LABOR LAW II In the absence of a specific provision in the CBA or
ECONOMIC PROVISIONS – refer to those that have direct
and measurable monetary cost consequences such as wage
rates, paid vacations, pensions, health and welfare plans, and
other fringe benefits; and
NON-ECONOMIC PROVISIONS – refer to those whose
monetary cost cannot be directly computed such as the no-
strike, no-lockout, union security and check-off clauses,
grievance procedures, etc.
GRIEVANCE – any question by either the employer or the
union 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 provision of the CBA or company personnel policies;
GRIEVANCE PROCEDURE – refers to the system of grievance
settlement at the plant level as provided in the collective
bargaining agreement;
_____________________________________________________________
GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION
***Grievance machinery clause is required in every CBA for
the purpose of settling labor-management disputes arising
from its interpretation or implementation or interpretation or
enforcement of company personnel policies;
***Grievance Machinery is a part of the continuous process of
collective bargaining; It is intended to promote a friendly
dialogue between labor and management as a means of
maintaining industrial peace; It is necessary to provide a
grievance machinery mechanism so that ambiguities in the
contract that may trigger off grievances could be handled
properly and intelligently.
***Unresolved grievances will be referred to voluntary
arbitration;
PROCEDURE IN HANDLING GRIEVANCE:
existing company practice prescribing for the procedures in
handling grievance, the ff shall apply:
1) An employee shall present this grievance or complaint
orally or in writing to the shop steward. Upon receipt
thereof, the shop steward shall verify the facts and
determine whether or not the grievance is valid;
2) If the grievance is valid, the shop steward shall
immediately bring the complaint to the employee’s
immediate supervisor. The shop steward, the employee
and his immediate supervisor shall exert efforts to settle
the grievance at their level.
3) If no settlement is reached, the grievance shall be
referred to the grievance committee which shall have
ten (10) days to decide the case.
SUBMISSION TO VOLUNTARY ARBITRATION
***Where grievance remains unresolved within seven (7)
calendar days, either party may serve notice upon the other of
its discretion to submit the issue to voluntary arbitration;
***7 day period is reckoned from the date of their
submission for resolution to the last step of the grievance
procedure;
***The notice shall state the issue or issues to be arbitrated;
GRIEVANCE ELEVATED DIRECTLY TO VOLUNTARY
ARBITRATION WITHOUT PASSING THROUGH THE
GRIEVANCE MACHINERY:
***when the grievance machinery has been proven to be
ineffective in the past or when the parties inadvertently failed
to include a grievance machinery in their CBA;
***Barangay Conciliation is not applicable in labor cases;
ORIGINAL AND EXCLUSIVE JURISDICTION OF VA:
1) Grievances arising from the implementation or
interpretation of the CBA; and
2) Those arising from the interpretation or enforcement of
company personnel policies which remain unresolved
after exhaustion of the grievance procedure;

***Parties may also agree that the VA shall hear and
decide all other disputes including ULP and Bargaining
Deadlocks
POWERS OF VOLUNTARY ARBITRATORS:
1) Adjudicatory Power – power to hold hearings, receive
evidence and take whatever action is necessary to
resolve the issues subject of the dispute;
2) Compulsory Power – can issue Subpoenas;
3) Power to Conciliate and Mediate – should exert best
efforts to conciliate or mediate in order to aid the parties
in reaching a voluntary settlement of the dispute;
4) Power to encourage the parties to enter into a
stipulation of facts;
5) Power to issue Writ of Execution – to enforce its final
decision.
***Non-Litigous or Non-Adversarial in nature; Not strictly
governed by the technical rules of procedure and evidence
applicable in judicial proceedings.
TITLE VIII – STRIKES AND LOCKOUTS
CONCERTED ACTIVITY – a joint undertaking of workers
designed to secure better terms and conditions of employment
through the machinery of collective bargaining and
negotiations for their mutual benefit and protection.
STRIKE – any temporary stoppage of work by the concerted
action of employees as a result of any industrial or labor
dispute which, if directed against the employer, attempts to
damage, destroy or sabotage plant equipment and facilities,
and similar activities.
KINDS OF STRIKE:
AUTHORIZED – Strikes that are called upon or approved by
the majority of the union membership.
***USE AT YOUR OWN RISK
#GOALDIGGERS
UNAUTHORIZED – They are called without the majority
approval of the union members in the bargaining unit.
GENERAL – extends over a whole community, province, state
or country; It is an extended form of sympathetic strike,
involving many workers who cease to work in sympathy with
the workers of another employer, or in order to put pressure
upon the government or in order to paralyze the present
economic and social systems.
LOCAL STRIKE – one undertaken by workers in a particular
enterprise, locality, or occupation; it usually involves only one
union or only one industry.
QUICKIE OR PARTIAL STRIKE– impromptu, brief work
stoppage in the plant but stoppage is for a period of few
minutes or hours. Sometimes used interchangeably with
“WILDCAT STRIKE” which is a work stoppage that violates
the labor contract and is not authorized by the union.
SLOWDOWN – a wilful reduction in the rate of work by a
group of employees for the purpose of restricting the output of
the employer. It is a strike on “installment plan.:
SIT-DOWN STRIKE – Similar to quickie and slowdown, for
the workers remain in the plant but refuse to work and their
machines and tools remain idle; the stoppage period in
sitdown strike is much longer than quickie strike.
PRIMARY STRIKE – one declared by the employees who have
a direct and immediate interest, whether economic or
otherwise, in the subject of the dispute, which exists between
them and their employer.
SECONDARY STRIKE – employees in concert refuse to assist
or cooperate with the allegedly unfair employers or their
product. It occurs when a group of employees refuse in
concert to remain at work for an employer, not because of any
complaint over their labor standards under him, but because
he persists in dealing with a third person against whom
they have a grievance.

SYMPATHETIC – This is carried on by workers in sympathy
to another group of workers who are on strike.
POLITICAL – It is a cause-oriented strike where workers join
a march, rally or demonstration for the purpose of making a
political stand on national issues.
LEGAL – it has complied with all the requirements for staging
a lawful strike.
ILLEGAL – It is one which takes place when there is a law
prohibiting it, such as one in no-strike in vital industries, or
when there is an injunction or restraining order prohibiting
the employees to declare a strike.
UNFAIR LABOR PRACTICE – is a strike staged as a result of
the employer’s or union’s ULP.
ECONOMIC STRIKE – is a strike staged to force wage or
other concessions from the employer which he is not required
by law to grant.
LIGHTNING STRIKE – sudden stoppage of work by the
concerted action of the workers without compliance with the
requirements for declaring a lawful strike.
WHO MAY DECLARE A STRIKE OR LOCKOUT
***Any certified or duly recognized bargaining representative
may declare a strike in cases of bargaining deadlocks and
ULP.
***In the absence of a certified or duly recognized bargaining
representative, any legitimate labor organization in the
establishment may declare a strike but only on grounds of
ULP.
***Only a group of employees without a union cannot stage a
strike.
GROUNDS FOR STRIKE/LOCKOUT:
1) Collective Bargaining Deadlock; and
2) Unfair Labor Practice.
***USE AT YOUR OWN RISK
#GOALDIGGERS
***Strike and lockout cannot be declared on grounds
involving inter-union or intra-union disputes.
PROCEDURAL REQUIREMENTS FOR A LAWFUL STRIKE
OR LOCKOUT:
1) Must be based on a valid and factual ground;
2) Must be approved by a majority of the total membership
of the Union or the members of the BOD of the
Corporation or Association or of the partners in a
partnership, obtained by secret ballot in a meeting
called for the purpose;
3) NOTICE shall be filed with the NCMB:
a. 15 days from the intended date of strike, if the
issues raised are ULP; or
b. 30 days if it involves bargaining deadlock;
c. Cooling off period need not be observed if the
issue constitute UNION BUSTING;
4) Compliance with the 24 hours prior notice rule on
strike voting; (24 HOUR PRIOR NOTICE RULE)
5) A strike or lockout vote shall be reported to the NCMB-
DOLE Regional Branch at least 7 days before the
intended strike or lockout subject to the cooling off
period. (7 DAY STRIKE BAN)
***In UNION BUSTING, the time reqt for the filing of the
NOTICE OF STRIKE shall be dispensed with but the strike
vote ret, being mandatory in character, shall “in every case”
be complied with.
WHAT CONSTITUTE UNION BUSTING:
1) Dismissal from employment of union officers duly
elected in accordance with the union constitution and
by-laws;

