Special Lecture

Labor Law Review

Post-employment, Social Legislation, Self-organization

General Rule

A regular employee is entitled to security of tenure

Terminate employees based only on either just or authorized cause/s

RELIEFS IN CASE OF ILLEGAL DISMISSAL

1. Reinstatement without loss of seniority rights and other privileges

2. Full backwages including allowances

3. Other benefits or their monetary benefits

REINSTATEMENT

Immediately executory

Employer has to either RE-ADMIT them under the same terms and
conditions prevailing prior to their dismissal, or to REINSTATE THEM IN
THE PAYROLL

Failing to exercise the options in the alternative, employer must pay the
employees salaries. (ISLRIZ Trading v. Capada)

Strained relations

Reinstatement exacerbates the tension and strained relations between the

parties, or

The relationship between the employer and the employee has been unduly
strained by reason of their irreconcilable differences, particularly where
the illegally dismissed employee held a managerial or key position in the
company, it would be more prudent to order payment of. (Bank of Lubao v.
Manabat)

BACKWAGES

Basis of computation
• From the time compensation is withheld up to actual reinstatement

Backwages should not be diminished or reduced by the earnings derived

by him elsewhere during the period of his illegal dismissal.

Employer must be penalized for illegally dismissing his employee.

(Bustamante v. NLRC)

SERIOUS MISCONDUCT
1. Misconduct
2. Grave and aggravated in character
3. Relating to the performance of employee’s duties
4. Rendering the employee unfit to continue working for the employer

Fight requires physical combat; it is more than a verbal tussle to constitute

as serious misconduct (Northwest Airlines v. del Rosario)

1. Sexual harassment (fondling the hands, massaging the shoulder and

caressing the nape of a secretary);
2. Fighting within company premises;
3. Uttering obscene, insulting or offensive words against a superior;
4. Misrepresenting that a student is his nephew and pressuring and
intimidating a co-teacher to change that student’s failing grade to
passing (Colegio de San Juan de Letran v. Villla)

Pre-marital sexual relations between two consenting adults who have no

impediment to marry each other, and, consequently, conceiving a child
out of wedlock, does not amount to a disgraceful or immoral conduct
under Section 94(e) of the 1992 MRPS. (Leus v. St. Scholastica)

Outburst on-stage during a Christmas party, particularly the invectives

thrown at his superior ("Putang ina mo ka VK, gago ka.”) constitutes serious
misconduct (Benitez v. Sta. Fe Moving & Relocation)
 willful disobedience/ insubordination

1. Disobedience or insubordination
2. Wilful or intentional characterised by a wrongful and perverse
attitude
3. Order violated must be reasonable, lawful and made known to the
employee
4. Pertain to duties which he has been engaged to discharge

Eating non-company products outside the employer’s premises during break

time; leaving a chilled iced tea bottle inside the iced bin in violation of the
company’s sanitation and hygiene policy, do not constitute willful breach of
trust (Coffee Bean & Tea Leaf v. Arenas)

Sanchez was validly dismissed due to willful disregard and disobedience of

the company Code of Discipline punishing dishonest acts, i.e., "theft,
pilferage of hospital or co-employee property, x x x or its attempt in any
form or manner from the hospital, co-employees, doctors, visitors, [and]
customers (external and internal)". Such act is obviously connected with
Sanchez's work, who, as a staff nurse, is tasked with the proper stewardship
of medical supplies. (St. Luke’s Medical v. Sanchez)

Gross and habitual neglect of duty

1. Neglect of duty
2. Gross and habitual in character

The totality of infractions or the number of violations committed during

the period of employment shall be considered in determining the penalty to
be imposed upon an erring employee. The offenses committed by him
should not be taken singly and separately but in their totality. (Mansion
Printing v. Bitara)

Neglect in the obligation to maintain constant communication with her

superior in order to ensure that her work is up to par; her negative attitude
and unprofessional behavior towards co-workers and the company;
inefficiency and ineptitude in her job as a CHR Director, all constitute gross
and habitual neglect of duty (Reyes-Rayel v. Philippines Leun Thai
Holdings)
An employer has the right to require the performance of overtime service in
any of the situations contemplated under Article 89 of the Labor Code and
an employees non-compliance is willful disobedience. (Realda v. New Age
Graphics)

A procurement officer who repeatedly violates the company’s procurement

manuals is liable for willful disobedience. (Mirant Corporation v. Sario)

An unsatisfactory rating can be a just cause for dismissal only if it amounts

to gross and habitual neglect of duties.

