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# 1663 F. T. Benitez St, Malate, Manila
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Handout No. 42

Floating Status/Constructive Dismissals

The Court agrees with the ruling of the Labor Arbiter, NLRC and Court of Appeals that a floating status of
a security guard, such as respondent, for more than six months constitutes constructive dismissal. In
Nationwide Security and Allied Services, Inc. v. Valderama, 644 SCRA 299 (2011), the Court held: x x x the
temporary inactivity or “floating status” of security guards should continue only for six months. Otherwise,
the security agency concerned could be liable for constructive dismissal. The failure of petitioner to give
respondent a work assignment beyond the reasonable six-month period makes it liable for constructive
dismissal. (Emeritus Security and Maintenance Systems, Inc. vs. Dailig, 720 SCRA 572, G.R. No. 204761
April 2, 2014)

Article 279 of the Labor Code of the Philippines mandates the reinstatement of an illegally dismissed
employee, to wit: Security of Tenure. x x x An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages,
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. Thus, reinstatement
is the general rule, while the award of separation pay is the exception. The circumstances warranting the
grant of separation pay, in lieu of reinstatement, are laid down by the Court in Globe-Mackay Cable and
Radio Corporation v. National Labor Relations Commission, 206 SCRA 701 (1992), thus: Over time, the
following reasons have been advanced by the Court for denying reinstatement under the facts of the case
and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage
of time (22 years of litigation) or because of the realities of the situation; or that it would be ‘inimical to
the employer’s interest’; or that reinstatement may no longer be feasible; or, that it will not serve the
best interests of the parties involved; or that the company would be prejudiced by the workers’ continued
employment; or that it will not serve any prudent purpose as when supervening facts have transpired
which make execution on that score unjust or inequitable or, to an increasing extent, due to the resultant
atmosphere of ‘antipathy and antagonism’ or ‘strained relations’ or ‘irretrievable estrangement’ between
the employer and the employee. (Id)

Pakyaw Basis

Engagement on “pakyaw” or task basis does not characterize the relationship that may exist between the
parties, i.e., whether one of employment or independent contractorship. Article 97(6) of the Labor Code
defines wages as “x x x the remuneration or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered[.]” In relation to Article 97(6), Article 101 of the Labor Code speaks of workers paid by results or
those whose pay is calculated in terms of the quantity or quality of their work output which includes
“pakyaw” work and other non-time work. (David vs. Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

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Handout No. 42

Elements of Employer-Employee Relationship

To determine the existence of an employer-employee relationship, four elements generally need to be

considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee’s conduct. These elements or indicators
comprise the so-called “four-fold” test of employment relationship. Macasio’s relationship with David
satisfies this test. (David vs. Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed to straight-hour

wage payment, is the non-consideration of the time spent in working.

A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed to straight-hour wage

payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work. Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used in
pay computation. (David vs. Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

Under the Implementing Rules and Regulations (IRR), exemption from the coverage of holiday and
Service Incentive Leave (SIL) pay refer to “field personnel and other employees whose time and
performance is unsupervised by the employer including those who are engaged on task or contract
basis.”

The general rule is that holiday and SIL pay provisions cover all employees. To be excluded from their
coverage, an employee must be one of those that these provisions expressly exempt, strictly in
accordance with the exemption. Under the IRR, exemption from the coverage of holiday and SIL pay refer
to “field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis[.]” Note that unlike Article 82 of the Labor
Code, the IRR on holiday and SIL pay do not exclude employees “engaged on task basis” as a separate and
distinct category from employees classified as “field personnel.” Rather, these employees are altogether
merged into one classification of exempted employees. Because of this difference, it may be argued that
the Labor Code may be interpreted to mean that those who are engaged on task basis, per se, are excluded
from the SIL and holiday payment since this is what the Labor Code provisions, in contrast with the IRR,
strongly suggest. The arguable interpretation of this rule may be conceded to be within the discretion
granted to the LA and NLRC as the quasi-judicial bodies with expertise on labor matters. (David vs.
Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

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Handout No. 42

The payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the
coverage of Service Incentive Leave (SIL) and holiday pay. (Id)

They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they qualify as
“field personnel.” The IRR therefore validly qualifies and limits the general exclusion of “workers paid by
results” found in Article 82 from the coverage of holiday and SIL pay. This is the only reasonable
interpretation since the determination of excluded workers who are paid by results from the coverage of
Title I is “determined by the Secretary of Labor in appropriate regulations.” (David vs. Macasio, 729 SCRA
67, G.R. No. 195466 July 2, 2014)

In determining whether workers engaged on “pakyaw” or task basis is entitled to holiday and Service
Incentive Leave (SIL) pay, the presence (or absence) of employer supervision as regards the worker’s
time and performance is the key.