2) Existence of the union must be threatened by such
dismissal
PURPOSE OF THE MANDATORY COOLING OFF PERIOD:
***The 15 and 0 days is designed to afford the parties the
opportunity to amicably resolve the dispute with the
assistance of the NCMB..
PURPOSE OF THE 24 HOUR NOTICE RULE:
1) Inform the NCMB of the intent of the union to conduct a
strike vote;
2) Give the NCMB ample time to decide whether or not
there is a need to supervise the conduct of strike vote to
prevent any acts of violence and/or irregularities
attendant thereto;
3) Should the NCMB decide motu propio or upon the
request of an interested party including the employer, to
supervise the strike vote, to give ample time to prepare
for the deployment of the requisite personnel, including
peace officers if need be.
PURPOSE OF STRIKE VOTE:
-To ensure the overwhelming sentiment that the decision to
strike broadly rests with the majority of the union members in
general and not with a mere minority, at the same time,
discourage wildcat strikes, union bossism and even
corruption.
***Give the DOLE an opportunity to verify whether the
projected strike really carries the approval of the majority
union members.
***Seven day strike ban starts from the day after the results of
the strike vote have been submitted to the regional branch of
the NCMB.
WHO HAS JURISDICTION OVER LEGALITY OF STIKE OR
LOCKOUT?
***USE AT YOUR OWN RISK
#GOALDIGGERS
GENERAL RULE: Labor Arbiter
EXCEPTION: When the Secretary of Labor and Employment
assumed jurisdiction.
QUESTION: CAN THE PARTIES, AFTER THE ASSUMPTION
OF JURISDICTION BY THE SOLE, STILL SUBMIT THE CASE
FOR VOLUNTARY ARBITRATION?
ANSWER: YES
***Even if the strike were to be declared valid because its
objective and purpose is lawful, the strike may still be
declared INVALID where the means employed are illegal.
PROHIBITED ACTIVITIES:
1) Commit any act of violence, coercion, or intimidation;
2) Obstruct the free ingress to or egress from the
employer’s premises for lawful purposes; or
3) Obstruct public thoroughness;
4) Non-Strikers were mauled and suffered physical
injuries inflicted by the strikers;
5) Destruction of company property; and the use of
Molotov bombs thrown into the wok compound;
6) Where the strikers resorted to terrorism to prevent non-
strikers from working.
STRIKE DECLARED IN GOOD FAITH – A strike may be
considered legal when the union believed that the respondent
company committed unfair labor acts and the circumstances
warranted such belief in good faith although subsequently
such allegation of unfair labor practices are found out as not
true.

***However, with the enactment of RA 6715, filing of notice of
strike, strike vote and notice given to the DOLE are
mandatory in nature. Hence, claim of good faith is not a valid
excuse to dispense with the procedural steps for a lawful
strike,
ILLEGALITY OF STRIKE OR LOCKOUT:
***may be declared illegal if any of the reqts for a valid strike
or lockout is not complied with;
***Also, when either of the parties commit prohibited acts or
practices, the strike or lockout may be declared illegal.
CONSEQUENCES IF STRIKE IS DECLARED ILLEGAL:
***IN CASE OF STRIKE, Employer may be authorized to
terminate the employment of union officials who knowingly
participated in the illegal strike and/or any worker or union
officer who knowingly participated in the commission of other
illegal acts during the strike.
***IN CASE OF LOCKOUT, any worker whose employment has
been terminated as a consequence thereof may be entitled to
reinstatement including payment of full backwages and other
benefits
***A strike that is undertaken despite the issuance by the
SOLE of an assumption or certification order becomes a
prohibited activity and thus illegal. A striker cannot invoke
good faith where assumption orders of the DOLE were
disregarded.
***Right to strike can be waived by inserting a no-strike
clause in the CBA or a provision expressly providing for
conclusive arbitration of grievances.
***USE AT YOUR OWN RISK
#GOALDIGGERS
***GENERAL RULE: striking employees are not entitled to the
payment of wages for unworked days during the period of the
strike pursuant to the principle of “No Work, No Pay.”
UNLESS, parties enter into an agreement to the contrary.
CONVERSION DOCTRINE - It is when a strike starts as
economic and later, as it progresses, it becomes a ULP, or vice
versa.
STRIKE-BREAKER – any person who obstructs, impedes or
interferes with by force, violence, coercion, threats or
intimidation any peaceful picketing by employees during any
labor controversy affecting wages, hours or conditions of work
or in the exercise of the right to self-organization or collective
bargaining.
QUESTION: PHIMCO argues that the strike staged by its
employees was illegal as they committed the prohibited
acts under Art.264(e) of the LC such as blocking the
ingress and egress of the company premises. The
employees, on the other hand, submit that the picket was
peaceful and no human barricade blocked the company
premises. May a peaceful picketing of employees be held
illegal?
ANSWER: YES. Despite the validity of the purpose of a strike
and compliance with the procedural requirements, a strike
may still be held illegal where the means employed are illegal.
The means become illegal when they come within the
prohibitions under Art.264(e)of the Labor Code. Protected
picketing does not extend to blocking ingress to and egress
from the company premises, and, the fact that the picket was
moving, was peaceful and was not attended by actual violence
may not free it from taints of illegality if the picket effectively
 #GOALDIGGERS
blocked entry to and exit from the company premises respondents' intention was to protest what they perceived to
(PHIMCO Industries, Inc. v. PHIMCO Industries Labor be acts of unfair labor practice on the part of GNC through
Association, G.R. No. 170830, August 11, 2010). the exercise of their right to strike enshrined in the
Constitution and not to circumvent the "no strike, no lock-
QUESTION: The previous CBA between GNC and its out" clause and the grievance machinery and voluntary
bargaining agents GNCFLU and GNCNTMLU has a "no- arbitration provision of the CBA (Guagua National Colleges v.
strike, no lock-out" clause which likewise provides for GNC Faculty Labor Union, G.R. No. 204693, 13 July 2016).
mechanism for grievance resolution and voluntary LOCKOUT
arbitration. Thereafter, the presidents of both the ***It is one of the economic shields of the employer against
bargaining agents wrote the president of GNC to inform employees. It takes place when an employer temporarily
him of the former’s intention to open the negotiation for refuses to furnish work as a result of an industrial or labor
the renewal of the then existing CBA which would expire dispute.
after two months. However, GNC denied arriving at an
agreement with the bargaining agents not once but twice. LOCKOUT VS. SHUTDOWN
This prompted them to file a notice of strike charging In lockout, the plant In a shutdown, employer
GNC with bad faith bargaining and violation of its duty to continues to operate. The wilfully ceases operations
bargain. GNC filed a Motion to Strike Out Notice of Strike. employee-union members following a complete lockout.
It invoked the "no-strike, no lock-out" clause and the locked out are replaced by
grievance machinery and voluntary arbitration provision non-union substitutes so that
of the parties' existing CBA. According to it, the four the plant may continue to
grounds cited by respondents in their notice of strike all function.
come within the definition of "grievance" under their CBA, LOCKOUT VS. STRIKE
hence, not strikeable. Is the contention of GNC valid? Temporary stoppage of work Temporary stoppage of work
by the employer by the employee
A: No. It is settled that a "no strike, no lock-out" provision in
the CBA "may only be invoked by an employer when the strike INSTANCES CONSIDERED LEGAL LOCKOUT:
is economic in nature or one which is conducted to force wage 1) Economic reverses or financial losses are justifiable
or other agreements from the employer that are not mandated grounds for closure of establishment or lay-off;
to be granted by law. It is not applicable when the strike is 2) Legitimate sale of business which is a management
grounded on unfair labor practice. GNCFLU and GNCNTMLU prerogative is not lockout;
cannot be faulted into believing that GNC was bargaining in 3) A permanent closure of business is not lockout but it
bad faith and had no genuine intention to comply with its must be bona fide;
duty to bargain collectively since it denied arriving at an 4) Stoppage of business operations due to lack of raw
agreement with respondents not once but twice. Clearly, materials is not lockout;

