantly. CIR. (Association of Independent Unions in the Philippines vs. L-2660.

e. 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. (ALPAP vs. It suffices if such belief in good faith is entertained by labor as the inducing factor for staging a strike. 219 SCRA 47. 761). (Almeda vs. (PNOC Dockyard and Engineering Corporation vs. Greenfield (MSMG-UWP) vs. However.. Feb. NLRC. NLRC.NAFLU vs. such allegations of unfair labor practices were found to be groundless. No. the resulting strike may be considered legal although. Restaurants and Allied Industries vs. March 6. 28. 2000. G. 125561. 76 SCRA 274). NLRC. 114 SCRA 930. July 28. 939. G. Master Iron Labor Union vs. 306. even if no ULP acts are committed by the employer. 1982). (PASVIL/Pascual Liner. 248 SCRA 688). As an exception. 155. therefore. G. CIR. R. 1995. NLRC. where the union believed that the employer committed ULP and the circumstances warranted such belief in good faith. R. a strike based on a ³non -strikeable´ ground is generally an illegal strike. 60. No. R. 95 Phil. 1998. No. chanrobles virtual law library Indeed. A strike is illegal if used as a means to circumvent valid contractual commitments (Manila Oriental Sawmills vs. June 29. Insurefco Paper vs. 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. (National Union of Workers in Hotels. Inc. G. CIR. corollarily. 4. R. R. Strike to circumvent contracts and judicial orders. 28) or to circumvent judicial orders lawfully issued. NLRC. chanrobles virtual law library . 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. f. 124823. Inc. Premature strike. 96 Phil. NLRC. G. vs. however. 1993). (Samahan ng mga Manggagawa sa M. NLU. 113907. Insurefco. 291 SCRA 231. Workers Union . 1999). As a general proposition. 91 Phil. Ramos. subsequently. 1998. For instance. 118223. Pepsi-Cola Labor Union vs. a strike grounded on ULP is illegal if no such acts actually exist. 17. June 26. No. No. 102672. Oct. if the employees believe in good faith that ULP acts exist so as to constitute a valid ground to strike. Panay Electric Co. A strike is illegal if staged without giving the employer reasonable time to consider and act on the demands made by the union. Feb. 287 SCRA 192. then the strike held pursuant to such belief may be legal.

1991]. was unconvinced because it found the accusation of union-busting bereft of any proof. 123276. the strike was declared illegal in the light of the ruling in Tiu vs. vs. however. The ruling in Bacus vs. NLRC. No. [G. [G. 156. [G. R. 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. Inc. [G. 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. Ople. In Samahang Manggagawa sa Sulpicio Lines. 1997. August 18. Inc. as held in Reliance Surety and Insurance Co. Cebu Portland Cement Company vs. October 23. 1997). CIR. NLRC.. 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. 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). Hence. Cement Workers Union.R.. therefore. R. 25 SCRA 504). R. L-56856. (National Union of Workers in Hotels. 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. the petitioner union claimed that the strike was legal for it was done in good faith. G. March 25. 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. NLRC. 86917-18. 123276. No. cannot be applied here.It is. if the strike conducted was violative of the mandatory legal requirements. chanrobles virtual law library . The Court. NLRC. 2004]. 25. Jan. Sulpicio Lines. Tiu vs. Restaurants and Allied Industries vs. 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. Inc. ± NAFLU vs. 18. supra. No. 140992. (Ferrer vs. No. was attended by acts of harassment and violence. 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. Scanning the records very carefully failed to indicate any evidence to sustain such charge. Aug. was prompted by no actual. the strike is illegal. However. 17 SCRA 353. and there was no semblance of good faith. R. No. having been staged in response to what its officers and members honestly perceived as unfair labor practice or union -busting committed by respondent company. existing unfair labor practice committed by the employer. 277 SCRA 680.

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

but subject to exceptions. Section 3 of the Constitution. National Labor Relations Commission. 308 [1993]). Said the Supreme Court: ³This Court finds no merit in the UNIVERSITY¶s contention. 188189 [1996]). 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. Section 3 of the Constitution) which is further echoed in Article 211 of the Labor Code. In her Order dated March 28. 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. ³When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual respondents. Hence. 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. Inc. 151379. as expressed in PAL v. 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. is the maintenance and upholding of the status quo while the dispute is being adjudicated. the University contends that the Secretary cannot take cognizance of an issue involving employees who are not part of the bargaining unit. vs. 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. Inc. 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. In Metrolab Industries. (225 SCRA 301. (Article XIII. No. ³The University¶s act of suspending and terminating union members and the Union¶s act of filing another Notice of Strike after this Office . However. as amended. thereby negating the direct intervention of this office. v. The Honorable Secretary of Labor.parties to the case should inform the DOLE Secretary of pendency thereof. (254 SCRA 182. nor did the Secretary gravely abuse the same. 1995. This is in keeping with the general principle embodied in Article XIII. xxx. R. then they cannot be covered by the Secretary¶s assumption order. the Secretary did not exceed her jurisdiction. In the 2005 case of University of Immaculate Concepcion. [G. January 14. Roldan-Confessor. 2005]. this privilege is not absolute.

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

Drilon. the NCMB which effected the conversion. NLRC. in some cases. 1986]. Having been so converted. However. The NLRC. 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. but did not enjoin the unlawful strike itself. 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 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. 2003]. 162. Upon such conversion. No. 7. issued a TRO only for free ingress to and egress from petitioner¶s plants. [304 SCRA 1(1999)] where the same issue of NLRC¶s duty to enjoin an unlawful strike was raised. When the NCMB ordered the preventive mediation the union had thereupon lost the notice of strike it had filed. the notice of strike filed by the union has been converted into a preventive mediation case. (See also PAL vs. 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. under the law. which may be prevented through an injunction in accordance with Article 254. no coercive powers of injunction. chanrobles virtual law library In the earlier case of San Miguel Corporation vs. however. 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. It is automatic in nature which means that it may be . It ignored the fatal lack of notice of strike consequent the conversion thereof into a preventive mediation case. public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike. In IBM vs. In the 2003 case of San Miguel Corporation vs. The reason is when trade unionism and strikes are used in violation of the law. a strike can no longer be staged based on said notice. [198 SCRA 586 (1991)]. 193 SCRA 223 [1991]). Oct.However. injunction was allowed against a strike which was staged to compel the employer to ignore the law. petitioner company sought recourse from the NLRC. NLRC. No. the legal effect is that there is no more notice of strike to speak of. Clearly. Sanchez. 74425. June 10. 119293. NLRC. R. In this case. Failure promptly to issue an injunction by the NLRC was likewise held therein to be an abuse of discretion. [G. has. injunctions issued to enjoin the conduct of the strike were held to be valid. misuse thereof can be the subject of judicial intervention. Consequently. chanrobles virtual law library In Bulletin Publishing vs. [G. R.

would make the strike illegal. G. 208 SCRA 157 [1992]). Dec. Nos. Scholastica¶s College vs. In her order. 210 SCRA 565 [1992]. on the part of a worker. even for one day. G. Federation of Free Workers vs. 143013-14. therefore. R. Inciong. R. 119381. 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. . St. strikes are enjoine d or. Thus. Returning to work. 18.). 1996. 163. (Telefunken Semiconductors Employees Union -FFW vs. CA. if one has already taken place. 162783. This holds true even if a Motion for Reconsideration of the assumption or certification order is filed. If one has already taken place at the time of assumption or certification. Cf. 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.. Article 263 [g] is clear. the consequence thereof is clear. id. 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]. Once an assumption/certification order is issued. 254 SCRA 595. 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. is ³not a matter of option or voluntariness but of obligation. Violation thereof. [G. July 14. No. Manggagawa ng Komunikasyon sa Pilipinas. (Ibid. all strikers should immediately return to work.´ (Marcopper Mining Corporation vs.´ (Emphasis supplied) In the 2005 case of PLDT vs. 2000). 602. Torres.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.´ In setting aside this ³qualified´ return-to-work order for being contrary to law. 2005]. Brillantes. March 11. she directed the return to work of all strikers ³except those who were terminated due to redundancy. Tomas certified the labor dispute to the NLRC for compulsory arbitration. Secretary of Labor and Employment Patricia Sto. it is error for striking workers to continue with their strike alleging absence of a return-to-work order. No. R. once an assumption or certification order is issued.

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

pursuant to Article 263 [g]. the company laid -off ninety-four (94) of its rank-and-file employees invoking the exercise of management prerogative. Court of Appeals. where the Secretary of Labor. [190 SCRA 758 (1990)]. viz. 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. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts.. Inc. is particularly instructive. directed the university to ³readmit all its faculty members.´ 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.´ Instead of fully complying therewith by allowing the faculty members to teach in the classroom. under the said order. the Secretary of Labor. under the same terms and conditions prevailing prior to the present dispute. pursuant to Article 263 [g]. the university gave some of them ³substantially equivalent academic assignments without loss in rank.: ³. July 7. NLRC. Roldan -Confesor. In this case. Inc. ± Unlicensed Crews Employees Union ± Associated Labor Unions [TASLI-ALU] vs.´ The order simply means that the employees should be returned to their ship assignments as before they staged their strike. pay or privilege. No. 2004]. Inc. [G. vs. assumed jurisdiction over the labor dispute at Metro Drug. ³ Likewise apropos is the case of University of Sto. management prerogatives must always be exercised consistently with the statutory objective. Tomas v s. 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. including the sixteen (16) union officials. 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. 166. chanrobles virtual law library In Trans-Asia Shipping Lines. The Court upheld said order of the Secretary of Labor as it quoted the assailed resolution therein. The Secretary of Labor declared the layoff illegal and ordered the company to reinstate the employees.The case of Metrolab Industries. Is ³payroll reinstatement´ proper to implement a return-towork order? . The respondent is mandated. Pending resolution of said dispute.. R. [254 SCRA 182 (1996)]. 145428.

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

the government must still perform its function and apply the law. 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. As a consequence of the above findings. especially if national interest is involved. therefore. [G. For instance. 167. When is ³payroll reinstatement´ not proper? In some cases. in a subsequent order. which is not correctible by a special civil action for certiorari. payroll reinstatement in lieu of actual reinstatement . 140518. Indeed. Nevertheless. However. in Manila Diamond Hotel Employees¶ Union vs. In the Manila Diamond Hotel case. Bitter labor disputes always leave an aftermath of strong emotions and unpleasant sit uations. 2004]. payroll reinstatement was not allowed by the Supreme Court. The petitioner-union correctly pointed out that labor disputes naturally involve strained relations between labor and management. It observed that the NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious problem. The NLRC was. Moreover. and that in most strikes. the ³great breadth of discretion´ by the Secretary once he assumes jurisdiction over a labor dispute is recognized. however. No.dispute between striking teachers and the university. [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. 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. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions. there was no showing that the facts called for payroll reinstatement as an alternative remedy. the High Court disallowed the payroll reinstatement of workers who were ordered to return to work by reason of the assumption order. the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. the Supreme Court found that it was merely an error of judgment. R. The Hon. December 16. 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. faced with a situation where the striking teachers were entitled to a return-to-work order. 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. NLRC. However. the relations between the strikers and the non-strikers will similarly be tense. Court of Appeals. It distinguished the case from the earlier case of University of Santo Tomas (UST) vs.

it agreed to reinstate them and comply fully with the return-to-work order issued by the Secretary of Labor and Employment. 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. Philippine Airlines. CIR. a return-to-work order does not have the effect of rendering as moot and academic. R. 38 . 438). the deadline fixed for the returnto-work would. (Bisaya Land Transportation Co. NLRC.. July 7. [G. have already passed and. Inc. 168. Secretary of Labor and Employment. during a conference before the Chairman of the NLRC. No. chanrobles virtual law library However. 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. 12. (Insurefco Pulp vs. can no longer be affirmed insofar as the time element is concerned. 283 SCRA 145). Insurefco. (Philippine Airlines Employees Association vs. vs. 266 SCRA 713 [1997]) 169. for by then. Liner. 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. Nos. 145428. as in the UST case aforementioned.is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable. In the same breadth. None appears to have been established in this case. 95 Phil. in the ordinary course. (Telefunken Semiconductors Employees Union-FFW vs. R. 122743 and 127215. Inc. The reason is simple: a return-towork order is immediately effective and executory notwithstanding the filing of a motion for reconsideration. 2004]. 102 Phil. 761). according to Unlicensed Crews Employees Union ± Associated Labor Unions [TASLI-ALU] vs. 1997. hence. 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. 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.. Dec. the issue of the legality of the strike. CA. vs. (Reformist Union of R.B. 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. Inc.

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

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

Petitioners here claimed that the assumption and return -towork orders issued by the Secretary of Labor were allegedly inadequately served upon them. ³Records also show that the Order of 16 September 1995 was served at the strike area with copies left with the striking workers. shows that the Notice of Order of 8 September 1995 was actually served on the Union President.m. 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. Nos. although a certain Virgie Cardenas also refused to acknowledge receipt. to wit: ³x x x. and on 11 September 1995 at 9:30 a. .issued in the national interest. the reports of the DOLE process server. however. The certification/assumption order may be served at any time of the day. presents a good study on this point. similarly refused to acknowledge receipt of the 8 September 1995 Order on 9 September 1995 at 1:25 p. the Union ± with its officers and members in attendance ± never questioned the propriety or adequacy by which these Orders were served upon them.´ f.). 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. 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. The Federation of Free Workers officially received a copy as acknowledged by a certain Lourdes at 3:40 p. Specifically. 143013-14. December 18. The Union¶s counsel of record.m. The Supreme Court. much less disputed with clear and convincing evidence. Allan Montano. Atty. found this contention untenable in the light of what had already been clearly es tablished in this case. refused to acknowledge receipt of the same on two separate occasions (on 8 September 1995 at 7:15 p. CA. R. ³Likewise. [G. of 18 September 1995. 2000].m. ³The foregoing clearly negate the Union¶s contention of inadequate service of the Orders dated 8 and 16 September 1995 of Acting Secretary Brillantes. however. per the process server¶s return. through the simple expediency of refusing to acknowledge receipt thereof. The latter.m. Furthermore.