In determining whether workers engaged on “pakyaw” or task basis is entitled to holiday and SIL pay, the
presence (or absence) of employer supervision as regards the worker’s time and performance is the key:
if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or
task basis also falls within the meaning of “field personnel” under the law, then he is not entitled to these
monetary benefits. (David vs. Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

As with holiday and service incentive leave pay, 13th month pay benefits generally cover all employees;
an employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules and
Regulations Implementing Presidential Decree (P.D.) No. 851 enumerates the exemptions from the
coverage of 13th month pay benefits.

The governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13thmonth pay benefits
generally cover all employees; an employee must be one of those expressly enumerated to be exempted.
Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the exemptions from the
coverage of 13th month pay benefits. Under Section 3(e), “employers of those who are paid on x x x task
basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof” are exempted. Note that unlike the IRR of the Labor Code on
holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD No. 851 exempts
employees “paid on task basis” without any reference to “field personnel.” This could only mean that
insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the exemption
from its coverage with the requirement that the task worker be a “field personnel” at the same time.
(David vs. Macasio, 729 SCRA 67, G.R. No. 195466 July 2, 2014)

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Handout No. 42

Bystander Rule.

Basic in the realm of labor union rights is that the certification election is the sole concern of the workers,
and the employer is deemed an intruder as far as the certification election is concerned. Thus, the
petitioner lacked the legal personality to assail the proceedings for the certification election, and should
stand aside as a mere bystander who could not oppose the petition, or even appeal the Med-Arbiter’s
orders relative to the conduct of the certification election. As the Court has explained in Republic v.
Kawashima Textile Mfg., Philippines, Inc. (Kawashima), 559 SCRA 386 (2008): Except when it is requested
to bargain collectively, an employer is a mere bystander to any petition for certification election; such
proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the employer. The choice of
their representative is the exclusive concern of the employees; the employer cannot have any partisan
interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an
appeal from it; not even a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to block the
certification election. The employer’s only right in the proceeding is to be notified or informed thereof.
(Heritage Hotel Manila vs. Secretary of Labor and Employment, 730 SCRA 400, G.R. No. 172132 July 23,
2014)

A petition for cancellation of union registration shall not suspend the proceedings for certification
election nor shall it prevent the filing of a petition for certification election.

Under the long established rule, too, the filing of the petition for the cancellation of NUWHRAIN-HHMSC’s
registration should not bar the conduct of the certification election. In that respect, only a final order for
the cancellation of the registration would have prevented NUWHRAIN-HHMSC from continuing to enjoy
all the rights conferred on it as a legitimate labor union, including the right to the petition for the
certification election. This rule is now enshrined in Article 238-A of the Labor Code, as amended by
Republic Act No. 9481, which reads: Article 238-A. Effect of a Petition for Cancellation of Registration.—A
petition for cancellation of union registration shall not suspend the proceedings for certification election
nor shall it prevent the filing of a petition for certification election. (Heritage Hotel Manila vs. Secretary of
Labor and Employment, 730 SCRA 400, G.R. No. 172132 July 23, 2014)

The mixed membership does not result in the illegitimacy of the registered labor union unless the same
was done through misrepresentation, false statement or fraud according to Article 239 of the Labor
Code.

In Air Philippines Corporation v. Bureau of Labor Relations, 492 SCRA 243 (2006), we categorically
explained that --- Clearly, then, for the purpose of de-certifying a union, it is not enough to establish that
the rank-and-file union includes ineligible employees in its membership. Pursuant to Article 239(a) and (c)
of the Labor Code, it must be shown that there was misrepresentation, false statement or fraud in
connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the
minutes of ratification, or in connection with the election of officers, minutes of the election of officers,

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Handout No. 42

the list of voters, or failure to submit these documents together with the list of the newly elected-
appointed officers and their postal addresses to the BLR. (Heritage Hotel Manila vs. Secretary of Labor
and Employment, 730 SCRA 400, G.R. No. 172132 July 23, 2014)

As to confidential employees who were excluded from the right to self-organization, they must (1) assist
or act in a confidential capacity, in regard (2) to persons who formulated, determined, and effectuated
management policies in the field of labor relations.

Worth reiterating is that the actual functions of an employee, not his job designation, determined whether
the employee occupied a managerial, supervisory or rank-and-file position. As to confidential employees
who were excluded from the right to self-organization, they must (1) assist or act in a confidential capacity,
in regard (2) to persons who formulated, determined, and effectuated management policies in the field
of labor relations. In that regard, mere allegations sans substance would not be enough, most especially
because the constitutional right of workers to self-organization would be compromised. (Heritage Hotel
Manila vs. Secretary of Labor and Employment, 730 SCRA 400, G.R. No. 172132 July 23, 2014)

Two classes of corporate positions of trust.