***USE AT YOUR OWN RISK


5) Closure of business due to strike is not lockout in order
to prevent further “hemorrhaging of its capital or
economic catastrophe.
***Any worker whose employment has been terminated as a
consequence of an unlawful lockout is entitled to
reinstatement with full backwages.
INDUSTRIES INDISPENSABLE TO NATIONAL INTEREST:
1) Hospital Sector;
2) Electric power Industry;
3) Water Supply Services, to exclude small water supply
services such as bottling and refilling stations;
4) Air Traffic Control;
5) Such other industries as maybe recommended by the
national tripartite industrial peace council.
CONDITION FOR A VALID EXERCISE OF ASSUMPTION
AND CERTIFICATION POWERS:
1) Both parties have requested the SOLE to assume
jurisdiction over the labor dispute;
2) After a conference called by the Office of the SOLE, he
determines the propriety of the issuance of the
Assumption or Certification Order, motu propio or upon
a request or petition by either party to the labor
dispute.
LEGAL EFFECTS OF ASSUMPTION POWER:
1) Enjoining an impending strike or lockout;
2) I strike/lockout has already taken place at the time of
assumption, all striking or locked out employees and
other employees subject of the notice of strike shall
immediately return to work and the employer shall
immediately resume operations and re-admit all
***USE AT YOUR OWN RISK
#GOALDIGGERS
employees under the same terms and conditions
prevailing before the strike or lockout; and
3) Notwithstanding the foregoing, parties to the case may
agree at any time to submit the dispute to the SOLE or
his/her duly accredited Voluntary Arbitrator or to a
panel of Voluntary Arbitrators.
***It was not necessary for the SOLE to issue return-to-
work order in Assumption Order. The mere issuance of an
Assumption Order automatically carries with it a return-to-
work order although not expressly stated therein.
***Decisions of the Secretary, NLRC, Voluntary Arbitrator, or
Panel of Voluntary Arbitrators shall be rendered within 30
calendar days from submission of the case for resolution.
***Such decisions shall be final and executory 10 days after
the receipt thereof by the parties.
***Assumption of jurisdiction contemplates only ACTUAL
REINSTATEMENT; SOLE Order for mere payroll
reinstatement, a grave abuse of discretion.
***Return-to-work order does not interfere with the
management’s prerogative, but merely regulates it when, in
the exercise of such right, national interests will be affected.
PICKETING
It is a device used by the union to bolster their strike. It
refers to outside patrolling or marching to and from of the
strikers at the company’s premises usually accompanied by
the display of placards and other signs making known the
facts involved in a labor dispute.

***The purpose of picket is peaceful persuasion.
STRIKE PICKETING
Focuses on stoppage of work, Focuses on publicizing the
labor dispute and its
incidents to inform the public
of what is happening in the
company struck against.
***Picketing has been equated with freedom of speech;
Wearing armbands and putting up placards to express one’s
views without violating the rights of third parties, are legal per
se and even constitutionally protected. These rights are by no
means absolute. Protected picketing does not extend to
blocking ingress and egress from the company premises.
STRANGER PICKETING – kind of picketing by a union
having no members employed in the place picketed. There
exists no employer-employee relationship between the
picketers and the employer of the place being picketed.
DOCTRINE OF INNOCENT BYSTANDER – Courts can
confine or localize the sphere of communication or
demonstration to the disputants and insulate establishments
or persons with no industrial connection or interest to the
dispute.
BOYCOTT - a combination, the purpose of which is to coerce
the employer by the restriction and withholding of patronage
so as to diminish his volume of business.
KINDS OF BOYCOTT
***USE AT YOUR OWN RISK
#GOALDIGGERS
1) PRIMARY BOYCOTT – refusal to patronize is confined
to the employees who have a direct interest in the
dispute with the employer.
2) SECONDARY BOYCOTT – refusal to patronize is done
by persons who have no economic interest in the
dispute, enlisted to assist the employees in coercing the
employer to meet the demands of the workers.
***Primary Boycott is not an unlawful conspiracy. However,
secondary boycott has been declared to be unlawful.
***Government employees cannot call or join a strike, mass
leaves, walkouts and other forms of mass action in order to
realize their demands or force concessions, economic or
otherwise.
***A strike against the government by its employees is a civil
service offense which may be punished administratively.
***They cannot bargain collectively but they have the right to
collective negotiations. Public employees are part of the
government which they serve.
***Government Owned or controlled corporation organized
under the Corporation Code without original charter of its
own is covered by the LABOR CODE and not by civil service
laws.
QUESTION: Company C, a toy manufacturer, decided to
ban the use of cell phones in the factory premises. In the
pertinent Memorandum, management explained that too
much texting and phone-calling by employees disrupted

company operations. Two employee-members of Union X
were terminated from employment due to violation of the
memorandum-policy. The union countered with a
prohibitory injunction case (with prayer for the issuance
of a temporary restraining order) filed with the
RTC challenging the validity and constitutionality of the
cell phone ban. The company filed a motion to dismiss,
arguing that the case should be referred to the grievance
machinery pursuant to an existing CBA with Union X, and
eventually to Voluntary Arbitration. Is the company
correct? Explain. (2010 Bar)
ANSWER: NO. The RTC has jurisdiction to hear and decide
the prohibitory injunction case filed by Union X against
Company C to enjoin the latter from implementing the
memorandum-policy against the use of cell phones in the
factory. The issue in this case is the validity and
constitutionality of the cell phone ban being implemented by
Company C. The issue, therefore, does not involve the
interpretation of the memorandum-policy, but its intrinsic
validity.
POST EMPLOYMENT
TERMINATION OF EMPLOYMENT
COVERAGE – apply to all establishments or undertakings
whether for profit or not.
***including educational, medical, charitable and religious
institutions and organizations.
TERMINATION – denotes dismissal or lay-off.
***USE AT YOUR OWN RISK
#GOALDIGGERS
DISMISSAL – a form of ending employer-employee
relationship initiated either by the employee or the employer
such as in the case of just cause or authorized cause
dismissal.
DISCHARGE – takes place when there is a deliberate
intention by the employer to dispense with the employee’s
services which may be in the form of actual or constructive
discharge.
LAY-OFF – a termination initiated by the employer without
prejudice to reinstatement or recall of an employee who has
been temporarily separated brought about by adverse
economic conditions, breakdown of machinery, shutdown for
repairs or lack of raw materials.
FURLOUGH – means temporary halt of employment initiated
by an employee as a result of lack of work.
Article 294. SECURITY OF TENURE. In cases of regular
employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work
shall be entitled to resintatement without loss of seniority
rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. 
***Employment is not merely a contractual relationship; it has
assumed the nature of property right. It may spell the
difference whether or not a family will have food on their
table, roof over their heads and education for their children. It
is for this reason that the State has taken up measures to
protect employees from unjustified dismissals because the

