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2008 PRE-WEEK BAR EXAM NOTES ON LABOR LAW By: Prof.

JOSELITO GUIANAN CHAN

LABOR LAWS OF THE PHILIPPINES

2008 PRE-WEEK BAR EXAM NOTES ON LABOR LAW By: Prof. JOSELITO GUIANAN CHAN

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

2. Pertinent text of the above-mentioned laws follows: REPUBLIC ACT NO. 9492 - AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 [APPROVED ON JULY 25, 2007] Regular Holidays and Nationwide Special Days. “ (1) Unless otherwise modified by law, and or proclamation, the following regular holidays and special days shall be observed in the country: a) Regular Holidays New year’s Day-January 1 Maundy Thursday-Movable date Good Friday-Movable date Eidul Fitr-Movable date Araw ng Kagitingan-Monday nearest April 9 (Bataaan and Corregidor Day) Labor Day-Monday nearest May 1 Independence Day-Monday nearest June 12 National Heroes Day-Last Monday of August Bonifacio Day-Monday nearest November 30 Christmas Day-December 25 Rizal Day-Monday nearest December 30 b) Nationwide Special Holidays: Ninoy Aquino Day-Monday nearest August 21 All Saints Day-November 1 Last Day of the Year-December 31

c) In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of the week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that follows: Provided, That for movable holidays, the President shall issue a proclamation, at least six (6) months prior to the holiday concerned, the specific date that shall be declared as a nonworking day: Provided, however, The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao. chanrobles virtual law library

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REPUBLIC ACT NO. 9481 - AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELFORGANIZATION, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES (which lapsed into law on May 25, 2007 and became effective on June 14, 2007) Note: The following provisions of the Labor Code have been amended by R. A. No. 9481: Article 234 - Requirements of Registration Article 238 - Cancellation of Registration Article 239 - Grounds for Cancellation of Union Registration Article 245 - Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees Article 256 - Representation Issue in Organized Establishments Article 257 - Petitions in Unorganized Establishments and INSERTED as new provisions the following: Article 234-A – Chartering and Creation of a Local Chapter Article 238-A – Effect of a Petition for Cancellation of Registration Article 239-A – Voluntary Cancellation of Registration Article 242-A – Reportorial Requirements Article 245-A – Effect of Inclusion as Members of Employees Outside the Bargaining Unit Article 258-A – Employer as Bystander FULL TEXT OF R. A. NO. 9481 ACCOMPANIED BY SHORT COMMENT:

ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or an independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings; (c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; (d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and chanrobles virtual law library (e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it. Comment: Labor organizations which are required to register. Prior to its amendment by R. A. No. 9481, Article 234 makes a general reference to the organization that may register as labor organization, viz: “*a+ny applicant labor organization, association or group of unions or workers.” As worded now, Article 234 as amended by R. A. No. 9481, makes specific reference to the following organizations which may register as labor organization, to wit: 1. Federation; 2. National Union; 3. Industry Union; 4. Trade Union Center; 5. Independent Union. Acquisition of legal personality as legitimate labor organization. Just like in the old provision, Article 234, as amended by R. A. No. 9481 legal personality is acquired upon the issuance of the certificate of registration. 20% membership requirement applies only to registration of independent union. chanrobles virtual law library

Requirements for registration of federation or national union under Article 237: (a) Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; and chanrobles virtual (b) The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved.” (See Article 237, Labor Code). ART. 234-A. Chartering and Creation of a Local Chapter. - A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter’s officers, their addresses, and the principal office of the chapter; and chanrobles virtual law library (b) The chapter’s constitution and by-laws: Provided, That where the chapter’s constitution and bylaws are the same as that of the federation or the national union, this fact shall be indicated accordingly. The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president. Comment: TRADE UNION CENTER. A “Trade Union Center” is any group of registered national unions or federations organized for the mutual aid and protection of its members; for assisting such members in collective bargaining; or for participating in the formulation of social and employment policies, standards, and programs, and is duly registered with the Department of Labor and Employment in accordance with Rule III, Section 2 of the Implementing Rules. (Section 1(p), Rule I, Book V, of the Implementing Rules, as amended by Department Order No. 9; San Miguel Corp. Employees Union-PTGWO vs. San Miguel Packaging Products Employees Union – PDMP, G.R. No. 171153, Sept. 12, 2007). chanrobles virtual law library Only federation or national union may directly create a local chapter. Under Article 234-A, it is clear that the authority to directly create a local chapter is vested only with a duly registered federation or national union which is empowered to issue a charter certificate indicating the establishment of the local chapter. No other entities are granted the same authority under this provision.

TRADE UNION CENTERS ARE NOT ALLOWED TO CHARTER DIRECTLY. Article 234, as amended by R. A. No. 9481, now includes the term Trade Union Center, but interestingly, the provision indicating the procedure for chartering or creating a local or chapter laid down in Article 234-A, still makes no mention of a “trade union center.” Thus, applying the Latinmaxim expressio unius est exclusio alterius, it was held in the 2007 case of San Miguel Corp. Employees Union-PTGWO vs. San Miguel Packaging Products Employees Union – PDMP, [G.R. No. 171153, Sept. 12, 2007],that trade union centers [like the Pambansang Diwa ng Manggagawang Pilipino (PDMP)] are not allowed to charter directly a local or a chapter. ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor organization, whether national or local, may be cancelled by the Bureau, after due hearing, only on the grounds specified in Article 239 hereof.

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

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

(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-lam or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election; chanrobles virtual law library (c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau.hanrobles virtual law library Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. (As inserted by Section 7, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). Article 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are NOT eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank-and-file union and the supervisors’ union operating within the same establishment may join the same federation or national union. Article 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union. (Introduced as new provision by Section 9, Republic Act No. 9481 which lapsed into law on May 25, 2007 and became effective on June 14, 2007). chanrobles virtual law library Article 256. Representation Issue in Organized Establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed by any legitimate labor organization including a national union or federation which has already issued a charter certificate to its local chapter participating in the certification election or a local chapter which has been issued a charter certificate by the national union or federation before the Department of Labor and Employment within the sixty (60)-day period before the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be

9481 which lapsed into law on May 25. March 21. In cases where the petition was filed by a national union or federation. 6715. No. the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. including a national union or federation which has already issued a charter certificate to its 1ocal/chapter participating in the certification election or a local/chapter which has been issued a charter certificate by the national union or federation. That the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. it shall not be required to disclose the names of the local chapter’s officers and members. and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition. . 2007 and became effective on June 14. chanrobles virtual law library --------------------oOo---------------------- REPUBLIC ACT NO.1) of Republic Act. In cases where the petition was filed by a national union or federation. 2007).conducted between the labor unions receiving the two highest number of votes: Provided. it shall not be required to disclose the names of the local chapter’s officers and members. 23. 1989 and Section 10. 8042. No. otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 is hereby amended to read as follows: chanrobles virtual law library . AMENDING FOR THIS PURPOSE Approved: April 10. (As amended by Section 23. 9481 which lapsed into law on May 25. Republic Act No. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature. 2007 Sec.In all cases. (As amended by Section 12. 2007 and became effective on June 14. Republic Act No. 1989 and Section 11. a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by any legitimate labor organization. whether the petition for certification election is filed by an employer or a legitimate labor organization. (As amended by Section 24. March 21. 2501 & H. . 5498]. chanrobles virtual law library Article 257. 2007). Employer as Bystander. paragraph (b. Republic Act No.In any establishment where there is no certified bargaining agent. Republic Act No.AN ACT TO STRENGTHEN THE REGULATORY FUNCTIONS OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA). Republic Act No. 9422 [S. Petitions in Unorganized Establishments. 2007 and became effective on June 14. 2007). At the expiration of the freedom period. No. the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. Article 258-A. 6715. 9481 which lapsed into law on May 25.

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

NO. the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary. each composed of three (3) members. and the SEVENTH. The Commission shall exercise its adjudicatory and all other powers. National Labor Relations Commission. Lapsed into law on JULY 27. AND EIGHT divisions. Whenever the required membership in a division is not complete and the concurrence of two (2) Commissioners to arrive at a judgment or resolution cannot be obtained. The Commission may sit en banc or in EIGHT (8) divisions. 442. and a copy thereof attached to the record of the case and served upon the parties. composed of a Chairman and TWENTY-THREE (23) Members. 213. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction. on temporary or emergency basis.AND 216 OF P. Of the EIGHT (8) divisions. AS AMENDED. OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES. the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong. the first. chanrobles virtual law library The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. FOURTH. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. without the signature of the President. second third. . The Chairman and the SEVEN (7) remaining members shall come from the public sector. respectively. allow cases within the jurisdiction of any division to be heard and decided by any other division whose docket allows the additional workload and such transfer will not expose litigants to unnecessary additional expenses.D. respectively: Provided. 2006. chanrobles virtual law library Upon assumption into office. That the Commission sitting en banc may. A certification to this effect signed by the Presiding Commissioner of the division shall be issued. . functions. The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. FIFTH AND SIXTH divisions shall handle cases coming from the National Capital Region and other parts of Luzon. with the latter to be chosen PREFERABLY from among the INCUMBENT LABOR ARBITERS. Section 27 (1) of the Constitution) ART. in accordance with Article VI. and duties through its divisions. Eight (8) members each shall be chosen ONLY from among the nominees of the workers and employers organizations. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. cases from the Visayas and Mindanao.There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment SOLELY for program and policy coordination only.

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

that the labor arbiters who are presently holding office in the region where they are residents shall be deemed appointed thereat. those of the Presiding Justice and Associate Justices of the Court of Appeals. Provided.The creation of the additional divisions shall be implemented for a period of not more than three (3) years . the Division Presiding Commissioners and other Commissioners shall all be appointed by the President. and upgrade their current salaries. 5. benefits and other emoluments in accordance with law. chanrobles virtual law library The Chairman and the Commission. rules and regulations: Provided. Appointment to any vacancy in a specific division shall come only from the nominees of the sector which nominated the predecessor." chanrobles virtual law library ART. Labor Arbiters shall have the same rank. however. The Chairman and members of the Commission shall have the same rank. shall the provision of this Article result in the diminution of the existing salaries. rules and regulations. In no case. respectively. and the other Commissioners and the Labor Arbiters shall hold office during good behavior until they reach the age of sixty-five (65) years. upon recommendation of the Commission en banc to a specific arbitration branch. preperably in the region where they are residents." chanrobles virtual law library Sec. . receive an annual salary equivalent to and be entitled to the same allowances. and be entitled to the same allowances. and its regional branches as the needs of the service may require. Salaries. retirement and other benefits and privileges as those of the judges of the regional trial courts. benefits and other emoluments. retirement and benefits as. shall appoint the staff and employees of the Commission. 216. Implementation. unless sooner removed for cause as provided by law or become incapacitated to discharge the duties of their office. The Chairman. The Labor Arbiters shall also be appointed by the President. subject to the Civil Service Law. however. allowances and benefits of the aforementioned officials. and shall be subject to the Civil Service Law. receive an annual salary equivalent to. That the President of the Republic of the Philippines may extent the services of the Commissioners and Labor Arbiters up to the maximum age of seventy (70) years upon the recommendation of the Commission en banc.The Chairman.

chanrobles virtual law library b. and a living wage. What are the basic principles enunciated in the Labor Code on protection to labor? a. chanrobles virtual law library “The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes. chanrobles virtual law library “The State shall regulate the relations between workers and employers. and to expansion and growth. Article XIII *Social Justice and Human Rights] of the 1987 Constitution) chanrobles virtual law library 2. It shall guarantee the rights of all workers to self-organization. local and overseas. Labor contracts are not ordinary contracts as the relation between capital and labor is impressed with public interest.” (Section 3 (Labor). The State shall afford protection to labor. and promote full employment and equality of employment opportunities for all. and just and humane conditions of work. humane conditions of work. JOSELITO GUIANAN CHAN LABOR LAWS OF THE PHILIPPINES PART . labor laws and rules shall be interpreted in favor of labor. What is the protection-to-labor clause in the Constitution? “The State shall afford full protection to labor. and shall enforce their mutual compliance therewith to foster industrial peace. including the right to strike in accordance with law. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. . The State shall assure the rights of workers to self-organization. chanrobles virtual law library c. organized and unorganized. and peaceful concerted activities.2008 PRE-WEEK BAR EXAM NOTES ON LABOR LAW By: Prof. promote full employment. In case of doubt. collective bargaining and negotiations.II LAW ON LABOR STANDARDS 1. They shall be entitled to security of tenure. recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments. race or creed and regulate the relations between workers and employers. ensure equal work opportunities regardless of sex. collective bargaining. security of tenure. including conciliation.

2. Who has jurisdiction over claims for death and other benefits of OFWs? Labor Arbiters have jurisdiction over claims for death. What is the nature of the liability of local recruitment agency and foreign principal? chanrobles virtual law library 1. rules and regulations. c. (SEE PART TWO OF THIS 3-PART PRE-WEEK SERIES FOR MORE EXTENSIVE DISCUSSION OF THIS TOPIC) 6. 5. construction contractors. public employment offices. Money claims of OFWs. 8.Civil Service laws. 8042). What is the basis of compensation for death benefits of OFWs? Basis of compensation for death generally is whichever is greater between Philippine law or foreign law. private employment agencies. No. f. Which has jurisdiction over disciplinary action cases of OFWs? . b. Local Agency is solidarily liable with foreign principal. shipping or manning agents or representatives. What is the relevant law on recruitment for overseas employment? Migrant Workers and Overseas Filipinos Act of 1995 (R. 4. • When created under the Corporation Code . and g. Work-connection is required. disability and other benefits arising from employment of OFWs. Philippine Overseas Employment Administration (POEA). Severance of relations between local agent and foreign principal does not affect liability of local recruiter. Applicability of Labor Code to government-owned or controlled corporations: • When created with original or special charter . such other persons or entities as may be authorized by the Secretary of Labor and Employment.d. RECRUITMENT AND PLACEMENT OF WORKERS: 3. private recruitment entities. 7. Labor Code applies to all workers. e. 9. d. A. e.Labor Code applies. whether agricultural or non-agricultural. What are the entities authorized to engage in recruitment and placement? chanrobles virtual law library a.

2. The reason for the ban is to ensure full regulation of employment in order to avoid exploitation. What is illegal recruitment? 1. promising or advertising for employment abroad. corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the Secretary of Labor and Employment.     . 3. contract services. whether for profit or not. transporting. 11.The POEA retains jurisdiction over disciplinary action cases. 10. Employers cannot directly hire workers for overseas employment except through authorized entities (see enumeration above). hiring. or procuring workers and includes referring. Elements of illegal recruitment: a. chanrobles virtual law library (Note: Any non-resident foreign corporation directly hiring Filipino workers is doing business in the Philippines and may be sued in the Philippines). Some relevant principles:  Mere impression that recruiter is capable of providing work abroad is sufficient. or whose license or authority has been suspended. chanrobles virtual law library b. chanrobles virtual law library "Referral" of recruits also constitutes recruitment activity. First element: Recruitment and placement activities. revoked or canceled by the POEA or the Secretary of Labor and Employment. enlisting. Illegal recruitment may be committed by any person whether licensees or non-licensees or holders or non-holders of authority.means any person. Non-prosecution of another suspect is not material. Is direct-hiring of OFWs allowed? Why? No. Illegal recruitment under Article 38 applies to both local and overseas employment. contracting. when undertaken by a non-licensee or non-holder of authority: Provided. offers or promises for a fee employment abroad to two or more persons shall be deemed as engaged in such act. Any act of canvassing. in any manner. utilizing. Absence of receipt to prove payment is not essential to prove recruitment. That any such non-licensee or non-holder who. Second element: Non-licensee or non-holder of authority . Only one (1) person recruited is sufficient to constitute recruitment.

if committed against 3 or more persons individually or as a group. By a syndicate . 12. A person convicted for illegal recruitment may still be convicted for estafa. chanrobles virtual law library 14. What is the prescriptive period of illegal recruitment cases? Under R. 13. What is an apprenticeship? Who is an apprentice? “Apprenticeship” means any training on the job supplemented by related theoretical instruction involving apprenticeable occupations and trades as may be approved by the Secretary of Labor and Employment. 17. TRAINING AND EMPLOYMENT OF SPECIAL WORKERS APPRENTICE: 16. A. In large scale . 15. 8042. When is illegal recruitment considered economic sabotage? Illegal recruitment is considered economic sabotage . able and willing at the time of application to perform the services for which the alien is desired. the prescriptive period of illegal recruitment cases is five (5) years except illegal recruitment involving economic sabotage which prescribes in twenty (20) years. What are the requirements before a non-resident alien may be employed in the Philippines? Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. b. For an enterprise registered in preferred areas of investments. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent. Who is an apprentice? . the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise.if carried out by a group of 3 or more persons conspiring and confederating with one another.when the commission thereof is attended by the qualifying circumstances as follows: a. May an alien employee transfer his employment after issuance of permit? After the issuance of an employment permit.

000 hours of practical training on-the-job.75% of the statutory minimum wage. Apprentices become regular employees if program is not approved by DOLE. Wage rate of learners is 75% of the statutory minimum wage. What are the important principles related to apprenticeship? a. What are the pre-requisites before learners may be hired? Pre-requisites before learners may be validly employed: a. the employment of learners is necessary to prevent curtailment of employment opportunities. possess vocational aptitude and capacity for the particular occupation as established through appropriate tests. b. be at least fifteen (15) years of age. when no experienced workers are available. 19. be physically fit for the occupation in which he desires to be trained. b. Who is a handicapped worker? A “handicapped worker” is one whose earning capacity is impaired: . and chanrobles virtual law library d. LEARNERS: 20. 18. provided those who are at least fifteen (15) years of age but less than eighteen (18) may be eligible for apprenticeship only in non-hazardous occupation. Ratio of theoretical instructions and on-the-job training . whether or not such practical training is supplemented by theoretical instructions. possess the ability to comprehend and follow oral and written instructions. c. Who is a learner? A “learner” is a person hired as a trainee in industrial occupations which are non-apprenticeable and which may be learned through practical training on the job for a period not exceeding three (3) months. HANDICAPPED WORKERS: 22.100 hours of theoretical instructions for every 2. the employment does not create unfair competition in terms of labor costs or impair or lower working standards. c. and c.An “apprentice” is a worker who is covered by a written apprenticeship agreement with an employer. What are the qualifications of an apprentice? a. 21. b. Wage rate of apprentices .

Employees not covered: a. Article 85 .Compensation for rest day. by age. Article 95 . Domestic servants and persons in the personal service of another.Night shift differential.Overtime work. • If disability is not related to the work for which he was hired.Service charges. or b. 2. Article 93 . and Article 96 . injury. chanrobles virtual law library . he cannot be considered a handicapped worker insofar as that particular work is concerned. Sunday or holiday work. or c. e. Article 87 . Article 89 .Right to service incentive leave.Hours worked. Government employees.Undertime not offset by overtime. mental deficiency. chanrobles virtual law library Article 92 .When employer may require work on a rest day. Employees covered . What are the provisions of the Labor Code on working conditions? The following provisions are covered under Book III of the Labor Code: Article 83 .Emergency overtime work. chanrobles virtual law library Article 88 . d. Who are covered (and not covered) by the said provisions on working conditions? 1. Managerial employees. 24. or d. Article 94 . He may have a disability but since the same is not related to his work. c. b. Article 84 .Meal periods.Normal hours of work. he should not be so considered as handicapped worker.applicable to all employees in all establishments whether operated for profit or not.Right to holiday pay.Computation of additional compensation.a. • Wage rate .Right to weekly rest period. Other officers or members of a managerial staff. Article 91 . Workers paid by results. Article 86 . WORKING CONDITIONS: chanrobles virtual law library 23. physical deficiency. Article 90 .75% of the statutory minimum wage.

and only on temporary duration. reporting to SSS). What is the most important requirement in order for the Labor Code provisions on working conditions to apply? The existence of employer-employee relationship is necessary. card. It does not necessarily mean the ordinary calendar day from 12:00 midnight to 12:00 midnight unless the employee starts to work at this unusual hour. D. 25. the Labor Code does not apply. chanrobles virtual law library . inclusion in payroll. What is the test of employment relationship? There is no uniform test of employment relationship but the four (4) elements of an employer-employee relationship are as follows: (a) Selection and engagement of employee. Members of the family of the employer. and g. Without this relationship. "Work day" means 24 consecutive-hour period which commences from the time the employee regularly starts to work.not prohibited by law provided there is no reduction in pay of workers.allowed provided employees voluntarily agree thereto. (c) Power of dismissal. Cash Vouchers for salaries.f. Shortening of work week . 27. What is meant by “normal hours of work”? 1. Reduction of eight-hour working day . I.. Hours of work of part-time workers .payment of wage should be in proportion only to the hours worked. "Work week" is a week consisting of 168 consecutive hours or 7 consecutive 24-hour work days beginning at the same hour and on the same calendar day each calendar week. "Normal" hours of work of employees -eight (8) hours per day. 26. 2. What is the quantum of evidence required to prove employment relationship? The quantum of evidence required to prove employment relationship is mere substantial evidence (e. chanrobles virtual law library 4. 6. NORMAL HOURS OF WORK: 28. there is no diminution in pay.g. (b) Payment of wages. Non-agricultural field personnel. and (d) Power of control (the most important test). 5. 3.

The employer has the prerogative to control all aspects of employment in his business organization such as hiring. Interphil Laboratories. As the Labor Arbiter elucidated in his report: “Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A. work supervision. and . to 6:00 P.M. wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A. to 6:00 A. R. the Labor Arbiter found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. 54 in San Juan de Dios Hospital Employees Association vs. transfer of employees. working regulations. 2001]. G. Well-settled is the rule that management retains the prerogative. (Consolidated Food Corporation. it is evident from the foregoing provision that the working hours may be changed.M. and that the employees shall observe such rules as have been laid down by the company. Inc. Hours of work of hospital and clinic personnel . NLRC (G. working methods. No. 1997). Regular Working Hours . the rule that hospital employees who worked for only 40 hours/5 days in any given workweek should be compensated for full weekly wage for 7 days is no longer applicable.. December 19. place and manner of work. R. No. lay-off of workers and the discipline. 118647. It was established that the employees adhered to the said work schedule since 1988. without any question or complaint. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours. G. et al.M.M. should such change be necessary for its operations.R.M. to change the working hours of its employees. NLRC. the two-shift schedule while their CBA was still in force and even prior thereto. of the following day that has been going on since 1988. vs. R. No. tools to be used. Consequently.” (Article VI of the CBA). work assignments. [G. chanrobles virtual law library According to the Supreme Court. Prerogative to change working hours. dismissal and recall of workers. Inc.M. The regular working hours for the Company shall be from 7:30 A. they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours. whenever exigencies of the service so require. should such change be necessary in the operations of the Company. 126383. 28. Nov. the parties to the CBA stipulated: “Section 1. supervision of workers. 119205. and 6:00 P. 1999). vs. Proof of this is the case undisputedly filed by the union for and in behalf of its members. however the company may change the prevailing work time at its discretion. The two-shift schedule effectively changed the working hours stipulated in the CBA. et al. In the 2001 case of Interphil Laboratories Employees Union-FFW vs. 23. (Sime Darby Pilipinas. 15 April 1998. The employees are deemed to have waived the eight-hour schedule since they followed. 289 SCRA 86). NLRC. 142824. time.7. at the discretion of the company.A normal workday shall consist of not more than eight (8) hours. No. to 4:30 P. In the instant case.M.. Sept. processes to be followed. As the employees assented by practice to this arrangement.The Supreme Court has voided Policy Instructions No. The schedule of shift work shall be maintained.

dated March 1. to 6:00 A. The following are the compensable hours worked: a. at 2:00 P. union Director Enrico C. to 6:00 P.M. such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. This is more humane and in keeping with sound business operations than the outright termination of the services or the total closure of the enterprise.M. to 10:00 P.M. testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company.” Furthermore. 2. shift. 8. he. Likewise. 6. What is the effect of reduction of workdays on wages/living allowances? In situations where there is valid reduction of workdays. Even their own witness. All time during which an employee is required to be on duty or to be at the employer’s premises or to be at a prescribed workplace. to 2:00 P. Gonzales. 1993. 1985). the employer may deduct the wages and living allowances corresponding to the days taken off from the workweek.M. and when on the 6 to 6 shifts.M. which were passed around daily for the employees to sign. May workdays be reduced on account of losses? Yes.” 29. since the reduction of workdays is resorted to as a cost-saving measure. (Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23. chanrobles virtual law library 3.. 30. 31. Santos. (Explanatory Bulletin on the Effect of Reduction of Workdays on Wages/Living Allowances issued by the DOLE on July 23. This view is consistent with the principle of “no-work-no-pay. .considered compensable hours worked. his schedule was sometime at 6:00 A. What is meant by “hours worked”? 1. and sometime at 6:00 P.considered compensable if waiting is an integral part of the employee's work or he is required or engaged by the employer to wait. All time during which an employee is suffered or permitted to work. sometime at 6:00 A. the union Vice-President Carmelo C. had rendered overtime during those dates and was paid because unlike in other departments. and b. demanded that the company make a recomputation of the overtime records of the employees from 1987 xxx. xxx In fact. in situations where the reduction in the number of regular working days is resorted to by the employer to prevent serious losses due to causes beyond his control. 9 to 12.. he received the commensurate pay xxx. his name appeared but without his signatures. Coffee breaks and rest period of short duration .M. 1985).M. it has become a habit to them to sign the overtime schedule weekly xxx. however. while in the overtime permits.. of the 6:00 P. Waiting time .M. in the absence of an agreement specifically providing that a reduction in the number of workdays will not adversely affect the remuneration of the employees.M.M.6:00 A. it would be unfair to require the employer to pay the wages and living allowances even on unworked days that were taken off from the regular workweek.M. to 6:00 A.

11. a truck helper may sleep after performing his task and while his truck is traveling on its way to its assignment. meetings.not compensable working time. and training periods sanctioned by employer . Travel that is all in the day’s work .considered hours worked. Being time-off. 7. The employees can use the time effectively for their own interest. 6.not compensable hours worked. chanrobles virtual law library 8. Travel time: a. If he is required to work while eating.4. Working while on call . or b. Attendance in hearings in cases filed by employee . Travel away from home . basic rules:  Brown-outs of short duration not exceeding twenty (20) minutes . But the same may not be done by the driver. it is not compensable hours worked and employee is free to do anything he wants.compensable hours worked. 9. Attendance in lectures. For example.compensable hours worked.compensable hours worked. Participation in strikes . Every employee is entitled to not less than one (1) hour (or 60 minutes) time-off for regular meals.compensable if employee is required to remain on call in the employer’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose. Attendance in CBA negotiations or grievance meeting . except to work. chanrobles virtual law library . Sleeping while on duty is compensable if the nature of the employee’s work allows sleeping without interrupting or prejudicing work or when there is an agreement between the employee and his employer to that effect. 10. Power interruptions or brown-outs. MEAL PERIOD: 32. What is “meal period”? 1. c. 5. Travel from home to work -not compensable working time b. The employees can leave their workplace or go elsewhere whether within or without the work premises.compensable hours worked. chanrobles virtual law library Brown-outs running for more than twenty (20) minutes may not be treated as hours worked provided any of the following conditions are present:  a. he should be compensated therefor.

On a rest day. Plus 10% of 130% of regular hourly rate on said days or a total of 110% of 130% of the applicable regular hourly rate. For overtime work in the night shift. Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed between 10:00 p. What is “night-shift differential”? 1.m. special day or regular holiday: Plus 10% of the regular hourly rate on a rest day. therefore. chanrobles virtual law library 1. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the overtime hourly rate on an ordinary day. chanrobles virtual law library b. the compensation for overtime night shift work is also computed on the basis of the hourly rate.m.2. Computation of Night Shift Differential Pay: a. chanrobles virtual law library 2. of the following day.) work is overtime work. Work rendered after normal eight (8) hours of work is called overtime work. to 6 a. distinguished . OVERTIME WORK: 34. On an ordinary day. 2. Night shift differential and overtime pay. Where night shift (10 p. c. What is “overtime work”? 1. it is considered coffee break or rest period of short duration and.m. chanrobles virtual law library 2. and 6:00 a. the payment of the night differential pay is for the work done during the night. compensable. If meal time is shortened to not less than twenty (20) minutes . . to 6 a. The reason is.m. while the payment of the overtime pay is for work in excess of the regular eight (8) working hours.m. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic hourly rate.m. 3.) work is regular work. Where night shift (10 p. the receipt of overtime pay shall not preclude the right to receive night differential pay. If shortened to less than 20 minutes. NIGHT-SHIFT DIFFERENTIAL: 33.When the work of an employee falls at nighttime. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate. 2. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or special day or regular holiday. 1. 1. On a rest day or special day or regular holiday. special day or regular holiday or a total of 110% of the regular hourly rate.compensable hours worked. Since overtime work is not usually eight (8) hours.