´ g. tabloids. 75271-73. the Supreme Court observed that the above-cited rule is not applicable to the case at bar inasmuch as Sections 1 and 4. Tuico. No. has been questioned. The numerous publications of the subject DOLE Orders in various newspapers. he is deemed to have abandoned his job. between the hours of eight in the morning and five in the afternoon. [G. petitioners cannot now feign ignorance of his official intervention.´ 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. 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. except Saturdays. June 27. It is already in itself knowingly participating in an . The argument. however. It is clear from the law that from the moment a worker defies a return-to-work order. R.¶ We cannot but admit the same for the purpose for which it was presented. 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. Sundays and holidays. The Union¶s arguments are less than convincing. suffice it for us to state that the bulletin board belonged to the Union. unverified/unverifiable and thus utterly inadmissible. As pointed out by the Secretary of Labor in his decision. 1988]. 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. pictures of which were presented by the Company in evidence. x x x´ However. 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. therefore. 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.To cast doubt on the regularity of the aforesaid service of the two Orders issued by the Secretary of Labor. ± Writ of Execution shall be served at any day. to wit: ³The admissibility of the evidence presented by the Company. In the case of the announcements posted on the Union¶s bulletin board. not material. the defiant workers should not be dismissed. petitioners in Telefunken [supra] cite Section 1. 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. Hours and Days When Writ Shall Be Served.

In labor disputes adversely affecting the continued operation of such hospitals. 174. 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. 171. Inciong. clinics or medical institutions. Otherwise. however. Power to assume or certify strikes or lockouts in hospitals. the Supreme Court held in CCBPI Postmix Workers . The DOLE Secretary may immediately assume jurisdiction over the labor dispute within 24 hours from his knowledge thereof. in which case. They are deemed to have lost their employment status. whose mo vement and services shall be unhampered and unrestricted. What is the effect of the illegality of strike on employment of strikers? The rule is different for union officers. organize government employees' organizations and may negotiate certain terms and conditions of employment except: (1) those requiring appropriations. Government employees may. 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. as distinguished from ordinary members of the union.illegal act. [G. 1992]. April 20. The mere declaration of the illegality of strike would result in the termination of employment of union officers. 172. for the duration of the strike or lockout. R. In Federation of Free Workers vs. 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. 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. 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. 173. they shall be deemed to have also lost their employment status. 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. No. as are necessary to insure the proper and adequate protection of the life and health of its patients. or (2) exercise of prerogatives. most especially emergency cases.

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

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

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

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

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

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

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

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

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

in its Manual of Regulations for Banks and Other Financial Intermediaries requires the rotation of bank personnel. (Castillo vs. securities and bookkeeping records should be rotated´ and that such rotation ³should be irregular. Dapiton. j. The Manual directs that the ³duties of personnel handling cash. an employee who had been on a day shift for sometime may be transferred to the night shift. 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. is legal. No. Rotation among bank employees. Telegraph and Telephone Corp. 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. Particularly so when no illicit.R. CIR. CIR. m. k. supra). . 39 SCRA 81). 320 SCRA 124. 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. Where the rotation of employees from the day shift to the night shift was a standard operating procedure of management. [supra] as well as the instant case. the refusal to be transferred within the Philippines based on personal grounds was considered willful disobedience of a lawful order.´ Consequently. (Philippine Industrial Security Agency vs. (Cinema. 1999. unannounced and long enough to permit disclosure of any irregularities or manipulations. 18 SCRA 1071 [1996]).an overseas post. 127421. (Allied Banking Corporation vs. The Bangko Sentral ng Pilipinas. 138). Transfer in accordance with pre-determined and established office policy and practice. 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. G. Dec. Transfer pursuant to company policy. CA. Consequently. as in the Dosch case [supra]. Stage and Radio Entertainment Free Workers vs. (where the refusal of the employee was upheld as valid) cannot be likened to a transfer from one city to another within the country. Transfer due to standard operating procedure of management. as in the 1991 case of Phil. legally required. l. 8.

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

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

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

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

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

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

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

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

would result in absurdity. and appreciation of the dignity and responsibility of his office. 2004]. 28. the imposition of the penalty of reprimand or suspension would be futile. 156515. regard for his employer¶s rules. rape. or has not resulted in any prejudice to the company. the fact that the offense was committed for the first time. No employer may rationally be expected to continue in employment a person whose lack of morals. chanrobles virtual law library . despite the heavier penalty provided therefor by the Labor Code. respect and loyalty to his employer. Borromeo. The matter of imposing the appropriate penalty depends on the employer. 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. 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. NLRC. Oct. In Stanford Microsystems. In China Banking Corporation vs. Like all other business enterprises. R. 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. has so plainly and completely been bared. e. No. or otherwise dictated by common sense. the rules. g. otherwise.g. The employer-bank was left with no other recourse but to impose the ancillary penalty of restitution. No.. h. Right to choose which penalty to impose. vs. R. Obviously. literally applied. 19. 1988]. [G.´ 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. was held not to be a valid excuse. 74187. Inc. this. 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. grave offenses. This is dictated by logic. in view of his voluntary separation from the employer-bank. its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected. [G.the employee ought not to be visited with a consequence so severe such as dismissal from employment. Right to impose heavier penalty than what the company rules prescribe. Jan.

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

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

if any. NLRC. 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. consult a union official or lawyer. Nos. 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. vs. in order to enable the employees to intelligently prepare their explanation and defenses. (2) Hearing required.The requirement of due process is two-fold. and decide on the defenses they will raise against the complaint. Inc. are violated and/or which among the grounds under Article 282 is being charged against the employees. 2007]. The Supreme Court. the notice should specifically mention which company rules. explained the due process requirement in Genuino vs.R. [G. What is the two-fold due process requirement? Two-fold due process requirement. the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. June 29. and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period.R. 166208. 12. 2007]. No. 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. reiterating its earlier holding in King of Kings Transport.The first written notice to be served on the employees should contain the specific causes or grounds for termination against them. A general description of the charge will not suffice. thus: chanrobles virtual law library (1) First written notice. Two notices and a hearing required. Lastly. and (2) Procedural aspect. . Mamac. 13. the employers should schedule and conduct a hearing or conference wherein the employees will .2. [G. Moreover. . gather data and evidence..After serving the first notice. 142732 -33. December 4. thus: (1) Substantive aspect. 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.

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

00 to distinguish it from the Agabon case where the penalty was P30. on the other.00. 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. [G.case of Jaka Food Processing Corporation vs. the employee has committed some serious misconduct. i. on one hand.e. the dismissal process is initiated by the employer¶s exercise of his management prerogative. as a rule. ³On another breath. Instead. he has neglected his duties. 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. the law requires payment of separation pay.000. and a dismissal for authorized cause under Article 283. March 28.000. the High Court declared: chanrobles virtual law library ³The difference between Agabon and the instant case is that in the former. as in this case. which is one of the authorized causes under Article 283 of the same Code. R. there ought to be a difference in treatment when the . Thus. a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Pacot. payment of separation pay. ³A dismissal for just cause under Article 282 implies that the employee concerned has committed. ³For these reasons. respondents were dismissed due to retrenchment. or. the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case. he undertakes to implement a retrenchm ent program. ³At this point. as in Agabon. is guilty of some fraud against the employer. In awarding a ³stiffer´ sanction of P50. or is guilty of. some violation against the employer.e. In this case. is not required. when the employer opts to install labor saving devices. when he decides to cease business operations or when. while in the second. 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. 151378. 2005]. we note that there are divergent implications of a dismissal for just cause under Article 282. i. it can be said that the employee himself initiated the dismissal process.

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

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

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

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

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

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

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

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. (BPI Credit Corporation vs. 2005]. petitioner was not sufficiently apprised of the gravity of the situation he was in. 154315.. 19. The first notice issued in this case merely stated that respondent is being charged of dispensing and drinking beer o n December 5. [G. chanrobles virtual law library In Philippine Pizza. NLRC.. 1998. 106027. the notices given to petitioner were declared legally deficient. The employee must be dismissed based on the same grounds . together with the equivalent of a one-month pay. No. even if she were given the opportunity to be heard. 1997. Inc. chanrobles virtual law library In the 2005 case of Cruz vs. 20. No. Neither was she given any chance to be heard. Respondent was not notified of the specific act or omission for which her dismissal was being sought. and neither of these elements can be eliminated without running afoul of the constitutional guarantee. At any rate. for she knew no cause to answer to. There is here a deprivation of procedural due process. [G. 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.m. as required by law. petitioners violated respondent¶s right to due process. G. July 25. 1994). Notice to explain must correctly and fully inform the employee of the charges against him. were different from the ones cited for his termination. 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. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day. the employer must furnish them the two written notices.procedural due process. No. R. she c ould not have defended herself effectively. 2005]. In dismissing employees. around 11:30 to 11:45 p. May 9. Bungabong. Consequently. Coca-Cola Bottlers Phils. did not contain the particulars of the charges nor the circumstances in which the violation happened. The first notice dated July 27. 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. and nothing more. R. June 15. 165586. vs. The notice to the employee should embody the specific charges for which he is being asked to explain. The evidence in this case is crystal-clear. Inc. R..

Notice posted in bulletin board. Sept. 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. NLRC. not sufficient. chanrobles virtual law library In Artemio Labor vs. In case of termination. 17. Book VI. . 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. as amended by Article III. 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. Rule I. 110388. A dismissal must not only be for a valid or substantial cause. 222 SCRA 818 [1993]). If an employee is dismissed based on grounds different from those cited in said notice. The dismissal of an employee must be based on the same grounds cited in the first notice given to him to explain. [G. 1995].. No. Inc. their abandonment. 2004). vs. 22. he is deemed to have been deprived of procedural due process. 10. the petitioners were guilty of both abandonment and dishonesty or misconduct. Nagkakaisang Empleyado ng Wellcome -DFA. No.R. and warned them in the form of a reminder that such absence is a ground for separation or dismissal from the company. G. then the company should have put them down in black and white. chanrobles virtual law library If indeed. (See also Imperial Textile Mills. (Section 2. Series of 1997. 217 SCRA 237 [1993]. 158693. (Glaxo Wellcome Phils. 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. vs. Inc. 14. 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. San Miguel Corporation vs. supra. For in this situation. according to the Supreme Court. BPI Credit Corporation vs. Notice should be served at employee¶s last known address. Agabon vs. where it sought an explanation from them on their alleged absence without official leave or. Department Order No. chanrobles virtual law library 21. Nothing was mentioned therein about dishonesty or any other misconduct on the part of the petitioners. NLRC. in short. NLRC. R. supra). The letters cum notice cannot be considered to include dishonesty or misconduct.mentioned in the first notice. the notices shall be served on the employee¶s last known address. Nov. Rules to Implement the Labor Code. NLRC. NLRC.

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

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

1999. 154315. 117221. There should be no outright termination of his employment without due process. It was merely a token gesture to cure the obviously defective earlier dismissal. Outright termination violates due process. [G. No. R. but he was not given a fair and reasonable opportunity to confront his accusers and defend himself against the charge of theft. Inc. Indeed. the records of the case. G. vs. 1997. May 9. [G. No. The termination letter was issued by the HRD Vice President on December 15. Guianan. July 5. Otherwise. vs. 2005]. Clearly then. Thus. . (IBM Philippines. 1999] presents an extreme case of illegal dismissal. Bizarre case of employee illegally dismissed twice. R. G. Gorombalem. When dismissal was already a foregone conclusion. the opportunity to explain or present his side. was already final. 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. The employer should give an employee who committed an act considered lawful cause for his dismissal. The employee who had served the company for more than two decades was first dismissed on the basis of an anonymous letter. April 13. No. NLRC and Felizardo A. Benguet Corporation vs. while there was just cause for the employee¶s dismissal. the decision to terminate respondent which was made effective on December 19. however. vs. No. November 16. even before respondent could present his side and refute the charges against him. show that he was not afforded due process. it will be a violation of his right to security of tenure and due process of law. He was able to submit his explanation denying that he stole beer from the company dispenser.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. 1997. 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. 124166. his termination was tinged with bad faith. nothing that respondent could say or do would have changed the d ecision to dismiss him. 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. Bungabong. (Robusta Agro Marine Products. 80500. Inc. 1989). 305 SCRA 592). Inc. at that point. In Philippine Pizza. NLRC. R. R.

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

G. Nov. 1997. NLRC. Construction Supply. 28. (Manuel vs. September 17. 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. Oct. L19052. No. May the right against unreasonable searches and seizures be invoked in administrative proceedings? As applied to labor cases. [G. On the contrary. 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. No. the admissions made during such investigation may be used as evidence to justify dismissal. (Pascual. chanrobles virtual law library 32. vs. Marti. G. Therefore. 31. Board of Medical Examiners. Jr. R.. Cabal vs. such an invasion gives rise to both cri minal and civil liabilities. C. 1997. 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. that the Bill of Rights does not protect citizens from unreasonable searches and seizures perpetrated by private individuals. 113271. 282 SCRA 326).The answer is in the affirmative. May 16. chanrobles virtual law library 33. (Waterous Drug Corporation vs. It is not true that the citizens have no recourse against such assaults. [193 SCRA 57 (1991)]. No. R. 2004]. Jr. R. Inc. the Supreme Court declared that it finds no reason to revise the doctrine laid down in People vs. If the investigation is merely an administrative investigation conducted by the employer and not a criminal investigation. 1962). 127553. L-25018. where the employer prohibited its employees against personal or marital . Kapunan. 280 SCRA 735). 1969. Dec. 16. G. No. No.. 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. The right to counsel attaches only upon the start of such investigation. N. R. G. 162994. 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. May the right to equal protection of the laws be asserted in administrative proceedings? In the case of Duncan Association of Detailman-PTGWO vs. Glaxo Welcome Philippines.