right to security of tenure is not only a statutory right but,
more so, a constitutional right.
SECURITY OF TENURE – the right of a worker to be secured
or to continue in employment until the same is terminated by
virtue of a valid, just cause or on grounds authorized by law.
***Intended to shield workers from unwarranted and
unconsented demotion and transfer;
***While it is a constitutionally guaranteed right of the
employee, it does not, however, mean perpetual employment
for the employee.
MANAGEMENT PREROGATIVE – every employer, has the
inherent right to regulate, according to his own discretion and
judgment, all aspects of employment, including hiring, work
assignments, working methods, the time, place and manner of
work, work supervision, transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of employees.
PROMOTION – the advancement from one position to another
with an increase in duties and responsibilities as authorized
by law, and usually accompanied by an increase in salary.
DEMOTION – involves a situation where an employee, is
relegated to a subordinate or less important position
constituting reduction to a lower grade or rank, with a
corresponding decrease in duties and responsibilities, and
usually accompanied by a decrease in salary.
***Any increase in salary should only be considered incidental
but never determinative of whether or not a promotion is
bestowed upon an employee.
BONUS – an amount granted and paid ex gratia to the
employee for his industry and loyalty which contributed to the
***USE AT YOUR OWN RISK
#GOALDIGGERS
success of the employer’s business and made possible the
realization of profits.
***it is not a demandable obligation, UNLESS:
- It is stipulated in an employment contract or CBA; it
becomes a contractual obligation;
- It is a company policy or practice;
- Granted as an additional compensation which the
employer agreed to give not contingent on profit
becomes a part of a wage; therefore, a demandable
obligation.
RELIEFS AND NORMAL CONSEQUENCES IN ILLEGAL
DISMISSAL
***reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from
him up to the time of his actual reinstatement;
***Award of separation pay in lieu of reinstatement;
***Award of indemnity in the form of nominal damages for
violation of the belated due process rule;
***Payment of salaries corresponding to the unexpired portion
of the employment contract for an illegally dismissed
employee whose employment is contractual or for a fixed
period;
***Award of damages and attorney’s fees to an illegally
dismissed employee;
***Award of financial assistance to an illegally dismissed
employee on some equitable grounds, length of service,
charity, compassion or understanding;
***Imposition of 6 percent legal interest on backwages,
separation pay and other monetary awards.
 #GOALDIGGERS
REINSTATEMENT – refers to restoration to a state from ***ONLY the LABOR ARBITER’S reinstatement order is self-
which one has been removed or separated. executory or immediately executory.

***Reinstatement and re-employment are not synonymous. 2 OPTIONS ON REINSTATEMENT:

Although both terms refer to restoration of employment, the 1) ACTUAL REINSTATEMENT – the employee is restored
former connotes an obligation; while the latter, is to his former position under the same terms and
discretionary on the part of the employer to place the conditions of employment prevailing prior to his
employee affected in the position previously held. dismissal. Here, the employee performs his job and he
is paid his compensation;
RETURN-TO-WORK ORDER REINSTATEMENT ORDERS 2) PAYROLL REINSTATEMENT – reinstatement of the
Interlocutory in nature A judgment on the merits employee in the payroll of the company without
handed down by the LA requiring him to report back for work, but he receives
pursuant to the original and his compensation.
exclusive jurisdiction ***Reinstatement of non-employees is not allowed;
provided for under the code.
Both immediately executory WHEN REINSTATEMENT NOT PROPER:
1) Position no longer exists;
REINSTATEMENT BACKWAGES a. REMEDY – Should be given a substantially
A restoration to a state from A form of relief that restores equivalent position; if possible;
which one has been removed the income that was lost by b. If not possible – Payment of separation pay
or separated. reason of the unlawful equivalent to 1 month salary for every year of
dismissal service.
May be ordered without May be awarded without 2) Position previously occupied already filled up;
payment of backwages ordering reinstatement 3) Position not previously occupied by the employee;

***An order of reinstatement by the LABOR ARBITER IS

WHEN CAN SEPARATION PAY BE GRANTED IN LIEU OF
IMMEDIATELY EXECUTORY AND AT THE SAME TIME SELF-
REINSTATEMENT/REASONS FOR DENYING
EXECUTORY EVEN PENDING APPEAL which requires no writ
REINSTATEMENT:
of execution to be issued to implement it.
1) That reinstatement can no longer be effected in view of
the long passage of time;
***However, Issuance of Writ of Execution is necessary if
2) That it would be inimical to the employer’s interest;
reinstatement is ordered by the NLRC on appeal or by the CA
3) That reinstatement may no longer be feasible;
and the Supreme Court, as the case may be.

***USE AT YOUR OWN RISK


4) That it will not serve the best interests of the parties
involved;
5) That the company would be prejudiced by the workers
continued employment;
6) That it will not serve the prudent purpose as when
supervening facts have transpired which make
execution unjust or inequitable;
7) That there is a resultant strained relations between the
employer and the employee, where the employee
concerned occupies a position of trust and confidence.
***Salary rate prevailing at the end of the period of putative
service would be the basis for computation;
CIRCUMSTANCES THAT BAR REINSTATEMENT:
a) Dismissal for cause;
b) Abandonment of right or laches;
c) Resignation of employee;
d) Physical incapacity of employee;
e) Employee accepts retirement pay;
f) Doctrine of Strained Relationship – When the employer
can no longer trust the employee and vice versa;
QUESTION: Does the strained relations rule always
bar reinstatement in all cases?
ANSWER: NO. The rule should be applied on a case to
case basis, based on each case’s peculiar conditions
and not universally. Otherwise, reinstatement can never
be possible simply because some hostility is invariably
engendered between the parties as a result of litigation.
That is human nature (Anscor Transport v. NLRC, G.R.
No. 85894, September 28, 1990).
g) Closure or cessation of Business Operation;
***USE AT YOUR OWN RISK
#GOALDIGGERS
h) Transfer of business to an innocent transferee;
i) Act of State – reinstatement could not be enforced if the
employer has ceased operations because of an act of the
state;
j) Abolition of Position;
k) Prescription
l) Conviction for a crime;
m) Not conducive to industrial harmony;
n) Over-aged employee;
o) Fiduciary relationship – in cases between the
househelper and the employer, reinstatement is not
proper in case of illegal dismissal;
p) Legal Proscription – in case of illegal dismissal of an
OFW;
q) Fear of reprisal;
r) Supervening events
a. Business has been acquired by another entity;
b. Total destruction of the establishment due to
fortuitous events such as fire;
c. Insolvency of the company;
d. Physical injury or disability, or death of the
employee
SENIORITY RIGHTS – refer to the credible years of service in
the employment record of the illegally dismissed employee as
if he or she never ceased working for the employer.
BACKWAGES – a form of relief that restores the income of the
employee that was lost by reason of the unlawful dismissal.
***the award is not in redress of private right, but rather, is in
the nature of a command upon the employer to make public
reparation for his violation of the Labor Code.

WHAT IS THE PERIOD COVERED BY THE PAYMENT OF
BACKWAGES?
The backwages shall, from the time that wages are
unlawfully withheld until the time of actual reinstatement or,
if reinstatement is no longer feasible, until the finality of
judgment awarding backwages, cover the period from the date
of dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is no longer
feasible
2. Finality of judgment awarding backwages (Buhain v. CA,
G.R. 143709, July 2, 2002).
The backwages to be awarded should not be
diminished or reduced by earnings elsewhere during the
period of his illegal dismissal. The reason is that the Ee while
litigating the illegality of his dismissal must earn a living to
support himself and his family
SEPARATION PAY – the amount that an employee receives at
the time of his severance from the service and is designed to
provide the employee with the wherewithal during the period
that he is looking for another employment.
***It is payable to an employee whose services are validly
terminated for authorized causes such as automation,
retrenchment, redundancy, closure of business or disease.
DAMAGES –indemnity recoverable by a person who has
sustained an injury, either in his person, property, or relative
rights, through the act or default of another.
REGULAR, CASUAL AND PROBATIONARY EMPLOYMENT
***USE AT YOUR OWN RISK
#GOALDIGGERS
TYPES OF EMPLOYMENT:
a) REGULAR – Those who have been engaged to perform
activities which are usually necessary or desirable in
the usual business or trade of the employer;
b) CASUAL- those whose employees or those who are
neither regular nor project employees.
c) PROJECT- those whose employment has been filed for
a specific project or undertaking, the completion or
termination of which has been determined at the time of
engagement of the employee or
d) SEASONAL - where the work or service to be performed
is seasonal in nature and the employment is for the
duration of the season;
TYPES OF REGULAR EMPLOYMENT
1. AS TO NATURE OF WORK – An employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable
in the usual business or trade of the employer, the
provisions of written agreements to the contrary
notwithstanding and regardless of the oral agreements of the
parties (IRR, Book VI, Rule I, Sec. 5 [a]).
2. AS TO LENGTH OF SERVICE – Any employee who has
rendered at least one (1) year of service, whether such service
is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed
and his employment shall continue while such activity exists
(IRR, Book VI, Rule I, Sec. 5 [b]).
***What determines regularity or casualness is not the
employment contract, written or otherwise, but the nature of
the job;