Poor or unsatisfactory performance of an employee does not necessarily

mean that he is guilty of gross and habitual neglect of duties (INC Shipping
Mgt.v. Camporedondo)

ABANDONMENT

A just cause for dismissal based on Article 282(b) of the Labor Code
(Protective Maximum Security v. Fuentes)

Deliberate and unjustified refusal of an employee to resume his

employment

FACTORS

1. Failure to report for work or absence without valid or justifiable

reason; and
2. a clear intention to sever employer-employee relationship

Fraud or wilful breach of trust

1. Act, omission or concealment

2. Involving a breach of legal duty, trust or confidence justly reposed
3. Committed against the employer or his/her representative
4. In connection with the employees work

• Employees occupying positions of trust and confidence;

Managerial employees: vested with the powers and prerogatives to lay

down management polices and/or to hire, transfer, suspend, lay-off,
 recall, discharge, assign or discipline employees, or effectively
recommend such managerial actions.

• situations where the employee is routinely charged with the care and
custody of the employer’s money or property.

Cashiers, auditors, property custodians, or those who, in the normal

and routine exercise of their functions, regularly handle significant
amounts of money or property (Mendoza v. NLRC)

Loss of trust and confidence:

(1) loss of confidence should not be simulated;

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

Loss of trust and confidence arising out of an act of misappropriation of

company funds in the course of processing customer applications; the
issuance of additional receipts for excessive payments exacted from
customers is a willful breach of the trust reposed by the
company.(Villanueva, Jr. v. NLRC)

The act that breached the trust must be willful such that it was done
intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently (Torres v. Rural Bank of San Juan)

The function of vault custodian and cashier in one person is a very risky
situation of conflicting interests — the cashier can purloin the money in her
custody and effectively cover her tracks by simply not recording in the
books the cash receipt she misappropriated. Only a most trusted clerk would
be allowed to perform the two functions, and the respondent enjoyed this
trust. (PJ Lhuiller v. Velayo)
An account and marketing officer tasked with the approval of loans is one
entrusted with delicate matters, including the custody, handling, care and
protection of the bank's assets.

Disclosing his password to another employee and participation in the

issuance of fraudulent bank certifications constitute justifies loss of trust and
confidence. (Philippine Savings Bank v. Barrera)

ANALOGOUS CAUSES

Theft committed by an employee against a person other than his employer, if

proven by substantial evidence, is a cause analogous to serious misconduct
(Hocheng Phils. v. Farrales)

An employee’s attitude problem is a valid ground for his termination. It is a

situation analogous to loss of trust and confidence. (Heavylift Manila v. CA
& Galay)

CONSTRUCTIVE DISMISSAL

Constructive dismissal sets in when the preventive suspension went beyond

the maximum period allowed by law.

A diminution of pay is prejudicial to the employee and amounts to

constructive dismissal. (Siemens Phils. v. Domingo)

INSTALLATION OF
LABOR SAVING DEVICE

1. Introduction of machine, equipment or other devices;

2. In good faith;
3. Valid purpose (save on cost, enhance efficiency and other justifiable
economic reasons)
4. No other option available than the introduction of machinery or
equipment and the consequent termination of the employee
5. Fair and reasonable criteria in selecting the employee
 REDUNDANCY

1. Superfluous positions or services of employees;

2. In excess of what is reasonably demanded by the actual requirements of
the enterprise to operate economically and efficiently;
3. Good faith in abolishing redundant positions;
4. Fair and reasonable criteria in selecting the employee
5. Adequate proof of redundancy (i.e. new staffing pattern, feasibility
studies/proposals, viability of the new created positions, job description,
approval by the management of the restructuring)

Change in the job title is not synonymous to a change in the functions. A

position cannot be abolished by a mere change of job title.