). this exception is not present in this case. (Ibid. it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. period. has been found to have become entwined or involved in a wrongful private conduct. 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 application of the said policy was made in an impartial and even-handed manner. chanrobles virtual law library b. chanrobles virtual law library 34. The legal basis for the valid imposition thereof is found in the Rules to Implement the Labor Code. What is preventive suspension? a. the termination is in implementation of a mass lay-off. the termination may cause a serious labor dispute. In any event. with due regard for the lot of the employee. Its employees are free to cultivate relationships with and marry persons of their own choosing. the company actually enforced the policy after repeated requests to the employee to comply with the policy. Significantly. 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. however. Legal basis. or 2.relationships with employees of competitor companies. 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 . . in any of its manifestations or actions. Justification for imposition of preventive suspension (not a penalty). Obviously. 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. The only exception occurs when the state. from the wordings of the contractual provision and the policy in its employee handbook. Indeed.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. When may the effects of termination be suspended? Grounds. (Article 277 [b]) 35. The Labor Code does not contain any provision on preventive suspension.

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

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. he is . No. NLRC. 161158. 1994]. chanrobles virtual law library In Pheschem Industrial Corporation vs. However. [G. 13]. It was considered a mere procedural lapse which should not affect his substantive right to reinstatement. Reinstatement when not prayed for. 105338. No. there is nothing left to be done except the execution thereof. Reinstatement under Article 279 presupposes that the judgment has already become final and executory. [G. 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. effect. As pronounced in Dela Cruz vs. (See also General Baptist Bible College vs. 1998. R. Reinstatement under Article 223 of the Labor Code. 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. May 9. It may be availed of even pending appeal. Moldez. 27. Reinstatement should be granted although he failed to specifically pray for the same in his complaint. by expressly asking for separation pay. 299 SCRA 1. 2005]. Reinstatement under Articles 279 and 223 of the Labor Code. In the interest of justice. 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. The failure to allege reinstatement as one of the reliefs in the complaint for illegal dismissal is not fatal. Reinstatement when what is prayed for is separation pay. however. R. What is reinstatement? a. NLRC. chanrobles virtual law library ‡ In case of illegal dismissal . 121288. No. however. Nov. Dec. [G. 219 SCRA 549 [1993]). applies in a case where reinstatement was not prayed for in the complaint but the payment of separation pay in lieu thereof. the Labor Arbiter¶s ruling where he granted petitioner separation pay instead of ordering his reinstatement should be corrected. Consequently. the petitioner therein would have been entitled to reinstatement as a consequence of his illegal dismissal from employment. 20. A different rule. according to Manipon vs. R.37. NLRC.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). distinguished.

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

Closure of the business of the employer. Pizza Inn vs. Book VI. G. 255 SCRA 430. Leogardo. Rule I.. Torillo vs. 06. Inc. NLRC. Oct. R. July 27. Ople. Rule I. 30. Fire which gutted the hotel and resulted in its total destruction. Castro. (Callanta vs. Meris. 142759. 5. 10. No. (See also RCPI vs. 210 SCRA 222. NLRC. considering that more than ten (10) years have since elapsed from the date of their dismissal. No. 8. (Bagong Bayan Corporation vs.1996. R. (Section 4[b]. Jan. 1986). 3. (Section 4[b]. [G. Rule I. in lieu of reinstatement and in addition to the three-year back salaries. Jr. No. No. private respondent-employer has to pay. 1994]. However. 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. 73334. G. chanrobles virtual law library Reinstatement when position no longer exists. 1988). chanrobles virtual law library 2. (Electruck Asia. Rules to Implement the Labor Code. separation pay equivalent to at least one (1) month pay for every year of service. 2004). G. R. 1986). Book VI. 4. in which case. unless such position no longer exists at the time of his reinstatement. 70361. Carnation Philippines. R. June 28. G. Reinstatement should no longer be ordered when it is rendered moot and academic by reason of supervening events such as: 1. 28. he should be given a substantially equivalent position in the same establishment without loss of seniority rights. Non-existence of the employee¶s former position at the time of reinstatement for reasons not attributable to the fault of the employer. No. chanrobles virtual law library Reinstatement rendered moot and academic by supervening events. NLRC. Vicente. Book VI. What is the distinction between reinstatement and . R. 70615. R. 74531. R. 197 SCRA 471). Nov. 147031. Rules to Implement the Labor Code. 435). No. 1986). 73352. vs. Philtread Tire & Rubber Corporation vs. (Section 4. G. An illegally dismissed employee is ent itled to be reinstated to his former position. No. as held in Tanduay Distillery Labor Union vs. Dec. G. Dec. in the event that the previous positions of petitioners may no longer be open or available. 2004). chanrobles virtual law library 38. Pedroso vs. Rules to Implement the Labor Code.

R. G. NLRC. 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. does not give rise to strained relations that may justify non-reinstatement. Bondesto.backwages? Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed. 158759. chanrobles virtual law library . R. the filing of the complaint for illegal dismissal does not by itself justify the invocation of this doctrine. 147142. CA. otherwise. G. then. No. March 3. 14. 139847. 1992). G. Buat. 143171.. (Paguio Transport Corporation vs.R. Sept. [292 SCRA 109 (1998)]. 2004). NLRC. R. (Globe-Mackay Cable and Radio Corporation v. 39. Feb. 2005. March 5. In Quijano vs. if the strained relations engendered as a result of litigation are sufficient to rule out reinstatement. a. to his status quo ante dismissal. R. (Sagum vs. 28. 2004). PLDT vs. Strained relations must be demonstrated as a fact. G. reinstatement would thus become the exception rather than the rule in cases of illegal dismissal. 82511. (Paguio Transport Corporation vs. (Cabatulan vs. No strained relations should arise from a va lid and legal act of asserting one¶s right. Strained relations must be raised before the Labor Arbiter. Mercury Drug Corporation. Indeed. Litigation. G. chanrobles virtual law library As a rule. NLRC. b. by itself. 21. Aug. No. the same may not be allowed. 1998). If the issue of strained relations is raised only in the appeal from the Labor Arbiter¶s decision. No. 2005). Tolentino. 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. No. 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. (Procter and Gamble Philippines vs. 119500. G. i.e. R. 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. supra). No. What is the doctrine of ³Strained Relations´? In a plethora of cases. No. May 26.

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

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

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

890. 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. 4. R. Abad. Wyeth Phils. vs. though. 2 002] and was further expounded the 2005 decision in Philippine Commercial International Bank vs. [G. 897. Jr. (Etcuban. chanrobles virtual law library 5. 2005]. however. R. chanrobles virtual law library 41. Inc. when termination is due to disease under Article 284. 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. Lao. 148410. 6. No. surely. G. No. however.. 158045. [G. R. 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. Inc. still . This is not allowed. Sulpicio Lines. [164 SCRA 671]. In PLDT vs. the services of a househelper prior to the expiration of the fixed -term employment under Article 149. [433 Phil. chanrobles virtual law library This equitable principle was emphasized again lately in the 2002 case of San Miguel Corporation vs.3. 2004]. 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. In Gustilo vs. the Court of Appeals. 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. NLRC and Abucay. October 4. when the employer terminates without just cause. In some cases. 17. Jan. 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. No. the grant of separation benefits is hardly justifiable. February 28. 149629. 2005). when the employee has been dismissed for serious misconduct or some other causes reflecting on his moral character or person al integrity.. the Supreme Court awards separation pay to a legally dismissed employee on the grounds of equity and social justice. despite its finding that the dismissal was legal. July 11.. As stated in San Miguel. he does not deserve such generosity if his offense is the misappropriation of the receipts of his sales.

If the answer is in the negative. notwithstanding a valid dismissal. R. 2005). Hence. an employee¶s lack of moral depravity could evoke compassion and thereby compel an award of separation pay. separation pay may ³exceptionally´ be awarded as a ³measure of social justice. NLRC. 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. 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. 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 . 28. reversed said award based on the aforementioned case of PLDT. 460. say loss of trust and confidence. 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. separation pay may be awarded to the employee. Feb. Moreover. however. (See also PCIB vs. 158045.awarded the complainant separation pay of P106. in the light of the plight of respondent who has spent the best years of his useful life with petitioner. separation pay may be awarded to him. Despite this holding. The Supreme Court. 466. in San Miguel. There had been jurisprudence granting separation pay for dismissals based on this ground. chanrobles virtual law library The San Miguel test. In line with the 2002 case of San Miguel [supra]. Under the San Miguel test. if the employee is dismissed due to some grounds other than serious misconduct. G. however. No. A party in a case who did not appeal is not entitled to any affirmative relief.00 allegedly by reason of several mitigating factors mentioned in its assailed Decision. (Camua vs.890. Abad.´ provided that the dismissal does not fall under either of two circumstances: (1) there was serious misconduct. the next query shifts to whether the alleged wrongful act was reflective of the moral character of the employee. chanrobles virtual law library Incidentally. 1997). no affirmative relief can be extended to it. Consequently. Abad. Sept. supra). if the dismissal does not fall under the first qualification (serious misconduct). 12. (PCIB vs. 344 Phil. Simply stated. It ruled that an employee who was legally dismissed from employment is not entitled to an award of separation pay. or (2) the dismissal reflected on the employee¶s moral chara cter.

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

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

however. 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. [G. 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. Bondesto. 2004]. When backwages should not only be for one (1) year. however. and thus he should not be moved to any other position where management would require his services. 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. The Supreme Court was unconvinced. Thus. As held by the Court of Appeals. 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. did not. however. therefore. Undeniably. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. 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. petitioner has now been left behind career-wise. March 5. Petitioner likens his claim to that for backwages in illegal dismissal cases. this contention is based merely on speculation. it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. No. In Procter and Gamble Philippines vs. 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. the Supreme Court. while affirming the illegality of the dismissal of the employee. even if he ranked higher and performed better than they during the past years. as evaluated according to a specified criteria.´ chanrobles virtual law library When backwages should only be for one (1) year. It ruled: ³Petitioner¶s claim. grant full backwages. 139847. What is more. He claims that his contemporaries now occupy higher positions as they had been promoted several time s during the course of this case.average or outstanding performance. R. . Petitioner averred that this would not have taken place had he not been illegally tran sferred. ³In contrast to a grant of backwages or an award of lucrum cessans in the civil law. is based simply on expectancy or his assumption that. he should be entitled to backwages which should be limited to one (1) year. qualify for the said increase later. Furthermore. 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.

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

and including allow ances and other benefits or their monetary equivalent. June 29. his termination being illegal. 1990 to June 26. In the 2002 case of Buhain vs. CA. R. he should be paid separation pay equivalent to one (1) month salary. deductible from backwages. Chrysler Philippines Labor Union. 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 and made effective one month therefrom. Such formula runs counter to the letter and spirit of the Labor Code. Inc. NLRC. [G. such non-reinstatement was not considered a sufficient ground to deny him his backwages. R. R. No. from May 13. respondent Paras should be paid full backwag es from the date of his illegal dismissal up to March 25. May 31. or to at least one-half month pay for every year of service. vs.´ chanrobles virtual law library Period of suspension. No. Thus: ³Considering that notices of retrenchment were mailed on February 25. 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. No. 143709. 1996 to May 21. Pursuant to Article 283 of the Labor Code. In reckoning the backwages. 152308. less backwages for three (3) months corresponding to the period of his suspension for the period March 29. Jan. 2005]. No. 2004]. 148738. Backwages should include period of preventive suspension. In conformity with Article 279. NLRC. 119724. a fraction of at least six months to be considered as one (1) year. In Mitsubishi Motors Philippines Corporation vs. 1999]. No deductions therefrom were allowed for the earnings derived elsewhere by the employee during the period of his illegal dismissal. petitioner should be . chanrobles virtual law library In Acesite Corporation vs. July 2. the Supreme Court directed the payment thereof from the time of his illegal dismissal on March 29. This period covers only a total of eight days. 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. R. [G. inclusive. whichever is higher. In computing the backwages. However. 1990. 2002]. In Metro Transit Organization. 26. 1990 up to the time of his actual reinstatement. [G. [G.supervened. The Hon. the Supreme Court considered th e date of effectivity of the retrenchment as the date when backwages should be reckoned. 1998. the computation of backwages was made subject to deduction for the three (3) days when the employee was under suspension. 1996.

in light of the Voluntary Arbitrator¶s conclusion that reinstatement is no longer possible. (Phi lippine Rabbit Bus Lines. 222 SCRA 707). 306 SCRA 155). No. Inc. 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. In reversing the NLRC. is not enough. Full backwages. in case of refusal of employer to reinstate. G. R. 125671. April 21. G. up to the date of the finality of this judgment. NLRC.given full backwages and all the benefits accruing to him from the first day of his preventive suspension. R. NLRC. peti tioner should have at the very least reinstated him in its payroll right away. Nos. vs. chanrobles virtual law library Employer¶s offer to reinstate does not forestall payment of full backwages. If the petitioner (employer) were sincere in its intention to reinstate the private respondent (dismissed employee). 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. given the circumstances in this case. 2000]. No. Only then could observance of labor laws be promoted and social justice upheld. vs. 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. 1993. 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. 44. 1996. chanrobles virtual law library Therefore. 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. In Condo Suite Club Travel. Mere offer to reinstate a dismissed employee. 1999. 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. 99054-56. (Medina vs. Payment of . after the supposed offer was made. R. May 13. Inc. can no longer be attributed to the fault of the employer. [G. Consolidated Broadcasting System. What are the distinctions between separation pay and backwages? Separation pay and backwages are two (2) different things. 122078. As previously stated. It explained that the failure of the employee to work. May 28. January 28.