*** The repeated rehiring of workers and the continuing need
for their services clearly attest to the necessity or desirability
of their services in the regular conduct of the business or
trade of the company;
QUESTION: Super Comfort Hotel employed a regular pool
of “extra waiters” who are asked to report for duty when
the Hotel’s volume of business is beyond the capacity of
the regularly employed waiters to undertake. Pedro has
been an “extra waiter” for more than 10 years. He is also
called upon to work on weekends, on holidays and when
there are big affairs at the hotel. What is Pedro’s status as
an Ee under the LC? (2008 Bar Question)
ANSWER: Pedro has acquired the status of a regular Ee.
Pedro was engaged to perform activities which are necessary
or desirable in the usual business or trade of the Er.
Moreover, Pedro has been “extra waiter” for more than 10
years. Under the law, any Ee who has rendered service for at
least one year, whether such service is continuous or broken,
shall be considered a regular Ee with respect to the activity in
which he is employed and his employment shall continue
while such activity exists (LC, Art. 295 as amended).
QUESTION: Linda was employed by Sectarian University
(SU) to cook for the members of a religious order who
teach and live inside the campus. While performing her
assigned task, Linda accidentally burned herself. Because
of the extent of her injuries, she went on medical leave.
Meanwhile, SU engaged a replacement cook. Linda filed a
complaint for illegal dismissal, but her employer SU
***USE AT YOUR OWN RISK
#GOALDIGGERS
contended that Linda was not a regular employee but a
domestic househelp. Decide. (2014 Bar Question)
ANSWER: The employer's argument that Linda was not a
regular employee has no merit. The definition of domestic
servant or househelper contemplates one who is employed in
the employer’s home to minister exclusively to the personal
comfort and enjoyment of the employer’s family. The Supreme
Court already held that the mere fact that the househelper is
working in relation to or in connection with its business
warrants the conclusion that such househelper or domestic
servant is and should be considered as a regular employee
(Apex Mining Co., Inc. v. NLRC, G.R. No. 94951, April 22,
1991). Here, Linda was hired not to minister to the personal
comfort and enjoyment of her employer's family but to attend
to other employees who teach and live inside the campus.
SEASONAL EMPLOYMENT - Employment where the job,
work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
*** During off-season, the relationship of employer-employee
is not severed; the Seasonal Ee is merely considered on LOA
without pay. Seasonal workers who are repeatedly engaged
from season to season performing the same tasks are deemed
to have acquired regular employment.
CASUAL EMPLOYMENT - It is an employment where the
employee is engaged in an activity which is not usually
necessary or desirable in the usual business or trade of the
employer, provided: such employment is neither Project nor

Seasonal (LC, Art. 295). He performs only an incidental job in
relation to the principal activity of the employer.
PROJECT EMPLOYMENT – contemplates an arrangement
whereby the employment has been fixed for specific project or
undertaking whose completion or termination has been
determined at the time of the engagement of the employee.
TO BE CONSIDERED PROJECT BASED, EMPLOYER MUST
SHOW COMPLIANCE WITH 2 REQUISITES:
1) Employee was assigned to carry out a specific project or
undertaking; and
2) Duration and scope of which were specified at the time
they were engaged for such project.
WHEN MAY A WORK POOL EMPLOYEE DEEMED A
REGULAR EMPLOYEE:
1) Continuously, as opposed to intermittently, re-hired by
the same employer for the same tasks; and
2) These tasks are vital, necessary and indispensable to
the usual business or trade of the employer;
***However, it was held that repeated rehiring of project
employees to different projects does not ipso facto make them
regular employees. Case law states that length of service
(through rehiring) is not the controlling determinant of the
employment tenure of project-based employees but, whether
the employment has been fixed for a specific project or
undertaking, with its completion having been determined at
the time of their engagement.
PROBATIONARY EMPLOYMENT – one where the worker,
legally referred to as probationary employee, is on trial by the
employer during which the employer determines whether or
not said employee is qualified for permanent employment.
***USE AT YOUR OWN RISK
#GOALDIGGERS
CHARACTERISTICS OF PROBATIONARY EMPLOYMENT
1. It is an employment for a trial period;
2. It is a temporary employment status prior to regular
employment;
3. It arises through a contract with the following elements:
a. The employee must learn and work at a particular
type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The employer reserves the power to terminate during
or at the end of the trial period
e. And if the employee has learned the job to the
satisfaction of the employer, he becomes a regular
employee.
PERIOD OF PROBATIONARY EMPLOYMENT:
GENERAL RULE: It shall not exceed 6 months;
EXCEPTIONS:
1) When the employer and employee agree on a shorter or
longer period;
2) When the nature of work to be performed by the
employee requires a longer period, such as extensive
trainings;
3) When a longer period is required and established by
company policy.
***six month probationary period should be reckoned from the
date of appointment up to the same calendar date of the 6th
month following
***Probationary employee terminated 3 days after the
expiration of the six month period, deemed regular employee
***Probationary employees are protected by the security of
tenure;

SERVICES OF AN EMPLOYEE ENGAGED ON A
PROBATIONARY BASIS MAY BE TERMINATED ON 2
GROUNDS:
1) For a JUST CAUSE;
2) When he fails to qualify as a regular employee in
accordance with reasonable standards made known by
the employer to the employee at the time of his
engagement.
Purpose of the probation period
*The purpose of the probation period is to afford the employer
an opportunity to observe the fitness of a probationary
employee at work.
QUESTION: Michelle Miclat was employed on a
probationary basis as marketing assistant by Clarion
Printing House but during her employment she was not
informed of the standards that would qualify her as a
regular employee. 30 days after, Clarion informed Miclat
that her employment contract had been terminated
without any reason. Miclat was informed that her
termination was part of Clarion’s cost-cutting measures.
Is Miclat considered as a regular employee and hence
entitled to its benefits?
ANSWER: YES. In all cases of probationary employment, the
employer shall make known to the employee the standards
under which he will qualify as a regular employee at the time
of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular
employee. In the case at bar, she was deemed to have been
hired from day one as a regular employee.
***USE AT YOUR OWN RISK
#GOALDIGGERS
TERMINATION BY EMPLOYER
2 FOLD REQUIREMENTS FOR LAWFUL DISMISSAL
1. SUBSTANTIVE – legality or illegality of the act of dismissal
(just and authorized causes)
2. PROCEDURAL – legality or illegality of the manner of
dismissal (due process; notice and hearing)
PROCEDURAL REQUIREMENTS OF DISMISSAL FOR JUST
CAUSES:
1. Notice (two-notice rule) – the employer is required to
furnish an employee who is to be dismissed with 2 written
notices before such termination:
a. Pre-notice- the notice to apprise the employee of the
particular acts or omissions for which dismissal is
sought and is considered as the proper charge;
b. Post-notice- the notice informing the employee of the
employer’s decision to dismiss him which notice 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.
2. Hearing (opportunity to be heard) – the worker may
answer the allegations against him in the notice of dismissal
within a reasonable period from receipt of the notice of
dismissal with the ample opportunity to be heard.
3. Judgement/Decision to Dismiss – it should be in writing
and should clearly state all the reason thereof.
Under the Perez Doctrine it is no longer the 2 notice rule
and hearing, because you can now dispense the hearing. The
Supreme Court held that what is important is that the
parties are given the opportunity to be heard unless they
request for a hearing. What is required is that the
complainant is given the opportunity to be heard (Perez v