In cases of redundancy, the management should adduce evidence and prove

that a position which was created in place of a previous one should pertain to
functions which are dissimilar and incongruous to the abolished office.
(Benson Industries Employees Union v. Benson Employees)

A position is redundant where it is superfluous, and superfluity of a position

or positions may be the outcome of a number of factors, such as:

• overhiring of workers,
• decreased volume of business, or
• dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. (Wiltshire File v.
NLRC)

RETRENCHMENT

1. Reasonably necessary and likely to prevent business losses;

2. Losses (if incurred) should not be de minimis but substantial, serious,
actual, and real; if expected, should be reasonably imminent;
3. Proven by sufficient and convincing evidence;
4. Retrenchment must be in good faith, for the advancement of employer’s
interest and not to defeat or circumvent the employee’s right to security
of tenure;
5. Fair and reasonable criteria in ascertaining who would be dismissed
PROOF:

Financial statements, audited by an independent auditor, showing the net

losses suffered within a sufficient period of time (GJT Rebuilders v. Ambos)

STANDARDS:

1. LIFO – except when employee volunteers to be separated

from employment
1. Less preferred status
2. Efficiency
3. Seniority

CLOSURE OR CESSATION OF OPERATIONS

Closure 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 companys business (Cheniver Deco Print v.
NLRC)

The employer is in good faith when it undertook several measures in cutting

down its costs: withdrawing certain privileges of petitioners executives and
expatriates; limiting the grant of additional monetary benefits to managerial
employees and cutting down expenses; selling of company vehicles; and
infusing fresh capital into the company. (Lopez v. Irvine Construction)

The one month prior notice rule is to give DOLE an opportunity to ascertain
the veracity of the cause of termination. Noncompliance clearly violates the
employees right to statutory due process.

While the employer is duty bound to reinstate his employees to their former
positions without loss of seniority rights if the operation of the business is
resumed within six months, employment is deemed terminated where the
suspension exceeds said period. Otherwise, the employer shall be entitled to
separation pay. (Lopez v. Irvine Construction)

Art. 283 of the Labor Code does not obligate an employer to pay separation
benefits when the closure is due to losses.
Closure or cessation is aimed at preventing further financial drain upon an
employer who cannot anymore pay its employees since business has already
stopped. As a form of recompense, the employer is required to pay its
employees separation benefits, except when the closure is due to serious
business losses. (North Davao Mining v. NLRC)

When the parties agree to deviate from the CBA and unqualifiedly covenant
the payment of separation benefits irrespective of the employer’s financial
position, then the obligatory force of that contract prevails and its terms
should be carried out to its full effect. (Benson Industries Employees Union
v. Benson Employees)

DISEASE

In the absence of the required certification by a competent public health

authority, the employee’s dismissal on account of disease shall be illegal.
(Wiltshire File v. NLRC)

It is the employer who terminates the services of the employee found to be

suffering from any disease. It does not contemplate a situation where it is the
employee who severs his or her employment ties. (Villaruel v. Yeo Han
Gan)

TWIN NOTICE REQUIREMENT

First notice
• Show cause within at least 5 days from receipt

Second notice

Applies only in dismissal thru just causes.

Must be in writing and personally served to the employee

A mere copy of the notice of termination allegedly sent by respondent to

petitioner, without proof of receipt, or in the very least, actual service thereof
upon petitioner, does not constitute substantial evidence. (Bughaw v.
Treasure Island)
Applicable Law
• CBA or agreement
• In the absence of an agreement, Art. 302 (formerly Art. 287) of the
Labor Code

RULES
• The CBA/agreement shall prevail over Art. 302
• If the agreement provides for an earlier retirement age, it will still prevail
• But if the agreement provides for lower benefits than that provided by
law, Art. 302 shall apply (Grace Christian High School v. Lavandera)

RETIREMENT

Retirement benefits and separation pay are not mutually exclusive

Retirement benefits are a form of reward for an employee's loyalty and

service to an employer and are earned under existing laws, CBAs,
employment contracts and company policies.