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

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

vs. NLRC. 8042. To reiterate. is entitled only to an amount corresponding to her three (3) months salary. the Supreme Court explained when an OFW is entitled to the three (3) months salary mentioned in the aforequoted Section 10 of R. it was ruled therein that the 3-month salary principle should be applied thereto. Employ Services and Resources. R. 2003]. vs. OFW who worked for only 21 days of her 1-year contract. Employ Services and Resources. However. G. (See also Phil. 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. said the High Court. 144786. Paramio.´ 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. [313 SCRA 88 (1999)]. vs. 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. which involves a one-year contract and yet. R. he is entitled to receive his salaries equivalent to the unexpired portion of his contract. a plain reading of the provision of Section 10 of Republic Act No. April 15. Nayona.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. No. G. Inc. 148407. comes into play only when the employment contract concerned has a term of at least one (1) year or more. Paramio. if his contract is for a period of at least one year. 144786. whichever is less. Inc. [G. Ut res magis valeat quam pereat. . Inc. (Phil. R. the OFW having worked for only 21 days of the 1-year period. whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term. No. 2004). April 15.. This is contrary to the wellestablished rule in legal hermeneutics that interpreting a statute. No. Noteworthy is the holding of the Supreme Court in Olarte vs. 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. 2004). i. Consequently. whichever is lower. November 12. chanrobles In the earlier case of Marsaman Manning Agency. This is evident from the words ³for every year of the unexpired term´ which follows the words ³salaries xxx for three months.e. an illegally dismissed overseas Filipino worker whose actual employment was only for twenty one (21) days of her 1-year contract. which is obviously less than her salaries for the unexpired portion of her one-year employment contract. No. or three months¶ salary f or every year of the unexpired term.

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

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. 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. 2001]. The High Court ruled: chanrobles virtual law library ³In order to give substance to the constitutional right of labor to security of tenure. respondent cannot be granted reimbursement of the entire assessed amount of P94. the Supreme Court awarded them backwages and separation pay in lieu of reinstatement. He is only entitled to the reimbursement of the amount of placement fee he actually paid. private respondents are entitled to separation pay. Considering that private respondents herein have only .000. Therefore. 2001]. or from 17 October 1991 to 19 August 1993. R. But more significantly. R. I. ³As to the second remedy granted by Article 279.. No. August 9. April 16. upheld. 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. 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.¶ Prevailing jurisprudence dictates that the employee be given one month pay for every year of service. allowed the refund for the repatriation plane ticket of the OFW. nowhere in the records does it appear that private respondents desire to be reinstated to their former employment. 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. in lieu of reinstatement. No. In the case of ATCI Overseas Corporation vs. We concur for this is the amount which private respondents would have received had they not been unlawfully dismissed.000 he gave as downpayment plus interest at twelve percent (12%) per annum. The case of Sevillana vs. [G. Award of backwages and separation pay to OFWs. chanrobles virtual law library Reimbursement of repatriation expenses such as return airfare. 143949. [International] Corp. any order of reinstatement issued by this Court will be difficult for private respondents to enforce against the Ministry of Public Health of Kuwait. which is the P30.Hence. inclusive of allowances. as an alternative to reinstatement.T. [G. where the two (2) private respondent-OFWs were declared as regular employees. This was by reason of the illegality of his dismissal. 99047. CA.

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

117593. 04. in circumvention of statutes. attorney¶s fees and other monetary awards in an illegal dismissal case devolves upon the employer-corporation. Inc. [G. [G. backwages. Thus. (Reahs vs. 2005]. No. 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. NLRC. Even assuming that the respondent company officials are also officers and incorporators of the satellite companies. 26. To justify solidary liability. R. That the superiors just happened to be foreigners is of no moment. such circumstance does not in itself amount to fraud. R. Oct.´ chanrobles virtual law library In Acesite Corporation vs. In such a case. 88795. 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. NLRC. NLRC. NLRC. G. it was held in Malayang Samahan ng mga Manggagawa sa M. No. 1998). 117473. G. Ramos. 1994). and to confuse legitimate issues. (Citing Del Rosario vs. April 20. Substantial identity of incorporators between respondent company and these satellite companies does not necessarily imply fraud. G. No.´ 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. R. . 1989 and that these corporations have different sets of incorporators aside from the respondent officers and are holding their principal offices at different locations. (Seaborne Carriers Corporation vs. 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. R. NLRC. No. R. 187 SCRA 777). 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. April 15.illegal dismissal of employees or for other wrongful acts. (Brent Hospital. vs. responsibility for the payment of separation pay in lieu of reinstatement. 152308. 1997). July 10. respondent company¶s corporate personality remains inviolable. Jan. Greenfield [MSMG-UWP] vs. moral and exemplary damages. chanrobles virtual law library Hence. No. 113907.

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

No. vs. 116123. either jointly or severally with the corporation. is different if it was the President who was dismissed and who filed the claim for unpaid wages. 257 SCRA 578 [1996]). the corporate officer cannot be held liable for the said monetary awards. 2004]. assistant vice-president and general manager. [G. R. . the president of the company who actively manages the business. March 13. chanrobles virtual law library f. 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. (Inciong. 156893. 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. 269 SCRA 564]. NLRC. of course. citing Naguiat vs. for failure of the parties to appeal therefrom. Corporate officers cannot be held liable absent any finding in the decision to that effect.as in this case . Timbal. had already become final and executory. 2005]. vs. when the law so provides or when the nature of the obligation so requires. chanrobles virtual law library The rule. NLRC.162472. R. Inc. Decision must state in its fallo that the obligation is solidary. falls within the meaning of an ³employer´ as contemplated by the Labor Code. Tan vs.that the dismissal was attended with malice or bad faith. July 28.. No. Jr. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. CA. 141926. [G.. There is a solidary liability on ly when the obligation expressly so states. chanrobles virtual law library In the dispositive portion of the Labor Arbiter¶s decision in the 2000 case of Industrial Management International Development Corp. July 14. [G. and plant security officer were impleaded in the case does not make them solidarily liable absent any showing . 1997. declares that the mere fact that the president and chief exec utive officer. It appears that the only reason they were impleaded was the fact that they were officers and/or agents of petitioner company. More so in a case where the decision of the Labor Arbiter. vs. Jr. chanrobles virtual law library g. R. 2005]. chanrobles virtual law library Coca-Cola Bottlers Phils. for the monetary award in favor of the employee. No. Daniel. 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. none of them may be compelled to satisfy in full said judgment. June 21. In this situation. [G.

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

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

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

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

vs. Dec. in Integrated Contractor and Plumbing Works. 27. 2005]. morals. R. Sept. NLRC. private respondent had been a project employee several times over. (Phesco. NLRC. (Tomas Lao Construction. 5. 104444-49. When length of service of project employee indicates regularity of employment. No. 1994). Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee. the employees are removed from the scope of project employees and they shall be considered regular employees. Inc. R. distinguished. in contrast. chanrobles virtual law library Termination of employment of project and regular employees. NLRC. March 18. Nos. Puente. 1997). 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. R. No. For while length of time may not be a controlling test for project employment. Repeated extensions of the employment contracts long after the completion of the project for which they were allegedly hired will make them regular employees. is extended long after the supposed project had been finished. 2005] where the employee involved was employed with the company for ten (10) years in various projects. 116781. 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. Inc. Regular employees. G. G. Consequently. 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. vs. Inc. [G. 153832. 152427.The same holding was made in Filipinas Pre -Fabricated Building Systems [Filsystems]. Where the employment of project employees. No. they should be struck down as contrary to public policy. vs. R. August 9. are legally entitled to remain in the service of their employer until that service is terminated by one or . [G. 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. good customs or public order. however. 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. vs. Thus.

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

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

After all . (Hacienda Fatima vs. No. A contract cannot be novated by the will of only one party. [G. No. January 28. his employment contract became ineffective. NLRC. No. What is regular seasonal employment? Is it valid? Yes. supra. Hiring of seaman for overseas employment but assigning him to local vessel. Esso Eastern Marine. 138193. Ltd. the decision to use the vessel for coastwise shipping was made by petitioner only and did not bear the written conformity of private respondent. the contract had an object. but not of the second. supra). it is not enough that they perform work or services that are seasonal in nature. effect. becaus e its object was allegedly absent. [G. condition. Millares vs. 2003]. Contrary to petitioner¶s contention. the petitioner does not deny hiring private respondent Guerrero as master mariner. vs. NLRC. but are merely considered on leave until re-employed.The contracts of OFWs cease upon expiration thereof. 54.Food and General Trade. National Federation of Sugarcane Workers -Food and General Trade (G. the workers . OFWs¶ employment automatically cease upon the expiration of their contracts. The Supreme Court was not persuaded by this argument. The validity of regular seasonal employment has been affirmed by the Supreme Court in a plethora of cases. 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. R. 2003]. Petitioner contends that using the vessel in coastwise trade and subsequently chartering it to another principal had the effect of novating the employment contract. it argues that since he was not deployed overseas. For respondent-workers to be excluded from those classified as regular employees. National Federation of Sugarcane Workers . 2003) The 2003 case of Hacienda Fatima vs. January 28. Inc. 149440. The non -deployment of the ship overseas did not affect the validity of the perfected employment contract. Petitioner cannot use its own misfeasance to defeat his claim. However. then. 149440. (Ravago vs. which was the rendition of service by private respondent on board the vessel. reiterated this rule. R. If the evidence proves the existence of the first.. Not being considered regular or permanent employees under Article 280. They must have also been employed only for the duration of one season. March 5. R. 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. chanrobles virtual law library In OSM Shipping Philippines.

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

R. Fixed-term employment. 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. ad infinitum. any worker hired by it for fixed terms of months or years can never attain regular employment status. they were employed on a mere temporary basis. General Milling Corporation. 1985.´ Consequently. it may hire and retire workers on fixed terms. On the same day of their termination. 2004). There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee¶s duties. 149329. R. packers and helpers at the Cainta Processing Plant of General Milling Corporation (GMC). domestic and international. However. No. No. General Milling Corporation.April 14. 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 . 2004]. there was no illegal dismissal when the petitioners¶ services were terminated by reason of the expiration of their contracts. 127673. July 12. G. On June 15. 149329. the parties are forbidden from agreeing on a period of time for the performance of such activities. The respondent GMC is a domestic corporation engaged in the production and sale of livestock and poultry. effect if duties are usually necessary or desirable in the employer¶s usual business. Philippine Veterans Bank. [G. the petitioners were hired as ³emergency workers´ and assigned as chicken dressers. the petitioners were employees of the Philippine Veterans Bank (PVB). depending upon the needs of its customers. No. As such. but are merely ³contractual employees. While the petitioners¶ employment as chicken dressers is necess ary and desirable in the usual business of the respondent. 2000]. July 12. R. petitioners were re-hired through PVB¶s Bank Liquidator. 2004]. (Pangilinan vs. [G. 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. and is a distributor of dressed chicken. chanrobles virtual law library In the 2004 case of Pangilinan vs. chanrobles virtual law library In the 2000 case of Medenilla vs. 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. since their employment was limited to a fixed period. 612 dated June 7. hence. they cannot be said to be regular employees. 1985. March 13. Under the petitioner¶s submission.

April 4. 1994]. Furthermore. In a fixed-period employment. No. 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. Fifteen days into his one-month employment. NLRC. Blancaflor vs.´ The Supreme Court interpreted this stipulation as a valid form of fixed-term employment. A contract for employment for a definite period terminates by its own term at the end of such period. No. he figured in a vehicular mishap. a bus driver was. Inc. dismissed by the bus company for cause. December 16. After October 31. 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. 105033. Later. however. 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. R. Fifteen (15) years later. vs. After investigation. 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. claiming that he was constructively dismissed because of the refusal of the latter to renew his contract. NLRC. (Pangilinan vs. he reappeared and out of generosity. he filed against the company a comp laint for illegal dismissal. General Milling Corporation. supra. 218 SCRA 366 [1993]). [G. In the case of Philippine Village Hotel vs. 1990. 1990. PNOC and Philippine Village Hotel [supra]. long time ago. In the 2004 case of Viernes vs. R. No. NLRC. chanrobles virtual law library In the case of Pantranco North Express. 108405. [G. ³An Act to Rehabilitate Philippine Veterans Bank´. 106654. [G. it terminates on the expiration of such period. NLRC. chanrobles virtual law library Employees allowed to work beyond fixed term become regular employees. The Supreme Court ruled against the complainant. R. 2003]. they were allowed to continue working in the . which was promulgated on January 2. lack of notice of termination is of no consequence because when the contract specifies the period of its duration.of services. Notice to terminate not necessary in fixed-term employment. 1994]. the petitioner-employees were initially employed on a fixed -term basis as their employment contracts were only for October 8 to 31. was re-hired on a fixed-term contractual basis of one (1) month. he was dismissed and his contract was no longer renewed. February 28. 1992.