Sweet Lines Inc. However. Illustrations on how overtime is computed: a. the overtime pay is plus 30% of the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the Labor Code. chanrobles virtual law library Premium and overtime pay. 4. For overtime work performed on a rest day which falls on a regular holiday. "Premium pay" means the additional compensation required by law for work performed within 8 hours on non-working days. NLRC. (Citing Philippine American General Insurance Inc. vs. e. c. and cannot be contradicted unless previously shown to have been made through palpable mistake or that no such admission was made. b. the overtime pay is plus 30% of the basic hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code. For overtime work performed on a regular holiday. 212 SCRA 194. Judicial admissions made by parties in the pleadings. "Overtime pay" means the additional compensation for work performed beyond 8 hours. R. "regular wage" or "basic salary" means "cash" wage only without deduction for facilities provided by the employer. 2000]. the latter is entitled to overtime compensation. For overtime work performed on an ordinary day. [G. no further evidence being required to prove the same. No further proof is required. 204 [1992]). the employer claims that the employee’s basic salary of P140. d. effect. the overtime pay is plus 30% of the basic hourly rate which includes 160% additional compensation. chanrobles virtual law library 5. In the 2000 case of Damasco vs. December 4.. the overtime pay is plus 30% of the basic hourly rate which includes 50% additional compensation as provided in Article 93 [c] of the Labor Code. Every employee entitled to premium pay is also entitled to the benefit of overtime pay. For overtime work performed on a rest day which falls on a special day. distinguished. 3. or in the course of the trial or other proceedings in the same case are conclusive.2. No. the employer admitted in his pleadings that the employee’s work starts at 8:30 in the morning and ends up at 6:30 in the evening daily.00 a day is more than enough to cover the “one hour excess work” which is the compensation they allegedly agreed upon. The Supreme Court ruled that in view of the employer’s formal admission that the employee worked beyond eight hours daily. Judicial admission by employer of overtime work. the overtime pay is plus 25% of the basic hourly rate. 115755. except holidays and Sundays. For overtime work performed on a rest day or on a special day. The employer already admitted she worked an extra hour daily. In computing overtime work. such as rest days and special days. .

When the completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. chanrobles virtual law library d. When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive. (No. 2. floods. (No. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required by law such as overtime pay or night shift differential pay. epidemic or other disasters or calamities. Exceptions when employee may be compelled to render overtime work: a. Every employee who is entitled to premium pay is likewise entitled to the benefit of overtime pay. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to public safety due to actual or impending emergency in the locality caused by serious accident. typhoons. Ibid.“Premium pay” refers to the additional compensation required by law for work performed within eight (8) hours on non-working days. DOLE Handbook on Workers Statutory Monetary Benefits). When may an employee be compelled to perform overtime work? 1. When the work is necessary to prevent loss or damage to perishable goods. EMERGENCY OVERTIME WORK: 36. Undertime work on any particular day shall not be offset by overtime on any other day. “Overtime pay” refers to the additional compensation for work performed beyond eight (8) hours a day. UNDERTIME NOT OFFSET BY OVERTIME: 35. and f. c. earthquake. 2. III. or in order to avoid serious loss or damage to the employer or some other causes of similar nature. IV. fire. e. installations or equipment. When overtime work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. such as rest days and special days. b. . The general rule remains that no employee may be compelled to render overtime work against his will. What is meant by “undertime not offset by overtime”? 1.). When there is urgent work to be performed on machines.

How is premium computed for work rendered on a rest day. chanrobles virtual law library b. In case of actual or impending emergencies caused by serious accident. equipment. If business is open on Sundays/holidays. 4. where the employer cannot ordinarily be expected to resort to other measures. When an employee refuses to render emergency overtime work under any of the foregoing conditions. to prevent loss of life and property. In the event of abnormal pressure of work due to special circumstances. Waiver of compensation for work on rest days and holidays is not valid. earthquake. or in case of force majeure or imminent danger to public safety. and chanrobles virtual law library f. WEEKLY REST PERIOD: 38. In case of urgent work to be performed on machineries. flood. Every employer shall give his employees a rest period of not less than 24 consecutive hours after every 6 consecutive normal work days.37. To prevent serious loss of perishable goods. Where the nature of the work is such that the employees have to work continuously for seven (7) days in a week or more. as in the case of the crew members of a vessel to complete a voyage and in other similar cases. 2. 39. When the work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. typhoon. epidemic or other disaster or calamity. d. 3. Sunday or holiday? . Preference of employee as to his rest day should be respected if based on religious grounds. rest day may be scheduled on another day. May an employee validly refuse to render overtime work under any of the afore-said circumstances? chanrobles virtual law library An employee cannot validly refuse to render overtime work if any of the afore-mentioned circumstances is present. or installations. fire. COMPENSATION FOR WORK ON REST DAY. SUNDAY OR HOLIDAY: 40. he may be dismissed on the ground of insubordination or willful disobedience of the lawful order of the employer. to avoid serious loss which the employer would otherwise suffer. c. What is “weekly rest period”? 1. When may an employer compel his employees to render work on a rest day? Under any of the following circumstances: a. e.

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

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

This figure does not deprive petitioners of their right to be paid on legal holidays. Petitioners have misread this case.“Even assuming that Section 2. as an analogous situation. The basic rule in this jurisdiction is “no work. the workers sought payment for un-worked legal holidays as a right guaranteed by a valid law.AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE SECTION 26. a violation of the equal protection clause. and or proclamation.” (Odango vs. no pay” principle. No. 223). Thus. (See Article 94 of the Labor Code and Executive Order No. the minimum allowable divisor is 287. No CBA exists in this case. 138 SCRA 273]. BOOK I OF EXECUTIVE ORDER NO. What are the regular holidays and special days? REPUBLIC ACT NO. petitioners seek payment of wages for un-worked non-legal holidays citing as basis a void implementing rule. NLRC. OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 [APPROVED ON JULY 25. Here. AS AMENDED. The 304 days divisor used by ANTECO is clearly above the minimum of 287 days. the employer was liable for underpayment because the divisor it used was 251 days. the following regular holidays and special days shall be observed in the country: a) Regular Holidays New year’s Day-January 1 . 42. CHAPTER 7. *G. Petitioners’ line of reasoning is not only a violation of the “no work. 147420. The circumstances are also markedly different. the un-worked half of Saturdays and other days that they do not work at all.” The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. petitioners’ claim will still fail. 28 August 1985. 292. Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). it also gives rise to an invidious classification. “ (1) Unless otherwise modified by law. Any divisor below 287 days means that ANTECO’s workers are deprived of their holiday pay for some or all of the ten legal holidays. Petitioners’ claim is based on a mistaken notion that Section 2. a figure that clearly fails to account for the ten legal holidays the law requires to be paid. the divisor ANTECO uses is 304 days. no pay. Ople.R. R. G. The facts show that petitioners are required to work only from Monday to Friday and half of Saturday. In Chartered Bank. 2004). chanrobles virtual law library “The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment. “Finally. there was a collective bargaining agreement that prescribed the divisor. which is the result of 365 days. In this case. chanrobles virtual law library “In Chartered Bank. petitioners cite Chartered Bank Employees Association v. Sustaining petitioners’ argument will make monthly-paid employees a privileged class who are paid even if they do not work. June 10. et al. No. L-44717.. In effect. 9492 . petitioners demand that ANTECO should pay them on Sundays. In Chartered Bank. Rule IV of Book III is valid. 2007] Regular Holidays and Nationwide Special Days.

no pay. The Eidul Adha shall be celebrated as a regional holiday in the Autonomous Region in Muslim Mindanao. That for movable holidays.” b. the specific date that shall be declared as a nonworking day: Provided. while a covered employee who works during special days is only paid an additional compensation of not less .Maundy Thursday-Movable date Good Friday-Movable date Eidul Fitr-Movable date Araw ng Kagitingan-Monday nearest April 9 (Bataaan and Corregidor Day) Labor Day-Monday nearest May 1 Independence Day-Monday nearest June 12 National Heroes Day-Last Monday of August Bonifacio Day-Monday nearest November 30 Christmas Day-December 25 Rizal Day-Monday nearest December 30 b) Nationwide Special Holidays: Ninoy Aquino Day-Monday nearest August 21 All Saints Day-November 1 Last Day of the Year-December 31 c) In the event the holiday falls on a Wednesday. A covered employee who does not work during regular holidays is paid 100% of his regular daily wage. while a covered employee who does not work during a special day does not receive any compensation under the principle of “no work. however. A covered employee who works during regular holidays is paid 200% of his regular daily wage. at least six (6) months prior to the holiday concerned. the holiday will be observed on the Monday that follows: Provided. chanrobles virtual law library 43. the President shall issue a proclamation. If the holiday falls on a Sunday. the holiday will be observed on the Monday of the week. What are the distinctions between “regular holidays” and “special days”? The following are the distinctions between “regular holidays” and “special days”: a.

Employers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of employee’s compensation or social security payment.50% over and above the basic pay. chanrobles virtual law library 2. What is the application of the principle of “no work. whichever is higher. Employees on leave while on SSS or employee's compensation benefits. What are the premium pay for working on holidays? 1. chanrobles virtual law library 44. chanrobles virtual law library b. no pay” to entitlement to holiday pay? The principle of “no work. Employees on leave of absence with pay .30% on top of basic pay. if the worker is permitted or suffered to work on special days which fall on his scheduled rest day.” (NOTE: R. 45. chanrobles virtual law library d. Premium pay for work performed during special days falling on scheduled rest day . What are the effects of absences on entitlement to regular holiday pay? The following are the effect of absences on entitlement to regular holiday pay: a. “Special holidays” are now known as “special days. What is the rule in case of absence during successive regular holidays? . chanrobles virtual law library c. When the day preceding regular holiday is a non-working day or scheduled rest day .than 30% of the basic pay or a total of 130% and at least 50% over and above the basic pay or a total of 150%. A. 9177 uses “Special Holidays” instead of “Special Days” in describing All Saints Day and Last Day of the Year which were described as such under Executive Order No. 48. chanrobles virtual law library 46. Employees on leave of absence without pay on the day immediately preceding a regular holiday .may not be paid the required holiday pay if he has not worked on such regular holiday. no pay” applies to special days but not to unworked regular holidays where the employees are always paid the equivalent of 100% of their basic pay. 203 [June 30. 47. in which case.Employee shall not be deemed to be on leave of absence on that day. he shall be entitled to the regular holiday pay if he worked on the day immediately preceding the non-working day or rest day.entitled to regular holiday pay. 1987]). What is the distinction between “special holidays” and “special days”? There is none. if they are not reporting for work while on such benefits. Premium pay for work performed during special days .

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

is less than twelve (12) months. Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law as regular holidays.The Supreme Court. computed from 1989 until the date of her actual reinstatement. including authorized absences and paid regular holidays. The basis of computation of service incentive leave is the salary rate at the date of commutation.whether continuous or broken or its equivalent period. Every covered employee who has rendered at least one (1) year of service shall be entitled to a yearly service incentive leave of five (5) days with pay. and it is one of the ‘benefits’ which would have accrued if an employee was not otherwise illegally dismissed. *285 SCRA 149. reckoned from the date the employee started working. 114734. 5. or that provided in the employment contract. 1083 also declares that “x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim. chanrobles virtual law library 4.” SERVICE INCENTIVE LEAVE: 51.” At any rate. Meaning of "one year of service" . where one of the issues pertained to the entitlement of an illegally dismissed employee to service incentive leave pay. No. The Court of Appeals did not err in sustaining Undersecretary Español who stated: chanrobles virtual law library “Assuming arguendo that the respondent’s position is correct. R. in which case. it was held that having already worked for more than three (3) years at the time of her unwarranted dismissal. [G. it is fair and legal that its computation should be up to the date of reinstatement as provided under Section [Article+ 279 of the Labor Code. 3. petitioner is undoubtedly entitled to service incentive leave benefits. NLRC. As ruled in Fernandez vs. whether continuous or broken. then by the same token. 176 (1998)+ “*s+ince a service incentive leave is clearly demandable after one year of service . NLRC. as amended. 2. We must remind the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker’s faith or religion. In the 2000 case of Imbuido vs. Article 3(3) of Presidential Decree No.service within twelve (12) months. ruled that there should be no distinction between Muslims and nonMuslims as regards payment of benefits for Muslim holidays. said period shall be considered as one (1) year for the purpose of determining entitlement to the service incentive leave. 2000]. (Note: there is no provision in the Labor Code granting vacation or sick leave). Grant of vacation leave or sick leave may be considered substitute for service incentive leave. Service incentive leave is commutable to cash if unused at the end of the year.” chanrobles virtual law library . What are the basic principles governing the grant of service incentive leave? 1. March 31. unless the number of working days in the establishment as a matter of practice or policy. however.

In the case of service incentive leave.. July 8. Bautista. Section 2. vs. It must be noted that this benefit is given by law on the basis of the service actually rendered by the employee. 156367. 151966. R. [G. CA. the computation thereof should only be up to the date of termination of employment. if the employee entitled to service incentive leave does not use or commute the same. 1997). (Republic Planters Bank.” Service incentive leave is a right which accrues to every employee who has served “within 12 months. Rule V. Inc. 349 Phil 65]. 6.R. NLRC. 152427. whether continuous or broken reckoned . August 9. as provided in the Collective Bargaining Agreement. Book III of the Implementing Rules and Regulations provides that “*e+very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. R. the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. Inc. R. In a case involving the accumulation of leave credits and their conversion into cash. the clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments.This Imbuido ruling was cited in the 2005 case of Integrated Contractor and Plumbing Works. the Supreme Court observed that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. such as the conversion of the accumulated leave credits into their cash equivalent. 2005]. Furthermore. No. JPL Marketing Promotions vs. Jan. NLRC. Accordingly. Leave credits are normally converted into their cash equivalent based on the last prevailing salary received by the employee. This is because the entitlement to said benefit accrues only from the time he has rendered at least one year of service to his employer. May 16. 2005]. But in another 2005 case. No. where an employee was never paid his service incentive leave during all the time he was employed. 1998. it was held that the same should be computed not from the start of employment but a year after commencement of service. chanrobles virtual law library As enunciated by the Supreme Court in Fernandez vs. January 28. now known as PNB-Republic Bank. for it is only then that the employee is entitled to said benefit. it was held that private respondent’s service incentive leave credits of five (5) days for every year of service. [G. No. vs. NLRC. it is granted as a motivation for the employee to stay longer with the employer. No. the Supreme Court observed that the conversion of leave credits into their cash equivalent is aimed primarily to encourage workers to work continuously and with dedication for the company. [G. Companies offer incentives. to lure employees to stay with the company. and in the particular case of the service incentive leave. Rationale for leave credit accumulation and cash conversion. Moreover. et al. R. No. G. vs. 117460. There is no cause for granting said incentive to one who has already terminated his relationship with the employer. he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. In the 2005 case of Auto Bus Transport System. should be computed up to the date of reinstatement pursuant to Article 279. 2005] which involves a project employee who later on became a regular employee after a series of re-hiring. [G. subject to a few exceptions. 105892. based on the actual service rendered to the petitioner in accordance with each contract of employment.

including those entities operating primarily as private subsidiaries of the government. receive*d+ various amounts as profit share. It quoted with approval the Labor Arbiter on this matter. restaurants. 93. In the 2005 case of Mayon Hotel & Restaurant vs. 157634. • The shares shall be distributed to employees not less often than once every 2 weeks or twice a month at intervals not exceeding 16 days. 104. is less than 12 months. 55. May 16.from the date the employee started working. lodging houses. as the solicitor general recommends. The Supreme Court was not persuaded.” It is also “commutable to its money equivalent if not used or exhausted at the end of the year. Although called profit share[.] such is in the nature of share from service charges charged by the hotel. to wit: “While complainants. fifteen percent (15%) for the management to answer for losses and breakages and distribution to managerial employees. [G. What are service charges? The rule on service charges applies only to establishments collecting service charges.00 salary ceiling for entitlement thereto is no longer applicable. R. night clubs. He may use it as leave days or he may collect its monetary value. bars. is to unduly restrict such right. [petitioners] failed to submit evidence that the amounts received by [respondents] as profit share are to be considered part of their wages and had been agreed by them prior to their . the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy. Service charge is not profit share and may thus not be deducted from wage. casinos and gambling houses.” In other words. and irrespective of the method by which their wages are paid. 94. 2005]. cocktail lounges. vol. designations or employment status. massage clinics. • The P2. regardless of their positions. in which case said period shall be considered as one year. the employer alleged that the five (5) percent of the gross income of the establishment being given to the respondent-employees can be considered as part of their wages. and b. Also. such as hotels. It applies to all employees of covered employers. To limit the award to three years. How is service charge distributed? Service charges are distributed in accordance with the following percentage of sharing: a.000. No. 103. an employee who has served for one year is entitled to it. Adana. II. and similar enterprises. 53. eighty-five percent (85%) for the employees to be distributed equally among them. rollo). or that provided in the employment contracts. SERVICE CHARGES: 52. This is more explained by [respondents] when they testified that what they received are not fixed amounts and the same are paid not on a monthly basis (pp. who were employed in the hotel.

task. lodging. “Fair and reasonable value” shall not include any profit to the employer. b. it is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. “Facilities” shall include articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer’s business. 56.they are synonymous in meaning and usage. or other method of calculating the same. or to any person affiliated with the employer. of board. chanrobles virtual law library c. FACILITIES AND SUPPLEMENTS: 55. for work done or to be done or for services rendered or to be rendered. Actual work is the basis of claim for wages ("No work. it includes the fair and reasonable value. 2. lodging and other facilities customarily furnished by an employer to his employees both in agricultural and non-agricultural enterprises. Further. What are “facilities”? 1. or other facilities customarily furnished by the employer to the employee. “Wage”. or commission basis. chanrobles virtual law library 4. piece. it is capable of being expressed in terms of money. however designated.the fair and reasonable value of board. whether fixed or ascertained on a time. What are the attributes of wage? 1. how can the amounts receive[d] by [respondents] be considered as profit share when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross receipt of an enterprise. as determined by the Secretary of Labor and Employment. and d. Commission .may or may not be treated as part of wage depending on the circumstances. it is the remuneration or earnings. “Supplements” means extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. no pay"). 3. Attributes of wage: a. .employment. or for services rendered or to be rendered. What are “supplements”? 1. Value of facilities . “salary” and “pay”.” WAGES: 54. 2. Profits are realized after expenses are deducted from the gross income. distinction .

R. (b) the provision of deductible facilities is voluntarily accepted in writing by the employee. should be removed. There was no proof of respondents’ written authorization. As ruled in Mabeza [infra]. NLRC. The records are clear that petitioners failed to comply with these requirements. bonus or sick leave) given but its purpose. Book III. 118506. therefore. As stated in Mabeza vs. The deduction of the cost of meals from respondents’ wages. Rule VII. that hotel workers are required to work different shifts and are expected to be available at various odd hours.R. May 16. and (c) the facilities are charged at fair and reasonable value. distinction: The benefit or privilege given to the employee which constitutes an extra remuneration over and above his basic or ordinary earning or wage. Considering. the quality of food served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this supposed Facility Evaluation Orders. therefore. on the ground that respondents have availed themselves of the food given by petitioners. . it is a facility. Voluntary acceptance of facilities required. In order that the cost of facilities furnished by the employer may be charged against an employee. his acceptance of such facilities must be voluntary. chanrobles virtual law library Consequently. Rules to Implement the Labor Code). the employer simply cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade. even granting that meals and snacks were provided by the hotel to its employees and indeed constituted facilities.In the same 2005 case of Mayon Hotel & Restaurant vs. Considering the failure to comply with the above-mentioned legal requirements. [G. food or snacks or other convenience provided by the employers are deemed as supplements if they are granted for the convenience of the employer. The criterion in making a distinction between a supplement and a facility does not so much lie in the kind (food. their ready availability is a necessary matter in the operations of a small hotel. Adana. What is the distinction between “facilities” and “supplements”? “Facilities" and "supplements”. 2005] it was noted by the Supreme Court the uncontroverted testimony of respondents on record that they were required to eat in the hotel and restaurant so that they will not go home and there is no interruption in the services of Mayon Hotel & Restaurant. and when said benefit or privilege is part of the laborer’s basic wage. 157634. April 18. such as petitioners’ business. the Labor Arbiter found that while the respondents admitted that they were given meals and merienda. such facilities could not be deducted without compliance with certain legal requirements. lodging) but the purpose. Indeed. the Labor Arbiter therefore erred when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries. as held in Mayon Hotel & Restaurant [supra]. (Section 7. 57. lodging. The law is clear that mere availment is not sufficient to allow deductions from employees’ wages. No. No. Legal requirements must be complied with before deducting facilities from wages. [G. The criterion is not so much with the kind of the benefit or item (food. is supplement. 1997 (271 SCRA 670)].

Thus. If profit is reduced. If there is no profit. as allowance for food. It is not part of wages since. agreement (e. bonus should likewise be reduced. Inc. 28. L-9742. 62. bonus may become demandable and enforceable. R. No. when meals are freely given to crew members of a vessel while they were on the high seas. No. (State Marine Cooperation and Royal Line.. 1963). Therefore. G. 27. R. BONUS: 61. a certain percentage of their daily wage. What is bonus? Is it demandable? “Bonus” is an amount granted and paid ex gratia to the employee for his industry or loyalty. absent any agreement making such bonus part of the compensation of the employees. on the other hand. Consequently. hence. United Cebu Autobus Employees Association.. out of necessity. (Cebu Autobus Company vs. it was ruled that the company should continue granting the said privilege. allowances shall not be included therein. chanrobles virtual law library 58. Are allowances part of wage? "Allowances" are not part of wages. Supplements. 1955). Oct. G. Feb. there should be no bonus. generally not demandable or enforceable. and the operator of the coastwise vessels affected should continue giving the same benefit. in the computation of the amount of retirement and other benefits. cannot be considered as facilities but supplements which could not be reduced having been given not as part of wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage. not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage. Thus. the deductions made therefrom for the meals should be returned to them. long practice. aside from their regular salary. who were assigned outside of the city limits. vs. if bonus is given as an . CBA) and other peculiar circumstances. What is a gratuity? “Gratuity” is a gift freely given by the employer in appreciation of certain favors or services rendered. free meals supplied by the ship operator to crew members. L-12444. it is not intended as compensation for actual work. It is further not demandable as a matter of right. strictly speaking. GRATUITY AND ALLOWANCES: 59. may not be so charged.g. Cebu Seamen’s Association. What is the rule on deductibility of “facilities” or “supplements” from wages? Facilities may be charged to or deducted from wages. In another case where the company used to pay to its drivers and conductors. Inc. 60. When is bonus demandable and enforceable? On the basis of equitable considerations.

220 SCRA 452). be penalized for its past generosity to its employees. L-74156. No. G. hence. G. the giving of the bonus should have been done over a long period of time. NLRC. night differential and holiday pay and cost-of-living allowances. 189 SCRA 274). without violating the non-diminution clause in the law since bonuses are not part of labor standards in the same class as salaries. the bank may not be forced to distribute bonuses which it can no longer afford to pay and. company practice or policy. the same are treated as part of the basic salary of the . it is deemed part of wage or salary. (Traders Royal Bank vs. 101761. et al. and two-months for year-end bonus. Aug. The contention of the union that the granting of said bonuses had ripened into a company practice that may no longer be adjusted to the prevailing condition of the bank has no legal and moral bases. such as the cash equivalent of unused vacation and sick leave credits. What is 13th month pay? “Thirteenth-month pay” shall mean one-twelfth (1/12) of the basic salary of an employee within a calendar year. cost-ofliving allowances. 13th MONTH PAY: 63. Its fiscal condition having declined. the employer may validly reduce it to two (2) months basic pay for mid-year bonus. bonus may be forfeited in case employee is found guilty of an administrative charge. chanrobles virtual law library The “basic salary” of an employee for the purpose of computing the 13th-month pay shall include all remunerations or earnings paid by the employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary. demandable. in effect. To be considered a “regular practice. 30.R. and must be shown to have been consistent and deliberate. G. provided under the Labor Code. in an amount equivalent to two (2) months gross pay for mid-year bonus and three (3) months gross pay for the year-end bonus. NLRC. overtime. R.R. No. 1990. chanrobles virtual law library The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if by individual or collective agreement. when considered a company practice. However. (National Sugar Refineries Corporation v. Thus. Bonus..additional compensation which the employer agreed to give without any condition such as success of business or more efficient or more productive operation. 163 SCRA 71). 88168. (Globe Mackay Cable and Radio Corporation vs. even if the bonus has been given for quite some time or since “time-immemorial” as asserted by the union. No.”. NLRC. Unlike 13th month pay. premium. holiday pay and leave benefits.

A. R. but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. June 15. These benefits included overtime premium for regular overtime. et al. they can no longer be withdrawn. Inc.. Semana. vacation and maternity leaves. [G. Aug. 4 [a]. not the amount actually received by an employee. vs. premium pay for special holidays. St. discontinued or eliminated. Samahan ng Malayang Manggagawa sa Honda. Consolidated Food Corporation vs. despite the fact that the law and the government issuances expressly excluded the same. NLRC. Samahan ng Malayang Manggagawa sa Honda. regular holiday pay and premiums for work done on rest days and special holidays as held previously in San Miguel Corporation [Cagayan Coca-Cola Plant] vs. was unconvinced. [349 Phil. where the employer. R. No. 220 (1998)]. Inc. legal holiday pay. 2005+. in its computation of the 13th-month pay of its employees. 1993. maternity leave pay. G. (Davao Fruits Corporation vs. Thus. it was ruled that for employees receiving regular wage. paternity leave pay. chanrobles virtual law library The Supreme Court. In the 2005 case of Honda Phils. April 28. excluded from the computation of “basic salary” are payments for sick. it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. R. It affirmed the ruling of the Voluntary Arbitrator that petitioner’s stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. and after audit was conducted.employees. night differentials. therefore. When it changed its person in charge of the payroll in the process of computerizing its payroll. Inciong. Petitioner’s submission of financial statements every year requires the services of a certified public . being favorable to the employees. night premium. added to the base figure. bereavement leave pay. (Davao Fruits Corporation vs. (No. from 1975 to 1981. Michael Academy vs. No. But in a case where the employer.. diminished. Associated Labor Union. 152456. company vacation and sick leave pay. R. [373 Phil. 85073. G. the 13th month pay due an employee was computed based on the employee’s basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. vacation and maternity leaves. 225 SCRA 562). [354 Phil. 24. NLRC. 145561. 85073. for two to three years prior to 1999. it was ruled that such act of the employer. “basic salary” has been interpreted to mean. 751 (1999)] and similar cases. had ripened into a practice and. legal and special holidays. No. A. In Hagonoy Rural Bank vs. regular holiday pay and premiums for work done on rest days and special holidays. 2004]. et al. 225 SCRA 562). [103 SCRA 139 (1981)]. 145561. Aug. (Honda Phils. Premium pay is not included in the computation of the 13th-month pay. Associated Labor Unions. G. And the same holding was made in the 2004 case of Sevilla Trading Company vs. NLRC. payments for sick. No. 1993. V. G. however. voluntarily and continuously included in the computation of its employees’ thirteenth-month pay. Petitioner-employer claimed that it entrusted the preparation of the payroll to its office staff. No.. 491 (1998)]. and cash conversion of unused company vacation and sick leave. reduced. vs. DOLE Handbook on Workers Statutory Monetary Benefits). June 15. including the computation and payment of the 13th-month pay and other benefits. union leave pay. X [C]. the amount of other benefits received by the employees which are beyond the basic pay. R. Revised Guidelines on the Implementation of the 13th-Month Pay Law. 2005). freely. 24.. No.