Separation pay is that amount which an employee receives at the time of his
severance from employment; recoverable only in instances enumerated
under Articles 283 and 284 of the Labor Code or in illegal dismissal cases
when reinstatement is not feasible (Goodyear Phils. v. Angus)

Retirement is the result of a bilateral act of the parties, a voluntary

agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the
former.

The age of retirement is primarily determined by the existing agreement

between the employer and the employees. In the absence of such agreement,
the retirement age shall be fixed by law. (Universal Robina Sugar Milling v.
Caballeda)

There is a difference between drivers paid under the boundary system and
conductors who are paid on commission basis for purposes, of applying the
law on SIL and retirement.
Employees paid on a commission basis still fall within the coverage of R.A.
7641; their retirement pay should include the cash equivalent of the 5-day
SIL and 1/12 of the 13th month pay. (Serrano v. Severino Santos Transit)

Retirement plans allowing employers to retire employees who have not yet
reached the compulsory retirement age of 65 years are not per se repugnant
to the constitutional guaranty of security of tenure.

By its express language, the Labor Code permits employers and employees
to fix the applicable retirement age at 60 years or below, provided that the
employees retirement benefits under any CBA and other agreements shall
not be less than those provided therein.

Company retirement plans must not only comply with the standards set by
existing labor laws, but they should also be accepted by the employees to be
commensurate to their faithful service to the employer within the requisite
period

Due process requires that notice of the employers decision to retire an

employee be given to the employee; there is no need for the employer to
consult the employee prior to retiring him (Obusan v. Phil. Nat’l Bank)

Retirement is a different specie of termination of employment from

dismissal for just or authorized causes. Retirement, on the other hand, 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 (Cainta
Catholic School v. Cainta Catholic School Employees Union)

SOCIAL SECURITY SYSTEM

DEPENDENTS

1. Legal spouse entitled to receive support

2. Child (unmarried legitimate, legitimated, legally adopted, and
illegitimate child, not gainfully employed, 21 years old and below [if
over, must either be congenitally ill or while still a minor has been
permanently incapacitated and incapable of self‐ support, physically or
mentally]); and
3. Parent receiving regular support
EMPLOYMENT
• Any service performed by an employee for his employer

EXCEPT
1. Purely casual employment
2. Service performed on or in connection with an alien vessel outside
the Philippines;
3. Service performed in the Philippine Government or instrumentality
or agency thereof;
4. Employment in foreign government or international organization, or
their instrumentalities

EXCEPT: In an agreement with the Philippine Government for the

inclusion in the SSS

EXCEPTION TO THE EXCEPTION: Those already covered by

their respective civil service retirement systems

5. Other services performed by temporary and other employees

excluded by SSS regulations

BENEFICIARIES
1. Dependent spouse until he or she remarries,
2. Dependent children (legitimate, legitimated or legally adopted, and
illegitimate) who shall be the primary beneficiaries of the member
3. In their absence, the dependent parents who shall be the secondary
beneficiaries of the member.
4. In the absence of all of the foregoing, any other person designated by
the member as his/her secondary beneficiary.

COMPULSORY MEMBERSHIP
• All employees not over sixty (60) years of age and their employers
• Spouses who devote full time to managing the household and
family affairs, may be covered by the SSS on a voluntary
basis.
• OFWs on a voluntary basis
• Self-employed individuals
•
EFFECTIVE DATE OF COVERAGE
First day
• Employer’s operation
• Employment by the employee
Upon registration (self-employed)
•
FAILURE TO REMIT
• Pay the contribution
• Penalty of three percent (3%) per month from the date the contribution
falls due until paid

REFUSES OR NEGLECTS TO PAY

• SSS shall collect
• Employee still entitled to the benefits

NATURE OF THE FUND

• Trust fund of the highest order

MATERNITY BENEFITS
• Coverage
• Female employee
• Paid at least three (3) monthly contributions in the 12-month
period preceding the semester of childbirth, abortion or
miscarriage
• 60 days (normal delivery); 78 days (caesarian operation)
• Only for the first four (4) deliveries or miscarriages