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

It was a clear circumvention of the employee¶s right to security of tenure and to other benefits like minimum wage. respondent workers asked petitioner company to extend to them regular appointments. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company.. Petitioner company refused. De Leon vs. Inc. 1992.´ 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. on e year after he was employed. No. R. engaged the services of respondent workers as ³sales route helpers´ for a limited period of five months. by operation of law.. respondent workers were employed by petitioner co mpany on a day-to-day basis. 71664. NLRC. the workers would then be paid their wages at the end of the day. No. No. After five months. vs. 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. 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. (Baguio Country Club Corporation vs. [G. May 9. cost-of-living allowance. Feb. 283 SCRA 133]. is a contract which has the purpose of circumventing the employee¶s security of tenure. he became a regular employee.O. 2003]. Dec. 148492. Inc. Coca-Cola Bottlers Phils. R. 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. In Pure Foods Corporation vs. NLRC. and 13th month pay.W. Ultimately.M. R.as provided for in Article 279 of the Labor Code. Aug. holiday pay. the Supreme Court reasoned that the repeated rehiring of respondent workers and the . chanrobles virtual law library Hiring of employees on a 5-month period basis. National Organization of Working Men (N. 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. No.). R. If thus hired. 12. NLRC G. 28. 70705. 122653. In declaring that the workers have become regular employees. 1997. Employment on a ³day-to-day basis for a temporary period.. 1989). 21. According to petitioner company. G. In the 2003 case of Magsalin & Coca-Cola Bottlers Phils. sick leave. [G.

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

the doctrinal ruling in the leading case of Agabon vs. 2004]. (b) Gross and habitual neglect by the employee of his duties. R. shall apply. NLRC. in the case at bar. vs.R. 65. April 13. November 17.000. the employer is liable for nominal damages in the amount of P30. To reiterate. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. it was held that if a probationary employee was dismissed for just cause but without affording him the required notice. Jr. 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. Agabon doctrine applies if dismissal of probationary employee is without due process. 2005]. In the 2005 case of Aberdeen Court. on the other hand. Inc. 149371. No. While the employer observes the fitness. G. the probationer. petitioners peremptorily dismissed them fro m the service. propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment. 158693. (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.. No. TERMINATION OF EMPLOYMENT BY THE EMPLOYER JUST CAUSES FOR TERMINATION OF EMPLOYMENT 64. Agustin.fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. Consequently. [G. and (e) Other causes analogous to the foregoing. What is serious misconduct? . 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. far from allowing the respondents to prove that they possessed the qualifications to meet the reasonable standards for their permanent employment.

.For misconduct or improper behavior to be a just cause for dismissal: (a) it must be serious. R. chanrobles virtual law library Series of irregularities. 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. 149629. Throwing a stapler and uttering invectives against a plant manager. CA. No. 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. In the 2005 case of Fujitsu Computer Products Corporation of the Philippines vs. 158232. R. 31. 2004).. Wyeth Phils. A series of irregularities. 2005]. No. a series of irregularities when put together may constitute serious misconduct. when considered together or in their entirety. An employee¶s fitness for continued employment cannot be compartmentalized or taken in isolation from one act to another. Indeed. No. G. in order to consider it a serious misconduct that would justify dismissal under the law. 4. 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. However.. Inc. may constitute serious misconduct. Aug.. Inc. Lanao del Norte Electric Cooperative. [G. Oct. a valid ground to termi nate employment. 73735. 1987. in order to consider it a serious misconduct that would justify dismissal under the law. when put together. To reiterate. 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. April 8. G.Requisites. Applying the foregoing standards. (Piedad vs. 153 SCRA 500). the Supreme Court ruled that his dismissal from the service is in order. may constitute serious misconduct. (Gustilo vs. it must have been done in relation to the performance of her duties as would show her to be unfit to continue . (b) it must relate to the performance of the employee¶s duties. R. and (c) it must show that the employee has become unfit to continue working for the employer. 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.

[G. No. Said the Supreme Court: ³It is of public knowledge that drugs can damage the mental faculties of the user. R. Inc. under the circumstances they were done. 152329. Hence. It cannot be used as a shield against dismissal fro m employment especially when the position involves the safety of human lives. 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. R. 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 . Roquero was tasked with the repair and maintenance of PAL¶s airplanes. In the 2003 case of Roquero vs. G. Hence. the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse. He cannot discharge that duty if he is a drug user. Philippine Air Lines. even if he was instigated to take drugs he has no right to be reinstated to his position. For instance. 124617. The exception is when such immoral conduct is prejudicial or detrimental to the interest of the employer. He took the drugs fully knowing that he was on duty and more so that it is prohibited by company rules. April 28. she cannot be held in violation therefor. Instigation is only a defense against criminal liability. valid ground to terminate employment. immorality is not a just ground to terminate employment. The acts complained of. April 22. (Philippine Aeolus Automotive United Corporation vs. in a case involving a teacher. 2000). 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.working for her employer. 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. Use of shabu. NLRC. did not in any way pertain to her duties as a nurse. Also.´ Immorality. His failure to do his job can mean great loss of lives and properties. 2003]. No. As a general rule.. Her employment identification card discloses the nature of her employment as a nurse and no other.

Ang Tibay. But. 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. 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. vs. justifying his termination from employment. R.and to elevate. Damasco. is not an immoral act which would justify the termination of her employment. No. 4515). definitely. chanrobles virtual law library Immoral act committed beyond office hours. The act of a lady teacher in falling in love with a student. while the other guard pretended to be asleep during all the time that the lustful act was commenced until consummated. the dismissal of the supervisor who maintained a concubine and practically drove his family away because of his illicit relationship was held legal. July 14. R. L-74187. NLRC. 54 O. Therefore. 287 SCRA 117). when a teacher engages in extra-marital relationship. Thus. the gravity and seriousness of the charges against the teacher stem from his being a married man and at the same time a teacher. As supervisor. of falling in love with her student whose age is 16. 1995). 115795. 101875. 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. Inc. yielding to this gentle and universal emotion is not to be so casually equated with . In another case. not immoral. March 6. especially when the parties are both married. G. NLRC. 1998. he failed to set a good example to the several personnel under him. (Stanford Microsystems. (Santos. The act of a 30-year old lady teacher. Jr. this only lends substance to the truism that the heart has reasons of its own which reason does not know. 28. such behavior amounts to immorality. G. (Sanchez vs. R. vs. 1988). If the two eventually fell in love despite the disparity of t heir ages and academic levels. G. Sexual intercourse inside company premises constitutes serious misconduct. the same including sexual misconduct. No. (Navarro III vs. No. Jan. G. 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. The school utterly failed to show that petitioner took advantage of her position to court her student.

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

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

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

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

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

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

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

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

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

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

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

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

Their belated gesture of goodwill is highly 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. The wrong had been committed and the wrong done. NLRC. He found refuge in the above case of Ranara.´ In the 2001 case of Suan vs. NLRC. however. 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. [G. In such instance. did not find any analogy between the two cases as the factual backdrop of Ranara [supra] is not the same as Suan. petitioner Jose Suan in the latter case who suffered a stroke. sincere or not. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. [212 SCRA 631]. it was only after the complaint had been filed that it occurred to Chang.back. where the employer offered to reemploy the illegally dismissed employee. At any rate. to detect every small shortcoming of his as a ground for vindictive disciplinary action. In Ranara vs. 2001].´ Curiously. 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. No. June 19. As observed by the Court of Appeals. was not dismissed but was only asked to go on exten ded leave . In any case. their intentions in making the offer are immaterial. in a belated gesture of good will. 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. reinstatement would no longer be beneficial to him. We doubt if his offer would have been made if Ranara had not complained against him. R. petitioners¶ offer of reinstatement was made only after more than one (1) month from the date of the filing of the illegal dismissal case. chanrobles virtual law library Neither does the fact that petitioners made offers to reinstate respondent legally disproves illegal dismissal. for the offer to reemploy respondent could not have the effect of validating an otherwise arbitrary dismissal. he will find it uncomfortable to continue working under the hostile eyes of the petitioners who had been forced to reinstate him. to invite Ranara back to work in his store. they could have made the offer much sooner. He had every reason to fear that if he accepted petitioners¶ offer. Notably. their watchful eyes would thereafter be focused on him. 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). In contrast. 141441. If petitioners were indeed sincere in inviting respondent back to work in the company. The Supreme Court. to which the Supreme Court was in full agreement. He must have surely realized that even if reinstated. Chang¶s sincerity is suspect.

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

March 14. July 27. As teller and cashier. NLRC. they are expected to possess a high degree of fidelity. Deputy Minister of Labor and Employment. R. nor incur any shortage relative to the funds in their possession. 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. January 22. Inc. 151981. immaterial. In Diamond Motors Corporation vs. The betrayal of this trust is the essence of the offence for which an employee is penalized. ruled that it is not material that the teller and cashier did not ³misappropriate any amount of money. 1998). 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. (See also San Miguel Corporation vs. San Miguel Corporation. Restitution does not have absolutory effect. 126805. Where there was a series of unauthorized encashments of personal checks. Inc. the Supreme Court in Central Pangasinan Electric Cooperative. 1. They are entrusted with a considerable amount of . R. R. R. Dec. [G. NLRC. No. No. 2003]. vs. No. even if the shortages have been fully restituted. 129413.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. 203-204 [1986]). 2001]. Hence. March 26. [G. No.. In Gonzales vs. 149416. 145 SCRA 196. No. NLRC and Pepsi-Cola Products. March 16. (Villanueva vs. vs. Inc. [G. 145800. CA. Phils. [G. 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. 2003]. Lack of misappropriation or shortage. 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. Macaraeg. 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. 2003] and in the earlier case of Philippine Airlines. 2000] involving the commission of fraud against the company.´ The basic premise for dismis sal on the ground of loss of confidence is that the employees concerned hold positions of trust. The respondents here held positions of utmost trust and confidence. R. 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. G. The Supreme Court has reiterated this rule in Santos vs.. 131653. [G.

R. 72. 2005]. to justify earlier action taken in bad faith. 22. No. 2002). Inc. 3. the position of project controller . 160404. 145405. Gulde. PLDT. It should not be used as a subterfuge for causes which are illegal.the position of respondent at the time of his dismissal . G. R. 2005). However. June 8. It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. the Supreme Court held that. in the 2005 case of Philippine National Construction Corporation vs. 149930. not a mere afterthought. For instance. 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. No. The employee involved holds a position of trust and confidence.cash.required trust and confidence. improper or unjustified. for it related to the handling of business expenditures or finances. May 6. the following guidelines must be followed: 1. undeniably. (Tolentino vs. In order to constitute a just cause for dismissal. and 5. It must be genuine. No. 2. What are the requisites for the ground of willful breach of trust? In the 2004 case of Charles Joseph U. 2004]. Respondent de Vera accepted payments from petitioner¶s consumers while respondent Macaraeg received remittances for deposit at petitioner¶s bank. In fact. Breach must be work-related. G. Ramos vs. They did not live up to their duties and obligations. the questioned act pertained to an unlawful scheme deliberately engaged in by petitioner in order to evade a constitutional and legal . 156283. in order to validly dismiss an employee on the ground of loss of trust and confidence under Article 282. The loss of confidence must not be simulated. R. Feb. 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. [G. June 29. (Sulpicio Lines. vs. [G. No. Matias. 4. R.

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

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

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

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

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

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

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

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

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. CA.For redundancy to be a valid ground to terminate employment. Pepsi-Cola Products Phils. ruled that it is not too keen on attaching such a sinister significance to these allusions. No. and (c) seniority]. good faith in abolishing the redundant positions. In Dole Philippines. Elimination of undesirables. whichever is higher. the private respondent-employees point to references in petitioner¶s studies of the redundancy program to the elimination of ³undesirables. [G. 2001]. and 4. R.. however. vs. 13. (b) efficiency. Characterization of service as redundant by employer. 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.. The Supreme Court. the characterization of the services of the employee who was terminated for redundancy is an exercise of business judgment of the employer. It is not enough. temporary employee]. In the 2001 case of Santos vs. Inc. 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. [G. the following requisites must be present: 1. abusers and worst performers through redundancy. fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished [such as less preferred status [e. for a company to merely declare that it has become overmanned. not an indication of bad faith. 3. Sept. R. As a general rule. therefore. g.´ ³abusers´ and ³worst performers´ as another indicia of petitioner¶s bad faith. 2. exception. Inc. .. not subject to review. 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. NLRC. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. 120009. 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.

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

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

[213 SCRA 652 (1992)].In Serrano vs. vs. In Asian Alcohol Corporation vs. [G. NLRC. Petitioner further asserts that the number of casuals remained relatively constant after the implementation of the redundancy program. 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. [G. 1999]. however. held valid. that it has always hired casuals to augment the company¶s manpower requirements in accordance with the demands o f the industry. NLRC. In De Ocampo vs. Indeed. [G. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. supra). 117040. NLRC. NLRC. No. 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. No. 131108. as shown by the graph appended as Annex ³J´ of its supplement to the motion for reconsideration before the NLRC. (Serrano vs. eventually deference is to be made to what management decides. While there should be mutual consultation. R. 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. chanrobles virtual law library Duplication of work. January 27. 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. Petitioner explains. Inc. R. 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. . the Supreme Court will not interfere with the exercise of judgment by an employer. March 25. 120009. 2000]. absent proof that management acted in a malicious or arbitrary manner. R. NLRC. Consequently. 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. Private respondent-employees in Dole Philippines. September 13. No. Petitioner company does not deny that they hired casual employees after the implementation of the redundancy program. Hiring of casuals after redundancy.

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

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

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

after all. (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. the losses expected should be substantial and not merely de minimis in extent.e. 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. Secondly. 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. such as status (i. actual and real or. are reasonably imminent as perceived objectively and in good faith by the employer. age. are not merely de minimis but substantial. Standards to be observed in retrenchment. whichever is higher. 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. efficiency. serious. if already incurred. There should. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. a drastic recourse with serious consequences f or the livelihood of the employees retrenched or otherwise laid off. as such imminence can be perceived objectively and in good faith by the employer.78. physical fitness. (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 substantial loss apprehended must be reasonably imminent. and financial hardship for certain workers. casual. seniority. if only expected. What are the requisites for the ground of retrenchment? Under Article 283. whether they are temporary. the bona-fide nature of the retrenchment would appear to be seriously in question. be a certain degree of urgency for the retrenchment which is. in other words. (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.. regular or managerial employees). .