Philippine Telegram and Telephone Company, G.R. 152048,
April 7,2009).
Where the employer had a valid reason to dismiss the
employee but has failed to comply with the due process
requirement, the dismissal may be upheld but the employer
will be penalized to pay an indemnity to the employee
(Wenphil Corp. v. NLRC, G.R. No. 80587, February 8, 1989).
PREVENTIVE SUSPENSION
The employer may place the employee under preventive
suspension, during the pendency of the investigation, if his
continued employment poses a serious and imminent threat
to life and property of the employer or his employees.
NOTE: It must not be more than 30 days; otherwise it will
amount to constructive dismissal.
JUST CAUSES FOR DISMISSAL
1. SERIOUS MISCONDUCT OR WILLFUL DISOBEDIENCE by
the employee of the lawful orders of his employer or
representative in connection with his work;
2. GROSS AND HABITUAL NEGLECT by the employee of his
duties;
3. FRAUD OR WILLFUL BREACH by the employee of the trust
reposed in him by his employer or duly organized
representative;
4. 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 representative;
5. OTHER CAUSES ANALOGOUS to the foregoing
***USE AT YOUR OWN RISK
#GOALDIGGERS
SERIOUS MISCONDUCT - It is an improper or wrong
conduct; the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in
judgment. To be serious within the meaning and intendment
of the law, the misconduct must be of such grave and
aggravated character and not merely trivial or unimportant.
ELEMENTS:
1. It must be serious or of such a grave and aggravated
character;
2. Must relate to the performance of the employees’ duties;
3. Employee has become unfit to continue working for the
employer
QUESTION: Samson made insulting and obscene
utterances towards the General Manager saying, “Si EDT
bullshit yan, sabihin mo kay EDT yan” among others
during the Christmas party. Are the utterances towards
the General Manager gross misconduct?
ANSWER: The alleged misconduct of Samson when viewed in
its context is not of such serious and grave character as to
warrant his dismissal. Samson made the utterances and
obscene gestures at an informal Christmas gathering and it is
to be expected during this kind of gatherings, where tongues
are more often than not loosened by liquor of other alcoholic
beverages, that employees freely express their grievances and
gripes against their employers. Employees should be allowed
wider latitude to freely express their grievances and gripes
against their employer. Employees should be allowed wider
latitude to freely express their sentiments during these kinds
of occasions which are beyond the disciplinary authority of
the Employer.

WILLFUL DISOBEDIENCE - There is wilful disobedience when
there is wanton disregard to follow orders of the employer.
Willful is characterized by a wrongful perverse mental attitude
rendering the employee’s act inconsistent with the proper
subordination.
The employee’s disobedience must relate to substantial
matters, not merely to trivial or unimportant matters.
Disobedience to be considered willful must be resorted to
without regard to its consequences.
REQUISITES:
1. The employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful
and perverse attitude; and
2. The disobeyed orders, regulations, or instructions of the
employer must be:
a. Reasonable and lawful
b. Sufficiently known to the employee
c. In connection with the duties which the employee has
been engaged to discharge
QUESTION. Is refusal to a promotion by an employee an
act of insubordination or willful disobedience?
ANSWER. NO. There is no law that compels an employee to
accept a promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has the right to
refuse. The exercise of the employee of the right to refuse a
promotion cannot be considered in law as insubordination or
willful disobedience
GROSS AND HABITUAL NEGLIGENCE - It implies a want or
absence of or failure to exercise diligence that an ordinary
prudent man would use in his own affairs. However, such
***USE AT YOUR OWN RISK
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neglect must not only be gross but must also be habitual in
character.
DEGREE OF NEGLIGENCE AS A JUST CAUSE FOR
TERMINATION
GENERAL RULE:Gross and habitual negligence.
a. Gross neglect has been defined as the want or
absence of or failure to exercise slight care or diligence,
or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to
avoid them.
b. Habitual neglect implies repeated failure to perform
one’s duties over a period of time, depending upon the
circumstance.
EXCEPTION: An employee who was grossly negligent in the
performance of his duty, though such negligence committed
was not habitual, may be dismissed especially if the grossly
negligent act resulted in substantial damage to the company.
FRAUD OR WILLFUL BREACH OF TRUST - Any act,
omission, or concealment which involves a breach of legal
duty, trust, or confidence justly reposed and is injurious to
another.
Fraud must be committed against the employer or
representative and in connection with the employee’s work.
REQUISITES OF FRAUD:
1) The employee has committed deceitful acts and used
dishonest means for personal gain or to damage the
employer; and

2) The fraud is work related which rendered him unfit to
work for his employer
REQUISITES FOR BREACH OF TRUST AND CONFIDENCE:
1) The employee holds a position of trust and confidence;
2) There exists an act justifying the loss of trust and
confidence; the act that betrays the employer’s trust
must be real;
3) The employee’s breach of the trust must be willful, it
was done intentionally, knowingly and purposely,
without justifiable excuse; and
4) The act must be work-related which renders him unfit
to perform it.
GUIDELINES FOR THE DOCTRINE OF LOSS OF
CONFIDENCE TO APPLY
1. Loss of confidence should not be simulated (reasonable
basis for loss of trust and confidence);
2. Not used for subterfuge for causes which are improper
and/or illegal or unjustified;
3. Not arbitrarily asserted in the face of overwhelming
evidence to the contrary;
4. Must be genuine, not a mere afterthought to justify
earlier action taken in bad faith; and
5. The employee involved holds a position of trust and
confidence
COMMISSION OF A CRIME - This refers to an offense
committed by the employee against the person of his employer
or any immediate member of his family or his duly authorized
representative and thus, conviction of a crime involving moral
turpitude is not analogous thereto as the element of relation
to his work or to his employer is lacking.
***USE AT YOUR OWN RISK
#GOALDIGGERS
***A criminal case need not be actually filed. The act itself is
sufficient.
***The conviction of an employee in a criminal case is not
indispensable to warrant his dismissal by his employer
ANALOGOUS CASES.- For an act to be included in analogous
cases of just causes of termination, it must be due to the
voluntary and/or willful act or omission of the employee.
***Previous offenses may be so used as a valid justification for
dismissal from work ONLY if the infractions are related to the
subsequent offense upon which the basis the termination of
employment is decreed.
DOCTRINE OF INCOMPATIBILITY - Where the employee
has done something that is contrary or incompatible with the
faithful performance of his duties, his employer has a just
cause for terminating his employment.
DOCTRINE OF COMMENSURATE PENALTY/
PROPORTIONALITY RULE - it is a hornbook doctrine that
infractions committed by an employee should merit only the
corresponding penalty demanded by the circumstance. The
penalty must be commensurate with the act, conduct or
omission imputed to the employee and must be imposed in
connection with the disciplinary authority of the employer.
AUTHORIZED CAUSES
It is a form of terminating employer-employee
relationship with a liability on the part of the employer to pay
separation pay as mandated by law.

AUTHORIZED CAUSES OF TERMINATION BY THE
EMPLOYER:
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchment
4. Closing or cessation of operation of the establishment or
undertaking
5. Disease
INSTALLATION OF LABOR-SAVING DEVICES
(AUTOMATION) - is a management prerogative of replacing
manpower with machine power in order to effect more
economy and greater efficiency in method of production
REQUISITES FOR A VALID AUTOMATION:
1. Written notice to the employee and to the DOLE at least
one (1) month before the intended date of termination;
2. Payment of separation pays of at least one (1) month for
every year of service;
3. Good faith in the discharge of employees; and
4. Reasonable criteria to be used in implementing automation
REDUNDANCY - It is the superfluity in the performance of a
particular work. It exists where the services of an employee
are in excess of what is reasonably demanded by the actual
requirements of the enterprise.
***A position is redundant when it is superfluous. Superfluity
is the outcome of some factors:
1. Over-hiring of workers
2. Decline in volume of business
3. Closure of a particular line of an economic activity
previously engaged by the employer.
***USE AT YOUR OWN RISK
#GOALDIGGERS
REQUISITES OF A VALID REDUNDANCY
1. Written notice served on both the employees and the DOLE
at least 1 month prior to separation from work
2. Payment of separation pay equivalent to at least 1 month
pay or at least 1 month pay for every year of service,
whichever is higher.
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining what positions
are to be declared redundant:
a. Less preferred status, e.g. temporary employee
b. Efficiency and
c. Seniority
RETRENCHMENT - It is the reduction of personnel usually
due to poor financial returns as to cut down on costs of
operations in terms off salaries and wages to prevent
bankcruptcy of the company.
***To be an authorized cause it must be effected in good
faith and for the retrenchment, which is after all a drastic
recourse with serious consequences for the livelihood of the
employee’s or otherwise laid-off.
***The kind of losses contemplated under the Labor Code is
actual or anticipated/impending losses. There is NO
prohibition for the EMPLOYER to embark on retrenchment
program if he could perceive that its economy will go down the
drain.
PREVENTIVE RETRENCHMENT IS ALLOWED
“To prevent losses” justifies retrenchment. Such
phrase means that retrenchment or termination of the
services of some employees is authorized to be undertaken by
the employer sometime before the losses anticipated are
actually sustained or realized. It is not the intention of the
lawmaker to compel the employer to stay his hand and keep