REMEDIES
• Commission
• Any disputes with respect to coverage, benefits, contributions and
penalties
• Decision shall be final and executory 15 days after notification
• Exhaustion of administrative remedies should be observed by the
parties
• Appeal to the Court of Appeals via Rule 43, then to the Supreme
Court via Rule 45
 SSS versus Azote

Only the legal spouse of the deceased member is qualified to be the

beneficiary of the latter’s SSS benefits

Although the SSC is not intrinsically empowered to determine the validity of

marriages, it is required by Section 4(b)(7) of R.A. No. 8282 to examine
available statistical and economic data to ensure that the benefits fall into
the rightful beneficiaries

Dy Caico versus SSS

The proviso “as of the date of his retirement” in Section 12-B(d) of Rep.
Act No. 8282 similarly violates the due process and equal protection clauses
of the Constitution.

Classifying dependent spouses and determining their entitlement to

survivor’s pension based on whether the marriage was contracted before or
after the retirement of the other spouse, regardless of the duration of the said
marriage, bears no relation to the achievement of the policy objective of the
law, i.e., “provide meaningful protection to members and their beneficiaries
against the hazard of disability, sickness, maternity, old age, death and other
contingencies resulting in loss of income or financial burden.”

SSS versus Atlantic Gulf

When the controversy involves the non-implementation of the approved and

agreed dacion en pago on the part of the SSS, it is a suit for specific
performance and one incapable of pecuniary estimation beyond the
competence of the Commission

Ortega versus SSS

Claims under the Labor Code for compensation and under the Social
Security Law for benefits are not the same as to their nature and purpose.

The pertinent provisions of the Labor Code govern compensability of work-

related disabilities or when there is loss of income due to work-connected or
work-aggravated injury or illness.
Benefits under the Social Security Law are intended to provide insurance or
protection against the hazards or risks of disability, sickness, old age or
death, inter alia, irrespective of whether they arose from or in the course of
the employment

SSS VERSUS
RIZAL POULTRY

The mandatory coverage under the Social Security Act is premised on the
existence of an employer-employee relationship

The illegal dismissal case before the NLRC involved an inquiry into the
existence or non-existence of an employer-employee relationship. The very
same inquiry is needed in the SSC case.

ACT OF MINISTRATION
Visayan Stevedore Transport Company v. Workmen’s Compensation
Commission

Alano versus ECC

COMING AND GOING RULE

When an employee is accidentally injured at a point reasonably proximate to

the place at work, while he is going to and from his work, such injury is
deemed to have arisen out of and in the course of his employment

Lazo versus ECC

COMING AND GOING RULE

Central Bank security guard, who was granted permission to leave his post
so he could bring home a sack of rice and who met an accident along the
way, is entitled to workmen’s compensation under P.D. 626

GSIS versus Alegre

24 hour duty

A. Employee must be at the place where his work requires him to be;
B. Must have been performing his official functions;
C. If the injury is sustained elsewhere, the employee must have been
executing an order for the employer

The 24-hour duty doctrine should not be sweepingly applied to all acts and
circumstances causing the death of a police officer but only to those which,
although not on official line of duty, are nonetheless basically police service
in character.

GSIS versus Capacite

Compensability; Increased risk doctrine

For sickness and the resulting death of an employee to be compensable, the
claimant must show either:

1. that it is a result of an occupational disease listed under Annex “A” of

the Amended Rules on Employees’ Compensation with the conditions
set therein satisfied; or
2. if not so listed, that the risk of contracting the disease was increased
by the working conditions

NATIONAL HEALTH INSURANCE ACT

Principles

Equity
• The Program shall provide for uniform basic benefits. Access to care
must be a function of a person’s health needs rather than his ability to
pay

Responsiveness
• The Program shall adequately meet the needs for personal health
services at various stages of a member’s life

Social Solidarity
• The Program shall be guided by community spirit; Enhance risk sharing
among income groups, age groups, and persons of differing health
status, and residing in different geographic areas
Fiduciary Responsibility
• The Program shall provide effective stewardship, funds management,
and maintenance of reserves

Informed Choice
• The Program shall encourage members to choose from among
accredited health care providers