. 2004).. April 28. despite the clarity of statute and jurisprudence at that time. March 18. petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged “corrected” computation of the thirteenth month pay. 1995. R. International School of Speech vs. This is consistent with the principle of equity that as the employer can require the employee to clear himself of all liabilities and property accountability. (No. No. G. if he worked only from January up to September. NLRC. chanrobles virtual law library In the 2005 case of Clarion Printing House. 148372. petitioner failed to adduce any other relevant evidence to support its contention. 13th-month pay of resigned or separated employee. R. Villarama vs. There was no explanation whatsoever why its inclusion of non-basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake. Also. vs. June 27. A. Semana. (Sevilla Trading Company vs. Inc. X [G]. an employee who was receiving P6. et al.00 x 6) / 12 = P3. so can the employee . Thus. DOLE Handbook on Workers Statutory Monetary Benefits. and irrespective of the method by which their wages are paid. et al. Revised Guidelines on the Implementation of the 13thMonth Pay Law. This is merely basic cost accounting. was held to be entitled to her proportionate 13th month pay computed as follows: chanrobles virtual law library (Monthly Salary x 6 ) / 12 = Proportionate 13th month pay (P6. R. 106341.500. It is quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. his proportionate 13th-month pay should be the equivalent of 1/12 of his total basic salary which he earned during that period. 2005]. R. An employee who has resigned or whose services were terminated at any time before the time for payment of the 13th-month pay is entitled to this monetary benefit in proportion to the length of time he worked during the year.accountant to audit its finances. et al. 64.00 The payment of the 13th-month pay may be demanded by the employee upon the cessation of employer-employee relationship. This implies that in previous years it does not know its cost of labor and operations. reckoned from the time he started working during the calendar year up to the time of his resignation or termination from service. V. Who are entitled to 13th month pay? All rank-and-file employees are entitled to a 13th-month pay regardless of the amount of basic salary that they receive in a month and regardless of their designation or employment status. 152456. 236 SCRA 280). No. 6. A. NLRC. provided that they have worked for at least one (1) month during a calendar year. 1994. 112658.500. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay.250. G.. NLRC. [G. No. G. 2.00 in monthly salary and who had worked for at least six (6) months at the time of her retrenchment. No. No. Sept.

Revised Guidelines on the Implementation of the 13th-Month Pay Law). has ripened into a . which was favorable to the employees though not conforming to law. from 1975 to 1981. Associated Labor Unions. Honda did not adduce evidence to show that the 13th month. June 15. August 24. the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. [G. Inc. reckoned from the time he started working during the calendar year. 14th month and financial assistance pay. (Section 6 thereof). vs. 145561.. No. and after they have exhausted all their leave credits and were no longer receiving their monthly salary from Honda. 114M in 1998 and 215M lost of sales in 1999 due to strike. under these circumstances. et al. This is an implicit acceptance that prior to the strike.” The memorandum dated November 22.demand the payment of all benefits due him upon the termination of the relationship. it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the company’s financial standing. Regarding pro-ration of the 13th month pay. 1993. 6. [G. In that case. 85073. R. It was a convenient coincidence for the company that the work stoppage held by the employees lasted for thirty-one (31) days or exactly one month. As held by the Voluntary Arbitrator: “The Company (Honda) explicitly accepted that it was the strike held that prompt*ed+ them to adopt a pro-rata computation. As the rules state. aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997. 2005].R. That a full month payment of the 13th month pay is the established practice at Honda is further bolstered by the affidavits executed by Feliteo Bautista and Edgardo Cruzada. No. they still received the full amount of their 13th month. there being no gap in the service of the workers during the calendar year in question. the computation of the 13th month pay should not be pro-rated but should be given in full. In the present case. Samahan ng Malayang Manggagawa sa Honda. The Court of Appeals thus held that: “Considering the foregoing. 1999 which Honda issued shows that it was the first time a prorating scheme was to be implemented in the company. Both attested that when they were absent from work due to motorcycle accidents. 225 SCRA 562] presented an example of a voluntary act of the employer that has ripened into a company practice. This enabled them to devise a formula using 11/12 of the total annual salary as base amount for computation instead of the entire amount for a 12-month period. the Supreme Court in Honda Phils. freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law.” (Emphasis supplied) chanrobles virtual law library More importantly. (No. It was held that this act. The case of Davao Fruits Corporation vs. a full month basic pay computation was the “present practice” intended to be maintained in the CBA. the employer. an employee is entitled to a pay in proportion to the length of time he worked during the year. took cognizance of the fact that the said Revised Guidelines on the Implementation of the 13th Month Pay Law provided for a pro-ration of this benefit only in cases of resignation or separation from work.

the employer. In another case. the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. What is more. 145561. No. we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 151966.R. discontinued or eliminated. [G. if not a deterrent. Jr. for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law. where the Supreme Court ruled that. petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This benefit is given by law on the basis of the service actually rendered by the employee. In the above quoted case of Davao Fruits Corporation vs. No. diminished. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. Velarde. we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. therefore.. . reduced. the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion. except those corporations operating essentially as private subsidiaries of the government. it was stated: “With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer. Philippine Constitution. including government-owned and controlled corporations. [Citing Santos vs. (Section 3. Honda Phils. G. Furthermore. 381. To allow the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingman’s welfare should be the primordial and paramount consideration. Inc. approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. [G. Associated Labor Unions.” (Emphasis supplied) Lastly. the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980. 2005]. While in Tiangco vs. in such a case. Semana. 152456. 28 April 2004. in Sevilla Trading Company vs. 65. 428 SCRA 239]. this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. can no longer be withdrawn. In all these cases. The government and any of its political subdivisions. 2005). the company practice lasted for six (6) years. 390-391 [2003]). No. 450 Phil. the computation for the 13th month pay should properly begin from the first day of employment up to the last day of work of the employee.practice and. July 8. or three (3) years and four (4) months. This. Abarquez. In the case at bar. Samahan ng Malayang Manggagawa sa Honda. Leogardo. for three (3) years and nine (9) months. R. Article XIII-Social Justice and Human Rights. CA. June 15. Davao Integrated Port Stevedoring Services vs. R. Who are exempted employers from the coverage of 13th month pay? The following are exempted employers: a. 100 of the Labor Code. chanrobles virtual law library But the rule is different if an employee was never paid his 13th month pay during his employment. A case in point is JPL Marketing Promotions vs. vs.

70. private respondent-employees were not given their 13th month pay and service incentive leave pay while they were under the employ of JPL. When should the 13th month pay be paid? The required 13th month pay shall be paid not later than December 24 of each year. mid-year bonus. R. the employer shall be covered by the 13th month pay law insofar as such workers are concerned. What is the rule in case an employee has multiple employers? Government employees working part-time in a private enterprise. except where the workers are paid on piece-rate basis in which case. The Supreme Court ruled that the difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. July 8. as well as non-monetary benefits.A. are entitled to the required 13th-month pay from all their private employers regardless of their total earnings from each or all their employers. Where an employer pays less than 1/12th of the employee’s basic salary. Admittedly. whether on full or part-time basis. In the 2005 case of JPL Marketing Promotions vs. Employers already paying their employees 13th-month pay or more in a calendar year or its equivalent at the time of this issuance. 69. chanrobles virtual law library d. Employers of household helpers and persons in the personal service of another in relation to such workers. [G. the employer shall pay the difference. 67. including private educational institutions. May payment of bonus be credited as payment of 13th month pay? . 66. irrespective of the time consumed in the performance thereof. as well as employees working in two or more private firms.b. What is meant by the phrase “its equivalent” in the 13th month pay law? The term “its equivalent” shall include Christmas bonus. Employers of those who are paid on purely commission. as properly held by the Court of Appeals and by the NLRC. cost of living allowances and all other allowances regularly enjoyed by the employee. 7833). the petitioneremployer contends that the employees are no longer entitled to the payment of 13th month pay as well as service incentive leave pay because they were provided salaries which were over and above the minimum wage. Thus. No. and those who are paid a fixed amount for performing a specific work. c. 151966. private respondents are entitled to the 13th month pay and service incentive leave pay. 68. The 13th month pay is tax exempt (R. boundary. profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends. CA. Is 13th month pay tax-exempt? Yes. or task basis. 2005].

MINIMUM WAGE: 72. et al. NLRC. 73. What is meant by “statutory minimum wage”? The term “statutory minimum wages” refers simply to the lowest basic wage rate fixed by law that an employer can pay his workers. et al. NLRC. case . Brokenshire Memorial Hospital. vs. case .Yes j..No f. et al. case . Framanlis Farms. Leogardo. Universal Corn Products vs. Valenzuela. August 31. 75. NLRC. Ople. vs. Ovejera. Inc.No b. R. What is the basis of the computation of the “statutory minimum wage”? The basis of the minimum wage rates prescribed by law shall be the normal working hours which shall not be more than eight (8) hours a day. et al. What is the principle of non-elimination or non-diminution of benefits? . DOLE Philippines vs.Yes g. et al. NLRC. et al. et al. 1989. Kamaya Point Hotel vs. (Kamaya Point Hotel vs. G. It is a gratuity to which the recipient has no right to make a demand. No. chanrobles virtual law library 74. 75289. et al. Marcopper Mining Corp. 177 SCRA 160). et al. Inc. et al.No 14th MONTH PAY: 71. case . NFSW vs.Yes e.a. It is. UST Faculty Union vs.Yes d.Yes c. Minister of Labor. NLRC. case . What is a 14th month pay? There is no law mandating the payment of 14th-month pay. case . vs. FEU case (involving transportation allowance which was treated as compliance with 13th month pay) h. therefore. United CMC Textile Workers Union vs. case .No i. case . How is the minimum wage fixed? The minimum wage rates for agricultural and non-agricultural workers and employees in every region shall be those prescribed by the Regional Tripartite Wages and Productivity Boards (RTWPB) which shall in no case be lower than the statutory minimum wage rates. case . in the nature of a bonus which may not be imposed upon the employer. FEU Employees Labor Union vs.

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

(h) Fair return of the capital invested and capacity to pay of employers; (i) Effects on employment generation and family income; and (j) The equitable distribution of income and wealth along the imperatives of economic and social development. 81. What is “wage distortion”? "Wage distortion" is a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. chanrobles virtual law library The issue of whether or not a wage distortion exists is a question of fact that is within the jurisdiction of the quasi-judicial tribunals. PAYMENT OF WAGES: 82. What are the forms of payment of wages? 1. Under the Civil Code, it is mandated that the laborer’s wages shall be paid in legal currency. Under the Labor Code and its implementing rules, as a general rule, wages shall be paid in legal tender and the use of tokens, promissory notes, vouchers, coupons or any other form alleged to represent legal tender is prohibited even when expressly requested by the employee. 2. Exceptions : A. Payment through automated teller machine (ATM) of banks provided the following conditions are met: 1. the ATM system of payment is with the written consent of the employees concerned; 2. The employees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked; 3. The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended; chanrobles virtual law library 4. There is a bank or ATM facility within a radius of one (1) kilometer to the place of work; 5. Upon request of the concerned employee/s, the employer shall issue a record of payment of wages, benefits and deductions for a particular period; 6. There shall be n additional expenses and no diminution of benefits and privileges as a result of the ATM system of payment;

7. The employer shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. (Explanatory Bulletin issued by DOLE Secretary Leonardo Quisumbing dated November 25, 1996). B. Payment by check or money order, (the foregoing conditions on existence of bank facility and other factors should also concur). Payslips as evidence of payment. Ideally, according to the Supreme Court in Kar Asia, Inc., et al. vs. Corona, (G. R. No. 154985, Aug. 24, 2004), the signatures of the employees should appear in the payroll as evidence of actual payment. However, the absence of such signatures does not necessarily lead to the conclusion that the amount due the employees was not received. More so in a case where it appears that the payslips for the same period bear the signatures of the employees plus a certification that they received the full compensation for the services rendered. While ordinarily a payslip is only a statement of the gross monthly income of the employee, his signature therein coupled by an acknowledgement of full compensation alter the legal complexion of the document. The payslip becomes a substantial proof of actual payment. Moreover, there is no hard-and-fast rule requiring that the employee’s signature in the payroll is the only acceptable proof of payment. By implication, the employees, in signing the payslips with their acknowledgement of full compensation, unqualifiedly admitted the receipt thereof. chanrobles virtual law library In the 2005 case of G & M [Phils.], Inc. vs. Cruz, (G. R. No. 140495, April 15, 2005), the Supreme Court affirmed the finding of both the Labor Arbiter and the NLRC on the admissibility as evidence of the pay slips. As a general rule, the Court is not duty-bound to delve into the accuracy of the NLRC’s factual findings in the absence of a clear showing that these were arbitrary and bereft of any rational basis. In the present case, petitioner failed to demonstrate any arbitrariness or lack of rational basis on the part of the NLRC. Article 221 of the Labor Code provides that proceedings before the NLRC are not covered by the technical rules of evidence and procedure. The probative value of the copy of the pay slips is aptly justified by the NLRC, as follows: “… the payslips are original duplicates of computerized payslips issued by the employer, Salim Al Yami Est., to its workers which contain entries such as pay date, employee’s I.D. number, employee name, category, basic rate, overtime hours and other relevant information, including an itemization of earnings (basic pay, overtime pay, meal allowance for the period covered) and deductions. The fact that the payslips are not authenticated will not militate against complainant’s claim, considering that in presenting the payslips, complainant has established the fact of underpayment, and the burden has shifted to the respondent to prove that complainant was totally compensated for actual services rendered.” Payroll.

Under Section 6[a], Rule X, Book III of the Rules Implementing the Labor Code, every employer is required to pay his employees by means of payroll. The payroll should show, among other things, the employee’s rate of pay, deductions made, and the amount actually paid to the employee. Interestingly, the failure of the employer to present the payroll to support his claim that the petitioner was not his employee, raises speculation whether this omission proves that its presentation would be adverse to his case. (Chavez vs. NLRC, et al., G. R. No. 146530, Jan. 17, 2005 citing Tan vs. Lagrama, 387 SCRA 393 [2002]). 83. What is the time of payment of wages? 1. Time of payment; exception. - The general rule is, wages shall be paid not less often than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. No employer shall make payment with less frequency than once a month. The exception to above rule is when payment cannot be made with such regularity due to force majeure or circumstances beyond the employer’s control, in which case, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. 84. What is the place of payment of wages? 1. As a general rule, the place of payment shall be at or near the place of undertaking. 2. Exceptions: a. When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; b. When the employer provides free transportation to the employees back and forth; and chanrobles virtual law library c. Under any other analogous circumstances, provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. 3. Payment of wages in bars, massage clinics or nightclubs is prohibited except in the case of employees thereof. 4. Payment through banks - allowed in businesses and other entities with twenty five (25) or more employees and located within one (1) kilometer radius to a commercial, savings or rural bank. 85. To whom should wages be paid? 1. General rule: payment of wages shall be made directly to the employee entitled thereto and to nobody else. 2. Exceptions.

a. Where the employer is authorized in writing by the employee to pay his wages to a member of his family; b. Where payment to another person of any part of the employee’s wages is authorized by existing law, including payments for the insurance premiums of the employee and union dues where the right to check-off has been recognized by the employer in accordance with a collective agreement or authorized in writing by the individual employees concerned; or chanrobles virtual law library c. In case of death of the employee, in which case, the same shall be paid to his heirs without necessity of intestate proceedings. Payment of wages and other monetary claims, burden of proof. In Jimenez vs. NLRC, [G.R. No. 116960, April 2, 1996, 256 SCRA 84] which involves a claim for unpaid wages/commissions, separation pay and damages against an employer, the Supreme Court ruled that where a person is sued for a debt admits that the debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. This is based on the principle of evidence that each party must prove his affirmative allegations. Since petitioner asserts that respondent has already been fully paid of his stipulated salary, the burden is upon petitioner to prove such fact of full payment. (See also National Semiconductor [HK] vs. NLRC, et al., G. R. No. 123520, June 26, 1998), Thus, it was stated in the Jimenez case that: “As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. “When the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. Where the debtor introduces some evidence of payment, the burden of going forward with the evidence - as distinct from the general burden of proof - shifts to the creditor, who is then under a duty of producing some evidence to show non-payment.” In the 2005 case of G & M [Phils.], Inc. vs. Cruz, [G. R. No. 140495, April 15, 2005], petitioner merely denied respondent’s claim of underpayment. It did not present any controverting evidence to prove full payment. Hence, the findings of the Labor Arbiter, the NLRC and the Court of Appeals that respondent was not fully paid of his wages stand. chanrobles virtual law library The positive testimony of a creditor may be sufficient of itself to show non-payment, even when met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show payment, but, where his testimony is contradicted by the other party or by a disinterested witness, the issue may be determined against the debtor since he has the burden of proof. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue.

Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and in effect admitted the allegations of private respondents. (G & M [Phils.], Inc. vs. Cruz, G. R. No. 140495, April 15, 2005). The reason for the rule, according to the 2000 case of Villar vs. NLRC, [G.R. No. 130935, 11 May 2000], is that the pertinent personnel files, payrolls, records, remittances and other similar documents – which will show that overtime, differentials, service incentive leave and other claims of workers have been paid – are not in the possession of the worker but in the custody and absolute control of the employer. chanrobles virtual law library RULE ON CONTRACTING OR SUBCONTRACTING: 86. What is contracting or subcontracting? Contracting or subcontracting - It refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. Employment and independent contracting, distinguished. The 2005 case of Chavez vs. NLRC, [G. R. No. 146530, January 17, 2005], is instructive as far as the distinction between employment and independent contracting is concerned. In debunking the contention of the employer that the truck driver is an independent contractor and not an employee, the Supreme Court ruled: “Fourth. As earlier opined, of the four elements of the employer-employee relationship, the ‘control test’ is the most important. Compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished. “Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the respondents’ supervision and control. Their right of control was manifested by the following attendant circumstances: 1. The truck driven by the petitioner belonged to respondent company; 2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent company’s goods;

3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmeña Street, Makati City or at BEPZ, Mariveles, Bataan; and chanrobles virtual law library 4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips. a. The routing slips indicated on the column REMARKS, the chronological order and priority of delivery such as 1st drop, 2nd drop, 3rd drop, etc. This meant that the petitioner had to deliver the same according to the order of priority indicated therein. b. The routing slips, likewise, showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon. c. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as, for example, the words ‘tomorrow morning’ was written on slip no. 2776. “These circumstances, to the Court’s mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. On the other hand, the Court is hard put to believe the respondents’ allegation that the petitioner was an independent contractor engaged in providing delivery or hauling services when he did not even own the truck used for such services. Evidently, he did not possess substantial capitalization or investment in the form of tools, machinery and work premises. Moreover, the petitioner performed the delivery services exclusively for the respondent company for a continuous and uninterrupted period of ten years. “The contract of service to the contrary notwithstanding, the factual circumstances earlier discussed indubitably establish the existence of an employer-employee relationship between the respondent company and the petitioner. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.” (Chavez vs. NLRC, et al., G. R. No. 146530, Jan. 17, 2005). In the 2002 case of Tan vs. Lagrama, [G. R. No. 151228, August 15, 2002], the Supreme Court distinguished employment from independent contracting. According to the Court, compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. (Citing De los Santos v. NLRC, G.R. No. 121327, Dec. 20, 2001). Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.

Following the control test, the High Court held in Tan vs. Lagrama [supra] that albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows that the latter performed his work as a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms. Petitioner’s control over Lagrama’s work extended not only to the use of the work area, but also to the result of Lagrama’s work, and the manner and means by which the work was to be accomplished. The Supreme Court further ruled: “Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the paintings, because he admitted that he paid Lagrama only for the latter’s services. “Private respondent Lagrama claimed that he worked daily, from 8 o’clock in the morning to 5 o’clock in the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week. Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves regularity in his employment by petitioner. “Second. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC, the pertinent portions of which stated: ‘Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. He was urinating right at the place where he was working when it was so easy for him, as everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had to make a virtual urinal out of his work place! The place then stunk to high heavens, naturally, to the consternation of respondents and everyone who could smell the malodor. ... ‘Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him from his painting job upon discovery and his admission of such acts. Nonetheless, though thoroughly scolded, he was not fired. It was he who stopped to paint for respondents. chanrobles virtual law library “By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his employee. For the right to hire and fire is another important element of the employer-employee relationship. Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the employer.

task. In this case. Samuel Villalba. to establish that the legitimate independent contractor is the true employer of petitioners. (3) the power of dismissal. Case of independent contractor [Sonza vs. depending on whether the elements of an employer-employee relationship are present or not. Otherwise.’ That Lagrama worked for Tan on a fixed piece-work basis is of no moment. or for services rendered or to be rendered. et al. Section 3(e). 2002. R. No. 15. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. raising speculations whether his failure to do so proves that its presentation would be adverse to his case. Rule 131. NLRC. whether fixed or ascertained on a time. The payroll should show among other things. however designated. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. Sec. et al. and the amount actually paid to the employee. and may or may not acquire an employment status. not a basis for determining the existence or absence of employer-employee relationship. (See Santos vs. the employee’s rate of pay. On the other hand. [G. ABS-CBN case]. Aug. 2002). 2000]. Aug. NLRC. June 8. Payment by result is a method of compensation and does not define the essence of the relation. . in Escario. 284 SCRA 399 [1998]). admitted in a sworn statement that he was told by Lagrama that the latter worked for petitioner. (Citing Revised Rules on Evidence. Lagrama. or commission basis.. an employer would be rewarded for his failure or even neglect to perform his obligation. “The Rules Implementing the Labor Code require every employer to pay his employees by means of payroll.. NLRC. It is a method of computing compensation. In the case at bar. Lagrama. (Citing Lambo vs. (Book III. there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. No. Petitioner in fact admits that the billboards are important to his business.“Third. et al. 317 SCRA 420 [1999]). 151228. Villaruel vs. To let the people know what movie was to be shown in a movie theater requires billboards. chanrobles virtual law library “The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. vs. for whom Lagrama had rendered service. NLRC. 151228.” (Tan vs. No. R. deductions made. Rule X. One may be paid on the basis of results or time expended on the work. piece. 293 SCRA 113 [1998]). 124055. “The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner. (2) the payment of wages. and (4) the power to control the employee’s conduct. capable of being expressed in terms of money. or other method of calculating the same. 6*a+). Moreover. See (Tan vs. G. petitioner did not present the payroll to support his claim that Lagrama was not his employee. the Supreme Court also used the so-called “four-fold test” in determining employer-employee relationship. That he did so only during weekends has not been denied by petitioner. Wages are defined as ‘remuneration or earnings. “Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship with petitioner. The elements of this test are (1) the selection and engagement of employee. 15. R. G.

Sonza complained that ABS-CBN did not pay his salaries. In May 1994. Quezon City. 13th month pay. Referred to in the Agreement as “AGENT. travel allowance and amounts due under the Employees Stock Option Plan (“ESOP”). . No. Although Philippine labor laws and jurisprudence define clearly the elements of an employer-employee relationship. Co-host for Mel & Jay radio program. the Court of Appeals affirmed the NLRC’s finding that no employer-employee relationship existed between Sonza and ABSCBN. 138051. The Agreement listed the services Sonza would render to ABS-CBN. Sonza filed a complaint against ABS-CBN before the Department of Labor and Employment. as follows: a.000 for the second and third year of the Agreement. the control test. June 10. Sundays. On certiorari. ABS-CBN continued to remit Sonza’s monthly talent fees through his account at PCIBank. The basic issue presented here is whether Sonza is an employee or an independent contractor. The NLRC. the Supreme Court used the four-fold test of determining the existence of an employer-employee relationship. In affirming the said decision of the Court of Appeals and holding that Sonza was not an employee but an independent contractor.m.” There is no case law stating that a radio and television program host is an employee of the broadcast station. and Carmela Tiangco (“TIANGCO”).. separation pay. R. Co-host for Mel & Jay television program. respondent ABS-CBN Broadcasting Corporation (“ABS-CBN”) signed an Agreement (“Agreement”) with the Mel and Jay Management and Development Corporation (“MJMDC”). chanrobles virtual law library The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction. National Capital Region in Quezon City. On 30 April 1996.” MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television. ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. 2004] is one of first impression. 5:30 to 7:00 p.The 2004 case of Sonza vs. ABS-CBN opened a new account with the same bank where ABS-CBN deposited Sonza’s talent fees and other payments due him under the Agreement. affirmed the Labor Arbiter’s ruling. [G. ABS-CBN Broadcasting Corporation. as President and General Manager. On 10 July 1996. Sonza filed an Opposition to the motion on 19 July 1996. Meanwhile. as EVP and Treasurer. b.. service incentive leave pay. In July 1996. signing bonus. more particularly. on appeal. Quezon Avenue Branch. 8:00 to 10:00 a.m. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.000 for the first year and P317. this is the first time that the Supreme Court has resolved the nature of the relationship between a television and radio station and one of its “talents. ABS-CBN agreed to pay for Sonza’s services a monthly talent fee of P310. ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza. Mondays to Fridays.

Medicare. During the life of the Agreement. such as retrenchment to prevent losses as provided under labor laws. there would be no need for the parties to stipulate on benefits such as “SSS. 2 March 2004+ that a television program host is an independent contractor. ABS-CBN would not have entered into the Agreement with Sonza but would have hired him through its personnel department just like any other employee. a television actress is a skilled position requiring talent and training not available on-the-job. but not conclusive. amounting to P317. If Sonza were ABS-CBN’s employee. reference to foreign case law in analyzing the present case is necessary. Power of Dismissal For violation of any provision of the Agreement. of an independent contractual relationship. recently held in Alberty-Vélez vs. because of his unique skills.3d 1.A. B. Sonza failed to show that ABS-CBN could terminate his services on grounds other than breach of contract. talent and celebrity status not possessed by ordinary employees. Corporación De Puerto Rico Para La Difusión Pública (“WIPR”). This circumstance indicates an independent contractual relationship between Sonza and ABS-CBN.000 monthly in the second and third year. talent and celebrity status not possessed by ordinary employees. ABSCBN agreed to pay Sonza’s talent fees as long as “AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement. ABS-CBN could not retrench Sonza because ABS-CBN remained obligated to pay Sonza’s talent fees during the life of the Agreement. First Circuit. *361 F. The United States Court of Appeals. either party may terminate their relationship. x x x and 13th month pay” which the law automatically incorporates into every employer-employee contract. Sonza’s talent fees. Power of Control Since there is no local precedent on whether a radio and television program host is an employee or an independent contractor. If Sonza did not possess such unique skills. D. Whatever benefits Sonza enjoyed arose from contract and not because of an employer-employee relationship. . is a circumstance indicative. Payment of Wages All the talent fees and benefits paid to Sonza were the result of negotiations that led to the Agreement. expertise or talent to distinguish them from ordinary employees. thus: First. talent and celebrity status. are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employeremployee relationship. Selection and Engagement of Employee Independent contractors often present themselves to possess unique skills. The specific selection and hiring of Sonza.” Even if it suffered severe business losses. ABS-CBN agreed to pay Sonza such huge talent fees precisely because of Sonza’s unique skills. chanrobles virtual law library C.