There are two classes of corporate positions of trust: on the one hand are the managerial employees
whose primary duty consists of the management of the establishment in which they are employed or of
a department or a subdivision thereof, and other officers or members of the managerial staff; on the other
hand are the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those
who, in the normal exercise of their functions, regularly handle significant amounts of money or property.
These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s
money or property, and are thus classified as occupying positions of trust and confidence. (P.J. Lhuillier,
Inc. vs. Velayo, 740 SCRA 147, G.R. No. 198620 November 12, 2014)

Requirements in order that an employer may invoke loss of trust and confidence in terminating an
employee.

In order that an employer may invoke loss of trust and confidence in terminating an employee under
Article 282(c) of the Labor Code, certain requirements must be complied with, namely: (1) the employee
must be holding a position of trust and confidence; and (2) there must be an act that would justify the
loss of trust and confidence. While loss of trust and confidence should be genuine, it does not require
proof beyond reasonable doubt, it being sufficient that there is some basis to believe that the employee
concerned is responsible for the misconduct and that the nature of the employee’s participation therein
rendered him unworthy of trust and confidence demanded by his position. (P.J. Lhuillier, Inc. vs. Velayo,
740 SCRA 147, G.R. No. 198620 November 12, 2014)

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Handout No. 42

A cashier who, through carelessness, lost a document evidencing a cash receipt, and then wilfully chose
not to record the excess cash as miscellaneous income and instead took it home and spent it on herself,
and later repeatedly denied or concealed the cash overage when confronted, deserves to be dismissed.

The respondent’s actuations were willful and deliberate. A cashier who, through carelessness, lost a
document evidencing a cash receipt, and then wilfully chose not to record the excess cash as
miscellaneous income and instead took it home and spent it on herself, and later repeatedly denied or
concealed the cash overage when confronted, deserves to be dismissed. Article 282 of the Labor Code
allows an employer to dismiss an employee for willful breach of trust or loss of confidence. It has been
held that a special and unique employment relationship exists between a corporation and its cashier.
Truly, more than most key positions, that of a cashier calls for utmost trust and confidence, and it is the
breach of this trust that results in an employer’s loss of confidence in the employee. (P.J. Lhuillier, Inc. vs.
Velayo, 740 SCRA 147, G.R. No. 198620 November 12, 2014)

It has been held that in dismissing a cashier on the ground of loss of confidence, it is sufficient that there
is some basis for the same or that the employer has a reasonable ground to believe that the employee
is responsible for the misconduct, thus making him unworthy of the trust and confidence reposed in him.

Therefore, if there is sufficient evidence to show that the employer has ample reason to distrust the
employee, the labor tribunal cannot justly deny the employer the authority to dismiss him. Indeed,
employers are allowed wider latitude in dismissing an employee for loss of trust and confidence. (P.J.
Lhuillier, Inc. vs. Velayo, 740 SCRA 147, G.R. No. 198620 November 12, 2014)

The Supreme Court (SC) held that misappropriation of company funds, notwithstanding that the
shortage has been restituted, is a valid ground to terminate the services of an employee for loss of trust
and confidence.

The respondent insisted that she never intended to misappropriate the missing fund, but in Santos v. San
Miguel Corp., 399 SCRA 172 (2003), the Court held that misappropriation of company funds,
notwithstanding that the shortage has been restituted, is a valid ground to terminate the services of an
employee for loss of trust and confidence. Also, in Cañeda v. Philippine Airlines, Inc., 516 SCRA 668 (2007),
the Court held that it is immaterial what the respondent’s intent was concerning the missing fund, for the
undisputed fact is that cash which she held in trust for the company was missing in her custody. At the
very least, she was negligent and failed to meet the degree of care and fidelity demanded of her as cashier.
Her excuses and failure to give a satisfactory explanation for the missing cash only gave the petitioners
sufficient reason to lose confidence in her. P (P.J. Lhuillier, Inc. vs. Velayo, 740 SCRA 147, G.R. No. 198620
November 12, 2014)

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Handout No. 42

Willful breach of trust is a just cause for termination of employment.