Compulsory Coverage
• All citizens of the Philippines shall be required to enroll in order to
avoid adverse selection and social inequity

Cost-sharing
• The Program shall continuously evaluate its cost sharing schedule to
ensure that costs borne by the members are fair and equitable and
that the charges by health care providers are reasonable

BENEFICIARY
• Any person entitled to health care benefits under this Act

COVERAGE

All citizens of the Philippines

DEPENDENT
1. Legitimate spouse who is not a member;
2. Unmarried and unemployed children (legitimate, legitimated,
illegitimate, acknowledged, legally adopted or stepchildren) below 21
years of age;
3. children who are 21 years old or above but suffering from
congenital disability, either physical or mental, or any disability
acquired that renders them totally dependent on the member for
support;
4. Parents who are 60 years old or above whose monthly income is
below an amount to be determined by the GSIS

HEALTH CARE PROVIDER

1. Duly licensed and accredited health care institution
2. Duly licensed and accredited health care professional
3. Health maintenance organization
 4. Community-based health care organization

CHANGE OF RESIDENCE
• A citizen can be under only one Local Health Insurance Office

• A person who changes residence, becomes temporarily employed, or for

other justifiable reasons, is transferred to another locality should inform
said Office of such transfer and subsequently transfer his Program
membership

EXCLUDED PERSONAL HEALTH SERVICES

• non-prescription drugs and devices;

• alcohol abuse or dependency treatment;
• cosmetic surgery;
• optometric services;
• fifth and subsequent normal obstetrical deliveries; and
• cost-ineffective procedures

QUASI-JUDICIAL POWERS

• to conduct investigations for the determination of a question,

controversy, complaint, or unresolved grievance brought to its
attention, render decisions or resolutions

• to summon the parties to a controversy, issue subpoenas requiring the

attendance and testimony of witnesses or the production of documents
and other materials necessary to a just determination of the case under
investigation

• to suspend temporarily, revoke permanently, or restore the

accreditation of a health care provider or the right to benefits of a
member and / or impose fines after due notice and hearing

GROUNDS FOR GRIEVANCE ACTION

1. any violation of the rights of patients;
2. willful neglect of duties of Program implementors that results in the
loss or non-enjoyment of benefits;
3. unjustifiable delay in actions or claims;
4. delay in the processing of claims that extends beyond the period agreed
upon; and
5. any other act or neglect that tends to undermine or defeat the purposes of
the NHIA

GSIS
MEMBER

Any person receiving compensation while in the service of an employer,

whether by election or appointment, irrespective of status of appointment,
including barangay and Sanggunian officials

DEPENDENT

1. Legitimate spouse dependent for support upon the member or pensioner;

2. Children (legitimate, legitimated, legally adopted child, including the
illegitimate child) unmarried, not gainfully employed, not over the age of
majority, 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; and
3. Parents dependent upon the member for support

COMPULSORY MEMBERSHIP

All employees receiving compensation who have not reached the

compulsory retirement age, irrespective of employment status

EXCEPT
1. members of the Armed Forces of the Philippines and the Philippine
National Police
2.
3. Members of the judiciary and constitutional commissions who shall
have life insurance only

PORTABILITY

All creditable services or periods of contributions made continuously or in

the aggregate of a worker under either of the Sectors shall be added up and
considered for purposes of eligibility and computation of benefits.
All services rendered or contributions paid by a member personally and
those that were paid by the employers to either System shall be considered in
the computation of benefits, which may be claimed from either or both
Systems.

TOTALIZATION

Adding up the periods of creditable services or contributions under each of

the Systems, for purposes of eligibility and computation of benefits

1. If a worker is not qualified for any benefits from both Systems;

2. If a worker in the public sector is not qualified for any benefits in the
GSIS; or
3. If a worker in the private sector is not qualified for any benefits from
the SSS.

If after totalization the worker‐member still does not qualify for any benefit,
the member will get whatever benefits correspond to his/her contributions
in either or both Systems.

If a worker qualifies for benefits in both Systems, totalization shall not

apply.

Overlapping periods of creditable services or contributions in both Systems

shall be credited only once for purposes of totalization