ABS-CBN could not dismiss or even discipline Sonza. ABS-CBN was still obligated to pay Sonza’s talent fees. All that ABS-CBN could do is not to broadcast Sonza’s show but ABS-CBN must still pay his talent fees in full.” Applying the control test.how he delivered his lines and appeared on television .did not meet ABS-CBN’s approval. Clearly. ABS-CBN engaged Sonza’s services specifically to co-host the “Mel & Jay” programs. Sonza claims that ABS-CBN’s power not to broadcast his shows proves ABS-CBN’s power over the means and methods of the performance of his work. appeared on television. as well as pre. Sonza is not an employee but an independent contractor. burdened as it was by the obligation to continue paying in full Sonza’s talent fees. How Sonza delivered his lines. WIPR could not assign the actress work in addition to filming “Desde Mi Pueblo. Thus. ABS-CBN was not involved in the actual performance that produced the finished product of Sonza’s work. ABS-CBN’s right not to broadcast Sonza’s show. This proves that ABS-CBN’s control was limited only to the result of Sonza’s work. ABS-CBN did not exercise control over the means and methods of performance of Sonza’s work. .and post-production staff meetings. However.” ABS-CBN’s sole concern was the quality of the shows and their standing in the ratings. To perform his work. the more likely the worker is deemed an employee. The clear implication is that Sonza had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBN could not terminate or discipline Sonza even if the means and methods of performance of his work . even if ABS-CBN was completely dissatisfied with the means and methods of Sonza’s performance of his work. and sounded on radio were outside ABS-CBN’s control. This test is based on the extent of control the hirer exercises over a worker. First. ABS-CBN could not dictate the contents of Sonza’s script. The Agreement required Sonza to attend only rehearsals and tapings of the shows. did not amount to control over the means and methods of the performance of Sonza’s work. ABS-CBN merely reserved the right to modify the program format and airtime schedule “for more effective programming. The greater the supervision and control the hirer exercises. The converse holds true as well . or even with the quality or product of his work. chanrobles virtual law library Clearly. In either case. Although ABS-CBN did have the option not to broadcast Sonza’s show. The control test is the most important test the courts apply in distinguishing an employee from an independent contractor. ABS-CBN did not assign any other work to Sonza. whether to broadcast the final product or not. ABS-CBN did not instruct Sonza how to perform his job.Second. the Agreement prohibited Sonza from criticizing in his shows ABS-CBN or its interests. Moreover. ABS-CBN must still pay Sonza’s talent fees in full until the expiry of the Agreement. Sonza contends that ABS-CBN exercised control over the means and methods of his work. Sonza’s argument is misplaced. chanrobles virtual law library Third. the more likely the worker is considered an independent contractor. Sonza only needed his skills and talent. the actress provided the “tools and instrumentalities” necessary for her to perform.the less control the hirer exercises. Sonza did not have to render eight hours of work per day.

chanrobles virtual law library Sonza further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. Broadcasters are not necessarily employees of radio and television stations. 28 Jan. Inc. vs. G. . We find that these general rules are merely guidelines towards the achievement of the mutually desired result. et al. crew and airtime are not the “tools and instrumentalities” Sonza needed to perform his job. ABS-CBN’s sole concern was for Sonza to display his talent during the airing of the programs.In Vaughan.2d 26. Clearly. Even though ABS-CBN provided Sonza with the place of work and the necessary equipment. the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. Sonza urges the Court to rule that he was ABS-CBN’s employee because ABS-CBN subjected him to its rules and standards of performance. Since the management did not have control over the manner of performance of the skills of the artists. The records do not show that ABS-CBN exercised any supervision and control over how Sonza utilized his skills and talent in his shows. The Agreement does not require Sonza to comply with the rules and standards of performance prescribed for employees of ABS-CBN. NLRC. the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. In this case. which Sonza admittedly possesses. the equipment.” chanrobles virtual law library The Agreement stipulates that Sonza shall abide with the rules and standards of performance “covering talents” of ABS-CBN. 1997. not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. however. not to employees of radio and television stations. Warner. What Sonza principally needed were his talent or skills and the costumes necessary for his appearance. Sonza was still an independent contractor since ABS-CBN did not supervise and control his work. The code of conduct imposed on Sonza under the Agreement refers to the “Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP).” The KBP code applies to broadcasters. 102199. Second. 267 SCRA 47). v. et al. which are top-rating television and radio programs that comply with standards of the industry. In any event. (AFP Mutual Benefit Association. No doubt. it could only control the result of the work by deleting objectionable features. However. A radio broadcast specialist who works under minimal supervision is an independent contractor. The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics. Sonza failed to show that these rules controlled his performance. must not deprive the one hired from performing his services according to his own initiative.. The hirer. 8 August 1946]. Sonza’s work as television and radio program host required special skills and talent. No. [157 F. crew and airtime needed to broadcast the “Mel & Jay” programs. Sonza claims that this indicates ABS-CBN’s control “not only *over+ his manner of work but also the quality of his work.R. ABS-CBN supplied the equipment.

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

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

raincoats and other paraphernalia of the security guards. L-51641. [No. the amount to be paid to a security guard is beyond the power of the petitioner to determine. the individual respondents are the employees of ASDAI. We fail to see how the complaining watchmen of the Marine Security Agency can be considered as employees of the petitioner. (e) disciplined and supervised them or principally controlled their conduct. there can be no question at all that the guards or watchmen receive compensation from private respondent and not from the companies or establishments whose premises they are guarding. (d) paid them salaries or wages. Service-oriented enterprises. such as the business of providing security services. nightsticks. and assigns the work of its watchmen. it was ASDAI which (a) selected. such merely confirms that the power to discipline lies with the agency. In fact. It is true that it may request the agency to change a particular guard. employees of the COMPANY. conduct or appearance is not satisfactory. “Since the petitioner has to deal with the agency. It is the agency that recruits. But this. Certainly. employees of the AGENCY alone. hires. the agency stands between the petitioner and the watchmen. and it is the agency that is answerable to the petitioner for the conduct of its guards.“In the matter of compensation. With respect to his wages. In point of fact. such fee is arrived at independently of the salary to which the guard or watchman is entitled under his arrangements with private respondent. “Neither does the petitioner have any power to dismiss the security guards. The fee contracted for to be paid by the client is admittedly not equal to the salary of a guard or watchman. 114 SCRA 826]. precisely. flashlights. on matters pertaining to the contracted task. it is the agency that quantifies and pays the wages to which a watchman is entitled. engaged or hired and discharged the security guards.” And as held in said Meralco case: “Under the security service agreement. and. Always. (c) provided the uniform. chanrobles virtual law library “As to the provision in the agreement that MERALCO reserved the right to seek replacement of any guard whose behavior. Hence. We fail to see any evidence in the record that it wielded such a power. is proof that the power lies in the hands of the agency. a watchman can not perform any security service for the petitioner's vessels unless the agency first accepts him as its watchman. Clave. Said ruling in SSS was reiterated in American President Lines vs. It is a standard stipulation in security service agreements that the client may request the replacement of the guards to it. and not the individual watchmen. (b) assigned them to MERALCO according to the number agreed upon. June 29. generally adhere to the business adage that “the customer or .” Clearly. 1982. firearms and ammunition. The agreement even explicitly provided that “*n+othing herein contained shall be understood to make the security guards under this Agreement. thus: “In the light of the foregoing standards. it being clearly understood that such security guards shall be considered as they are. the lump sum amount paid by the petitioner to the agency in consideration of the latter's service is much more than the wages of any one watchman. it stands to reason that the petitioner does not exercise any power over the watchmen's conduct.

service.There are 3 parties: principal.  . must satisfy the interests. The principal and the contractor or subcontractor may be a natural or juridical person. . Who are the parties to a contracting or subcontracting arrangement? Parties. chanrobles virtual law library “Contractor" or "subcontractor” refers to any person or entity engaged in a legitimate contracting or subcontracting arrangement. whether or not the arrangement is covered by a written contract.client is always right” and. conform to the needs. it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCO’s principal business. the person for whom the services are rendered must reserve the right to direct not only the end to be achieved but also the means for reaching such end. “Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. although security services are necessary and desirable to the business of MERALCO. which is the distribution of electricity.[26] Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. “The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. or work to a contractor or subcontractor.  “Principal” refers to any employer who puts out or farms out a job. “Needless to stress. The individual respondents failed to show that the rules of MERALCO controlled their performance. and cater to the reasonable impositions of its clients. The agreement provides that the agency is principally mandated to conduct inspections. thus. without prejudice to MERALCO’s right to conduct its own inspections. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCO’s premises to the latter’s detriment.” 87.[28] “Verily. and the workers engaged by the latter. xxx “The individual respondents can not be considered as regular employees of the MERALCO for. the security service agreements in the present case provided that all specific instructions by MERALCO relating to the discharge by the security guards of their duties shall be directed to the agency and not directly to the individual respondents. the contractor or subcontractor. for the power of control to be present.[27] Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.

provided that the normal production capacity or regular workforce of the principal cannot reasonably cope with such demands. janitorial. work or service on its own account and under its own responsibility. 89. (f) Specialized works involving the use of some particular. (e) Services involving the public display of manufacturers’ products which do not involve the act of selling or issuance of receipts or invoices. security. and social and welfare benefits. (ii) The contractor or subcontractor has substantial capital or investment. according to its own manner and method. What is permissible contracting or subcontracting arrangement? The principal may engage the services of a contractor or subcontractor for the performance of any of the following: (a) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services. and . (c) Services temporarily needed for the introduction or promotion of new products. security of tenure. tools or equipment the performance of which is beyond the competence of the regular workforce or production capacity of the principal. landscaping. (d) Works or services not directly related or not integral to the main business or operation of the principal. work or service pursuant to an arrangement between the latter and a principal called “contracting” or “subcontracting”. and chanrobles virtual law library (iii) The agreement between the principal and the contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards. unusual or peculiar skills. and messengerial services and work not related to manufacturing processes in manufacturing establishments. free exercise of the right to self-organization. chanrobles virtual law library 88. chanrobles virtual law library (b) Works or services temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to improve the management or operations of an enterprise. only for the duration of the introductory or promotional period. including casual work. When is contracting or subcontracting legitimate? Contracting or subcontracting shall be legitimate if the following circumstances concur: chanrobles virtual law library (i) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job. "Contractual employee” includes one employed by a contractor or subcontractor to perform or complete a job. and free from the control and directions of the principal in all matters connected with the performance of the work except as to the results thereof. expertise.

(ii) Requiring him to sign as a precondition to employment or continued employment. work or service through an in-house agency as defined herein. Book III. 90. What are the prohibited acts in the law on contracting and subcontracting? The following are hereby declared prohibited for being contrary to law or public policy: (a) Labor-only contracting. an antedated resignation letter. as amended by Department Order No. unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement. or circumventing the provisions of regular employment in any of the following instances: (i) In addition to his assigned function.] (d) Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee. Rule VIII-A. (c) Contracting out of work with a “cabo”. requiring the contractual employee to perform functions which are currently being performed by the regular employee of the principal or of the contractor or subcontractor. a blank payroll. (b) Contracting out of work which will either displace employees of the principal from their jobs or reduce their regular working hours. or a quitclaim releasing the principal. Rules to Implement the Labor Code. and chanrobles virtual law library (iii) Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor. (Section 6. or undermining his security of tenure or basic rights. in the guise of a labor organization. supplies workers to an employer. 10. contractor or subcontractor from any liability as to payment of the future claims. (f) Contracting out of a job. work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent. and . *A "cabo" refers to a person or group of persons or to a labor group which. with or without any monetary or other consideration whether in the capacity of an agent of the employer or as an ostensible independent contractor. (e) Contracting out of a job. The phrase “absent regular employees” includes those who are serving suspensions or other disciplinary measures not amounting to termination of employment meted out by the principal but excludes those on strike where all the formal requisites for the legality of the strike have been prima facie complied with based on the records filed with the National Conciliation and Mediation Board. Series of 1997). substitute services for absent regular employees provided that the period of service shall be coextensive with the period of absence and the same is made clear to the substitute employee at the time of engagement.(g) Unless a reliever system is in place among the regular workforce. a waiver of labor standards including minimum wages and social or welfare benefits.

actually and directly used . 145271. and any of the following elements are present: i) the contractor or subcontractor does not have substantial capital or investment which relates to the job.. supplies or places workers to perform a job. Labor Code. machineries and work premises. representations made by the subcontractor to the employees will bind the principal. It will be responsible to them for all their entitlements and benefits under the labor laws. tools. The subcontractor will be treated as the agent or intermediary of the principal. July 14. Manila Water Co. 2004). R. work or service for a principal. (See Manila Electric Company vs. meaning. a petition for cancellation of union registration may be filed against it. The principal and the subcontractor will be solidarily treated as the employer. For this purpose. labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits. work or service when not justified by the exigencies of the business and the same results in the reduction or splitting of the bargaining unit. (No. In summary. Effects of Department Order No. pursuant to Article 239(e) of the Labor Code. 3. 13. supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. DOLE Primer on Contracting and Subcontracting. G. G. 158255. Effects of a labor-only contracting arrangement. “Substantial capital or investment” refers to capital stocks and subscribed capitalization in the case of corporations. Series of 2001. The employees will become employees of the principal. subject to the classifications of employees under Article 28 of the Labor Code. b. implements. If the labor-only contracting activity is undertaken by a legitimate labor organization. 9. (Article 106. the following are the effects of a labor-only contracting arrangement: a. (No.. Substantial capital or investment. c. 91. July 8. or chanrobles virtual law library ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. Effects of Department Order No. No. The principal will become the employer as if it directly employed the workers engaged to undertake the subcontracted job or service.(g) Contracting out of a job. equipment. What is labor-only contracting? Labor-only contracting is hereby declared prohibited. Since the act of an agent is the act of the principal. R. Pena. 2005). d. et al. DOLE Primer on Contracting and Subcontracting. 3. work or service to be performed and the employees recruited. vs. No. Benamira. Series of 2001). Inc.

June 14. 2002]). chanrobles virtual law library If the intention was to require the contractor to prove that he has both capital and the requisite investment. it was no longer necessary for the labor contractor to further adduce evidence to prove that it does not fall within the purview of “labor-only” contracting. 97008-09. No. DOLE Primer on Contracting and Subcontracting. 3. [Feb. etc. cannot be considered as engaged in labor-only contracting being a highly capitalized venture. the Supreme Court ruled that the labor contractor is not engaged in labor-only contracting because it has sufficiently proved that it has substantial capital. machineries. July 23. [G. G. then the conjunction “and” should have been used.6 Million. chanrobles virtual law library . a big local bank. chanrobles virtual law library Right of control. Filipinas Synthetic Fiber Corporation [FILSYN] vs. G.000 of which is actually subscribed. 1993. chanrobles virtual law library In another similar case. (See also Baguio vs. But having established that it has substantial capital. Effects of Department Order No. (Section 5. (Section 5. (Neri vs. Nos. R. etc. etc.. equipment. work premises. it is a highly capitalized venture and cannot be deemed engaged in labor-only contracting. among others. Having substantial capital in the amount of P1 Million fully subscribed and paid for and is a big firm which services. The “right to control” shall refer to the right reserved to the person for whom the services of the contractual workers are performed. 2002]. 1991. Department Order No.. equipment. 79004-08. 21. Nos. Moreover. NLRC. NLRC. Substantial capital without investment in tools. et al. [Feb. No. Nos. government agencies. Series of 2002. July 23. Series of 2001). Further. 4. work or service contracted out. 113347. There is even no need for it to refute petitioners’ contention that the activities they perform are directly related to the principal business of respondent bank (FEBTC). the Supreme Court ruled that a contractor which is a going-concern duly registered with the Securities and Exchange Commission with substantial capitalization of P1. meaning. but also the manner and means to be used in reaching that end. 1993. R. It is a qualified independent contractor.. 18-02. NLRC. Oct. [G. it need not prove that it made investments in the form of tools. 8. 202 SCRA 465. 1996]. machineries. Series of 2002. et al.by the contractor or subcontractor in the performance or completion of the job. a university. P400.. 18-02. effect. 224 SCRA 7171]. a hospital center. to determine not only the end to be achieved. R. 21. an international bank. NLRC. This is clear from the use of the conjunction “or” in the provision of fourth paragraph of Article 106 of the Labor Code. R. 97008-09. equipment. In Neri vs. they are not necessary in its operation. while the janitorial services performed by the employee pursuant to the agreement between the indirect employer and the contractor may be considered directly related to the principal business of the indirect employer which is the manufacture of polyester fiber. nevertheless. among others. Department Order No. The law does not require both substantial capital and investment in such tools. 470). 224 SCRA 7171).

On the contrary. ratiocinated: “First. Labor Secretary Bienvenido Laguesma. private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. While it has an authorized capital stock of P1. Moreover. 1991. Inc. G. *Association Collectors Group. machineries. No. a corporation engaged in the business as Management Service Consultant. and other materials. Inc. the work of the private respondents was directly related to the principal business or operation of the petitioner. No. in the case of In re Petition for Certification Election Among the Regular Rank-and-File Employees Workers of Byron-Jackson (BJ) Services International Incorporated. petitioner. 158255. Prior to private respondents’ alleged employment with ACGI. the corporate address of ACGI was the residence of its president. in December 1993. the Supreme Court. R.00. R. only P62. Inc. they are merely incidental thereto. In fact. Federation of Free Workers (FFW)-Byron Jackson Services Employees Chapter. work premises. *which was contracted by petitioner Manila Water Company. chanrobles virtual law library In the 2004 case of Manila Water Co. the collection of the charges therefor by private respondents for the petitioner can only be categorized as clearly related to. (BSMI). to qualify as an independent contractor. is an independent contractor. 223). Peña. 149793. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors. The 121 collectors [composing ACGI] subscribed to four shares each and paid only the amount of P625.000. [G. Pena. 2004]. 2005]. vs.+ (ACGI). (Ecal vs. to collect charges for the Balara Branch].. It had provided management services to various industrial and commercial business establishments. April 15.00 is actually paid-in.. they were already working for petitioner. NLRC. does not have substantial capitalization or investment in the form of tools.000. it required private respondents to report daily and to remit their collections on . without which production and company sales will suffer. Inc.500. equipment. in dealing with the consumers. Herminio D. NLRC. Being in the business of providing water to the consumers in the East Zone. July 8. 195 SCRA 224. et al. [G. subject to its rules and regulations in regard to the manner and method of performing their tasks. Nos. In the 2005 case of Wack Wack Golf & Country Club vs. 92777-78. and has sufficient capital and resources to undertake its principal business. Further. which cannot be considered substantial capitalization. recognized BSMI as an independent contractor. Moreover. and in the pursuit of the latter’s business. engaged in the management of projects. R. business operations.00 in order to comply with the incorporation requirements. March 13. private respondents used the receipts and identification cards issued by petitioner. ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method. Its Articles of Incorporation proves its sufficient capitalization. chanrobles virtual law library “Second. This form of control and supervision never changed although they were already under the seeming employ of ACGI. free from the control and supervision of its principal. the Supreme Court ruled that there is indubitable evidence showing that Business Staffing and Management. jobs and other kinds of business ventures. Mr. in holding that the entity is not an independent contractor but a labor-only contractor. as opposed to being integral. chanrobles virtual law library “Lastly. functions.

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

G. materials and labor. the nature and extent of the work. No.which the contractor contracted its service of operating copier machines and offering copying services to the public. 124643. such as. The phrase “substantial capital and investment in the form of tools. equipment. The 2003 case of San Miguel Corporation vs. In that case.R. 111501.. No. the control of the premises. it was held that the law did not require one to possess both substantial capital and investment in the form of tools. machinery and work premises. etc. et al. several factors may be considered. 1993. 1998.R. further explained the principles of labor-only contracting. The Court likewise mentioned that the employees of BCC were engaged to perform specific special services for their principal.’ Furthermore. there were only two (2) complainants in that . March 5. work premises. which are directly related to the service it is being contracted to render. vs. R. (Philippine Fuji Xerox Corporation. 126586. Inc. a big local bank. 97008-09. Nos. July 23. What it did was simply to supply manpower to Fuji Xerox. No. equipment.608. In fact. (Citing Ponce v. machineries. G. No. we clarified that it was not enough to show substantial capitalization or investment in the form of tools. 224 SCRA 717]. manner and terms of payment. 144672. 2003]. NLRC. the duty to supply premises. where the contractor was adjudged to have engaged in labor-only contracting. The status of BCC had also been passed upon by the Court in a previous case where it was found to be a qualified job contractor because it was ‘a big firm which services among others. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. NLRC. 1996). tools.00 consisting of buildings. [G. equipment.R. the control and supervision of the workers.. February 2. NLRC. *G. petitioner alleged that the appellate court and the NLRC erred when they declared MAERC a labor-only contractor despite the finding that MAERC had investments amounting to P4. 324 SCRA 469+. the skill required. free from the control and supervision of its principal in all matters except as to the results thereof. the Court considered not only the fact that respondent Building Care Corporation (BBC) had substantial capitalization but noted that BCC carried on an independent business and performed its contract according to its own manner and method. appliances. among others. government agencies.080. a university. 293 SCRA 366). in Vinoya vs. July 10. machinery. The fact is that the contractor did not have copying machines of its own. “Accordingly. 2000. an international bank. to be considered an independent contractor. The Supreme Court said: “Petitioner also ascribes as error the failure of the Court of Appeals to apply the ruling in Neri vs. equipment. machinery and equipment.. and the mode. the term and duration of the relationship. to be considered a job contractor. The second condition to establish permissible job contracting was sufficiently met if one possessed either attribute.. a hospital center. clearly contemplates tools. but not necessarily confined to. firing and payment of the workers of the contractor. [G. etc. chanrobles virtual law library “However. jurisprudential holdings were to the effect that in determining the existence of an independent contractor relationship. R. whether the contractor was carrying on an independent business. Maerc Integrated Services. et al. work premises and other materials which are necessary in the conduct of his business” in the Implementing Rules. “In Neri. etc. NLRC. the right to assign the performance of specified pieces of work.. the power of the employer with respect to the hiring. July 30.

“In comparison. 2003). it contracts out labor in favor of clients. the parties cannot dictate. The Court cited the analogous case of Tabas vs. G. Any liability shall devolve upon the “labor only” contractor and the employer. none of its workers was also ever assigned to any other establishment. i. [169 SCRA 497 (1989)]. it being crucial that its character be measured in terms of and determined by the criteria set by statute. July 10. No. Naturally. jointly and severally. R. Maerc Integrated Services.e.” the contractor may still be considered a labor-only contractor. notwithstanding that the agreement or contract between the principal employer and the contractor states that the latter is an “independent contractor” and that the workers hired by it “shall not. Livi performs ‘manpower services. whether as “labor-only” contractor. (Tabas vs.case who were not only selected and hired by the contractor before being assigned to work in the Cagayan de Oro branch of FEBTC but the Court also found that the contractor maintained effective supervision and control over them. Stipulation in the contract. in any manner and under any circumstances. as earlier discussed. California Manufacturing Company. R..’ meaning to say.. Inc.. We hold that it is one notwithstanding its vehement claims to the contrary. and notwithstanding the provision of the contract that it is ‘an independent contractor. effect.. Moreover.’ The nature of one’s business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. December 20. 169 SCRA 497). we do not agree that the petitioners had been made to . chanrobles virtual law library Thus. the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers. MAERC. The “labor only” contractor is considered merely an agent of the employer. The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter’s own business. et al. NLRC. As held in the 2001 case of De los Santos vs. 2001]. tools and equipment amounted to more than P4 Million.. while MAERC’s investments in the form of buildings. by the mere expedient of a unilateral declaration in a contract. thus: “There is no doubt that in the case at bar. California Marketing Co. The existence of employer-employee relationship cannot be made subject of an agreement or contract. In this connection. Inc. Nor do we believe MAERC to have an independent business. the character of its business. with the severance of relationship between MAERC and SMC followed MAERC’s cessation of operations. 121327. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division. be considered employees of the Company. (San Miguel Corporation vs. [G. or job contractor. displayed the characteristics of a labor-only contractor. thus convincing us that it was created solely to service the needs of SMC. This was the holding of the Supreme Court in the case of Philippine Fuji Xerox Corporation [supra]. 144672. Inc. No.. and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor’s obligations under this Agreement. we cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis.

the Supreme Court cited the following circumstances that tend to establish it as such: 1) The SEC registration certificate of D.’ The petitioners had been charged with ‘merchandizing *sic+ promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occasional *sic+ price tagging. however. For one thing. publication. No.” (Philippine Fuji Xerox Corporation. For in Tabas. March 5. and that California had hired it to perform the latter’s merchandising activities. No. or “CMC”) were not similarly fortunate as those in Tabas [supra]. R. and Licron. x x x. marketing and merchandising activities. In declaring that D. further stated in said case that: “It would have been different. NLRC. It is not. Admark states that it is a firm engaged in promotional. It was. marketing and merchandising.perform activities ‘which are not directly related to the general business of manufacturing. Admark (petitioners’ employer) is a legitimate independent contractor. advertising. [G. petitioners who were likewise agency-supplied workers in the same company (California Manufacturing Co. the relations of parties must be judged from case to case and the decree of law. 124055.L. an integral part of the manufacturing business. such as advertising. For then. or otherwise. 1996). Inc. Livi as a placement agency. as if Livi had served as its *California’s+ promotions or sales arm or agents. L. Nabisco Biscuits. 111501. et al.” chanrobles virtual law library In other words. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement. will not absolve California since liability has been imposed by legal operation. its client. Livi would have been truly the employer of its employees and California. Petitioners here relied on the Tabas case in claiming that they are employees of said company. 3) D. using its *California’s+ premises and equipment. June 8. G. promotions. It was likewise engaged in the publication business as evidenced by it magazine the “Phenomenon. R. Corona Supply. For another. It had several merchandising contracts with companies like Purefoods.” chanrobles virtual law library . 2) The service contract between CMC and D. had Livi been discretely a promotions firm. then. we believe. rendered a piece of work it [California] could not have itself done.L..’ an activity that is doubtless. 2000]. the Supreme Court ruled that therein contractor Livi Manpower Services was a mere placement agency and had simply supplied CMC with the manpower necessary to carry out the company’s merchandising activity. CMC can validly farm out its merchandising activities to a legitimate independent contractor. “xxx. NLRC. et al. and as we indicated.’ California’s purported ‘principal operation activity. vs. But in the 2000 case of Escario vs. “The fact that the petitioners have allegedly admitted being Livi’s ‘direct employees’ in their complaints is nothing conclusive.. and not by declaration of parties. the fact that the petitioners were [are]. The Supreme Court considered such reliance on Tabas as misplaced. Admark was actually engaged in several activities.L. had simply supplied it with the manpower necessary to carry out its *California’s+ merchandising activities.

office equipments like computer.000.. SMC maintained a constant presence in the workplace through its own checkers. Inc.” chanrobles virtual law library The Supreme Court. Its asseveration that the checkers were there only to check the end result was belied by the testimony of Carlito R. [G. the High Court declared: “We hasten to add on this score that the Labor Arbiter as well as the NLRC and the Court of Appeals found that PSI is a legitimate job contractor pursuant to Section 8. communication equipments. 2003]. According to Singson. Inc. ammunitions. It had an authorized capital stock of P500. it was stipulated in the contract of services between MAERC and SMC that MAERC was an independent contractor and that the workers hired by it “shall not. that the checkers were also tasked to report on the identity of the workers whose performance or quality of work was not according to the rules and standards set by SMC.4) It had its own capital assets to carry out its promotion business. Maerc Integrated Services.. 159469. it is the totality of the facts and surrounding circumstances of each case. It paid rentals of P30. et al. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. In the 2003 case of San Miguel Corporation vs. 144672. R. and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract. No. PLDT.020 for the office space it occupied. typewriters. July 10. materials and equipment to service its clients. Maerc Integrated Services. It has substantial capital and investment in the form of guns. July 10. In the June 2005 decision in the case of Abella vs. .. [G. It ratiocinated. June 8. in any manner and under any circumstances. thus: chanrobles virtual law library “In deciding the question of control. vehicles. G. 2005]. head of the Mandaue Container Service of SMC.” disregarded the said stipulation in the contract. 2003).’ “Viewed alongside the findings of the Labor Arbiter that the MAERC organizational set-up in the bottle segregation project was such that the segregators/cleaners were supervised by checkers and each checker was also under a supervisor who was in turn under a field supervisor. Book II of the Omnibus Rules Implementing the Labor Code. be considered employees of the Company. R. the responsibility of watching over the MAERC workers by MAERC personnel became superfluous with the presence of additional checkers from SMC. No. In holding that PSI is a legitimate job contractor. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. Singson. It owned several motor vehicles and other tools. No. Rule VII. 144672. (PSI) to PLDT are the employees of PSI and not of PLDT. following the “control test. rather. there are indicia that it actively supervised the complainants. however.00. ‘it (was) necessary to identify the names of those concerned so that the management [referring to MAERC] could call the attention to make these people improve the quality of work. the language of the contract is not determinative of the parties' relationship. the Supreme Court ruled that the security guards supplied by People’s Security.” (San Miguel Corporation vs. R. “Despite SMC’s disclaimer. Inc.