all his employees until sometime after losses shall have been
materialized.
STANDARDS TO JUSTIFY RETRENCHMENT
1. The losses expected should be substantial and not merely
de minimis in extent;
2. The substantial loss apprehended must be reasonably
imminent;
3. It must be reasonably necessary and likely to effectively
prevent the expected losses; and
4. Alleged losses if already realized, and the expected
imminent losses sought to be forestalled, must be proven by
sufficient and convincing evidence
REQUISITES OF A VALID RETRENCHMENT
1. Written notice served on both the Ee and the DOLE at least
1 month prior to the intended date of retrenchment;
2. Payment of separation pay equivalent to at least one month
pay or at least 1/2 month pay for every year of service,
whichever is higher;
3. Good faith in effecting retrenchment;
4. Proof of expected or actual losses;
5. To show that the employer first instituted cost reduction
measures in other measures in other areas of production
before undertaking retrenchment as a last resort; and
6. The employer used fair and reasonable criteria in
ascertaining who would be retained among the employees,
such as status, efficiency, seniority, physical fitness, age, and
financial hardship of certain workers.
***Mere sliding incomes or decreasing gross revenues are not
necessarily losses, much less serious business losses within
the meaning of the law.
***USE AT YOUR OWN RISK
#GOALDIGGERS
CRITERIA IN SELECTING EMPLOYEES TO BE
RETRENCHED
There must be fair and reasonable criteria to be used in
selecting employees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority
CLOSURE OF BUSINESS – is the complete or partial
cessation of the operations and/or shutdown of the
establishment of the employer.
2 KINDS OF CLOSURE:
1. Partial Closure – although grounded on economic losses,
partial closure is a form of retrenchment.
Requirements:
a. Written notice to the employee and to the DOLE at
least 1 month before the intended date of termination
b. Separation pay equivalent to at least ½ month pay
for every year of service.
c. Cessation of business is bonafide in character.
2. Total Closure due to economic reverses or losses
Requirements:
a. Written notice to the EE and to the DOLE at least 1
month before the intended date of termination.
b. Cessation of business is due to serious economic
reverses or losses.
Requisites:
a. Written notice served on both the employees and the
DOLE at least 1 month prior to the intended date of
closure

b. Payment of separation pay equivalent to at least one
month pay or at least 1/2 month pay for every year of
service, whichever is higher, except when closure is due
to serious business losses
c. Good faith
d. No circumvention of the law
e. No other option available to the employer
***30 day notice to DOLE is intended to enable the proper
authorities to determine after hearing whether such closure
and/or dismissal is being done in good faith;
SEPARATION PAY IN AUTHORIZED CAUSE DISMISSAL
a) ONE (1) MONTH PAY FOR EVERY YEAR OF
SERVICE
1) Labor saving devices;
2) Redundancy
b) ONE-HALF (1/2) MONTH PAY FOR EVERY YEAR OF
SERVICE
1) Retrenchment to prevent losses;
2) Closure of business NOT DUE to serious
economic reverses;
c) NO SEPARATION PAY
1) Closure or cessation of business due to serious
economic reverses or losses
OBLIGATION OF A TRANSFEREE OF THE CLOSED TO
ABSORB THE EMPLOYEES OF THE OLD CORPORATION
GENERAL RULE: There is no law requiring a bona fide
purchaser of assets of an on-going concern to absorb in its
employ the Ee’s of the transferor.
EXCEPTIONS
1. When the transaction between the parties is colored or
clothed with bad faith.
***USE AT YOUR OWN RISK
#GOALDIGGERS
2. Where the transferee was found to be merely an alter ego of
the different merging firms
3. Where the transferee voluntarily agrees to do so
DISEASE - It must be incurable within 6 months and the
continued employment is prohibited by law or prejudicial to
his health as well as to the health of his co-Ees with a
certification from the public health officer that the disease is
incurable within 6 months despite due to medication and
treatment.
DISEASE AS A GROUND FOR DISMISSAL
When the employee suffers from a disease, and:
1. His continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees
2. With a certification by competent public health
authority that the disease is incurable within 6 months
despite due medication and treatment.
SUBSTANTIVE REQUIREMENTS FOR TERMINATION DUE
TO DISEASE:
1) An employee has been found to be suffering from any
disease;
2) His continued employment is prohibited by law or
prejudicial to his health, as well as to health of his co-
employees;
3) A competent public health authority certifies that the
disease is of such nature or at such a stage that it
cannot be cured within a period of 6 months even with
proper medical treatment
***requirements of a medical certificate are mandatory;

***If the disease or ailment can be cured within 6 months,
employer shall not terminate the employee but shall ask the
employee to take a leave of absence.
***”any disease” includes non-contagious diseases;
**Twin Notice Rule applies to termination due to disease;
***an employee terminated due to disease is entitled to
separation pay equivalent to at least one (1) month salary or
to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year. The reason why an employee
gets less is the fact that he is also entitled to other benefits
such as those provided under the social security law and
PhilHealth Law.
Article 285. TERMINATION BY EMPLOYEE.
An employee may terminate without just cause the
employee-employer relationship by serving a written notice
on the employer at least one (1) month in advance. The
employer upon whom no such notice was served may hold the
employee liable for damages.
An employee may put an end to the relationship
WITHOUT SERVING ANY NOTICE ON THE EMPLOYER for
any of the following just causes:
1. Serious insult by the employer or his representative
on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the
employee by the employer or his representative;
3. Commission of a crime or offense by the employer or
his representative against the person of the employee or any
of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
***USE AT YOUR OWN RISK
#GOALDIGGERS
***Theabove mentioned just causes could compel an
employee to resign which metamorphoses into a case of
constructive dismissal;
ABANDONMENT – the deliberate and unjustified refusal of an
employee to resume his employment.
2 FACTORS FOR A VALID ABANDONMENT:
1) The failure to report for work or absence without valid
or unjustifiable reason;
2) A clear intention to sever employer-employee
relationship, with the second as the more determinative
factor which is manifested by overt acts from which it
may be deduced that the employee has no more
intention to work.
RESIGNATION – the voluntary act of an employee who finds
himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service,
then he has no other choice but to dissociate himself from his
employment.
***Once resignation is accepted and approved by the
employer, its withdrawal requires the consent of the employer.
***Resignation to be effective MUST BE IN WRITING; However,
there is no legal prohibition for an employee to resign verbally;
***VERBAL RESIGNATION once tendered and accepted by the
employer can no longer be withdrawn as it was already “FAIT
ACCOMPLI”
***Voluntary resignation; NO SEPARATION PAY;
CONSTRUCTIVE DISMISSAL – exists where an employee
quits or resigns because “continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a dimunition in pay.