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

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

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

No.609. even on appeal.´ 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.316. 148372. respectively. petitioners seek to justify the retrenchment on the ground of serious business losses brought about by the Asian economic crisis.339. Philippine Postal Savings Ban k. R. inter alia. Said Financial Statements. it was declared that pursuant to the policy that technical rules of procedure are not strictly applied in labor cases. however. delay in the submission of evidence should be clearly explained and should adequately prove the employer¶s allegation of the cause for termination.. 155278. together with the other member-companies of the EYCO Group of Companies.08. .072. Marine Corporation vs. be allowed to present. 2005). They wer e not audited by an independent external auditor. [G. No. September 16.96. However. 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 . among other things. June 27. 8799) presupposes a finding that. Inc. wastage or destruction of assets of other properties or paralyzation of business operations. 2003].79 and P155. NLRC. effect. [G. was suffering business reverses justifying. In contrast. respectively. chanrobles virtual law library Audited financial statements belatedly filed in the CA. The financial statements show that in 1994 and 1995. No. 152039. R. In the 2003 case of Tanjuan vs.005. (See also Clarion Printing House. the retrenchment of its employees. were prepared only by petitioners¶ accountant and approved by the manager.´ shows that Clarion. petitioner corporation earned an income of only P77. loss.Regulation Code. No. 2005]. F. April 8. R.89. petitioners adduced before the Labor Arbiter the 1994 and 1995 Financial Statements.918. However. and P21. A. on cogent grounds. In the 2005 case of F. employers may. the 1996 and 1997 Financial Statements showed loss es of P18. G. Evidence of losses in a retrenchment case may be presented for the first time on appeal with the NLRC. to arise that would impair and affect [its] operations . The Honorable Second Division NLRC. To prove their claim. vs. . . . R. delay in the submission of evidence should be clearly explained and should adequately prove the employer¶s allegation of the cause for termination. evidence of bus iness losses to justify the retrenchment of workers. and thus resulting to ³complications and problems . 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.

NLRC. They were not presented before the Labor Arbiter and the NLRC although they were executed on 30 March 1998. In Taggat Industries. R. Even this. 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. 1999]. Marine [supra]. F. 1987. 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. 155278. NLRC. more than four (4) years since the company declared losses in 1987. several months prior to the filing of the complaint for illegal dismissal on 12 January 1999. Distinguishing the Cañete from the F. 1991. 2003 (supra)]. [G. The same cannot be said of the private respondent in this case. That was why this Court in Cañete ratiocinated that the petitioner therein had the opportunity to rebut the truth of the additional documents. September 16. if there was any truth that the company . F. Indeed. No. [320 Phil. R. the same is belied by the fact that the private respondent-employees remained employed by petitioner c ompany until October 15.. In Cañete vs. 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. 120971. the Supreme Court did not allow the presentation of evidence of losses for the first time before the Court of Appeals. [G. But in F. 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.were introduced.´ Retrenchment effected long after business losses. however. the Supreme Court ruled in the latter case: chanrobles virtual law library ³Petitioners cite Cañete vs. Philippine Postal Savings Bank. Marine cases. while sufficient evidence of the company¶s business losses was submitted by the petitioner company. 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. unlike in this case where the new financial statements were submitted for the first time before the Court of Appeals. per its financial statements for the period 1986 to December 31. No. March 10. NLRC. the Supreme Court allowed the presentation of documentary evidence for the first time on appeal with the NLRC. The holding is clearly not apropos since the documents were presented to the NLRC. [320 Phil. Inc. vs.´ Evidence of losses may be allowed to be presented for the first time on appeal with NLRC but not with CA. Inc. 313 (1995)] as in Tanjuan vs.

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

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

The Supreme Court considered this contention without merit. chanrobles virtual law library Burden of proof in case closure is due to losses.] Inc. No. 122876. The condition of business losses is normally shown by financial documents duly audited by independent auditors. April 15. 194 SCRA 592. Cheniver Deco Print Technics Corporation vs. it held that since the closure was due to s erious losses duly proven by clear evidence. 2005]. the employees affected were not entitled to separation pay.´ (Citing Coca -Cola Bottlers [Phils. Batangas is neither a closure nor retrenchment. It ruled that even though the transfer was due to a reason beyond its control. 26. R. No. General Services vs. According to the 2005 case of Danzas Intercontinental. 599 [1991]). R. although the more overriding consideration . (J. It is well settled that the burden of proving that the closure is bona -fide falls upon the employer. Daguman. [G. R.T. Daguman. G. 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. (Danzas Intercontinental. NLRC. Inc. petitioner has to accord its employees some relief in the form of severance pay. G. R. No. Relocation of business amounts to cessation of operations. No. there appears no complete dissolution of petitioner¶s business undertaking but the relocation of petitioner¶s plant to Batangas. 154368. NLRC. petitioner contends that the transfer of its business from its site in Makati to Sto.outlets or branches. 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. separation pay should not be awarded to the private respondents. vs. Inc. not necessarily the entire business operations. 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. February 17. hence. amounts to cessation of petitioner¶s business operations in Makati. Tomas. 148340. 2004). Jan. April 15. 2000]. Moreover. Audited financial statements necessary in closure due to losses. in our view. vs.A. In a 2000 case. thus: chanrobles virtual law library ³Broadly speaking. 154368. NLRC. 2005). [G.

The blame.are questions of fact that must be proven below. who are in the position to evaluate evidence. R. if the business losses that justify the closure of the establishment are duly proved. occurred through no . 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. 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. Me-Shurn Workers Union FSM. even on appeal with the NLRC. 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. A. when it was placed under CARP. No. 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. NLRC. the right of affected employees to separation pay is lost for obvious reasons. Matters regarding the financial condition of a company . 156292. R. Otherwise. Parenthetically. under justifiable circumstances. The Supreme Court thus said in National Federation of Labor vs. [G. January 11. PEARA. In the 2005 case of Me-Shurn Corporation vs. The resulting closure of the business establishment. 127718. the High Tribunal held that as the employer-petitioners have the burden of proving the existence of an authorized cause. March 2. for the termination of petitioners¶ employment can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a cooperative. they should have presented the company¶s audited financial statements before the Labor Arbiter or. The termination of their employment was not caused by the private respondents.those that justify the closing of its business and show the losses in its operations . 6657.is. 2005] and Danzas Intercontinental [supra]. private respondents¶ landed estate pursuant to R. 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. the petitioners are not entitled to separation pay. good faith. [G. Closure due to CARP. if any. Patalon Coconut Estate. No. 6657. ultimately to take over . as agrarian lot beneficiaries. of course. the employer closing his business is obligated to pay his employees their separation pay.

xxx. 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. Rather. the Supreme Court said: ³Anent the legality of the Labor Arbiter¶s award of separation pay in favor of petitioners. R. the Supreme Court had occasion to re-affirm the ruling in the above 2000 case of National Federation of Labor [supra].fault of the private respondents. Thus.T. If the landowners ceased their operation. it was something forced upon them by an act o f law or the State. Sarphil Corporation. [G. it was not because they wanted to. [G. by an act of the Law or State to benefit petitioners by making them agrarian lot beneficiaries. 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. We quote with approval the following disquisitions of public respondent which We have found to be substantiated by the evidence.¶ (Emphasis supplied) ³The ruling in the parallel case of National Federation of Labor vs. NLRC. 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. The resulting severance of employment relationship between the parties came about INVOLUNTARILY. in the case of Manaban vs. primarily because dismissal presupposes a unilateral act by the employer in terminating the employment of its workers. Quoting the Court of Appeals¶ decision affirming the ruling of the NLRC. R. distinguished. as in this case. No. April 11. not one forced upon it.A. 150915. No. 148340.´ chanrobles virtual law library In 2005. 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. There. The 2004 case of J.´ chanrobles virtual law library Retrenchment and closure of business. The closure of business operations contemplated under Article 283 refers to a voluntary act or decision on the part of the employer. . 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. is apropos. NLRC. 2005]. General Services vs.

2. It is sometimes also referred to as d own-sizing. [G. Termination of an employment may be predicated on one without need of resorting to the other. on one hand.January 26. G. Jan. This requirement is mandatory. 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. 1997). The Supreme Court. 1997. In this case. NLRC. while the Court of Appeals defined the issue to be the validity of dismissal due to alleged closure of business. they are actually two separate and independent authorized causes for termination of employment. 266 SCRA 24. Inc. Notices required under Article 283. 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. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. the ground cited by petitioner in terminating its employees working in its Food and Beverage Department (F & B Department) was retrenchment. 32. 2004] discusses in clear terms the distinction between retrenchment and closure of business. Article 283 requires that separate 30-day prior notices should be sent to the affected employees and to the Department of Labor and Employment. chanrobles virtual law library Closure of business. 116593. however. No. August 9. R. 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. The reason is that when petitioner decided to cease operating its F & B Department and open the same to a concessionaire. While an employer may have a valid ground for implementing a retrenchment program. vs. On the other hand. In this case. No. R. mandatory. 2005]. 157611. While the two are often used interchangeably and are interrelated. Inc. 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. found closure as the most appropriate ground. 80. It terminated the employment of all personnel assigned at the department. usually due to financial losses. NLRC. 24. (Fuentes vs. NLRC. Pulp and Paper. Sept. it is not excused from complying with the required written notice served both to the employee concer ned and the DOLE at . it cited jurisprudence relating to retrenchment to support its resolution and conclusion. chanrobles virtual law library The foregoing distinction was reiterated in the 2005 case of Alabang Country Club. it did not reduce the number of personnel assigned thereat. vs.

the employer should be held liable in the amount of P20. Notice to the employee. (Explanatory Note. 147002. rationale. NLRC. it should not invalidate the dismissal. In addition. Abelgas. In Agabon. G. [G. February 11. 2004]. [G. However. . NLRC. 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. 1. (PT & T vs. April 15. April 15. TPI Philippine Cement Corporation. R. No. G. 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. Cabinet Bill No. The notice requirement is a substitute for the prior -clearance requirement in case of termination of employment. the Supreme Court ruled that dismissal for authorized cause but without complying with the notice requirement does not make the dismissal illegal or ineffectual. 2005). (PT & T vs. 2005]. (Emco Plywood Corporation vs. 45 which was later enacted into law as Batas Pambansa Bilang 130). NLRC. No. 149090. while this infirmity cannot be cured. Rationale for the notice requirement. R. Consequently. 2. this notice requirement gives employees some time to prepare for the eventual loss of their jobs and their corresponding income. 158693 November 17. 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. defective or illegal. No.least one month prior to the intended date of retrenchment. No. R.00 as nominal damages for non-compliance with the procedural requirements of due process. 2005 Absence of notice does not render the dismissal ineffectual. R. R. No.000. 2004). In the 2005 case of Cajucom VII vs. effect per Agabon case. 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. Failure to observe 30-day prior notice rule. 147002. April 14. vs. Notice to DOLE. rationale. 148532. G.

(Ibid. Inc. R. NLRC. Inc. Abelgas. NLRC. No. Philippine Telegraph & Telephone Corporation vs.00. [176 SCRA 256 (1989)]. A notice sent to the foremen. NLRC. September 13. 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. R. entitling the dismissed employee to payment of indemnity in the form of nominal damages. chanrobles virtual law library In a subsequent 2001 case. the section heads. 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. In International Hardware. (Emco Plywood Corporation vs. No. [G. not on their supervisors. however. redundancy. [G. Petitioner accurately invoked the case of International Hardware . the lack of notice to the DOLE. Notice should be served to employees themselves. 147002. 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. renders the same defective. 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. chanrobles virtual law library Notice to DOLE should state correct number of workers to be terminated. vs. it. the amount of indemnity is pegged at P30. 2001]. Such notice is defective if it stated that the company would terminate the services of 104 of its workers but had actually dismissed 250. vs. does not render the voluntary redundancy program void.. 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.). 120009.In another 2005 case. according to the Supreme Court in Dole Philippines. April 15. The written notice should be served on the employees themselves. Based on prevailing jurisprudence. Notice to DOLE need not be complied with in case of voluntary personnel reduction program.000. closure or cessation of operation or to prevent financial losses to the business of the employer. supra). 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. 2005].

NLRC. Such advance payment cannot be treated as a replacement or substitute for the notices required under the law. Having established private respondent¶s good faith in undertaking the assailed redundancy program. R. CA. 117040.. 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. [G. Inc. there is no need to rule on this contention. However. July 5. May the employer validly pay in advance. 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. in its Resolution on the Motion for Reconsideration. No. 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. unimpeded time to look for a new job during the one (1) month period he is no longer required to work by his employer. chanrobles virtual law library In another 2001 case. they would not have agreed to their termination.[supra]. not a substitute for written notice requirement. [G. The employer paying the advance salaries should still comply with said notice requirement one month prior to the intended effectivity of the termination. Advance payment of one month salary. 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. upon the service of notice to the employee and to the DOLE. Here. the advance payment of the salary for one month does not dispense with the requirement of the 1-month prior notice. 141947. No. 2001]. In other words. had the occasion to reiterate the rule that . Petitioners assail the voluntariness of their consent by stating that had they known of PEPSI¶s bad faith. nor would they have signed the corresponding releases and quitclaims. Santos vs. was cited. 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. where the Supreme Court. May 4. Pepsi-Cola Products Phils. The case in point is the 2000 en banc case of Serrano vs. 2000].. R.