The employer is made by the statute responsible to the employees of the labor-only contractor as if such employees had been directly employed by the employer. R. the evidence as it stands is at odds with petitioners’ assertion that PSI is an “in-house” agency of PLDT so as to call for a piercing of veil of corporate identity as what the Court has done in De leon. Inc. vs. 138051. NLRC. Thus. 10 July 2003). and Philippine Cable.photocopying machines. June 10. July 14. 143428. 1986. the nature of the liability of the employer is more direct. 158255. Industrial Timber Corporation vs. the “labor-only” contractor is the agent of the principal. G. Pepito. R. the security guards which PSI had assigned to PLDT are already the former’s employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement. (2) the employee who is ostensibly under the employ of the “labor-only” contractor. No.. The law. this time for a comprehensive purpose: employer for purposes of the Labor Code. etc.” chanrobles virtual law library Nature of liability of employer and labor-only contractor. (Vinoya vs. 19. et al. G. No. (Philippine Bank of Communications vs. holds both the employer and the laboronly contractor responsible to the latter’s employees for the more effective safeguarding of the employees’ rights under the Labor Code. ABS-CBN Broadcasting Corporation. Sandoval Shipyards.. then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. vs. May 30. Here. R. the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the labor-only contractor. R. machineries. G. 146 SCRA 347). chanrobles virtual law library The reason is. NLRC. San Miguel Corporation v. No. equipment. 2001). No. 2004. the principal. No. et al. 126586. (Sonza vs. NLRC and Fortune Tobacco Corporation. et al. (Manila Electric Company vs.. et al. G. R. et al. 2005.. The law makes the principal responsible to the employees of the “labor-only” contractor as if the principal itself directly hired or employed the employees. and above all. . vs. R. work premises and other materials. Dec. It has been consistently held in our jurisdiction that since the “labor-only” contractor does not have substantial capital investment in the form of tools.. in effect. et al. 145271. the workers supplied by him are employees of the owner of the project to whom said labor was supplied. G.. to prevent any violation or circumvention of any provision of said Code. MAERC Integrated Services. Feb. there are three parties involved: (1) the “labor-only” contractor.R.. 112661. NLRC. No. No. the labor-only contractor is treated as mere agent or intermediary of the employer. 2001+. Inc. L-66598. [G. 2. 2000. In a labor-only contract. it is servicing clients other than PLDT like PCIBank. among others. June 25. Benamira.. et al. the labor-only contractor is treated as agent and the former. G. Under this scheme. 169 SCRA 341). et al. Manila Water Co. and (3) the principal who is deemed the real employer. 144672. 2004. where labor-only contracting exists in a given case.R. Pena. No. July 8.. G. Consequently. Inc. Therefore. Crown Triumph.

Maerc Integrated Services. On the other hand.e. July 10. the law creates an employer-employee relationship for a limited purpose. Consequently. 2003).. Inc. (Manila Water Co. et al. distinguished. 158255... the duty to comply with the requirements of the law for terminating employees as well as payment of monetary claims of the latter would necessarily devolve on the principal which is deemed the real. 144672. it was ruled that the principal was not discharged from paying the separation benefits of the workers inasmuch as the contractor was shown to be a labor-only contractor. the client was held liable to the complainant messenger as if the latter had been directly employed not only by the agency but also by said client. (San Miguel Corporation vs. et al. July 10. direct employer. vs. Other than that. a bank.The statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. (San Miguel Corporation vs. R. In a case involving retrenchment of workers effected by the labor-only contractor consequent to the termination of the labor-only contract. G. NLRC. i. No. 2003).. the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. 2004). Duty to comply with legal requirements for valid termination in labor-only contracting situations. No. The client company controlled the performance of the duties of the messenger. in labor-only contracting. In legitimate job contracting. Resultantly. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the laboronly contractor as if such employees had been directly employed by the principal employer. In a case. R. the principal should have complied with the requirement of written notice to . The messengers worked in the premises of the client and were paid their salaries through the service agency. Inc. chanrobles virtual law library Having made the distinction between the liability of a job contractor and that of a labor-only contractor. (Philippine Bank of Communications vs. Maerc Integrated Services. in solidum with the labor-only contractor. chanrobles virtual law library Liability of legitimate contractor and labor-only contractor.. The Supreme Court declared that the service agency is engaged in “labor-only” contracting. et al. et al.. therefore. it is clear that if there is a finding of labor-only contracting. 144672. Inc. G. a service agency supplied 11 messengers to its client. 146 SCRA 347). There is a wide gulf of distinction between the liability of a legitimate independent contractor and the liability of a labor-only contractor. July 8.. the principal employer is not responsible for any claim made by the employees. becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. G. The principal employer. No. Pena. R. to ensure that the employees are paid their wages.

Maerc Integrated Services. et al. 110731. A company which supplies a considerable workforce totaling 120 mechanics. Their work was directly related. 95845. Moreover. b. work premises. a. was declared a labor-only contractor for its failure to prove that it had substantial capital or investment in the form of tools. Clave. petitioners do not even allege . NLRC.is directly related to the day-to-day operations of the bank.as in fact. cashiers. 21.both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date of retrenchment. is a labor-only contractor and. the principal should be held liable for the separation pay of said workers. Messengerial work .the delivery of documents to designated persons whether within or without the bank premises . Moreover. A search company which supplies messengers to a bank is a labor-only contractor considering that the messengers rendered services to the bank. the labor agencies have “substantial capital or investment in the form of tools. vs. a mere agent of the petitioner-employer. gardeners. No. Its argument that it is not so engaged as labor-only contractor since it is possessed of substantial capital or investment in the form of office equipment. 2003). therefore. vs. the work assigned to them are directly related to the business of the latter. among others.” Resultingly. janitors. (Shoppers Gain Supermart. July 26. G. An employee who hires dispatchers for the operator of a transportation company. 3. equipment. Oct. et al. tools and trained service personnel was not accepted by the Supreme Court. d. the workers supplied by three manpower agencies to a supermarket to work as merchandisers. July 10. (San Miguel Corporation vs. et al. et al. Said company is not a parcel delivery company. R. their jobs involved normal and regular functions in the ordinary business of the petitioner corporation and given the nature of their functions and responsibilities. (Tiu vs. G. in different clientcompanies for longer or shorter periods of time. No. including the fines imposed for violations of the notice requirement. et al.. et al. 144672. 1989). warehousemen and so forth were declared employees of the supermarket and the manpower agencies. labor-only contractors. c. 86010. like wages. as it were. within the premises of the bank and alongside other people also rendering services to the bank.. check-out personnel. Inc. In accordance with the provisions of Article 106 of the Labor Code. G. Hence.. baggers. Feb. R. machineries. equipment. NLRC. No. it is improbable that petitioners did not exercise direct control over their work. [114 SCRA 826 (1982)] if indeed such distinguishing way is . 1996). et al. Illustrative cases of labor-only contracting. work premises and other materials. the supermarket is deemed the direct employer of the labor-only contractor’s employees and thus liable for all benefits to which such workers are entitled. G. R. separation benefits and so forth. (Guarin. there is no evidence .. 1996). firemen and grasscutters to a garment manufacturer. R.. necessary and vital to the day-to-day operations of the supermarket.that aside from supplying the manpower. as its name indicates. NLRC. It is a recruitment and placement corporation placing bodies. machineries. No. It is this factor that distinguishes this case from American President Lines vs. sales ladies.

the legitimate job contractor provides specific services. et al. their compensation was paid in lump sum. chanrobles virtual law library 92. to ensure that the employees are paid their wages. R. 146 SCRA 347). In the former. Other than this obligation of paying the wages. R. 1986. they were required to observe regular working hours and render overtime services when needed. chanrobles virtual law library e. 19. while in the latter. defects in the workmanship of their jobs while in progress.. on the one hand. among others: the company supplied all the tools. chanrobles virtual law library Principal distinctions between legitimate job contracting and labor-only contracting. the joint and several obligation of the principal employer and the legitimate job contractor is only for a limited purpose. G. et al. The person who agreed with a motor company under the terms of their Work Contract to supply only labor and supervision over his contractual workers in doing automotive body-painting work and to hire or bring in additional workers as may be required by the company and to handle additional work load or to accelerate or facilitate completion of work in process is a labor-only contractor in the light of the following circumstances. Inc. no employer-employee relationship exists between the employees of the job contractor and the principal employer (indirect employer). an employer-employee relationship is created by law between the principal employer and the employees of the labor-only contractor. Dec. and they are required to observe company rules. regulations and policies such as the wearing of identification cards and uniforms. e. as this term is understood under Article 107 of the Labor Code. the principal employer is considered only an “indirect employer”. and the prohibited labor-only contracting. the labor-only contractor merely provides the personnel to work for the principal employer. NLRC. permissible job contracting. The principal distinctions between legitimate. In the former. No. the legitimate job contractor undertakes to perform a specific job for the principal employer. while in the latter. In the former. that is. while in the latter. c. d. In the former. a. are subject to correction by the company’s supervisors. 14. Dec. b. No. the laboronly contractor provides only manpower. while in the latter. 156 SCRA 522). 98382. the principal employer is not responsible for any claim made by the employees. the principal employer is considered the “direct employer” of the employees in accordance with the last paragraph of Article 106 of the Labor Code. G.needed. (Philippine Bank of Communications vs. 1987. machinery and materials necessary for the performance by the former and his men of the contracted job within the premises of the company. on the other. NLRC. In the former. L-66598. while in the latter. vs.. What is “in-house agency”? . the principal employer becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. equipment. (Broadway Motors.

managed or controlled by the principal. chanrobles virtual law library 93. MERALCO as principal becomes jointly and severally liable for the individual respondents’ wages. . When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it. or controlling it. R. 94. What is the nature of the liability of an indirect employer? The nature of the liability of the principal is joint and solidary with the contractor or subcontractor for any violation of any provision of the Labor Code. (Article 109. 145271. July 14. thus: “The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. xxx “When ASDAI as contractor failed to pay the individual respondents. while MERALCO is deemed the indirect employer of the individual respondents for the purpose of paying their wages in the event of failure of ASDAI to pay them. [G. A finding that a contractor is a “labor-only” contractor is equivalent to a finding that there exists an employer-employee relationship between the owner of the project and the employees of the “laboronly” contractor since that relationship is defined and prescribed by law itself. 2005] where it was held. Benamira. MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code. the indirect employer shall be considered as direct employer. Labor Code). For purposes of determining the extent of their civil liability for the payment of wages. managing. The best illustration of these principles is the 2005 case of Manila Electric Company vs. No. Who is an indirect employer in a contracting or subcontracting arrangement? The principal is considered the indirect employer of the workers supplied by independent contractor or subcontractor.Similarly prohibited under the law is the operation of an “in-house agency” whereby a contractor or subcontractor is engaged in the supply of labor which: (i) is owned. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. under Articles 106 and 109 of the Labor Code. chanrobles virtual law library xxx “ASDAI is held liable by virtue of its status as direct employer. and (ii) operates solely for the principal owning.

” 95. ASDAI is charged with knowledge of labor laws and the adequacy of the compensation that it demands for contractual services is its principal concern and not any other’s. number 3: “claims of laborers and other workers engaged in the construction. If the payment is made before the debt is due. To contend that Article 110 of the Labor Code is applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding. on the goods manufactured or the work done. 5. 415 SCRA 573]. Claims for unpaid wages do not.” or by Article 2242. Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Judicial proceedings in rem is required for creditors’ claims against debtors to become operative. reconstruction or repair of buildings. ‘He who made the payment may claim from his co-debtors only the share which corresponds to each. the solidary liability of MERALCO with that of ASDAI does not preclude the application of Article 1217 of the Civil Code on the right of reimbursement from his co-debtor by the one who paid.R. because of his insolvency.’ “ASDAI may not seek exculpation by claiming that MERALCO’s payments to it were inadequate for the individual respondents’ lawful compensation. upon said buildings. 144134. fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code. 2. The right to preference given to workers under Article 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. therefore. with the interest for the payment already made.” To the extent that claims for unpaid wages fall outside the scope . 2003. The right of preference as regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of the workers but a right to a first preference in the discharge of the funds of the judgment debtor. What is meant by worker preference in case of bankruptcy? 1. as held in Mariveles Shipyard Corp. If two or more solidary debtors offer to pay. *G.“However. the creditor may choose which offer to accept. canals and other works. November 11. reimburse his share to the debtor paying the obligation. vs. canals or other works. Payment made by one of the solidary debtors extinguishes the obligation. number 6: “claims for laborer’s wages. 3. No. Court of Appeals. As an employer. no interest for the intervening period may be demanded. which provides: ‘ART. except to the extent that such claims for unpaid wages are already covered by Article 2241. 1217. Article 110 applies only in case of bankruptcy or judicial liquidation of the employer. chanrobles virtual law library 4. ‘When one of the solidary debtors cannot. in proportion to the debt of each. such share shall be borne by all his co-debtors.

(G.. it was held that there is no merit in the contention of the NLRC that taxes are also absolutely preferred claims only with respect to movable and immovable properties on which they are due. INC. 2000) ALEMAR’S SIBAL AND SONS. Mortgage credit. 6. What are allowable wage deductions? . Preference of taxes. 99. the same may not be assessed or subjected to the 10% attorney’s fees. NLRC. 1999) where the same issue is discussed and further PREFERENCE IN CASE OF BANKRUPTCY OR LIQUIDATION UNDER ARTICLE 110 OF THE LABOR CODE. 128003. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. NO. the employer may be assessed attorney’s fees equivalent to ten percent (10%) of the amount of wages recovered. NLRC. It shall be unlawful for any person to demand or accept. ET AL. What is meant by the principle of non-interference in disposal of wages? Employers are not allowed to interfere in the disposal of wages of employees. 114761. (G. JANUARY 19. 2. chanrobles virtual law library ATTORNEY’S FEES: 97. INC. attorney’s fees which exceed ten percent (10%) of the amount of wages recovered. In one case. The basis of the 10% attorney’s fees is the amount of wages recovered.of Article 2241. R. R. The claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on a judgment. VS. NO. . APRIL 14. In cases of unlawful withholding of wages. 3. JULY 26. 4. number 6 and 2242. R. What is the amount of attorney’s fees that may be allowed by law? 1. in any judicial or administrative proceedings for the recovery of wages. 7.A mortgage credit is a special preferred credit under Article 2241 of the Civil Code while workers’ preference is an ordinary preferred credit. ET AL.. The attorney’s fees may be awarded only when the withholding of wages is declared unlawful. NO. ET AL. REHABILITATION RECEIVERSHIP: 96. number 3. NLRC.). (G. PROHIBITIONS REGARDING WAGES: 98. 126773. INC. Should there be any other monetary awards given in the proceedings. VS. VS.). they would come within the ambit of the category of ordinary preferred credits under Article 2244. 2000) (SEE ALSO RUBBERWORLD (PHILS. What is the effect of rehabilitation receivership on monetary claims of employees? RUBBERWORLD (PHILS.

f. intimidation. e. When the deductions are with the written authorization of the employees for payment to a third person and the employer agrees to do so. or equipment supplied by the employer. to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force. stealth. Withholding of wages because of employee’s debt to the employer which is already due. Withholding tax mandated under the National Internal Revenue Code. Deductions made for agency fee from non-union members who accept the benefits under the CBA negotiated by the bargaining union. including deductions for the insurance premiums advanced by the employer in behalf of the employee as well as union dues where the right to check-off has been recognized by the employer or authorized in writing by the individual employee himself. May deduction be allowed to ensure employment or retention of employment? It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. shelter and medical attendance. directly or indirectly. provided that the latter does not receive any pecuniary benefit. SSS. Pag-IBIG). Is withholding of wages and kickback allowed? No. occupations or business where the practice of making deductions or requiring deposits is a recognized one. clothing. d.g. Deductions made pursuant to a judgment against the worker under circumstances where the wages may be the subject of attachment or execution but only for debts incurred for food.Deductions from the wages of the employees may be made by the employer in any of the following cases: a. When the deductions are authorized by law. chanrobles virtual law library 102. g. (e. 100. materials. except when the employer is engaged in such trades. What are deposits for loss or damage? No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools. directly or indirectly. What are the retaliatory measures prohibited under the law? . When deductions from wages are ordered by the court. This form of deduction does not require the written authorization of the non-union member. 103. It shall be unlawful for any person. from the transaction.. c. 101. b. threat or by any other means whatsoever without the worker’s consent. or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.

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

including wage. 1989)? It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. The following are acts of discrimination: (a) Payment of a lesser compensation. 6725 (May 12. id. for work of equal value. to a female employee as against a male employee. What are the acts of discrimination against women expressly prohibited under R. . What are the required facilities for women? Employers are required to: (a) Provide seats proper for women and permit them to use such seats when they are free from work and during working hours. provided they can perform their duties in this position without detriment to efficiency. 108. (b) To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women. 6725. or where the woman employee has been engaged to provide health and welfare services. and (b) Favoring a male employee over a female employee with respect to promotion. 107.). salary or other form of remuneration and fringe benefits.(c) Where the work is necessary to prevent serious loss of perishable goods. A. chanrobles virtual law library (e) Where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency by male workers. (R. A. study and scholarship grants solely on account of their sexes. chanrobles virtual law library (f) Where the women employees are immediate members of the family operating the establishment or undertaking. (d) Where the woman employee holds a responsible position of managerial or technical nature. (c) To establish a nursery in a workplace for the benefit of the women employees therein. and chanrobles virtual law library (d) To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. There is criminal liability for the willful commission of any of the foregoing unlawful act. training opportunities. and (g) Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations.

(e) That the maternity benefits shall be paid only for the first four deliveries after March 13. is entitled to the maternity leave benefits. the employer shall pay to the SSS damages equivalent to the benefits which said employee would otherwise have been entitled to. March 3. 1992). are granted to employees in lieu of wages and. 7322.MATERNITY LEAVE BENEFITS: 109. (f) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof. 111. whether married or unmarried. A. Are voluntary or self-employed members of the SSS entitled to maternity leave benefits? chanrobles virtual law library . abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100%) of her present basic salary. like other benefits granted by the SSS. 1973. Is an unmarried pregnant woman entitled to maternity leave benefits? Every pregnant woman in the private sector. What are maternity leave benefits? A covered female employee who has paid at least three monthly maternity contributions in the twelvemonth period preceding the semester of her childbirth. and chanrobles virtual law library (g) That if an employee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her employer to the SSS. therefore. Are maternity leave benefits included in the computation of 13th month pay? Maternity benefits. (d) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same compensable period of sixty (60) days for the same childbirth. allowances and other benefits or the cash equivalent of such benefits for sixty (60) days subject to the following conditions: (a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. abortion or miscarriage. 110. 112. (b) That the payment shall be advanced by the employer in two equal installments within thirty (30) days from the filing of the maternity leave application. (R. (c) That in case of caesarian delivery. the employee shall be paid the daily maternity benefit for 78 days. may not be included in computing the employee’s 13th-month pay for the calendar year. and the SSS shall in turn pay such amount to the employee concerned. or without the latter having been previously notified by the employer of the time of the pregnancy.

8.In addition to leave privileges under existing laws. PATERNITY LEAVE: 113. Thus. otherwise known as “The Solo Parents’ Welfare Act of 2000. What is paternity leave? “Paternity leave” refers to the benefit granted to a married male employee allowing him not to report for work for seven (7) days (for each delivery for the first 4 deliveries) but continues to earn the compensation therefor. 2000 providing for parental leave of seven (7) days. 116.” was approved on November 7. parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year. it is provided: “Sec. 114. Voluntary or selfemployed members have no employers so they do not have maternity contributions. 115. For this purpose. It is defined as follows: “(d) ‘Parental leave’ . What is parental leave? Republic Act No. it is not convertible to cash. Appropriating Funds Therefor and for Other Purposes).shall mean leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required. THE SOLO PARENTS' WELFARE ACT OF 2000: 117. What is meant by “cohabiting”? “Cohabiting” refers to the obligation of the husband and wife to live together. under Section 8 thereof. 8972 (An Act Providing for Benefits and Privileges to Solo Parents and Their Children.” chanrobles virtual law library It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from any other leave benefits provided under existing laws or agreements. If paternity leave is not availed of.Voluntary or self-employed members are not entitled to the maternity benefit because to be entitled thereto. lawful wife refers to a woman who is legally married to the male employee concerned.” . . on the condition that his spouse has delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly-born child. corresponding maternity contributions should be paid by employers. What is meant by “spouse”? “Spouse” refers to the lawful wife. What is “delivery”? “Delivery” shall include childbirth or any miscarriage. Parental Leave.

121. and similar establishments? . thus: “Sec. massage clinics. What are stipulations against marriage? It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married. (Section 3[e]. The phrase “flexible work schedule” is defined in the same law as follows: (e) “Flexible work schedule” . solo parents are allowed to work on a flexible schedule. A. chanrobles virtual law library DISCRIMINATION AGAINST WOMEN: 119. What are the acts considered discriminatory against women under the law? It shall be unlawful for any employer: (1) To deny any woman employee the benefits provided for in the law or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under the Labor Code. 120. That the same shall not affect individual and company productivity: Provided. – The employer shall provide for a flexible working schedule for solo parents: Provided.” (Section 6. 8972). or to actually dismiss. That any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds. What is the status of women working in nightclubs. 8972? Under Republic Act No. (3) To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. What is meant by flexible work schedule under R. Flexible Work Schedule. study and scholarship grants solely on account of their sexes. No. discharge. or to stipulate expressly or tacitly that upon getting married. (2) To discharge such woman on account of her pregnancy. 8972). 6. chanrobles virtual law library (5) To favor a male employee over a female employee with respect to promotion. training opportunities. discriminate or otherwise prejudice a woman employee merely by reason of her marriage. 8972. (4) To pay lesser compensation to a female employee as against a male employee for work of equal value. Republic Act No. or while on leave or in confinement due to her pregnancy.is the right granted to a solo parent employee to vary his/her arrival and departure time without affecting the core work hours as defined by the employer. further.118. a woman employee shall be deemed resigned or separated. Republic Act No.

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

(Section 12. That his/her employment neither endangers his/her life.(h) “Child pornography” refers to any representation of a child engaged in real or simulated explicit sexual activities or any representation of the sexual parts of a child for primarily sexual purposes. and in no case beyond forty (40) hours a week. 2003). chanrobles virtual law library (3) No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the evening and six o'clock in the morning of the following day and no child fifteen (15) years of age but below . [NOTE: The term "child" shall apply to all persons under eighteen (18) years of age. safety. and the approval of the Department of Labor and Employment: Provided. 123. That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education. safety. health. (b) The employer shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration. television or other forms of media is essential: Provided. further. 9231. That the employment contract is concluded by the child's parents or legal guardian. R. as amended by R. That the following requirements in all instances are strictly complied with: (a) The employer shall ensure the protection. A. No. morals and normal development of the child. In the above exceptional cases where any such child may be employed. a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. if possible. with the express agreement of the child concerned.] 124.A. the employer shall first secure. No. and chanrobles virtual law library (c) The employer shall formulate and implement. subject to the approval and supervision of competent authorities. What is the working hours of a working child? (1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours a week: Provided. or chanrobles virtual law library (2) Where a child's employment or participation in public entertainment or information through cinema. and the duration and arrangement of working time. theater. (2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than eight (8) hours a day. radio. further. health. December 19. That the work shall not be more than four (4) hours at any given day. before engaging such child. and morals. What is the minimum employable age of children? Children below fifteen (15) years of age shall not be employed except: (1) When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed: Provided. 7610. a continuing program for training and skills acquisition of the child. nor impairs his/her normal development: Provided. however.

debt bondage and serfdom and forced or compulsory labor.00) annually. procuring. A. the other parent shall administer the same. In the absence or incapacity of either of the parents. the order of preference on parental authority as provided for under the Family Code shall apply. (Section 12-B. or is found to be highly stressful psychologically or may prejudice morals. including recruitment of children for use in armed conflict. No. No. such that it: chanrobles virtual law library (a) Debases. December 19. emotional or sexual abuse. 9231. for which he/she shall render a semi-annual accounting of the fund to the Department of Labor and Employment. (Section 12-A. or (4) Work which. or (3) The use. A. or . No. or practices similar to slavery such as sale and trafficking of children. 2003). 126. by its nature or the circumstances in which it is carried out. No. A.A. in compliance with the provisions of this Act. offering or exposing of a child for prostitution. is hazardous or likely to be harmful to the health. or (2) The use. as amended by R. No. education or skills acquisition and secondarily to the collective needs of the family: Provided.A. as amended by R. safety or morals of children. 125. 7610. That not more than twenty percent (20%) of the child's income may be used for the collective needs of the family. procuring or offering of a child for illegal or illicit activities. The phrase "worst forms of child labor" shall refer to any of the following: (1) All forms of slavery.The parent or legal guardian of a working child below eighteen (18) years of age shall set up a trust fund for at least thirty percent (30%) of the earnings of the child whose wages and salaries from work and other income amount to at least two hundred thousand pesos (P200. 2003)? No child shall be engaged in the worst forms of child labor. What is meant by “worst form of child labor” under R. 7610. The child shall have full control over the trust fund upon reaching the age of majority. R. or (b) Exposes the child to physical. Trust Fund to Preserve Part of the Working Child's Income. No. In case both parents are absent or incapacitated. A. earnings and other income of the working child shall belong to him/her in ownership and shall be set aside primarily for his/her support. How is the working child’s income be used or administered? The wages. as defined under the "Anti-trafficking in Persons Act of 2003". 9231. (Section 12-C. R. 9231. degrades or demeans the intrinsic worth and dignity of a child as a human being. No.eighteen (18) shall be allowed to work between ten o'clock in the evening and six o'clock in the morning of the following day. 7610. The income of the working child and/or the property acquired through the work of the child shall be administered by both parents.A. 9231 (December 19. 2003).000. R. . December 19. including the production and trafficking of dangerous drugs and volatile substances prohibited under existing laws. salaries. for the production of pornography or for pornographic performances. as amended by R. 2003). December 19.

or to extreme temperatures. underwater or at dangerous heights. substances. flammable substances. chanrobles virtual law library (e) Officer or social worker of the Department of Social Welfare and Development. 127.A. tobacco and its byproducts. co-agents or processes involving ionizing. (b) Parents or guardians. R. No. fungi. responsible citizens where the violation occurred. (d) Officer. Who may file a complaint in case of unlawful acts committed against children? Complaints on cases of unlawful acts committed against children as enumerated herein may be filed by the following: (a) Offended party. (c) Ascendant or collateral relative within the third degree of consanguinity. physical strength or contortion. fire. but not limited to the dangerous feats of balancing. 128. elements. nematodes and other parasites. 7610. or (f) Is performed in an unhealthy environment exposing the child to hazardous working conditions. (Section 14. December 19. gambling or any form of violence or pornography. No. A. or vibrations. viruses. protozoans. or chanrobles virtual law library (g) Is performed under particularly difficult conditions. EMPLOYMENT OF HOUSEHELPERS: . as amended by R. or (g) At least three (3) concerned. equipment and tools such as power-driven or explosive power-actuated tools. or which requires the manual transport of heavy loads. radiation. Is the employment of children in advertisements prohibited? No child shall be employed as a model in any advertisement directly or indirectly promoting alcoholic beverages. social worker or representative of a licensed child-caring institution. (f) Barangay chairman of the place where the violation occurred. or (d) Involves the use of dangerous machinery. or (h) Exposes the child to biological agents such as bacteria. noxious components and the like. 9231. 2003). or (i) Involves the manufacture or handling of explosives and other pyrotechnic products.(c) Is performed underground. noise levels. where the child is residing or employed. intoxicating drinks. or (e) Exposes the child to physical danger such as.

whether male or female. 135. Househelper shall be assigned to work in a commercial. unless there is a stipulation to the contrary. the employer shall give him or her an opportunity for at least elementary education. chanrobles virtual law library 131. How should a househelper be treated? A househelper should be treated in a just and humane manner and no physical violence should be inflicted on him. Is an employer obligated to provide board and lodging to a househelper? The employer shall furnish the househelper. food and medical attendance. 132. but not the services of laborers in a commercial or industrial enterprise. What is the indemnity for unjust termination of services of a househelper? . Who is a “househelper” or “domestic servant”? “Househelper” or “domestic servant” shall refer to any person. The cost of education shall be part of the househelper’s compensation. What is the time and manner of payment of wages? Wages shall be paid directly to the househelper to whom they are due at least once a month. 133. chanrobles virtual law library 134.129. industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein. Is an employer obligated to provide a househelper the opportunity for education? If the househelper is under the age of eighteen (18) years. suitable and sanitary living quarters as well as adequate food and medical attendance. 130. May a househelper be assigned to non-household work? No. The original contract of domestic service shall not last for more than two (2) years but it may be mutually renewed for such periods by the parties. cooks. 136. free of charge. and ministers exclusively to the personal comfort and enjoyment of the employer’s family. who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof. nursemaids or family servants. What should be paid by way of compensation to the househelper? The minimum wage rates of househelpers shall be the basic cash wages which shall be paid to the househelpers in addition to lodging. chanrobles virtual law library Household services include the services of family drivers. No deductions therefrom shall be made by the employer unless authorized by the househelper himself or by existing laws.