BURDEN OF PROOF ON THE EMPLOYEE - The employee
who is complaining of constructive dismissal has the burden
of proof “to prove that her resignation was not voluntary, but
was actually a case of constructive dismissal, with clear,
positive, and convincing evidence.”
RESIGNATION CONSTRUCTIVE DISMISSAL
Voluntary Involuntary or forced
resignation
Not entitled to separation pay, Entitled to either
unless it is a company reinstatement or separation
practice or provided in the pay and backwages.
CBA
Burden of proving Burden of provingconstructive
voluntariness is on the dismissal is on the employee.
employer.
QUESTION: Quinanola was transferred from the position
of Executive Secretary to the Executive Vice President
and General Manager to the Production Dep’t as
Production Secretary. Quinanola rejected the assignment
and filed a complaint for illegal dismissal due to
constructive dismissal. Did the transfer of Quinanola
amount to constructive dismissal?
ANSWER: NO. Quinanola’s transfer was reasonable since it
did not involve a demotion in rank or a change in her place of
work nor a diminution in pay, benefits and privileges. It did
not constitute constructive dismissal. Furthermore, an Ee’s
security of tenure does not give him a vested right in his
position as would deprive the company of its prerogative to
change his assignment or transfer him where he will be most
useful
***USE AT YOUR OWN RISK
#GOALDIGGERS
FORCED RESIGNATION – takes place where the employee is
made to perform an involuntary act such as submission of
resignation, in order to validate the action of management in
inveigling, luring or influencing or practically forcing the
employee to effectuate the termination of employment, instead
of the employer doing the termination himself.
***The test of constructive dismissal is whether a reasonable
person in the employee’s position would have felt compelled to
give up his position under the circumstances.
ANALOGOUS CASES – the following constitute analogous
causes where an employee may terminate employment
relationship:
1) Undue delay in the payment of employee’s salaries or
wages;
2) Violation of employment terms and conditions;
3) Insanitary or unhygienic working conditions
WHEN AN EMPLOYMENT NOT DEEMED TERMINATED:
1. There is a bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6)
months; or,
2. The fulfilment by the employee of a military or civic duty
REQUISITES
1. It must be for a period not exceeding six months;
2. The employer shall reinstate the employee to his former
position without loss of seniority rights; and,
3. That the employee indicates his desire to resume his work
not later than one month from the resumption of operations of
his employer.

OBLIGATION OF THE EMPLOYER UPON RESUMPTION OF
WORK
1. Notify the employees of the resumption of operation; and,
2. Reinstate the employees to prior position.
OBLIGATION OF THE EMPLOYEE UPON RECEIPT OF
NOTIFICATION
Notify employer not later than one month of desire to return.
NOTE: If employee shall not notify employer of ones desire to
return, the employee shall be deemed resigned and shall not
be entitled to separation pay, as he is deemed to have
resigned voluntarily.
EMPLOYEE NOT REINSTATED AFTER THE RESUMPTION
OF OPERATIONS
This amounts to constructive dismissal. Thus, the employee is
entitled to the following:
1. Reinstatement to his position or to a substantially
equivalent position;
2. Backwages inclusive of allowances and other benefits or
their monetary equivalent.
QUESTION: An accidental fire gutted the JKL factory in
Caloocan. JKL decided to suspend operations and
requested its employees to stop reporting for work. After
six (6) months, JKL resumed operations but hired a new
set of employees. The old set of employees filed a case for
illegal dismissal. If you were the Labor Arbiter, how would
you decide the case? (2014 Bar Question)
ANSWER: I will rule in favor of the employees. JKL factory
merely suspended its operations as a result of the fire that
gutted its factory. Article 286 of the Labor Code states that an
employer may bona fide suspend the operation of its business
***USE AT YOUR OWN RISK
#GOALDIGGERS
for a period not exceeding six (6) months. In such a case,
there would be no termination of the employment of the
employees, but only a temporary displacement. Since, the
suspension of work lasted more than six months, there is now
constructive dismissal
RETIREMENT FROM THE SERVICE
RETIREMENT - It is the result of a bilateral act of the parties,
a voluntary agreement between the employer and the
employee whereby the latter after reaching a certain age
agrees and/or consents to sever his employment with the
former.
PERSONS COVERED BY RETIREMENT BENEFIT
All employees in the private sector:
1. Regardless of their position, designation or status; and
2. Irrespective of the method by which their wages are paid;
3. Part-time employees;
4. Employees of service and other job contractors;
5. Domestic Helpers or Persons in the personal service of
another;
6. Underground mine workers (R.A. 8558);
7. Employees of GOCCs organized under the Corporation
Code (without original charters)
PERSONS NOT COVERED BY RETIREMENT BENEFITS
1. Employees of the National Government and its political
subdivisions, including GOCCs (if they are covered by the
Civil Service Law);
2. Employees of retail, service, and agricultural
establishments or operations employing NOT MORE THAN
10 EMPLOYEES.

RETIREMENT AGE
It is the age of retirement that is specified in the
1. CBA;
2. Employment contract;
3. Retirement plan; or
4. Optional retirement age for underground mining
Employees.
COMPUTATION OF RETIREMENT BENEFITS IN THE
ABSENCE OF AN APPLICABLE AGREEMENT OR
RETIREMENT PLAN
A retiree is entitled to a retirement pay equivalent to at
least ½ month salary for every year of service, a fraction of at
least 6 months being considered as 1 whole year (R.A. 7641).
Composition of ½ month salary or retirement pay
Unless parties provide for broader inclusions, retirement pay
is comprised of:
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of service
incentive leaves (22.5/year of service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by the Employer
and Employee (IRR, Book VI, Rule II, Sec.5.2).
***The “one-half month salary” is equivalent to 22.5 days.
PRESCRIPTION OF OFFENSES AND CLAIMS
Article 305. OFFENSES. Offenses penalized under this Code
and the rules and regulations issued pursuant thereto shall
prescribe in three (3) years.
***USE AT YOUR OWN RISK
#GOALDIGGERS
All unfair labor practice arising from Book V shall be filed
with the appropriate agency within one (1) year from
accrual of such unfair labor practice; otherwise, they shall
be forever barred.
***Cause of action accrues upon the categorical denial of
claim;
***Prescriptive period to file for illegal dismissal is 4 years, as
it is one for injury to the rights of the plaintiff;
***Claims for backwages, damages and attorney’s fees
arising from employee’s claim of illegal dismissal shall
prescribe in 4 YEARS, not the 3 year period for filing
money claims.
PRESCRIPTIVE PERIOD NOT SUSPENDED BY CRIMINAL
CASE
The filing of the criminal case against the employee does
not have the effect of suspending or interrupting the
prescriptive period for the filing of an action for illegal
dismissal. An action for illegal dismissal is an
administrative case which is entirely separate and
distinct from a criminal action for estafa. Each may
proceed independently of the other.
QUESTION: Workers were terminated in
October/November 1997. They filed illegal dismissal
complaint in May 1998 but withdraw it voluntarily in
March 1999. Few years later, however, they again filed
the same kind of complaint in June 2002 or almost five
years after their dismissal in 1997. Is the complaint filed
out of time?

ANSWER: Yes. The four-year period to file an illegal dismissal
complaint had lapsed. The eight-month period during which
their cases were pending should not be excluded from the
four-year prescriptive period
#GOALDIGGERS
compensation case which shall be processed and
determined strictly in accordance with the pertinent
provisions of this Code.

PROMISSORY ESTOPPEL - It may arise from the making of a

promise, even though without consideration, if it was
intended that the promise should be relied upon. If in fact it
was relied on, a refusal to enforce it would virtually sanction
the perpetration of fraud or would result in other injustice.

Article 306 (291). MONEY CLAIMS. All money claims

arising from employer-employee relations accruing during
the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise
they shall be forever barred.

All money claims accruing prior to the effectivity of

this Code shall be filed with the appropriate entities
established under this Code within one (1) year from the
date of effectivity, and shall be processed or determined in
accordance with the implementing rules and regulations of
the Code; otherwise, they shall be forever barred.

Article 307 (292). INSTITUTION OF MONEY CLAIMS. Money

claims specified in the immediately preceding Article shall be
filed before the appropriate entity independently of the
criminal action that may be instituted in the proper
courts.

Pending the final determination of the merits of money

claims filed with the appropriate entity, no civil action
arising from the same cause of action shall be filed with
any court. This provision shall not apply to employees

***USE AT YOUR OWN RISK