The law is plain and clear: willful breach of trust is a just cause for termination of employment. Necessarily,
a finding of breach of trust on the part of respondent in the present case already justified her dismissal
from service by petitioners. An employer cannot be compelled to retain an employee who is guilty of acts
inimical to the interests of the employer. A company has the right to dismiss its employees as a measure
of protection, more so in the case of supervisors or personnel occupying positions of responsibility. (Supra
Multi-Services, Inc. vs. Labitigan, 799 SCRA 337, G.R. No. 192297 August 3, 2016)

The award of separation pay is inconsistent with a finding that there was no illegal dismissal.

The award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under
Article 279 of the Labor Code, as amended, and as held in a catena of cases, the employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof. (Supra Multi-Services, Inc. vs. Labitigan, 799 SCRA 337, G.R. No. 192297
August 3, 2016)

By the designating clause “arising from the employer-employee relations,” Article 217 should apply with
equal force to the claim of an employer for actual damages against its dismissed employee.

Whereas the Court in a number of occasions had applied the jurisdictional provisions of Article 217 to
claims for damages filed by employees, it also held that by the designating clause “arising from the
employer-employee relations,” Article 217 should apply with equal force to the claim of an employer for
actual damages against its dismissed employee, where the basis for the claim arises from or is necessarily
connected with the fact of termination, and should be entered as a counterclaim in the illegal dismissal
case. (Supra Multi-Services, Inc. vs. Labitigan, 799 SCRA 337, G.R. No. 192297 August 3, 2016)

A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the exclusive original jurisdiction over
grievances arising from the interpretation or implementation of collective bargaining agreements.

Should the parties agree, a Voluntary Arbitrator or a panel of Voluntary Arbitrators shall also resolve the
parties’ other labor disputes, including unfair labor practices and bargaining deadlocks. Article 262-A of
the Labor Code provides that the award or decision of the Voluntary Arbitrator “shall be final and
executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties.”
(Philippine Electric Corporation (PHILEC) vs. Court of Appeals, 744 SCRA 361, G.R. No. 168612 December
10, 2014)

Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is considered a quasi-
judicial agency, the Supreme Court (SC) concluded that a decision or award rendered by a Voluntary
Arbitrator is appealable before the Court of Appeals (CA).

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Handout No. 42

Article 262-A of the Labor Code provides that the award or decision of the Voluntary Arbitrator “shall be
final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the
parties.” (Philippine Electric Corporation (PHILEC) vs. Court of Appeals, 744 SCRA 361, G.R. No. 168612
December 10, 2014)
Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is considered a quasi-judicial
agency, this court concluded that a decision or award rendered by a Voluntary Arbitrator is appealable
before the Court of Appeals. Under Section 9 of the Judiciary Reorganization Act of 1980, the Court of
Appeals has the exclusive original jurisdiction over decisions or awards of quasi-judicial agencies and
instrumentalities. (Id)

Statute provides that the Voluntary Arbitrator’s decision “shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the parties.”

We ruled that Article 262-A of the Labor Code allows the appeal of decisions rendered by Voluntary
Arbitrators. Statute provides that the Voluntary Arbitrator’s decision “shall be final and executory after
ten (10) calendar days from receipt of the copy of the award or decision by the parties.” Being provided
in the statute, this 10-day period must be complied with; otherwise, no appellate court will have
jurisdiction over the appeal. This absurd situation occurs when the decision is appealed on the 11th to
15th day from receipt as allowed under the Rules, but which decision, under the law, has already become
final and executory. (Philippine Electric Corporation (PHILEC) vs. Court of Appeals, 744 SCRA 361, G.R. No.
168612 December 10, 2014)

The ten (10)-day period to appeal under the Labor Code being a substantive right, this period cannot be
diminished, increased, or modified through the Rules of Court.

Under Article VIII, Section 5(5) of the Constitution, this court “shall not diminish, increase, or modify
substantive rights” in promulgating rules of procedure in courts. The 10-day period to appeal under the
Labor Code being a substantive right, this period cannot be diminished, increased, or modified through
the Rules of Court. (Philippine Electric Corporation (PHILEC) vs. Court of Appeals, 744 SCRA 361, G.R. No.
168612 December 10, 2014)

The rule is that a Voluntary Arbitrator’s award or decision shall be appealed before the Court of Appeals
(CA) within ten (10) days from receipt of the award or decision.

The rule, therefore, is that a Voluntary Arbitrator’s award or decision shall be appealed before the Court
of Appeals within 10 days from receipt of the award or decision. Should the aggrieved party choose to file
a motion for reconsideration with the Voluntary Arbitrator, the motion must be filed within the same 10-
day period since a motion for reconsideration is filed “within the period for taking an appeal.” (Philippine
Electric Corporation (PHILEC) vs. Court of Appeals, 744 SCRA 361, G.R. No. 168612 December 10, 2014)

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