(a) Employer. No. The materials may or may not be furnished by the employer or contractor. chanrobles virtual law library THE SOCIAL SECURITY SYSTEM (SSS): 139. That a self-employed person shall be both employee and employer at the same time. business. Who is a “field personnel”? A field personnel is a non-agricultural employee who regularly performs his duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. A. legitimated or legally adopted. physically or mentally.If the period of household service is fixed. he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity. branches or instrumentalities. EMPLOYMENT OF HOMEWORKERS & FIELD PERSONNEL: 137. (b) Employee . or activity of any kind and uses the services of another person who is under his orders as regards the employment. domestic or foreign. If the househelper leaves without justifiable reason. industry. That a self-employed person shall be both employee and employer at the same time. 8282). including corporations owned or controlled by the Government: Provided. natural or juridical. he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days. a system of production under which work for an employer or contractor is carried out by a homeworker at his/her home. except the Government and any of its political subdivisions. Definition of terms under the SSS Law (R.The dependents shall be the following: (1) The legal spouse entitled by law to receive support from the member. or if over twenty-one (21) years of age.Any person who performs services for an employer in which either or both mental or physical efforts are used and who receives compensation for such services. 138. (2) The legitimate. and illegitimate child who is unmarried. If the househelper is unjustly dismissed. Who is an “industrial homeworker”? An industrial homeworker is a worker who is engaged in industrial homework. except for a just cause. chanrobles virtual law library (c) Dependents . not gainfully employed. where there is an employeremployee relationship: Provided. he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support. and has not reached twenty-one (21) years of age. . who carries on in the Philippines any trade.Any person. neither the employer nor the househelper may terminate the contract before the expiration of the term. and (3) The parent who is receiving regular support from the member. undertaking.

if on any other basis.The dependent spouse until he or she remarries. legitimated or legally adopted children: Provided. legitimated children of the member. the dependent legitimate.Any service performed by an employee for his employer except: (1) Employment purely casual and not for the purpose of occupation or business of the employer. Employees of bona fide independent contractors shall not be deemed employees of the employer engaging the service of said contractors. further. any foreign government.The period from one end of the last payroll period of the preceding month to the end of the last payroll period of the current month if compensation is on hourly. (f) Monthly . further. and illegitimate children. legitimated or legally adopted. (g) Contribution . That in the absence of the dependent legitimate. as well as the cash value of any remuneration paid in any medium other than cash except that part of the remuneration in excess of the maximum salary credit as provided under Section Eighteen of this Act.(d) Compensation . (i) Beneficiaries . or their wholly-owned instrumentality: Provided. That the provisions of this Act shall be supplementary to any such agreement. (h) Employment . That the terms of such agreement shall conform with the provisions of this Act on coverage and amount of payment of contributions and benefits: Provided. his/her dependent illegitimate children shall . however. may enter into an agreement with the Philippine Government for the inclusion of such employees in the SSS except those already covered by their respective civil service retirement systems: Provided. international organization or their wholly-owned instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines. chanrobles virtual law library (e) Monthly salary credit . finally. chanrobles virtual law library (2) Service performed on or in connection with an alien vessel by an employee if he is employed when such vessel is outside the Philippines. chanrobles virtual law library (4) Service performed in the employ of a foreign government or international organization. and (5) Such other services performed by temporary and other employees which may be excluded by regulation of the Commission. That this exemption notwithstanding. who shall be the primary beneficiaries of the member: Provided.All actual remuneration for employment. That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate.The compensation base for contributions and benefits as indicated in the schedule in Section Eighteen of this Act. daily or weekly basis. including the mandated cost-of-living allowance. ‘monthly’ shall mean a period of one (1) month.The amount paid to the SSS by and on behalf of the members in accordance with Section Eighteen of this Act. (3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof.

That any benefit already earned by the employees under private benefit plans existing at the time of the approval of this Act shall not be discontinued. (p) Net earnings . whichever is greater: Provided. further. chanrobles virtual law library (j) Contingency . as well as those workers enumerated in Section Nine-A hereof. That the injury or sickness which caused the disability shall be deemed as the permanent disability for the purpose of computing the average monthly salary credit. (k) Average monthly salary credit . That in the case of domestic helpers. Who are covered by the SSS? (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of age and their employers: Provided. disability. chanrobles virtual law library (n) Member .Net income before income taxes plus non-cash charges such as depreciation and depletion appearing in the regular financial statement of the issuing or assuming institution. the dependent parents who shall be the secondary beneficiaries of the member.be entitled to one hundred percent (100%) of the benefits.The result obtained by dividing the sum of the six (6) highest monthly salary credits in the twelve-month period immediately preceding the semester of contingency by one hundred eighty (180). reduced or otherwise impaired: Provided. he shall pay to the SSS only the contribution required of him and he shall continue his contribution to .Any person whose income is not derived from employment. the number of calendar years in which six (6) or more contributions have been paid from the year of coverage up to the calendar year containing the semester prior to the contingency: Provided. That private plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS in such a way where the employer’s contribution to his private plan is more than that required of him in this Act. their monthly income shall not be less than One thousand pesos (P1.The retirement.00) a month: Provided.The worker who is covered under Section Nine and Section Nine-A of this Act. death. injury or sickness and maternity of the member. (o) Self-employed .For a member covered prior to January nineteen hundred and eighty five (1985) minus the calendar year of coverage plus the number of calendar years in which six (6) or more contributions have been paid from January nineteen hundred and eighty five (1985) up to the calendar year containing the semester prior to the contingency.000. In the absence of all the foregoing. or the result obtained by dividing the sum of all the monthly salary credits paid prior to the semester of contingency by the number of monthly contributions paid in the same period. That the Commission may provide for a different number of contributions in a calendar year for it to be considered as a credited year of service. In their absence. For a member covered in or after January nineteen hundred and eighty five (1985). (l) Average daily salary credit . any other person designated by the member as his/her secondary beneficiary. (m) Credited years of service . further. 140. as defined under this Act.The result obtained by dividing the sum of the last sixty (60) monthly salary credits immediately preceding the semester of contingency by sixty (60).

2. further. finally. Professional athletes. directors. 3. (c) Filipinos recruited by foreign-based employers for employment abroad may be covered by the SSS on a voluntary basis. which may be necessary to adopt by reason of the reduced contributions thereto as a result of the integration. Are self-employed persons covered? Coverage in the SSS shall also be compulsory upon such self-employed persons as may be determined by the Commission under such rules and regulations as it may prescribe. eliminations or improvements in the benefits to be available under the remaining private plan. That the compulsory coverage of the self-employed person shall take effect upon his registration with the SSS. unless they are also engaged in other vocation or employment which is subject to mandatory coverage. scriptwriters and news correspondents who do not fall within the definition of the term "employee" in Section 8 (d) of this Act. That any changes. coaches. Individual farmers and fishermen. All self-employed professionals. chanrobles virtual law library 143. Unless otherwise specified in the law. further. 141. 142. all provisions of the SSS LAW applicable to covered employees shall also be applicable to the covered self-employed persons. That nothing in this Act shall be construed as a limitation on the right of employers and employees to agree on and adopt benefits which are over and above those provided under this Act. Actors and actresses. What is the effect of separation from employment? . and 5. (b) Spouses who devote full time to managing the household and family affairs. modifications. trainers and jockeys. That the private benefit plan which the employer shall continue for his employees shall remain under the employer’s management and control unless there is an existing agreement to the contrary: Provided. chanrobles virtual law library 4. may be covered by the SSS on a voluntary basis. including but not limited to the following: 1. When does coverage take effect? Compulsory coverage of the employer shall take effect on the first day of his operation and that of the employee on the day of his employment: Provided. Partners and single proprietors of businesses. adjustments.such private plan less his contribution to the SSS so that the employer’s total contribution to his benefit plan and to the SSS shall be the same as his contribution to his private benefit plan before the compulsory coverage: Provided. shall be subject to agreements between the employers and employees concerned: Provided.

That no retroactive payment of contributions shall be allowed other than as prescribed under Section 22-A of the SSS Law. continue to pay the total contributions to maintain his right to full benefit. (8) Maternity leave benefit. No. however. (7) Sickness benefit. JOSELITO GUIANAN CHAN LABOR LAWS OF THE PHILIPPINES PART . THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS): 146. 144. (5) Permanent disability benefits.The national government. 8291). and financial institutions with original charters.refers to that part of labor law which regulates the relations between employers and workers.Any person receiving compensation while in the service of an employer as defined herein. A. he shall not be required to pay contributions for that month. collective bargaining. agencies or instrumentalities. (6) Funeral benefit. (a) Employer. (4) Death benefits. Example: Book V of the Labor Code which deals with labor organizations. What are the benefits under the SSS Law? (1) Monthly pension. including government-owned or controlled corporations. What is the effect of interruption of business or professional income? If the self-employed realizes no income in any given month. (b) Employee or Member.When an employee under compulsory coverage is separated from employment. his employer’s contribution on his account and his obligation to pay contributions arising from that employment shall cease at the end of the month of separation. however.III LABOR RELATIONS LAW 1. but said employee shall be credited with all contributions paid on his behalf and entitled to benefits according to the provisions of this Act. branches. Definition of terms under the GSIS Law (R. (2) Dependents’ pension . whether by election or appoint 2008 PRE-WEEK BAR EXAM NOTES ON LABOR LAW By: Prof. . He may.(3) Retirement benefits. its political subdivisions. What is the distinction between “labor relations” and “labor standards”? Labor relations . be allowed to continue paying contributions under the same rules and regulations applicable to a separated employee member: Provided. He may. the constitutional commissions and the judiciary. 145.

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

Termination disputes (or illegal dismissal cases). Labor Arbiters have no appellate jurisdiction. 4. 5. exceeding the amount of P5. exemplary and other forms of damages arising from the employer-employee relations. Cases that workers may file involving wages. or chanrobles virtual law library 2. Cases arising from any violation of Article 264 of this Code.• Social Security System (SSS).000. JURISDICTION OF LABOR ARBITERS 3.00) regardless of whether accompanied with a claim for reinstatement. including those of persons in domestic or household service. hours of work and other terms and conditions of employment. all other claims arising from employer-employee relations. chanrobles virtual law library 5. and • Philippine Health Insurance Corporation (PHIC). any money claim. 2. 4. regardless of amount. rates of pay. Except claims for Employees’ Compensation. Medicare and maternity benefits. What are the money claims over which Labor Arbiters have jurisdiction? Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be classified as follows: 1. What are the cases falling under the jurisdiction of the Labor Arbiters? Labor Arbiters have jurisdiction over the following cases 1. Unfair labor practice (ULP) cases. accompanied with a claim for reinstatement (which involves a termination case). moral. 3. • Government Service Insurance System (GSIS). including questions involving the legality of strikes and lockouts. if accompanied with claim for reinstatement.000. regardless of whether accompanied with a claim for reinstatement. involving an amount exceeding five thousand pesos (P5. Social Security. any money claim.00 per claimant (which does not necessarily involve termination of employment). Claims for actual. and chanrobles virtual law library 6. . What is the nature of jurisdiction of Labor Arbiters? The jurisdiction is original and exclusive in nature.

No. 2000) – The suspension of the proceedings is necessary to enable the rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder the rescue of the distressed company. jurisdiction is vested with Voluntary Arbitrators. the SEC order becomes functus officio. The NLRC may not proceed with hearing of monetary claims. Do Labor Arbiters have jurisdiction over money claims of Overseas Filipino Workers (OFWs)? Labor Arbiters have jurisdiction over all monetary claims of Overseas Filipino Workers arising from employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment. 9. NLRC.. there is no legal impediment for the execution of the decision of the Labor Arbiter for the payment of separation pay by presenting it with the rehabilitation receiver and liquidator. involving or arising out of recruitment laws. (G. NLRC.). the monetary awards cannot be executed. including claims for actual.6. Do Labor Arbiters have jurisdiction over wage distortion cases? Labor Arbiters have jurisdiction over wage distortion cases only in unorganized establishments. R. Thus. July 26. subject to the rules on preference of credits. chanrobles virtual law library [See also RUBBERWORLD (PHILS. G. 128003. 8. ET AL. ET AL. R. Only when there is liquidation that the monetary claims may be asserted. In organized establishments. Once the receivership proceedings have ceased and the receiver/liquidator is given the imprimatur to proceed with corporate liquidation. VS. INC. What is the effect of rehabilitation receivership on monetary claims of workers? RUBBERWORLD (PHILS. No. 126773. chanrobles virtual law library (NOTE: The POEA continues to have jurisdiction over recruitment or pre-employment cases which are administrative in nature. To proceed with the labor proceedings is grave abuse of discretion. R. exemplary and other forms of damages. (ALEMAR’S SIBAL AND SONS. No.). INC. (G. January 19.. 114761. What is the effect of receivership or liquidation of business on the jurisdiction of Labor Arbiters? The jurisdiction conferred upon Labor Arbiters and the NLRC would not be lost simply because the assets of a former employer had been placed under receivership or liquidation. INC. . moral. 7. VS. April 14. rules and regulations. including money claims arising therefrom or violation of the conditions for issuance of license to recruit workers). If already decided. 2000) Rehabilitation receivership of a company issued by the SEC has the effect of suspending all proceedings in all judicial or quasi-judicial bodies. VS. NLRC. ET AL. 1999)].

either NLRC (in certified cases) or DOLE Secretary (in assumed cases) has jurisdiction. Not only this. [G. Mira. August 5. where there was already actual termination. November 21. In the same Atlas Farms case. 8042. et al. except in strikes and lockouts in industries indispensable to the national interest. No. it must be noted that according to the 2003 case of Land Bank of the Philippines vs. vs. Listana. R. NLRC. In Atlas Farms. it was categorically ruled that given the fact of dismissal. implementation or enforcement stage. These matters are still within the province of the Regional Trial Courts. 2002]. Labor Arbiters have jurisdiction thereover. 144314. or brought to voluntary arbitration. Inc. the claim for unpaid salaries of overseas workers should be whichever is less between salaries for unexpired portion of the contract or 3 months for every year of the remaining unexpired portion of the contract (in case contract is one year or more). R. Sr. November 18. Do Labor Arbiters have injunction power? It must be noted that the provision in the 1990 version of the NLRC Rules granting injunction power to the Labor Arbiters is no longer found in its 2002 version. thus placing them within the jurisdiction of the Labor Arbiter. 2002) Under Section 10. 152611. . No.10. it is already cognizable by the Labor Arbiter. Inc. in which case.. But. 142244. Do Labor Arbiters have jurisdiction over legality of strikes and lockouts? Labor Arbiters have jurisdiction over the issue of legality of strikes and lockouts. (G. it may be referred to the grievance machinery set up in the CBA.. [G. No. with alleged violation of the employee’s rights. 12. the Supreme Court affirmed the earlier rulings to this effect. 2003]. quasi-judicial agencies that have the power to cite persons for indirect contempt pursuant to Rule 71 of the Rules of Court can only do so by initiating them in the proper Regional Trial Court. vs. It is not within their jurisdiction and competence to decide the indirect contempt cases. 11. Is termination dispute a grievable issue over which Labor Arbiters have no jurisdiction? It has long been settled that a termination dispute (illegal dismissal case) is not a grievable issue. However. Do Labor Arbiters have contempt powers? Yes. 14. Republic Act No. It is opined that this deletion is correct since Article 218 of the Labor Code grants injunctive power only to the “Commission” which obviously refers to the NLRC’s various divisions and not to the Labor Arbiter. it can be said that the cases were effectively removed from the jurisdiction of the Voluntary Arbitrator. How should the monetary claims of OFWs be computed? Skippers Pacific. Where the dispute is just in the interpretation. R. hence. 13.

2002]. petitioner argued that he is not a corporate officer of the IBC but an employee thereof since he had not . cashier. is considered intra-corporate dispute. Inc. leaves. Consequently. Under Art. vs. But what about if the position is not included in the roster of officers in the By-laws? Does the holder of the position to be considered a corporate officer? In the case of Nacpil vs. the dispute is about payment of wages. March 21. 107660. Labor Arbiters have jurisdiction over their claims. 8799 (Securities Regulation Act of 2000). R. bonuses. 121948. etc. 6938. chanrobles virtual law library In the case of Perpetual Help Credit Cooperative. otherwise known as “The Cooperative Code of the Philippines” are composed of members. overtime pay. Jan. The by-laws may and usually do provide for such other officers. as they may deem necessary. therefore. the law does not limit corporate officers to these three. these disputes are within the original and exclusive jurisdiction of the Labor Arbiter. A. vice president.15. No. There is no evidence in this case that private respondents are members of petitioner cooperative and even if they are. Section 25 of the Corporation Code gives corporations the widest latitude to provide for such other offices. 2001]. (such as unpaid salaries. damages and attorney's fees. No. (Lozon vs. October 8. auditor. Faburada. 217 of the Labor Code. -Labor Arbiters have no jurisdiction over termination of corporate officers and stockholders which. 1995. [G. 16. It must be emphasized that a corporate officer’s dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. 13th month pay. JURISDICTION OVER INTRA-CORPORATE DISPUTES. G. rest day and termination of employment. the Supreme Court ruled that employees of cooperatives (as distinguished from members thereof) are covered by the Labor Code and. No. What are the cases which do not fall under the jurisdiction of the Labor Arbiters? a. Issues on the termination of their membership with the cooperative do not fall within the jurisdiction of the Labor Arbiters. R. [G. Do Labor Arbiters have jurisdiction over monetary claims and illegal dismissal cases of employees of cooperatives? a. Intercontinental Broadcasting Corporation. the Supreme Court has held that one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. Cooperatives organized under Republic Act No. However. Jurisdiction of RTC includes adjudication of monetary claims of the corporate officer who was dismissed. Members of cooperatives are not employees. NLRC.). The Regional Trial Courts (not SEC) now have jurisdiction under R. 02. and treasurer. R. 240 SCRA 1) Who are corporate officers?There are specifically three (3) officers which a corporation must have under the statute: president.. secretary. b.g. and general manager. e. Labor Arbiters have jurisdiction over illegal dismissal cases of employees of cooperatives. under the law. 144767.

He.” As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of . No. As earlier stated. Consequently. No. In support of his argument. that petitioner is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of P. It must be noted that the Supreme Court has held that in most cases. 266 SCRA 462 [1997]). NLRC. she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. as petitioner’s appointment as comptroller required the approval and formal action of the IBC’s Board of Directors to become valid. It held that even assuming that he was in fact appointed by the General Manager.” (Union Motors vs. she is tasked. It has been stated that “the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. among others.D. therefore. Had petitioner been an ordinary employee. chanrobles virtual law library The Supreme Court considered petitioner’s argument untenable. because the IBC’s Board of Directors is empowered under Section 25 of the Corporation Code and under the corporation’s by-laws to appoint such other officers as it may deem necessary. 902-A (now by the RTC under R. the Assistant Vice-President was appointed Accounting Clerk by the Bank on July 14. 1963. the “by-laws may and usually do provide for such other officers. 2001]. petitioner underscores the fact that the IBC’s By-Laws does not even include the position of comptroller in its roster of corporate officers. the Board of Directors may also be empowered under the by-laws to create additional officers as may be necessary. 1995 by the IBC’s General Manager. such appointment was subsequently approved by the Board of Directors of the IBC. The Bank’s contention that she merely holds an elective position and that. One who rose from the ranks is a regular employee and not a mere corporate officer. including the signing of transmittal letters covering the same.” Additionally. 141093. In Prudential Bank and Trust Company vs. “an employee is regular because of the nature of work and the length of service. in effect. not because of the mode or even the reason for hiring them. such board action would not have been required. 8799) which includes controversies involving both election and appointment of corporate directors. to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased. officers. February 20. Reyes. From that position. she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19. [G. Then in 1982. That the position of Comptroller is not expressly mentioned among the officers of the IBC in the by-laws is of no moment. trustees. 1991. He points out that he had actually been appointed as such on January 11. A. therefore. NLRC. and managers. contended that his dismissal was a controversy falling within the jurisdiction of the labor courts. As Assistant Vice President of the foreign department of the Bank. (Tabang vs. 314 SCRA 531. it is clear. R.been elected nor appointed as Comptroller and Assistant Manager by the IBC’s Board of Directors. 539 *1999+) and that where a corporate officer is not specifically indicated in the roster of corporate officers in the by-laws of a corporation. she is not a regular employee is belied by the nature of her work and her length of service with the Bank. she rose to become supervisor.

R. G. it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but to no avail. 1996. [G. United Nations Revolving Fund for Natural Resources Exploration [UNRFNRE]. in an illegal dismissal case filed against the Asian Development Bank (ADB).the bank. [320 Phil. 182 SCRA 644. Feb.R. R. JURISDICTION OVER GOVERNMENT CORPORATIONS WITH ORIGINAL CHARTERS. 1990. the Supreme Court ruled that it enjoys immunity from legal process of every form and. et al. (Department of Foreign Affairs vs. as held in Rural Bank of Coron [Palawan]. therefore. February 29. There is an exception to the immunity rule as exemplified by the case of United States vs. c. JURISDICTION OVER IMMUNED ENTITIES. For instance. chanrobles virtual law library A corporate officer may also be. September 18. No. vs. 660]. et al. 6. Inc. ADB's officers. No. Here. They have no jurisdiction if entity has original charter. 48 SCRA 242 [1972]). instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employees. 262 SCRA 39. her services may be terminated only for a just or authorized cause. 1995.. World Health Organization vs.Labor Arbiters have jurisdiction over cases involving employees of government-owned or controlled corporations without original charters (organized under the Corporation Code). Exception: when said entities perform proprietary activities (as distinguished from governmental functions). In dismissing the case. 26.. the suit cannot prosper. Hon. [G. she is entitled to security of tenure. The case of Mainland Construction Co. NLRC. enjoy immunity in respect of all acts performed by them in their official capacity. indeed.. 353 (1995)]. vs. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. 2006]. . she was also its Financial Assistant and the Personnel Officer of the two other petitioner corporations. chanrobles virtual law library A corporate officer may also be an employee whose dismissal may vest jurisdiction on the Labor Arbiter. Rodrigo. it was held that when the function of the . 164888. vs. In fine. that is. on their part. as a regular employee. G. Both treaties have the force and effect of law. Movilla.Labor Arbiters have no jurisdiction over labor cases involving entities immuned from suit. respondent was the Corporate Secretary of the Rural Bank of Coron. the Court said that being a member of the United Nations and a party to the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations. Dec. No. et al. R. Inc. Aquino. 79470. the Supreme Court had occasion to assert and reiterate said rule in an illegal dismissal case filed against a specialized agency of the United Nations. (Lasco. Cortes. Nos. 43-44). This being in truth a case of illegal dismissal. While. The Labor Arbiter has thus jurisdiction over respondent’s complaint. . the Philippine Government adheres to the doctrine of immunity granted to the United Nations and its specialized agencies. 113191. In 1995. 109095-109107. at the same time. b. an employee.

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

Cases involving claim of employee for cash prize offered under the Innovation Program of a company which. PNOC-Exploration Corporation vs. Juco. G. Inciong. 158 SCRA 53). Ernani Cruz Pano. (Tolentino vs. 5. 144 SCRA 678).2. L-47739. Jr. Exercise of equity jurisdiction to enjoin activities for purposes of compelling an employer to ignore a clear mandate of the law. June 22. Sanchez. chanrobles virtual law library 7. Militante. vs. 9. No. 164 SCRA 501). Labor Code). 143 SCRA 602. Laron. Rule X. Ernani Cruz Pano. Issue of replevin intertwined with a labor dispute. 156 SCRA 299). (Singapore Airlines vs. Violation of labor laws which are penal in nature. (Philippine Association of Free Labor Unions [PAFLU] vs. chanrobles virtual law library 3. 10. 14. require the application of general civil law on contracts. (Bulletin Publishing Corporation vs. although arising from employer-employee relationship. 11. R. G. 142 SCRA 49). . 8. Hernandez. Insolvency proceedings in the enforcement of the worker preference ordained under Article 110 of the Labor Code. (Molave Motor Sales. Examples are illegal recruitment cases. (Singapore Airlines vs. 122 SCRA 671). 166 SCRA 625). 4. 6. Claims for commissions and certain reimbursements made by an independent contractor. Cases involving claim for liquidated damages for breach of a contractual obligation. (Asian Footwear vs. Inc. R. No. 134 SCRA 172. Salas. 12. NLRC. Cases involving issue of whether sale of property being levied on execution was done in bad faith. Also the issue of liability in suretyship. Cases initiated by employer against an employee for sum of money and damages for cost of repair jobs made on an employee’s personal cars as well as for the purchase price of parts and vehicles. Metropolitan Waterworks and Sewerage System vs. Hon. Cases arising from violation of training agreement. 161 SCRA 719). (Article 264. June 22. (Basaya. 13. Rules and Regulations Governing Overseas Employment) or criminal offenses or felonies committed in the course of strikes and lockouts. Book II. (National Housing Corporation vs. L-47739. Agarrado. (Section 10. 1983. 91 SCRA 563). 1983. 122 SCRA 671). NLRC. Cases of contempt involving a judge of the regular court. (San Miguel Corporation vs. vs. (Sara vs. Cases filed by government-owned corporations performing governmental functions. Hon. Soriano. Cases involving an injunction filed by a third party with the regular court against the sheriff enforcing a decision in a labor case. 129 SCRA 485).

even assuming arguendo that she was considered at the . the Branch Office had two (2) types of employees: (a) expatriates or the regular employees. employer-employee relationship. (Section 1. Maalat. however. 179 SCRA 459). to employment. R. the main witnesses. No. 201 SCRA 695. noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. Henk are non-residents of the Philippines.are not nationals of the Philippines. 16. R. The Supreme Court. NLRC. (Section 12. vs. No. The Secretary of Labor and Employment has exclusive jurisdiction over these cases. ruled that the Labor Arbiter has jurisdiction because the issue here involves termination of an OFW. respondent was hired by the Singapore branch of petitioner-bank while she was a tourist in Singapore in 1998. Book VI. Cases involving issues which do not arise from. (G. Thus. In this case. Subsequently. with principal offices at the PNB Financial Center. The inconvenience is compounded by the fact that the proper defendants – the Palace Hotel and MHICL . At the time. NLRC. 187 SCRA 694. Cabansag. Review of recruitment violation cases and other related cases decided by the POEA. or has no reasonable causal connection with. One of the issues presented before the Supreme Court was whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy. the Filipino was hired directly (without the intervention of the POEA) by the foreign employer while he was working in the Sultanate of Oman and was assigned to a hotel in China. Manila. Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995). The NLRC is not a convenient forum given that all the incidents of the case – from the time of recruitment.” Likewise. Galang.15. [G. 157010. chanrobles virtual law library 17. she filed a complaint before a Labor Arbiter. Petitioner is a private banking corporation organized and existing under the laws of the Philippines. Roxas Boulevard.occurred outside the Philippines. Mr. and (b) locally (direct) hired. Insular Life vs. After her 3-month probationary period. Grepalife Assurance Corporation vs. While she may have been directly hired in Singapore by petitioner. (Pepsi-Cola Distributors vs. Here. the NLRC has no jurisdiction when the main aspects of the case transpired in foreign jurisdictions and the only link that the Philippines has with the case is that the employee is a Filipino Citizen. NLRC. she was terminated. hired in Manila and assigned abroad including Singapore. Rule IV. The Certificate declared her a bona-fide contract worker in Singapore. 2000). 187 SCRA 773. What is the doctrine of forum non conveniens? May this be invoked against the exercise of jurisdiction by the Labor Arbiters/NLRC? In the case of The Manila Hotel Corp. Neither are they “doing business in the Philippines. Rules and Regulations Governing Overseas Employment). in answering this query in the affirmative. the Supreme Court ruled that under the international law doctrine of forum non conveniens. Schmidt and Mr. Cosmopolitan Funeral Homes vs. She applied for and was hired as Branch Credit Officer. Administrative action against the licensee or holder of authority cognizable by the POEA which could proceed independently from the criminal action. June 21. to dismissal . chanrobles virtual law library 17. October13. too. 120077. The said Manila Hotel case should be distinguished from Philippine National Bank vs. 2005].