Indeed.´ chanrobles virtual law library The petitioners¶ adherence to the above pronouncement of the Court is . we must not distinguish). in this manner: ³Article 283 speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. as by then the loss of employment would have been a fait accompli. as in this case. It cannot be a fully effective substitute for the thirty (30) days written notice required by law especially when. September 27. applies to both permanent and temporary-lay off. 1995. The petitioners insist that the one-month notice requirement does not apply in this situation. 2005]. hence. 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. 1998 to February 15. Besides. R. t he fact is that no notice was given to the Department of Labor and Employment (DOLE). April 15. [G.R. 248 SCRA 532]. 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. One-month notice requirement. No. [G. continues the High Court. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish. 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. This is so because Article 283 itself does not speak of temporary or permanent retrenchment. 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. NLRC. 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. No. chanrobles virtual law library This is the conclusion of the Supreme Court in the 2005 case of Philippine Telegraph & Telephone Corporation vs. 1999. NLRC. to commence from September 1. as the retrenc hment involved was merely temporary and not permanent. and they quote Sebuguero vs. 115394. there is no need to qualify the term.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. It must be stressed that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. They aver that this has been recognized by the Supreme Court. a job is more than the salary that it carries. 147002. It is not for the employer to make substitutions for a right that a worker is legally entitled to.

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

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

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

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

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

an employee who is sick of tuberculosis should consult a government-employed pulmonologist who is competent to make an opinion thereon. G.1. 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 his health. If the employee has cardiac symptoms.´ the person referred to in the law. 12. and 6. not acceptable. notice of termination based on this ground should be served to the employee. the competent physician in this case would be a cardiolo gist. or c. 1987. (Cebu Royal Plant [San Miguel Corporation] vs. 58639. ³Competent public health authority´ refers to a government doctor whose medical specialization pertains to the disease being suffered by the employee. or b. Hon. ‡Burden of proof rests on the employer. ‡Company physician is not a ³competent public health authority. R. his continued employment is either: a. a fraction of at least six (6) months being considered as one (1) whole year. prohibited by law. 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. 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. In the absence of the required certification by a competent public health authority. 2. 153 SCRA 38 [1987]). 3. Aug. 4. the Supreme Court has consistently ruled against the validity of . whichever is greater. an indispensable requisite. No. For instance. Deputy Minister of Labor. the employee is suffering from a disease. it having been issued not by a ³competent public health authority. Medical certificate issued by company doctor.´ ‡Medical certificate issued by company doctor is not sufficient. prejudicial to the health of his co-employees.

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

the Supreme Court. yet grossly unsuccessful attempt at compliance with Philippine laws. In the proceedings before the POEA. not sufficient. G. . Secondly. 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. August 9. 2004) Medical certificate issued by Labor Attache and Ministry of Public Health of Kuwait. The letter from the Ministry and the certification by t he Philippine labor attache fall short of the demands of the Omnibus Rules. the letter appears to have been an afterthought. it is only where there is such prior certification that the employee could be validly terminated from his job. 271 SCRA 216. NLRC. NLRC. April 14. (Tan vs. No. 143949. (Union Motor Corporation vs. ruled that there is nothing in the records to show that petitioner co mplied with Sec. 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. 9. R. 159738. in declaring the termination as illegal. Book VI of the Rules to Implement the Labor Code before private respondent-doctors were dismissed. Rule I. It is the employer. Rule I. thus making private respondents¶ dismissal illegal. Clearly. No. 116807. 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. [G. 2001]. First of all. R. petitioner did not present any certification whatsoever. The certificate should be procured by the employer. 8. No. G. and not the employee. 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. who has the burden of proof to justify that the termination was supported by said certificate. See also Phil. Sec. produced by petitioner after an adverse judgment was rendered against it by the POEA. In addition. Rather.documents could be considered as substantial evidence. R. Clearly. In the 2001 case of ATCI Overseas Corporation vs. Book VI. 1997. CA. of the Omnibus Rules was not complied with. 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. a belated. 8. Dec. petitioner has not proven that the same was presented to private respondents prior to their termination. even assuming that the letter from the Ministry complied with the Omnibus Rules.

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

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

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

vs. all aspects of employment including hiring. It has been held that an employer is free to regulate. chanrobles virtual law library Re-employment after acceptance of resignation. Once an employee resigns and executes a quitclaim in favor of the employer. he is thereby estopped from filing any further money claims against the employer arising from his employment. and 4.litigation. 120961. according to his own discretion and judgment. in protecting the rights of the laborer. A resigned employee who desires to take his job back has to reapply therefor. R. 2. He cannot arrogate unto himself the same position which he earlier decided to leave. 88. The law. 1997). NLRC. They should not be faulted for seeking employment elsewhere for their economic survival. What are the requisites for serious insult as a ground to terminate employment by employee? . 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. Oct. supra). serious insult by the employer or his representative on the honor and person of the employee. 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. NLRC. inhumane and unbearable treatment accorded the employee by the employer or his representative. Inc. 2. chanrobles virtual law library 87. other causes analogous to any of the foregoing. effect. 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. Such money claims may be given due course only when the voluntariness of the execution of the quitclaim or release is put in issue. chanrobles virtual law library Resignation and execution of quitclaim. (Philippine National Construction Corporation vs. No. (Philippines Today. G. impels neither the oppression nor self-destruction of the employer. 3. 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.

chanrobles virtual law library 91. 90. in forced resignation. 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. and 2. it must be committed by the employer or his representative. th e employee is made to do or perform an involuntary act . it was committed by the employer or his representative. luring or influencing or . 92. and 3.In order to be considered a just cause to warrant the valid termination of employment by the employee without notice. the insult must be serious in character. the treatment is inhumane and unbearable in nature. 2. 2. and 3. it is perpetrated by the employer or his representative. 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. as distinguished from constructive dismissal. unreasonable or unlikely as in the case of an offer involving a demotion in rank and a diminution in pay. 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. a crime or offense is committed. it must injure the honor and person of the employee. the following requisites must concur: 1. 89.meant to validate the action of management in inveigling.However. it was perpetrated against the person of the employee or any of the immediate members of his family.submission or tender of resignation . 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.

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

and consequently. No. I was of some help to you and your family. Instead of defending himself against the adverse audit report. Although she started as nanny to the son of petitioner Willi Hahn. the em ployee immediately filed a complaint for illegal dismissal thereby preempting an investigation by the employer on the matter. 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. ³LILIA MAGHUYOP´ In holding that the afore-quoted letter was voluntarily tendered by the employee. G. Lanao del Sur and Lanao Del Norte. July 22.49 in a µspot audit¶ conducted by the company. [G.R. (Belaunzaran vs. The Court concluded that he affixed his signature in the said letter of his own free will with full knowledge of the consequences thereof. the Court ruled that a salesman -promoter could not have been confused. National Labor Relations Commission. 105083. 120038. 225 SCRA 526]. so as not to smear her employment record. In rejecting his contention. resigned after he was found to have a shortage of P49. she did not realize the consequences of her resignation. In a case where the employer asked the employee to submit her resignation letter or. a national-promoter salesman of Distilleria Limtuaco Co. 20 August 1993. 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. she has risen to being the manager and officer-in-charge of the Willi Hahn Enterprises in SM Cebu branch. if not.. ³In Callanta vs.. NLRC. We find no merit in respondent¶s claim that being a mere clerk. ³Very truly yours. 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 Supreme Court declared: ³The letter is simple. ³Thank you for your assistance during the past. 23. . candid and direct to the point. R. assigned in Iligan City.³I am respectfully submitting my resignation from Willi Hahn Enterprises effective today.005. 1996). No. 1998.´ chanrobles virtual law library Act of employer in giving the employee the choice between resignation or investigation. not illegal. coerced or intimidated into signing the resignation letter. Dec. Inc.

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

No. 148532. Ompad. fulfillment by the employee of a military duty. G. 159195. 1998. May 9. 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. 2. What is bona-fide suspension of operations for a period not exceeding six months? ‡ No law on temporary retrenchment or lay-off. 2004). A resignation letter which contains words of gratitude and appreciation to the employer can hardly come from employees who are forced to resign. Michael Academy vs. supra). G. It was filed not because she wanted to return to work but to claim separation pay and backwages. effect. 119512. July 13. 292 SCRA 478). NLRC. bona-fide suspension by the employer of th e operation of his business or undertaking for a period not exceeding six (6) months. . (Emco Plywood Corporation vs. 95. TEMPORARY SUSPENSION OF OPERATION FOR SIX MONTHS UNDER ARTICLE 286 94. vs. No. Hence. fulfillment by the employee of a civic duty. chanrobles virtual law library However. 2005). Expression of gratitude to employer. It would have been illogical for the employee to resign and then file a complaint for illegal dismissal. Abelgas. (Mobile Protective & Detective Agency vs. April 14. the following situations are contemplated therein: 1. R. 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. R.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. (Willi Hahn Enterprises. (St. Maghuyop. R. or 3. Article 286 applies only by analogy. G. No.

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

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

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

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

‡ ³Agricultural establishment/operation´ refers to an employer which is engaged in agriculture. 1. the cultivation and tillage of soil. pineapple. as amended by Republic Ac t No. coconut.operations regularly employing not more than ten (10) employees. the culture of fish and other aquatic products in farms or ponds. dairying. 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. What is the distinction between optional and compulsory retirement? Article 287 of the Labor Code. . ‡ 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. 7641. chanrobles virtual law library 2. This term refers to all farming activities in all branches and includes. provides for two (2) types of retirement: (a) optional. raising of livestock or poultry. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. 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. Compulsory retirement. among others. an employee shall be retired upon . 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. such farming operations. 100. aquatic or other farm products. . tobacco. cultivation. abaca. the employer shall pay the difference. Optional retirement.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. production. and (b) compulsory. 99.Where there is no such retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. or in conjunction with. growing and harvesting of any agricultural or horticultural commodities. If the amount is less than those provided under the law. but does not include the manufacture and/or processing of sugar. and any activities performed by a farmer or on a farm as an incident to.

1. 2. What are included in the minimum 5-year service requirement? The minimum 5-year service requirement includes the following. One-half (1/2) month salary. . ALPAP. the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees. thereby depriving petitioner an opportunity to be heard on this point. 102.143686. 103. vacations. in effect. we rule that this added requirement. when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to retirement. 2002). included. he resolved a question which was outside of the issues raised. 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. The option of an employer to retire its employees is recognized as valid. January 15. ³Furthermore. on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire pilots. May an employee retire at an earlier or older age? The law recognizes as valid any retirement plan. Only actual service included. (G. agreement or management policy regarding retirement at an earlier or older age.R. Authorized absences. Hence. 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. 104. 101.reaching the age of sixty-five (65) years. regular holidays. is instructive: ³Finally. The decision o f the Supreme Court in the case of PAL vs. Section 2 of the 1976 PAL-ALPAP Retirement Plan. ³Surely. Due process only requires that notice be given to the pilot of petitioner's decision to r etire him. amended the terms of Article VII. No. It gives the pilot concerned an undue prerogative to assail the decision of management.

chanrobles virtual law library (b) the cash equivalent of five (5) days of service incentive leave. 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. One-half monthly salary of employees who are paid by results. components. . 1993. 2. No. the basis for determination of the salary for fifteen (15) days shall be their average daily salary (ADS). If said scheme provides for less than what the employee is entitled to under Republic Act No. a fraction of at least six (6) months being considered as one (1) whole year. Consequently. Does the Retirement Pay Law have any retroactive effect? Yes. 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. A. in reckoning the length of service. 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. 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. A.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. R. 7641) shall be included. 7641. 105. . May Pag-IBIG be considered as substitute retirement plan? As provided in R. One-half (1/2) month salary. 7641. 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. 3.In the absence of an applicable employment contract. 106.For the purpose of determining the minimum retirement pay due an employee. . the employer is liable to pay the difference. (c) one-twelfth (1/12) of the 13th month pay due the employee. 7742. provided such option does not in any way contravene an existing collective bargaining agreement or other employment agreement. Thus. the period of employment with the same employer before the effectivity date of the law (Republic Act No.

R. in the 2002 case of San Miguel Corporation vs. Jr. 8558 [An Act Amending Article 287 of Presidential Decree No. Hence. 109. upon acceptance of employment. .. 185 SCRA 44]. a proscription that binds the parties to it. 2002). winzes. No. 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. a contractual relationship is established giving the employee an enforceable vest ed interest in the retirement fund. agrees or consents to sever his employment with the former. effect on entitlement to retirement benefits. [G. May 7. What is the distinction between retirement and dismissal? Retirement is the result of a bilateral act of the parties. raises. 1998. 141707. No. Dismissal for cause. PNOC Shipping and Transport Corp. [G. vs. As held in Razon. as Amended. 2002]. 143136-37.107. on the other hand. (Gamogamo vs. 1990. working places whether abandoned or in use beneath the earth's surface for the purpose of searching for and extracting mineral deposits. No. 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. crosscuts. after reaching a certain age. 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. R. 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. 80502. Lao. a voluntary agreement between the employer and the employee whereby the latter. 442. R. tunnels. chanrobles virtual law library However. May 7. the dismissed employee is entitled to the retirement benefits provided thereunder. G. NLRC. drifts. Management discretion may not be exercised arbitrarily or capriciously especially with regards to the implementation of the retirement plan. July 11. Dismissal. 108. refers to the unilateral act of the employer in terminating the services of an employee with or without cause.