October 2. she already possessed the POEA Employment Certificate. (Id. it follows that the law that governs their relationship is the law of the place where the employment was executed and her place of work or assignment. chanrobles virtual law library Citing the ruling in PNB vs. that “it is limited to the relationship between labor and capital within the Philippines”. Eventually. petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the Labor Arbiter. No. This circumstance militates against petitioner’s contention that respondent was “locally hired”. respondent’s employment by the Singapore branch office had to be approved by the president of the bank whose principal offices were in Manila. and Managing Director of PCIB. common practices and customs” of Singapore. the Labor Arbiter has jurisdiction not only on the basis of Article 217 of the Labor Code but under Section 10 of Republic Act No. Feb. she was promoted to Manager position until September 1999. not of the Philippines. Under these provisions. Inc. among whom are overseas Filipino workers. At the time her employment was illegally terminated.start of her employment as a “direct hire” governed by and subject to the laws. in this case one deployed in Singapore. or the Migrant Workers and Overseas Filipinos Act of 1995. although by a Philippine Corporation. 157376.Europe -informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. Petitioners insisted on the application of the said principle since the respondent is a Canadian citizen and was a repatriate. it is clear that Labor Arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations. she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. the Supreme Court cited the following reasons that do not warrant the application of the said principle: . [G. European Head of PCIBank.A.R. Schonfeld. 8042. which was affirmed by the NLRC. No. NLRC. with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker. Cabansag [supra].). In rejecting petitioner’s contention. and that “since complainant was hired and assigned in a foreign land. as well as Section 62 of the Omnibus Rules and Regulations Implementing R. including termination disputes involving all workers. noted a palpable error in the Labor Arbiter's disposition of the case. Moreover. vs. and totally “governed by and subject to the laws. chanrobles virtual law library The principle of forum non conveniens was also invoked by petitioners in Pacific Consultants International Asia.the Senior Officer. It held that it was wrong for the Labor Arbiter to dismiss the case for lack of jurisdiction under its holding that “labor relations system in the Philippines has no extra-territorial jurisdiction”. [G.R.” chanrobles virtual law library The petitioner here was Corazon Sim who was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. the High Court in Sim vs. petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore. Instead. According to the Supreme Court. when she received a letter from Remegio David -. with regard to the issue on jurisdiction. Hence. 8042. 2007]. Significantly. 19. No. 166920. common practices and customs prevailing in Singapore. 2007].

000 and not accompanied by claim for reinstatement. provided. vs. original jurisdiction. June 19. hence. CA. c. (Id. it is properly considered as defense. and 2. 1997. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint. 103493. In Bank of America. No. certified to it by the Secretary of Labor and Employment for compulsory arbitration. Original jurisdiction. chanrobles virtual law library Second. [448 Phil. may cause grave or irreparable damage to any party. chanrobles virtual law library Third. Xxx. exclusive appellate jurisdiction. NT&SA.First. 196 (2003)]. Exclusive appellate jurisdiction. What are the two kinds of jurisdiction of the NLRC? The National Labor Relations Commission exercises two (2) kinds of jurisdiction: 1. that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to. Certified labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest. (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts. Injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which. b. it was held that:“xxx *a+ Philippine Court may assume jurisdiction over the case if it chooses to do so. Court of Appeals. a. (3) that the Philippine Court has or is likely to have power to enforce its decision. 181. b. Ltd. All cases decided by the Labor Arbiters including contempt cases. 274 SCRA 102). and. 19. Bank of America International. simple money claims and other benefits not exceeding P5. What is the distinction between the jurisdiction of the Labor Arbiters and the NLRC? .” JURISDICTION OF THE NLRC 18. Cases decided by the DOLE Regional Directors or his duly authorized Hearing Officers (under Article 129) involving recovery of wages. if not restrained or performed forthwith. 2.).R. The propriety of dismissing a case based on this principle requires a factual determination. a. (See PHILSEC Investment Corporation vs. Injunction in strikes or lockouts under Article 264 of the Labor Code. G. 1.

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

(NOTE: All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the CBA) chanrobles virtual law library JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL OF VAs 25. 2. What are the cases falling under the jurisdiction of the Grievance Machinery? Any grievance arising from: 1. the aggregate money claim of each employee does not exceed P5.the interpretation or implementation of the Collective Bargaining Agreement (CBA). What are the cases falling under the jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators? The Voluntary Arbitrator (or panel of Voluntary Arbitrators) has original and exclusive jurisdiction over the following: 1. and 3. the claimant does not seek reinstatement. (NOTE: Decisions of Med-Arbiters in intra-union disputes are appealable to the BLR). the claim must arise from employer-employee relationship. . and 2. provided that: 1. (Article 262). the Regional Director or any of the duly authorized hearing officers of DOLE have jurisdiction over claims for recovery of wages. (Art.00. 23. Decisions of the Med-Arbiter in certification election cases are appealable to the DOLE Secretary. (Article 261). JURISDICTION OF THE DOLE REGIONAL DIRECTORS / DULY AUTHORIZED HEARING OFFICERS. all unresolved grievances arising from the interpretation or implementation of the collective bargaining agreement after exhaustion of the grievance procedure. all other labor disputes including unfair labor practices and bargaining deadlocks. the interpretation or enforcement of company personnel policies. 259). JURISDICTION OF GRIEVANCE MACHINERY IN THE CBA 24. simple money claims and other benefits.000. upon agreement of the parties. and 2. all unresolved grievances arising from the implementation or interpretation of company personnel policies.c. What are the money claims falling under the jurisdiction of DOLE Regional Directors? Under Article 129. 3.

All disputes.Under Article 262.R. 29. JURISDICTION OF THE BUREAU OF LABOR RELATIONS (BLR)/MED-ARBITERS 28.26. How should cases falling under the jurisdiction of the Voluntary Arbitrator but erroneously filed with the Labor Arbiters or DOLE Regional Offices be processed? They shall immediately be disposed and referred to the Grievance Machinery or Voluntary Arbitration provided in the CBA. What are the relevant administrative functions of the BLR? The BLR has the following administrative functions: (1) registration of labor unions. In case of conflict. 142244. the Voluntary Arbitrator may assume jurisdiction only when agreed upon by the parties. 2000) . What is the jurisdiction of the NCMB? . VS. 18. NO. It reiterated the ruling that dismissal is not a grievable issue. OCTOBER 24. “Intra-union disputes” or “internal union disputes” which refer to disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of the union. chanrobles virtual law library CELESTINO VIVERO VS. Nov. COURT OF APPEALS. chanrobles virtual law library JURISDICTION OF THE NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) 30. 290 SCRA 603. 27.. who has jurisdiction over termination disputes. (1998)]. and (3) maintenance and custody of CBAs. 56 issued by DOLE Secretary Confesor clarifying the jurisdiction of Labor Arbiters and Voluntary Arbitrations does not apply. Policy Instructions No. 3. What are the cases falling under the jurisdiction of the BLR? The BLR has original and exclusive jurisdiction over the following: 1. 2. grievances or problems arising from or affecting labor-management relations in all workplaces. R. HAMMONIA MARINE SERVICES. ET AL. NO. 138938. firm or establishment. including any violation of the rights and conditions of union membership provided for in the Labor Code. (2) keeping of registry of labor unions. “Inter-union disputes” or “representation disputes” which refer to cases involving petition for certification election filed by a duly registered labor organization which is seeking to be recognized as the sole and exclusive bargaining agent of the rank-and-file employees in the appropriate bargaining unit of a company. except those arising from the interpretation or implementation of the CBA which are subject of grievance procedure and/or voluntary arbitration. 2002) Jurisdiction over termination disputes belongs to Labor Arbiters and NOT with Grievance Machinery nor Voluntary Arbitrator [cited Maneja vs. NLRC (G. INC. (G. Labor Arbiter or Voluntary Arbitrator? ATLAS FARMS. 616. NLRC.

mediation and voluntary arbitration cases. provinces or industries therein and to issue the corresponding wage order. POWER OF REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)/ NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) 33. involving or arising out of recruitment laws. JURISDICTION OF POEA 31. are indispensable to the national interest. maintains/updates a list of voluntary arbitrators. May the President assume jurisdiction over national interest cases? Yes. rules and regulations. 251 which created the National Conciliation and Mediation Board (NCMB) ordains that the conciliation.Executive Order No. It performs preventive mediation and conciliation functions. Labor Code). compiles arbitration awards and decisions. The NCMB has jurisdiction over conciliation. (Articles 120-127. the President of the Philippines shall not be precluded from determining the industries that. subject to the guidelines issued by the NWPC. and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. POEA’s jurisdiction is now confined to recruitment or preemployment cases which are administrative in nature. What are the cases falling under the jurisdiction of the POEA? The POEA has no more jurisdiction over monetary claims of OFWs. in his opinion. the NWPC has the power to review regional wage levels set by the RTWPBs to determine if these are in accordance with prescribed guidelines and national development funds. It is an attached agency under the administrative supervision of the Secretary of Labor and Employment. In connection with labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest. What are the powers of the RTWPB and NWPC? The RTWPB has the power to determine and fix minimum wage rates applicable in the region. . 8042. including money claims arising therefrom or violation of the conditions for issuance of license to recruit workers. POWER OF PRESIDENT TO ASSUME JURISDICTION OVER NATIONAL INTEREST CASES 32. Labor Code). It administers the voluntary arbitration program. It is with the NCMB that Notices of Strike or Lockout are filed. (Article 263[g]. mediation and voluntary arbitration functions of the Bureau of Labor Relations (BLR) shall be absorbed by NCMB. the same having been transferred to the Labor Arbiters by virtue of R. and provides counseling and preventive mediation assistance particularly in the administration of collective agreements. A. chanrobles virtual law library On the other hand.

• The SSS and the GSIS likewise administer either the employees’ compensation program which grants income benefits. • The Philippine Health Insurance Corporation has taken over the administration of the Medicare benefits which are now also in the hands of the SSS and the GSIS. (St. it may be elevated to the Supreme Court by way of ordinary appeal under Rule 45 of the Rules of Civil Procedure. What are the modes of appeal from the decisions of the various labor tribunals? 1. 2. (Article 247. DECISION OF LABOR ARBITERS: Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within ten (10) calendar days from receipt by the party of the decision. (Luzon Development Bank vs. including damages. of unfair labor practices cases.. No. From the ruling of the Court of the Appeals. October 6. there is no appeal. shall continue to be under the jurisdiction of ordinary courts. NLRC. 1998). . 120319. From the Court of Appeals. over the civil aspects. G. chanrobles virtual law library Other provisions of the Labor Code which vest jurisdiction in the regular courts over the criminal aspect of cases are Articles 272 and 288. 1995). injuries and deaths. This provision should be distinguished from Article 247 of the Labor Code which vests jurisdiction upon the Labor Arbiters. DECISION OF VOLUNTARY ARBITRATORS: The decision of a Voluntary Arbitrator or panel of Voluntary Arbitrators is appealable by ordinary appeal under Rule 43 of the Rules of Civil Procedure directly to the Court of Appeals. the case may be elevated to the Supreme Court by way of ordinary appeal under the same Rule 45. attorney’s fees and other affirmative relief. No. Which has jurisdiction over criminal and civil aspects of labor cases? By express provision of Article 241 of the Labor Code. et al. The only way to elevate the case to the Court of Appeals is by way of the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure. From the decision of the NLRC. Labor Code). Association of Luzon Development Bank Employees. 130866. medical and related benefits in cases of work-related illnesses. Martin Funeral Home vs. both criminal and civil liabilities arising from violations of the rights and conditions of membership in a labor organization enumerated in said Article. G.JURISDICTION OVER CLAIMS FOR SOCIAL SECURITY BENEFITS 34. What agencies of government administer social security programs? • The Social Security System (SSS) for the private sector employees and the Government Service Insurance System (GSIS) for the public sector employees are the agencies which administer the income benefits of the social insurance programs of the government. R.. JURISDICTION OVER CRIMINAL AND CIVIL LIABILITIES 35. R. September 16. APPEALS 36. et al.

et al. and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. SIMPLE MONEY CLAIMS AND OTHER BENEFITS NOT EXCEEDING P5. (NOTE: Appeal from CA to SC should be under Rule 45 (Petition for Review on Certiorari) and not Rule 65 (Special Civil Action for Certiorari) – SEA POWER SHIPPING ENTERPRISES. 38. If the denial is issued by the Regional Office. INC. . VS. chanrobles virtual law library (c) If made purely on questions of law. JUNE 28.The decision is appealable to the NLRC and not to the DOLE Secretary. 138270. the BLR’s decision is appealable to the Secretary of Labor and Employment by ordinary appeal. If the denial is originally made by the BLR. 4. What are the grounds for appeal? There are four (4) grounds. DECISION OF THE BLR: A. it may be appealed to the BLR. the same may be appealed to the BLR. G. Denial of application for registration of a union. DECISION OF THE MED-ARBITER IN CERTIFICATION ELECTION CASES – The decision is appealable to the DOLE Secretary of Labor and Employment. If the cancellation of union registration is ordered by the Regional Office.. 5. appeal may be had to the Secretary of Labor and Employment. COURT OF APPEALS.3. Abbott Laboratories Employees Union. ET AL. B. 2001) APPEAL TO THE NLRC FROM DECISIONS OF LABOR ARBITERS 37. DECISION OF THE DOLE REGIONAL DIRECTORS OR HIS DULY AUTHORIZED HEARING OFFICERS UNDER ARTICLE 129 INVOLVING RECOVERY OF WAGES. The decision of the BLR rendered in its appellate jurisdiction may not be appealed to the Secretary of Labor and Employment but may be elevated directly to the Court of Appeals by way of certiorari under Rule 65. R. Cancellation of registration of a union. Inc. G. No. vs. (Abbott Laboratories Philippines. to wit: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter. chanrobles virtual law library The decision of the BLR rendered in its original jurisdiction may be appealed to the Secretary of Labor and Employment whose decision thereon may only be elevated to the Court of Appeals by way of certiorari under Rule 65.000 AND NOT ACCOMPANIED BY CLAIM FOR REINSTATEMENT . R.. including graft and corruption. January 26. order or award was secured through fraud or coercion. (b) If the decision. What are the requisites for perfection of appeal? Requisites for perfection of appeal. 2000). NO. 131374. If the cancellation is done by the BLR in a petition filed directly therewith.

the Memorandum of Appeal should be under oath. b. 3. e. 1. if judgment involves monetary award. c. 10 calendar-day period is counted from receipt of decision by counsel of party. and chanrobles virtual law library e. a." 7. proof of service to the adverse party. 4. When allowing the appeal "in the interest of justice. R. 5. 39. 1982) at a time when the rule was 10 working days. posting of cash or surety bond. Allowing the appeal for other compelling reasons (due to typhoon falling on the 10th day. Nos. 10th day falling on a Saturday. d. July 20. Date of mailing (by registered mail) is date of filing. c. Reliance on erroneous notice of decision.a. the appeal should be filed within the reglementary period. chanrobles virtual law library f. d. Appeal filed before the Vir-Jen case (G. d. Saturdays. The 10-calendar day reglementary period to appeal is not extendible. Sundays and Legal Holidays included in reckoning 10-day reglementary period. b. payment of appeal fee. Appeal from decision of Labor Arbiter on third-party claim (10 working days). g. or excusable negligence). 58011-12. Motion for reconsideration of Labor Arbiter’s decision is not allowed. Failure to appeal or perfect appeal within 10-calendar day reglementary period will make the Labor Arbiter's decision final and executory. 6. . What is the reglementary period to perfect the appeal? The reglementary period is ten (10) calendar days. 2. Appeal from decision of Labor Arbiter in direct contempt cases (5 calendar days). 10th day falling on a Sunday or holiday. Exceptions to 10-calendar day period rule.

In the case of Pioneer Texturizing Corporation vs. m. If employer refuses to reinstate. Submission of new or additional evidence on appeal may be allowed.. Effect of perfection of appeal . the employee has no way of knowing if he has to report for work or not. i. chanrobles virtual law library Options of the employer. not fatal to the validity of appeal. the employee may file a motion to cite the former in contempt. Labor Code. Lack of verification of the memorandum of appeal is not fatal nor jurisdictional. an award or order for reinstatement under Article 223 is self-executory.Labor Arbiter loses jurisdiction. Failure to pay appeal docketing fee. reinstatement of the employee in the payroll of the company. Receipt by one of two counsels is receipt by the party. What is the reinstatement aspect of the Labor Arbiter's decision? If reinstatement is ordered by the Labor Arbiter in an illegal dismissal case. at the option of the employer). et al.Raising new issues or changing theory on appeal is not allowed. the employer has to inform the employee of his choice. Having ruled in Pioneer Texturizing [supra] that henceforth. it is immediately executory even pending appeal. In either instance. 280 SCRA 806 [1997]. j. thus: “After receipt of the decision or resolution ordering the employee’s reinstatement. actual reinstatement of the employee to his work under the same terms and conditions prevailing prior to his dismissal or separation. l. without requiring him to report back to his work. (Article 223. Employer has to notify employee of his choice of option. The employer is practically left with no effective contra-remedy that may forestall or stay the execution of a Labor Arbiter’s order for immediate reinstatement pending appeal. or 2. The employee ordered reinstated need not secure a writ of execution from the Labor Arbiter. NLRC. 40.” [Underscoring supplied] . Buat. 232 SCRA 587). All that the employer has is to avail of any of the following options: 1. k. Zamboanga City Water District vs.h. The notification is based on practical considerations for without notice. The posting of bond does not stay reinstatement. the Supreme Court prescribes the procedure to be followed. it is the employer who is duty-bound to inform employee of the reinstatement (either in the payroll or in the position previously held or in a substantially equivalent position if no longer available. Such award does not require a writ of execution. the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll.

NLRC. The entitlement of the dismissed employee to his salaries occasioned by the unjustified refusal of the employer to reinstate him becomes effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. to pay instead the salary of the employee. September 16.. (Christian Literature Crusade vs. 1998). R. April 10. The Court of Appeals reversed the ruling of the NLRC but. the dismissal of the employee was held valid by the Labor Arbiter. the dismissed employee was ordered reinstated. supra). Martin Funeral Home vs. 15. the employer can be compelled. Inc. Philippine Air Lines. as if he was reinstated. the remedy is not the grant of additional backwages to serve as damages but to file a motion to cite the employer for contempt. Jan. 1998]. NLRC and Bienvenido Aricayos. [G.R. Employer must pay for the salary of employee. 2003]. On appeal to the NLRC. Inc. vs. Inc. the dismissal of the employee was held valid. The case was remanded later from the Supreme Court to the Court of Appeals pursuant to the ruling in St. R. the dismissal of the employee was held not to be illegal. 152329. Remedy in case of employer’s refusal to comply with writ of execution to reinstate is contempt citation. on appeal to the Supreme Court. What. No. the Labor Arbiter’s decision was reversed and consequently. 1989. supra). No. under pain of contempt. The employee did not appeal from that decision of the NLRC but filed a motion for a writ of execution of the order of reinstatement. was the legal consequence of the reinstatement order issued by the NLRC which was never complied with by the employer all throughout the pendency of the case on appeal up to the Supreme Court? Did the subsequent affirmance by the Supreme Court of the validity of the dismissal have the effect of exonerating the non-complying employer from his obligation to pay for the salary of the employee consequent to the reinstatement-pending-appeal order issued by the NLRC? chanrobles virtual law library The Supreme Court said that the employer is liable to pay for the salary of the employee previously ordered reinstated by the NLRC although later on. employer should pay salary.. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries. the employer still refuses to reinstate the employee. G. [G. if any.Failure to exercise option. NLRC. (Roquero vs. 130866. See also Industrial and Transport Equipment. 113592. The employee should not be left without any remedy in case the employer unreasonably delays reinstatement. Failing to exercise any of the options. If despite several writs of execution. In the 2003 case of Roquero vs. No. The Labor Arbiter granted the motion but the employer refused to execute the said order on the ground that it has filed a Petition for Review before the Supreme Court. 171 SCRA 712. (Pioneer Texturizing Corporation vs. April 22. NLRC. Philippine Air Lines. chanrobles virtual law library .

On appeal. the Labor Arbiter ordered the reinstatement of respondent Zamora who immediately filed a motion for execution of the said order of reinstatement. 2007] insofar as illegally dismissed employees ordered to be reinstated in the payroll are concerned. then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries he/she received while the case was pending appeal. supra and Aris [Phil. However.502. it ordered petitioner APC to pay Zamora his unpaid salaries and allowances in the total amount of P198. or it can be deducted from the accrued benefits that the dismissed employee was entitled to receive from his/her employer under existing laws. collective bargaining agreement provisions. 142732-33. vs. 1991.Grand Air. vs. thus: “The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of the Labor Arbiter. Thereafter.In the 2006 case of Air Philippines Corp. the Supreme Court ratiocinated. 255). the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. 90501. pursuant to Article 223 of the Labor Code. its intransigence made it liable nonetheless to the salaries of respondent pending appeal.” In affirming the above grant by the NLRC of salaries and allowances to Zamora.” . In the eyes of the law. then the employee is entitled to the compensation received for actual services rendered without need of refund.] Inc. Philippine Airlines. the Labor Arbiter granted the motion and issued a writ of execution directing petitioner APC to reinstate complainant to his former position. 1994 NLRC Decision. Displeased with the modification. then she is not entitled to be paid the salaries stated in item no. 200 SCRA 246.R. Nos. if the employee was reinstated to work during the pendency of the appeal. APC sought a partial reconsideration of the foregoing resolution but the NLRC denied the same and justifed the award of unpaid salaries on the ground that “(t)he grant of salaries and allowances to complainant arose from the order of his reinstatement which is executory even pending appeal of respondent questioning the same. Aug. The ruling in Roquero [supra] was qualified by the Supreme Court in its ruling in the 2007 case of Genuino vs. December 4. the Supreme Court had taken the view that “(i)f the decision of the Labor Arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid. Considering that Genuino was not reinstated to work or placed on payroll reinstatement. 3 of the fallo of the September 3.R. this rule does not apply if employee was actually reinstated. NLRC. [G.. 5. Zamora filed a Motion for Reconsideration but the NLRC denied it.30 within fifteen (15) days from receipt of the resolution. constructive or otherwise. 2006]. NLRC. and company practices. Although petitioner did not comply with this writ of execution. the NLRC reversed the ruling of the Labor Arbiter and held that no dismissal. Zamora. and her dismissal is based on a just cause.R. took place for it was Zamora himself who voluntarily terminated his employment by not reporting for work and by joining a competitor . 7. [G. Inc. Aug. Payroll-reinstated employee should refund salary if dismissal is finally found legal on appeal. In this case. However. complainant was as if actually working from the date respondent received the copy of the appealed decision of the Labor Arbiter directing the reinstatement of complainant based on his finding that the latter was illegally dismissed from employment. There is logic in this reasoning of the NLRC. G.” (Citing Roquero vs. 148247. No. No.

No. it is necessary in case reinstatement is ordered by the NLRC on appeal. Consequently. 161305. While under the sixth paragraph of Article 223 of the Labor Code. The reason is that under the sixth paragraph of Article 223. the NLRC decision becomes “final and executory after ten calendar days from receipt of the decision by the parties. There is still a need for the issuance of a writ of execution. ruled that unlike the order for reinstatement of a Labor Arbiter which is self-executory. 173076. Citing Roquero vs. chanrobles virtual law library This was the holding in the 2007 case of Mt. orders or awards of the NLRC. [G. there is still a need for the issuance of a writ of execution of the NLRC decision to implement its order of reinstatement.” In view. if the reinstatement order is issued by the NLRC on appeal. petitioner argued that following the third paragraph of Article 223 of the Labor Code on reinstatement pending appeal. 10. that of the NLRC is not. Carmel College vs. 9. the same ruling was made in Panuncillo vs. an office or an employment. the decision of the NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by the parties. Oct. the Commission or any Labor Arbiter. 2007]. PAL [supra]. No. or med-arbiter or voluntary arbitrator may. If during the . however. of Article 224 of the Labor Code which requires the issuance of a writ of execution to execute decisions. however. 2007].R. the adverse party is not precluded from assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to the Supreme Court via a Petition for Review under Rule 45. While it is now well-settled that a writ of execution is not necessary to implement the reinstatement order issued by a Labor Arbiter upon a finding of illegality of dismissal since it is self-executory in accordance with Pioneer Texturizing [supra]. where the Labor Arbiter directed the reinstatement of the petitioner which was affirmed by the NLRC on appeal. CAP Philippines. motu proprio or on motion of any interested party. and such party or person may be punished for contempt if he disobeys such decision or order for reinstatement.R.. there is a need to secure a writ of execution from the Labor Arbiter a quo to enforce the reinstatement of the employee. If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of an employee even if there is no restraining order. Inc. [G. he could probably be merely observing judicial courtesy. Resuena.While writ of execution is not required in case reinstatement is ordered by the Labor Arbiter. what applies is not Article 223 but Article 224 of the Labor Code. issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory. such writ shall be served by the sheriff upon the losing party or upon any other person required by law to obey the same. Earlier. it is as if a temporary restraining order was issued. Feb. As contemplated by Article 224 of the Labor Code. under Rule III of the NLRC Manual on the Execution of Judgment. however. When it is the NLRC on appeal or the Court of Appeals which affirmed the NLRC’s ruling orders reinstatement.” In such a case. the Secretary of Labor and Employment or any Regional Director. the order of the NLRC to reinstate her and to pay her wages was immediately executory even while the case was on appeal before the higher courts: The High Court. the Supreme Court clarified that Article 223 of the Labor Code providing that reinstatement is immediately executory even pending appeal applies only when the Labor Arbiter himself ordered the reinstatement. which is advisable “if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court. it is provided that if the execution be for the reinstatement of any person to a position.

Had one been issued. It should be pointed out that an order of reinstatement by the labor arbiter is not the same as actual reinstatement of a dismissed or separated employee. the employer should not be allowed to remain unpunished for the delay. In the meantime. the Labor Arbiter or the NLRC must exercise extreme prudence and observe judicial courtesy when the circumstances so warrant if one is to heed the injunction of the Court in Philippine Geothermal.R. It ratiocinated. continues to accumulate. chanrobles virtual law library Employment elsewhere does not affect reinstatement order and obligation to pay backwages. Inc v. if not outright refusal. their obligation to the dismissed employees. 2006]. No. [G. [G. respondent would have been obliged to reinstate petitioner and pay her salary until the said order of the NLRC for her reinstatement was reversed by the Court of Appeals. employer is not liable to pay backwages.R.” chanrobles virtual law library But in the 2006 case of Triad Security & Allied Services. In this case. until the employer continuously fails to actually implement the reinstatement aspect of the decision of the Labor Arbiter. 160871. NLRC. and other benefits subsists. the Supreme Court ruled in the affirmative. Inc. 236 SCRA 371.pendency of the review no order is issued by the courts enjoining the execution of a decision of the Labor Arbiter or NLRC which is favorable to an employee. On the issue of whether backwages should continue to run even after the payment of separation pay. petitioner is not entitled to collect any backwages from the time the NLRC decision became final and executory up to the time the Court of Appeals reversed said decision. Feb. to immediately execute the reinstatement aspect of the labor arbiter’s decision. became final and executory due to the failure of the petitioner-employer to seasonably appeal the same. petitioner would not have been obliged to reimburse respondent for whatever salary she received in the interim. and following Roquero. the petitioners claimed that they could not reinstate respondents as the latter had already found jobs elsewhere. the . 13th month pay. September 8. 1994. In the same case of Triad Security [supra]. 6. the Supreme Court still ordered the payment of backwages for the period when the employees should have been reinstated by order of the Labor Arbiter. insofar as accrued backwages and other benefits are concerned. the illegally dismissed employee’s entitlement to backwages. 378-379]. It is only when the illegally dismissed employee receives the separation pay that it could be claimed with certainty that the employer-employee relationship has formally ceased thereby precluding the possibility of reinstatement. the payment of separation pay. the Supreme Court further ruled that since it has affirmed the challenged decision of the Court of Appeals finding that petitioner was validly dismissed and accordingly reversing the NLRC Decision that petitioner was illegally dismissed and should be reinstated. Thus. Until the payment of separation pay is carried out. Ortega. vs. the decision of the Labor Arbiter ordering the reinstatement of the respondent-employees and the payment of their backwages until their actual reinstatement and in case reinstatement is no longer viable. In not giving credence to this claim. thus: “It does not appear that a writ of execution was issued for the implementation of the NLRC order for reinstatement. chanrobles virtual law library If reinstatement order of Labor Arbiter is not executed and the finding of illegal dismissal is later reversed. In the same 2007 case of Panuncillo. No. 106370.

the employee ordered reinstated under Article 223 should be admitted back to work in a substantially equivalent position. Reinstatement in case of two successive dismissals. (Medina vs. Pedroso vs. they could not be faulted for their perseverance in looking for and eventually securing new employment opportunities instead of remaining idle and awaiting the outcome of this case. 222 SCRA 707. 141 SCRA 252 [1986]). If the former position is already filled up. The Labor Arbiter was correct in denying the third motion for reinstatement filed by the petitioner (employee) because what she should have filed was a new complaint based on the second dismissal. April 29. Inasmuch as no new complaint was filed. no appeal bond required. 20.Award of moral and exemplary damages and attorney’s fees. 155207. Labor Arbiter’s decision or order is required to state the amount awarded. 2005]) c. Cash. excluded from computation of bond. e. In Sevilla vs. The Fifth Division of the Honorable Court of Appeals. If bond is not genuine. d. (Orozco vs. Sept. No. g. h. appeal is not perfected. What are the rules in case of appeal involving monetary award? The following basic principles are worth mentioning: a. chanrobles virtual law library f. Remedy of employee in case employer failed to post bond is to file a motion to dismiss the appeal. If the amount of the monetary award is not included in the judgment. 108878. the appeal bond equivalent to the amount of the monetary award is not required to be posted. Surely. The surety bond should be issued by an accredited surety company. property or surety bond is required for perfection of appeal from monetary award. Bond should be posted within the 10-calendar day reglementary period. the Labor Arbiter could not have ruled on the legality of the second dismissal. a case involving two (2) successive dismissals. .High Court declared that respondents herein were minimum wage earners who were left with no choice after they were illegally dismissed from their employment but to seek new employment in order to earn a decent living. Non-posting of bond will not perfect the appeal. Reinstatement when position already filled up. The second dismissal gave rise to a new cause of action. NLRC. Castro. 41. it was held that the order of reinstatement pending appeal under Article 223 issued in the first case. R. [G. [G. Consolidated Broadcasting System [CBS]-DZWX. R. shall apply only to the first case and shall not affect the second dismissal. No. No monetary award. 1994]. b.