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

death and disability benefits paid in the plan are considered integrated with and in lieu of termination benefits under the Labor Code. 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.´ (See also Batangas Laguna Tayabas Bus Co. 7641. Or to put it more plainly. No. on the one hand. as provided in Section 14 [Retirement Benefits].´ chanrobles virtual law library Case where separation pay was charged to retirement pay. R. In Ford Philippines Salaried Employees Association vs. Dec. the Supreme Court ordered the payment not only of separation pay and backwages to an illegally dismissed teacher but additionally. [G. On the issue of mutual exclusivity of the CBA-mandated separation pay in case of retrenchment. [G. in the absence thereof. 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. Knowing this. 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. R. 1987]. on the other. 75347. 1976. August 24. 1998]. of the retirement benefits ³pursuant to any collective bargaining agreement in the workplace or. Court of Appeals. 11. and the retirement benefits provided in the Retirement Plan. No. the Supreme Court ruled that if it is provided in the Retirement Plan of the company that the retirement. a case decided before the advent of Republic Act No. NLRC. 107234. vs. ³We may presume that the counsel of the respondent company was aware of the prevailing doctrine embodied in the cases earlier cited. June 18. 71 SCRA 470). then the retirement fund may be validly used to pay such termination or separation pay because of closure of . G. collection of retirement benefits was prohibited if the employee had already received separation p ay.R. In Bongar vs. 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. Book VI of the Implementing Rules of the Labor Code. No L -38482.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. NLRC.

Article XI of the Retirement Plan). In case of termination due to redundancy.business. Inc. R. Inc. Cases where employees are entitled only to one form of benefit. The employees in this case who were terminated due to closure of the company¶s branches. Association of International Shipping Lines.x x x. in addition. 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.¶ In the 2004 case of Cruz vs. 141868. are entitled only to either the separation pay provided under Article 283 of the Labor Code. Said CBA provides. regardless of their length of service in the company or to the severance pay provided by law. Article VIII hereof. petitioners who were duly paid separation pay when they were retrenched. sickness or physical disability. April 26. 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. claimed that they are. which ever is the greater amount. In the 2005 case of Salomon vs. Consequently. the employee cannot be entitled to bot h benefits. the same being higher than what Article 283 provides.´ (Section 6 (b).. thus: ³Section 1. whichever is higher. In Cipriano vs.. 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. 156317. [G. or retirement benefits prescribed by the Retirement Plan. 2005]. Philippine Global Communications. a regular employee shall be entitled to a separation pay equivalent to his one (1) month basic pay for . but shall only be entitled to whichever is the greatest among them. x x x. L-24774. they were paid separation benefits computed under the Retirement Plan. R. as amended. [G. whichever is higher. 1968]. 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. August 21.. entitled to retirement benefits under the CBA citing the Aquino case [supra] as basis. No. May 28. 2004]. dissolution of a department/ conference/section and/or the whole ASSOCIATION. No. R. No. San Miguel Corporation. 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. [G.

Here. 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. Otherwise. if they are terminated for cause. 15 to less than 20 years of service ± 50% 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. whichever is higher.. An employee shall be entitled to the following benefits. considering their Releases and Quitclaims. xxx xxx xxx ³Section 3. Inc. The provisions of the Retirement Plan are controlling in determining such entitlement. as prescribed by the parties¶ CBA quoted above.every year of service.´ According to the Supreme Court. the emplo yees¶ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. Accordingly. then. if they rendered at least fifteen (15) years of continuous services. The provisions of the retirement plan are controlling. (Ibid. 20 years of service ± 100% of the monthly basic salary for every year of service. what each actually received is a separation pay. Clearly. As held in Cipriano [supra] and Aquino [supra]. they should not be allowed to claim both. Hence. petitioners were separated from the service for cause. (Cruz vs. the right of the concerned employees to receive both retirement benefits and separation pay depends upon the provisions in the Retirement Plan. 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. it is obvious that petitioners.). Philippine Global Communications. then. . 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. chanrobles virtual law library b. supra). In other words. they are no longer entitled to retirement benefits. a. are entitled only to either the separation pay. they shall be so paid. pursuant to the CBA. under the above cases. or optional retirement benefits.

No. chanrobles virtual law library In San Miguel Corporation vs. [G. on ground of equity for his long years of service without any derogatory record. NLRC. Confronted with the danger of being jobless. No. the private respondents had no choice but to sign the documents proffered to them. after serving the bus company since he was 25 years old. Feb. 100 SCRA 691 [1980]). plus his retirement benefits equiv alent to his gross monthly pay. the employees were given the option to retire. R. 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. Case of non-entitlement to retirement pay due to termination for cause. his employer refused to pay his retirement benefits pending the final resolution of the case. (De Leon vs. they were never asked if they still wanted to work for petitioner. NO. be retrenched or dismissed but they were made to understand that they had no choice but to leave the company. 1994 when he . NLRC. the Supreme Court. The mere absence of actual physical force to compel private respondents to ink an application for retirement did not make their retirement voluntary. July 23. In Villena vs. NLRC. 90664. At that time. 2004 which declared as legal the termination of his employment as a consequence of an illegal strike. an employee whose age was 57 when he was illegally singled out for retirement. 1991]. R. was declared to be entitled to his full backwages. it is to be treated as a discharge. Instead. the petitioner employee who turned 60 years old and retired on March 1. 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. 7. August 20. NLRC. In short. 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. 149610. In the 2004 case of Piñero vs. [G. R. It was in reality a Hobson¶s choice which means that they have no choice at all. unable to provide their families even with the basic needs or necessities of life. allowances and other benefits for every year of service up to age sixty (60) which is the normal retirement age for him. If the intention to retire is not clearly established or if the retirement is involuntary. [G. 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. 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. 2004]. 107693. 1998].

in any way.´ In case of retirement under the CBA or other applicable employment contract. This explains why. Article 287 becomes relevant only in the matter of ensuring tha t the retirement benefits are not less than those provided therein.1 and 3. 2001]. the CBA and other agreements. NLRC. 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. Other latest cases on retirement. otherwise known as the Social Security Act of 1997. 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. chanrobles virtual law library 111. It conveys in clear and unmistakable terms that once an employee retires.was declared to have lost his employment status. the employee is entitled to receive such retirement benefits as he may have earned under existing laws. October 17. No. 141673. 7641 intends to give the minimum retirement benefits to employees not entitled thereto under collective bargaining and other agreements. R. 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. is separate and distinct from the retirement benefits granted under Republic Act No. Ibid. provided that such retirement benefits under the CBA or other agreements should not. it is not Article 287 that is controlling but the retirement plan under the CBA or other applicable employment contract. Republic Act No. In the event that such benefits are less. Rule II.2. 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 . 7641. 8282. The opening paragraph of Article 287 clearly enunciates the intent and application of the law. 112. Concept of retirement under Article 287. Quezon University vs. in the third paragraph of Article 287. (Sections 3.). even if the petitioner has an existing valid retirement plan. The Supreme Court ruled that they are so entitled. [G. the issue raised is whether respondent-teachers are entitled to the retirement benefits provided for under Republic Act No. This is best illustrated in the 2001 case of Manuel L. be less than those provided under the law.

company policy or practice provides for retirement benefits which are equal or superior to that which is provided in said law. 24. The member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100. such retirement plan and not Article 287. whichever is the greater amount. R. it is clear that the retirement plan under the CBA or other agreements. the provisions of Article 287 of the Labor Code could not have contemplated the situation of PAL¶s pilots.00 or (b) to such termination pay benefits to which he may be entitled to under existing laws. Airline Pilots Association of the Philippines. petitioner University was ordered to pay the teachers their retirement differential pay (i.. should prevail and thus govern the computation of the benefits to be awarded. Conversely. 143686. Consequently. 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. A. Rather. entered into between petitioner and respondent on May 30. Normal Retirement. however.000 hours would still be in the prime of his life and at the peak of his career. 1997 up to actual payment.question. No. issued by Secretary Leonardo A. the parties provided for a special scheme of retirement different from that contemplated in the Labor Code. then. The normal retirement date is the date on which he completes twenty (20) years of service. 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.´ A pilot who retires after twenty years of service or after flying 20. Based on this peculiar circumstance that PAL pilots are in.000 hours for PAL shall be eligible for normal retirement. Quisumbing). January 15. [G.e. Inc. and are thus in need of financial assistance and reward for the years that they have rendered service. compared to one who retires at the age of 60 years old. 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. the difference between the retirement pay under R. it was intended for those who have no more plans of employment after retirement. No.000 hours as a pilot for PAL. The best case to exemplify this point is the 2002 case of Philippine Airlines. 2002]. The PAL Pilots¶ Retirement Benefit Plan is a retirement fund raised from . 1996. vs. 1972. (Labor Advisory on Retirement Pay Law dated Oct. If after applying Article 287. (a) Any member who completed twenty (20) years of service as a pilot for PAL or has flown 20.000. or on which he logs his 20. chanrobles virtual law li brary In any event.

NLRC. No. as amended by Republic Act No. R. 259 SCRA 161). or employer¶s retirement plan. May employers exercise the option to retire? The answer to this query is. 273 SCRA 576]. 1997. 95940. in the affirmative. (Capili vs. July 24. June 17. No. he could choose to retire upon reaching the age of 60 years. In sum. This is in addition to the amount of not less than P100. June 17. G. Upon retirement. That prerogative is exclusively lodged in the employee. No.contributions exclusively from petitioner of amounts equivalent to 20% of each pilot¶s gross monthly pay. 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. 1996. 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. Inc. Who should exercise the option to retire? Compulsory retirement takes place at age 65.). in Capili vs. an employee may optionally retire upon reaching the age of 60 years or more. provided it is before reaching 65 years which is the compulsory age of retirement. other employment contract. the option may be exercised by the employer in accordance therewith. NLRC. the pilot gets an amount equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. In the absence of any provision on optional retirement in a CBA. chanrobles virtual law library Thus. [G. 120802. If there is a provision on retirement in a CBA or any other agreement or if the employer has a retirement plan. (Ibid. R. of course.00 that he shall receive under the 1967 Retirement Plan. Indeed. 7641. NLRC. 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. In short. 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. while optional retirement is primarily determined by the CBA or other employment contract or employer¶s retirement plan. but not beyond 65 years.000. 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. 273 SCRA 576). (Pantranco North Express. Thereunder. R.´ . G. provided he has served at least five (5) years in the establishment concerned. 120802. vs. 1997. therefore. each pilot stands to receive the full amount of the contribution.

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

Catalina College in June 1955 as an elementary school teacher. [G. effect. The decision of the Supreme Court in the 2003 case of Sta. at its option.). As above noted. 259 SCRA 161]. (Ibid. chanrobles virtual law library Moreover. In this case. particularly its provision on optional retirement). R. to retire supervisors or rank-and-file members when it deems fit. In the earlier case of Bulletin Publishing Corp. this assertion does not appear to have any factual basis. No. the same is effective only upon the approval of management. November 19. NLRC. July 24. 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. appears to be a fact which private respondents have not controverted. vs. [144 SCRA 628 (1986)]. 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. NLRC. 2003] is instructive on the issue of interruption in the service.1990. There should be no unfair labor practice committed by management if the retirement of private respondents were made in accord with the agreed option. In 1970. Inc.´ Interruption in the service. R. Sanchez. 144483. No. in no uncertain terms. that retirement of an employee may be done upon initiative and option of the management. [G. vs. And where there are cases of voluntary retirement. 95940. 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. she had not been heard from . 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. That there were numerous instances wherein management exercised its option to retire employees pursuant to the aforementioned provisions. Catalina College vs. the Supreme Court held: ³The aforestated sections explicitly declare. 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. 1996. the teacher was hired by the Sta. she applied for and was granted a one-year leave of absence without pay on account of the illness of her mother. confirming the validity of The Plan. In Pantranco North Express.

. the teacher reached compulsory retirement age.by petitioner school. petitioner¶s creditable service is 17. at the Liceo de San Pedro. PNOC Shipping and Transport Corp. 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. 141707. 1977. Biñan. No. it was held that since the retirement pay solely comes from respondent company¶s funds. 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. she was employed as a teacher in another school . respondent PNOC Shipping and Transport Corporation (hereafter respondent) acquired and took over the shipping business of LUSTEVECO. In 1982. For. R. 1977. his creditable service should be reckoned from such date. 1979. Subsequently. her retirement benefits should thus be computed only on the basis of her years of service from 1982 to 1997. However. As the teacher was considered a new employee when she rejoined petitioner school upon re -applying in 1982.3333 years. it is but natural that respondent should disregard petitioner -employee¶s length of service in another company for the computation of his retirement benefits. he continued to work as company dentist. petitioner¶s creditable service must start from November 9. Laguna during school year 1981-1982. 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]. 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. 1977 when he started working with LUSTEVECO until his day of retirement on April 1. Service in another firm. excluded in the computation of retirement benefits. In the meantime. [G. 1995. she applied anew at petitioner school which hired her. In 1997.. On November 9. Ordinarily. Thus. petitioner was hired as company dentist b y Luzon Stevedoring Corporation (LUSTEVECO).the San Pedro Parochial School during school year 1980 1981 and later. 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. a private domestic corporation. petitioner was among those who opted to be absorbed by the respondent. and on August 1. 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 the 2002 case of Gamogamo vs. May 7.

hence they are not under the Civil Service Law. Inc. No. 77]. by reason of the nature of his work. Supposing the retiring employee. R. and fall under the Civil Service Law. 155214. simplified its computation by declaring that it means the total of ³22. February 13. No. the Supreme Court. vs.5 days´ but only the fifteen (15) days salary.5 days representing one twelfth [1/12] of the 13th month pay plus 5 days of service incent ive leave. Inc.5 days´ arrived at after adding 15 days plus 2. 264 SCRA 68. In other words. should he be paid upon retirement. Confesor. In any case. November 13.5 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. 1996. 2004]. [G. in addition to the salary equivalent to fifteen (15) days. 1146. 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. [G. The Supreme Court ruled that employees who are not entitled to 13th month pay and service incentive leave pay while still working should not be paid the entire ³22. Latag.Petitioner¶s contention cannot be upheld that his fourteen (14) yea