CA. NLRC. in the cases where belated posting of a bond was allowed. also Star Angel Handicraft vs. The eventual posting of the bond cannot be considered as substantial compliance warranting the relaxation of the rules in the interest of justice. No. In Mary Abigail’s Food Services. the appellants. it was held that in the cases where delayed payment of the bond was allowed. NLRC. 290 SCRA 408 [1998]. 2005. If there is no such willingness exhibited by petitioner and his failure to pay the bond was due simply to his own mistaken conclusion that he was exempt from paying because he was not the employer of the respondent-employees and thus was not liable to them. April 30. not by the appellant himself. such is a reckless conclusion since there was no circumstance which would have warranted such a belief. . G. The failure to post the bond must be caused by a third party. exhibited willingness to pay by posting a partial bond (See Teofilo Gensoli & Co. the failure of the Labor Arbiter to state in the decision the exact amount awarded and the inclusion of the bond as a requisite for perfecting an appeal. at the very least. No. 289 SCRA 407 [1998]) or by filing a motion for reduction of bond (See Rosewood Processing Inc. this rule will not apply. March 4. Motion to reduce bond may be granted only in meritorious cases such as when the monetary claims have already prescribed. according to Santos vs. there was substantial compliance with the rule. vs. May a Motion to Reduce Bond be filed? 1. 2003]. No. 140753. NLRC. especially if the Labor Arbiter’s decision states the exact monetary awards to be paid and there is nothing in the decision which could have given the petitioner the impression that the bond was not necessary or that he was excused from paying it. In order to effectively stop the running of the period within which to perfect the appeal. [G. R. and 3. In the instances where the Supreme Court acknowledged substantial compliance. in the case of Quiambao vs. 1996. the motion to reduce bond must comply with the requisites that: 1. May 9. it should be filed within the reglementary period. NLRC. Velarde. Inc. R. 2. But. the failure to pay was due to the excusable oversight or error of a third party. a reasonable amount of bond in relation to the monetary award should be posted together with said motion. it should be based on meritorious grounds. 236 SCRA 580 [1994]) within the 10-day period provided by law. chanrobles virtual law library Moreover. 254 SCRA 211]. The filing of a motion to reduce bond does not stop the running of the period to perfect appeal. 140294. [G. if the petitioner’s failure to post a bond was due to his own negligent and mistaken belief that he was exempt. technical considerations had to give way to considerations of equity and justice. the Supreme Court pointed out that.42. vs. 2. Thus. that is. vs. R. 91935.

. In Calabash Garments. April 12. resolution or decision. such as fraud.427. (Catubay vs. does not necessarily give the employer-appellant a ‘meritorious case’ and does not automatically warrant a reduction of the appeal bond. 226. vs. 152494. where the presence of any justifying circumstance recognized by law. Inc. in lieu of the required cash or surety bond.O Enterprises vs.” The NLRC denied the motion and consequently dismissed the appeal for non-perfection. R. [G. No.Furthermore. when not proper. mistake or excusable negligence. Kathy . The NLRC Rules clearly provide that “the filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. NLRC. R. even if it runs into millions. or where on equitable grounds. NLRC. the result would have been the same since he failed to post cash or surety bond within the prescribed period. the Supreme Court agreed with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied petitioner’s motion for the same failed to either elucidate why the amount of the bond was “unjustified and prohibitive” or to indicate what would be a “reasonable level.” Alternative remedy is to pay partial appeal bond while motion to reduce bond is pending with the NLRC. it was held that “a substantial monetary award. After careful scrutiny of the motion to reduce appeal bond. 286 SCRA 729 [1998]).g. 2000. 329 Phil. 119289. The fact that the NLRC took 102 days to resolve the motion will not help petitioner’s case. chanrobles virtual law library In holding that the petitioner’s argument is unavailing. e. G. he filed a motion to reduce bond alleging that the amount of P1.. [G. No. September 22. 1996. 260 SCRA 441. the petitioner filed his memorandum of appeal and paid the corresponding appeal fees on the last day for filing the appeal. the Supreme Court declared that while Section 6.” Petitioner should have seasonably filed the appeal bond within the ten-day reglementary period following the receipt of the order. properly vested the judge with discretion to approve or admit an appeal filed out of time. 235 (1996)+. a belated appeal was allowed as the questioned decision was served directly upon petitioner instead of her counsel of record who at the time was already dead.04 as bond is “unjustified and prohibitive” and prayed that the same be reduced to a “reasonable level. the exercise of that authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. accident. However. NLRC.” Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond. August 8. chanrobles virtual law library Motion to reduce bond. 2004]. the Supreme Court has allowed tardy appeals in judicious cases. resolution or decision of the NLRC to forestall the finality of such order. 110827. No. In the case of Ong vs. Petitioner contends that he was deprived of the chance to post bond because the NLRC took 102 days to decide his motion. R.802. Rule VI of the NLRC New Rules of Procedure allows the Commission to reduce the amount of the bond. Court of Appeals.

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

energy and meager resources of the workers to the point that they would be constrained to give up for less than what they deserve in law. within which to post cash or surety bond. Pursuing petitioners’ excuse. but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. The NLRC could not be said to have abused its discretion in requiring the posting of bond after it denied private respondents’ motion to be exempted therefrom. What appellant has to pay is a moderate and reasonable sum for the premium for such bond. No. not an excuse. Effect when NLRC grants additional time to post bond after denial of motion to reduce bond. Inc. In Mary Abigail’s Food Services. strict observance of the reglementary periods may be relaxed if warranted. R. the cash or surety bond was actually posted four (4) months after the filing of their memorandum on appeal.. CA. the Supreme Court did not consider as grave abuse of discretion the act of the NLRC in granting to the appellant-employer “an unextendible period of ten (10) days” upon receipt of the order denying the motion to exempt from filing appeal bond. Lim King Guan. Inc. UNFAIR LABOR PRACTICES 43. supra citing Biogenerics Marketing and Research Corporation vs. disrupts industrial peace and hinders the promotion of healthy and stable labor-management relations. *G. Suffice it to say that the law does not require outright payment of the total monetary award. was considered simply unacceptable by the Supreme Court. not sufficient ground. 150147. 2004]. that it was impossible to secure the required bond and file it within the ten-day reglementary period because after receiving a copy of the decision of the Labor Arbiter on December 23. 319 Phil. 44. In this case.” (See also Globe General Services and Security Agency vs. no bond would ever be posted on time whenever the reglementary period to file the same falls on such a season. 2005+. 653. Sotelo. is inimical to the legitimate interests of both labor and management. May 9. (Times Transportation Company. In Buenaobra vs. 372 Phil. 531. the reason given by the petitioners to justify their late posting of the bond. including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect. 1998. NLRC. R. No. January 20. vs. The Supreme Court reasoned that if only to achieve substantial justice. Surely. What are the aspects of unfair labor practice? . Long Christmas holiday. NLRC. An appellant cannot invoke financial difficulties as a ground in support of a Motion to Reduce Bond. 661 [1999]). the occurrence of the holiday season did not at all make impossible petitioners’ fulfillment of their responsibility to post the required bond. a long holiday (Christmas) season followed. 140294. What is the concept of unfair labor practice? An unfair labor practice act violates the right of workers to self-organization. Financial difficulties. 537 [1995]). vs. i.e. [G.

and (2) Criminal.There are two (2) aspects. 45. YELLOW DOG CONTRACT). which may include claims for actual. 2002])]. chanrobles virtual law library (c) To contract out services or functions being performed by union members when such will interfere with. Labor Arbiters shall have jurisdiction over the civil aspect of all cases involving unfair labor practices. What are the elements of ULP? Before an employer or labor organization. 18-02. Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code. the following ingredients must both concur: chanrobles virtual law library 1. Labor Code). No criminal prosecution may be instituted without a final judgment finding that an unfair labor practice was committed having been first obtained in the labor case. Labor Code). Name the parties which may commit unfair labor practice. Labor Code.k. restrain or coerce employees in the exercise of their right to self-organization. namely: (1) Civil. there is no ULP. 21. Absent one of the elements above will not make the act an unfair labor practice act. 46. restrain or coerce employees in the exercise of their rights to self-organization. 47. [Feb. restrain or coerce employees in the exercise of their right to self-organization that it shall be unlawful and shall constitute unfair labor practice.a. It is only when the contracting out of a job. Department Order No. . may be said to have committed unfair labor practices acts. What are the ULPs of the employer? (a) To interfere with. attorney’s fees and other affirmative relief. Parties who may commit ULP. Series of 2002. (Article 248 [c]. there should exist an employer-employee relationship between the offended party and the offender. [Note: The act of an employer in having work or certain services or functions being performed by union members contracted out is not generally an unfair labor practice act. and 2. (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs (a. work or service being performed by union members will interfere with. If not mentioned. and (2) Labor Organization (Article 249. the act complained of must be expressly mentioned and defined in the Labor Code as constitutive of unfair labor practice. (1) Employer (Article 248. Section 6 [f]. as the case may be. moral. exemplary and other forms of damages.

k. paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. if such non-union members accept the benefits under the collective bargaining agreement: Provided. provided it is the representative of the employees. dominate. 49. Who may be held criminally liable for ULPs of employer? On the part of the employer. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment. (c) To violate the duty. chanrobles virtual law library (b) To cause or attempt to cause an employer to discriminate against an employee. (g) To violate the duty to bargain collectively as prescribed by this Code. assist or otherwise interfere with the formation or administration of any labor organization. COMPANY UNION). except those employees who are already members of another union at the time of the signing of the collective bargaining agreement.(d) To initiate. discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code. . including discrimination against an employee with respect to whom membership in such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members. that the individual authorization required under Article 242. However.a. a labor organization shall have the right to prescribe its own rules with respect to the acquisition or retention of membership. or refuse to bargain collectively with the employer. hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. (e) To discriminate in regard to wages. (f) To dismiss. (h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute. or chanrobles virtual law library (i) To violate a collective bargaining agreement (but only if gross in character). including the giving of financial or other support to it or its organizers or supporters (a. 48. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent. authorized or ratified unfair labor practices shall be held criminally liable. associations or partnerships who have actually participated in. only the officers and agents of corporations. What are the ULPs of labor organizations? (a) To restrain or coerce employees in the exercise of their right to self-organization.

might. What are the types of union security clause? .a. only the officers. 53. a promise by the employee that upon joining a labor organization. in the nature of an exaction. (e) To ask for or accept negotiation or attorney’s fees from employers as part of the settlement of any issue in collective bargaining or any other dispute. in the mouth of a more hostile employer. during their period of employment or that they shall withdraw therefrom. (but only if gross in character). though innocent in themselves. and 3. The typical yellow dog contract embodies the following stipulations: 1. FEATHER-BEDDING). representatives or agents or members of labor associations or organizations who have actually participated in. be deemed improper and consequently actionable as an unfair labor practice. 2. the history of the particular employer’s labor relations or anti-union bias or because of their connection with an established collateral plan of coercion or interference. Who may be held criminally liable for ULPs of a labor organization? On the part of the union.k. including the demand for fee for union negotiations (a. a representation by the employee that he is not a member of a labor organization. authorized or ratified the unfair labor practices shall be held criminally liable. may be held to be constitutive of unfair labor practice because of the circumstances under which they were uttered. or attempt to organize one. The obvious purpose is to safeguard and ensure the continued existence of the union. chanrobles virtual law library 54. What is totality of conduct doctrine? The “totality of conduct doctrine” means that expressions of opinion by an employer.(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value. 52. he will quit his employment. What is “union security clause”? A “union security clause” is a stipulation in the CBA whereby the management recognizes that the membership of employees in the union which negotiated said agreement should be maintained and continued as a condition for employment or retention of employment. What is “yellow-dog contract”? A “yellow dog contract” is an agreement which exacts from workers as a condition of employment. a promise by the employee that he will not join a union. An expression which might be permissibly uttered by one employer. 50. 51. for services which are not performed or not to be performed. in case they are already members of a labor organization. or (f) To violate a collective bargaining agreement. members of governing boards. that they shall not join or belong to a labor organization.

. May 8. R. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts. [G. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. 90 SCRA 391. Relying merely upon the federation’s allegations. 55.(1) Closed shop agreement. Upon demand of the federation. the Supreme Court pronounced that while the company. Aug. In the case of Cariño vs. 113907. In Malayang Samahan ng mga Manggagawa sa M. 211 SCRA 361). Philippine Association of Free Labor Unions [PAFLU]. Although the Supreme Court has ruled that union security clauses embodied in the CBA may be validly enforced and that dismissals pursuant thereto may likewise be valid. 2000]. 29. The employer should not rely solely upon the request of the union. cannot override one’s right to due process. (Liberty Cotton Mills Workers Union vs.Classification. Sanyo Philippines Workers Union – PSSLU vs. due process must be observed by the employer. L-18782.. The right of an employee to be informed of the charges against him and to a reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped away by a union security clause or a union shop clause in a CBA. (8) Preferential hiring agreement. The employee sought to be dismissed must be given the opportunity to be heard. (4) Modified union shop agreement. Ramos. Canizares. No. What are the legal principles pertinent to union security clause arrangements? To validly dismiss an employee based on violation of union security clause. this does not erode the fundamental requirement of due process. G. No. is bound to dismiss any employee expelled by the union for disloyalty upon its written request. February 28. 8 SCRA 700. No. 1953. (5) Exclusive bargaining agreement. (3) Union shop agreement. Respondent company’s allegation that petitioners were accorded due process is belied by the termination letters received by the petitioners which state that the dismissal shall be immediately effective. 185 SCRA 177]. this undertaking should not be done hastily and summarily. 1990. Liberty Cotton Mills. under a maintenance of membership provision of the CBA. NLRC. An employee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job. . [G. employer should still afford due process to the expelled unionists. 91086. (6) Bargaining for members only agreement. respondent company terminated petitioners from employment when a separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers. petitioner union officers were expelled by the federation for allegedly committing acts of disloyalty and/or inimical to the interest of the federation (ULGWP) and in violation of the Constitution and By-laws. Binalbagan-Isabela Sugar Co. (2) Maintenance of membership agreement. Inc. R. Before dismissal may be effected by the employer for breach of a union security agreement. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing. Greenfield (MSMG-UWP) vs. the company terminated the petitioners without conducting a separate and independent investigation. [BISCOM] vs. R. (7) Agency shop agreement.

June 20. Effect of Union Security Clause on religious freedom. No. does not bar the members of that sect from forming their own union. The public respondent correctly observed that the “recognition of the tenets of the sect xxx should not infringe on the basic right of self-organization granted by the constitution to workers. 2008]. Cresenciano B. June 2. Thus. R. Inc. L-25246. In the case of Alabang Country Club. as held in the 2000 case of M. the Supreme Court. The Honorable BLR Director Pura Ferrer-Calleja. No. Liberty Cotton Mills. Considering that they are not members of any union and they refused to participate in the previous certification election.” chanrobles virtual law library In 1992. Employer’s liability in illegal dismissal based on union security clause. September 12. vs. 1988+ where it ruled that the decision in Benjamin Victoriano vs. 1992]. ruled on the issue of whether members of the Iglesia ni Kristo may be allowed to vote in a certification election. from joining or forming any labor . 170287. in the case of Alexander Reyes vs. R. Trajano. [G.Requisites for termination based on union security clause. and chanrobles virtual law library (3) there is sufficient evidence to support the union’s decision to expel the employee from the union. the respondents’ argument that petitioners are disqualified to vote because they are not constituted into a duly organized labor union but members of the Iglesia ni Kristo which prohibits its followers. [G. 14. (2) the union is requesting for the enforcement of the union security provision in the CBA. 1027] vs.R. An employee may not be compelled to join a union if it is based on religious objection. chanrobles virtual law library The foregoing requisites constitute just cause for terminating an employee based on the CBA’s union security provision. the Supreme Court declared that in terminating the employment of an employee by enforcing the union security clause. (Liberty Cotton Mills Workers Union vs. regardless of religious affiliation. the Supreme Court rendered a decision in the case of Kapatiran sa Meat and Canning Division [Tupas Local Chapter No. 84433. 1974] upholding the right of members of the Iglesia ni Kristo sect not to join a labor union for being contrary to their religious beliefs. In 1988. [G. Greenfield [supra]. on religious grounds. NLRC. the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter. [G. No. notwithstanding the fact that the dismissal was at the instance of the federation and that it undertook to hold the company free from any liability resulting from such a dismissal. 90 SCRA 391). The company is liable for the payment of backwages for having acted in bad faith in effecting the dismissal of the employees. Elizalde Rope Workers’ Union. No. Feb. L-82914. R. the employer needs only to determine and prove that: (1) the union security clause is applicable.

(See Article 248 [e]. administrative rule nor jurisprudence requires that only employees affiliated with any labor organization may take part in a certification election. 40-03. Rules to Implement the Labor Code. . It may also be a relocation motivated by anti-union animus rather than for business reasons. Neither does the contention that petitioners should be denied the right to vote because they “did not participate in previous certification elections in the company for the reason that their religious beliefs do not allow them to form. [Feb. vs. it shall be unfair labor practice for a labor organization. including the demand for fee for union negotiations. What is “feather-bedding”? According to this doctrine. administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections.organization. to violate the duty to bargain collectively as prescribed in the Labor Code (Article 248 [g]. 57.” persuade acceptance. Section 4. What is agency fee (check-off from non-union members)? The dues and other fees that may be assessed from non-union members within the bargaining unit who accept and avail of the benefits flowing from the CBA are called “agency fees. Their acceptance of the benefits flowing from the CBA and their act of paying the agency fee does not make them members thereof. it is unfair labor practice of the employer: 1. as amended by Department Order No. 59. 17. in the nature of an exaction. Book V. On the contrary. its officers. Neither law. and “hence.” is specious. 58. agents or representatives to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or other things of value. Inc. No law. as held in Airtime Specialists. to prevent non-union members from enriching themselves at the expense of union members. What are the CBA-related ULPs under the law? In connection with the right of workers to collective bargaining.” Payment of agency fee to the bargaining union/agent which negotiated the CBA is but a reasonable requirement recognized by law. join or assist labor organizations. Rule XXV. whether they are members of a labor organization or not. for services which are not performed or not to be performed. Labor Code). Ferrer-Calleja. [180 SCRA 749]. (Ibid. 2003]). What is a runaway shop? A “runaway shop” is an industrial plant moved by its owners from one location to another to escape union labor regulations or state laws. Series of 2003. not one of the unions which vied for certification as sole and exclusive bargaining representative. the plainly discernible intendment of the law is to grant the right to vote to all bona-fide employees in the bargaining unit. Labor Code.). 56. It must be emphasized that non-members of the certified bargaining agent which successfully concluded the CBA are not required to become members of the latter.

L-50568. CIR. chanrobles virtual law library On the part of the union. Ibid. vs. No. BCI Employees and Workers Union. 94 SCRA 270). NLRC. to violate a collective bargaining agreement. Oceanic Pharmacal Employees Union vs. vs. NDC Employees and Workers Union. CIR. Labor Code). Jan. L-37922.2. (Insular Life Assurance Co. The employer’s act of notifying through letters. Pacific Banking Corporation vs. to give salary adjustments according to the improved salary scales in the collective bargaining agreements. agreement or arrangement of any sort to the contrary shall be null and void. R. The act of the employer in refusing to implement the negotiated wage increase stipulated in the CBA. Violation of the CBA is ULP only if gross in character which means flagrant and/or malicious refusal to comply with the economic provisions thereof. has been held to be an unfair labor practice.. Employees Association-NATU. (Benguet Consolidated vs. . R. G. Trajano. Galvadores vs.. however. 1981. (Article 239 [g]. may be charged against union funds in an amount to be agreed upon by the parties. contrary to the stipulation in the CBA. (Article 222 [b]. 22 SCRA 1293).. negotiation fees or similar charges of any kind arising from any CBA shall be imposed on any individual member of the contracting union. R. 128 SCRA 112. vs. is unfair labor practice. The act of the employer in refusing to comply with the terms and conditions of a CBA constitutes bargaining in bad faith and is considered an unfair labor practice. Alba Patio de Makati Employees Association. Inciong. vs. 22 SCRA 1266). 144 SCRA 138. Nov. 1971. 35 SCRA 550). 1979. is unfair labor practice. as an active interference with the right of collective bargaining through dealing with the employees individually instead of through their collective bargaining representatives. Clave.).. No. No attorney’s fees. 30. L-25291. ILLUSTRATIVE CASES INVOLVING UNFAIR LABOR PRACTICES OF EMPLOYERS. Amalgamated Laborers Association vs.). 66 SCRA 181. G. Any contract. Refusal for a considerable number of years. absent employees individually during a strike following unproductive efforts at collective bargaining that the plant would be operated the next day and their jobs were open for them should they want to return to work. is unfair labor practice. L-50320. G. No. 37 SCRA 244). Insular Life Assurance Co. 7. No. (National Development Co. The following acts of the employer were generally held as unfair labor practice acts: 1. The act of the employer to permit non-union members to participate in the service charges. asking for or accepting attorney’s fees or negotiation fee from employers is a ground for cancellation of union registration. If not gross. (Philippine Apparel Workers Union vs. Labor Code. Attorney’s fees. 3. Inc. Ltd. July 31. which increase is intended to be distinct and separate from any other benefits or privileges that may be forthcoming to the employees.. violation of the CBA is no longer considered ULP. G. Alhambra Industries. Ibid. (Article 248 [i]. 1984). R. March 16. (Alba Patio de Makati. Ltd. to pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute (Article 248 *h+.

The act of the employer in instructing an employee not to affiliate or join a union. Sept. (Henriz Manufacturing Co. 205). 382. (Ibid. 689). CIR. L-50568. The act of the employer in asking the union’s recruiter to surrender the union affiliation forms and threatening him with bodily harm. 107 Phil. No. wage increase given for the purpose of mollifying employees after the employer has refused to bargain with the union. 97 Phil. which hampers their exercise of free choice. Inciong. chanrobles virtual law library 9. 762. CIR. and the employer’s statement. R. The act of the employer in refusing to reinstate strikers who voluntarily and unconditionally offered to return to work but did not accept the new discriminatory conditions imposed against them because of their union membership or activities.). CIR. G. profit-sharing and a new building to work in. 3. The act of the employer in indirectly forcing its employees to join another union. NLRB.). 15 SCRA 174). 5. (Visayan Stevedores vs. will be given to them. vs.2. No. Micaller. (Cromwell Commercial Employees and Laborers Union vs. Progressive Federation of Labor. (Velez vs. new benefits such as hospitalization. 30. 278). R. 99 Phil. made about six (6) weeks after the strike started. so they would abandon the strike and return to work. 6. (Ibid. PAV Watchmen’s Union. Philippine Steam Navigation Co. or to induce strikers to return to work. 19 SCRA 426. vs. 7. Offer of a Christmas bonus to all “loyal” employees of a company shortly after the making of a request by the union to bargain. accident insurance. When an employer engages in surveillance or takes steps leading his employees to believe it is going on.” “overtime pay” for work performed in excess of eight hours and “arrangements” for their families. Philippine Marine Officers Guild. employer’s promise of benefits in return for the striking employees’ abandonment of their strike. 1 SCRA 17). p. (Oceanic Pharmacal Employees Union vs. The act of the employer in conducting espionage or surveillance of the meetings and activities of the union. G. Withdrawal by the employer of holiday pay benefits stipulated under a supplementary agreement with the union. The act of the employer in interrogating its employees in connection with their membership in the union or their union activities. chanrobles virtual law library 10. (Macleod vs. (51A CJS Sec. Offer of reinstatement and attempt to “bribe” the strikers with “comfortable cots. Nov. (Scoty’s Department Store vs. 4. National Fastener Corporation vs. a violation results because the employees come under threat of economic coercion or retaliation for their union activities. L-19778. 1979). 321 F 2d 00).” “free coffee and occasional movies. 7. chanrobles virtual law library 8. and the furtive nature of his activity tends to demonstrate spectacularly the state of his anxiety. Surveillance is illegal since it shows the opposition of the employer to the existence of the union. 1964). to a group of strikers in a restaurant that if the strikers returned to work. . constitute strike-breaking and union-busting which is unfair labor practice.

CIR. Nos. CIR. (Philippine Charity Sweepstakes Office. (National Labor Union vs. 1987. 1988). June 30. R. May 30. PAFLU. R. Sept. G. The act of the employer in ceasing its operation due to establishment of the union. The uneven application by the employer of the company’s marketing plan which caused undue hardship to the president and vice president of the union. 1988). 173 NLRB No. 1982). 67158-62. 20. Zamora. . The act of the purchasers of a business establishment in replacing the union members who were negotiating a CBA with the old owner at the time of the sale. L-27546. No. R. The Association of Sweepstakes Staff Personnel. NLRB vs. The determination to cease operations is a prerogative of management that is usually not interfered with by the State as no business can be required to continue operating at a loss simply to maintain the workers in employment. resorted to merely to get rid of the employees who were members of the union. 1988). G. G. Inc. vs. R. 14. June 6. Inc. 218. chanrobles virtual law library 18. 30964. R. The retrenchment of employees who belong to a particular union. G. No. (Madrigal & Co. vs. No. (CLLC E. 405). NLRC. CIR. 375 U. 42 SCRA 68. Federacion Obrero de la Industria. (Bataan Shipyard and Engineering Co. Sept. 78604. G. 116 SCRA 417). The announcement by the employer of benefits prior to the conduct of a certification election. That would be taking of property without due process of law which the employer has a right to resist. No. in order for it to be able to effectuate the mass lay-off of union members. intended to induce the employees to vote against the union. No. R. The act of the employer in engaging in capital reduction to camouflage the fact that it had been making profit.11. unless the latter admits his guilt. May 9. (Re Louisiana Plastics.. (AHS/Philippine Employees Union vs. L-48237. The act of the employer in suspending union officers who attended the hearing in the petition for certification election they filed. vs. Refusal of the employer to reinstate an employee who was illegally dismissed based on the union security clause. 9. 17. CIR. NLRC. 1982). May 9. The grant of concessions and privileges during the pendency of certification election case to members of one of the unions participating therein. Inc. No. R. 116 SCRA 459). G.. National Labor Union vs. 1982. vs. the State is bound to intervene. with no satisfactory justification why said employees were singled out. 73721. 90634-35. L31276. Cruz vs. L-39154. chanrobles virtual law library 12. G. 151 SCRA 355). S. (Litex Employees Association. July 16. Gochangco Workers Union. G. Sy Chie Junk Shop vs. NLRC. chanrobles virtual law library 19. vs. chanrobles virtual law library 13. 9. Simulated sale in bad faith of business. 15. 1990. But where it is manifest that the closure is motivated not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations with the management. 16. Nos. NLRC.. 1987). G. R. G.. Exchange Parts Co. (Moncada Bijon Factory vs. No. (Carmelcraft Corporation vs. March 30. R. 4 SCRA 756.

G. Rance vs. 26. G. 12. Jan. L-39889. 1 SCRA 734. 1997]). 11. 275 SCRA 633 [July 17. NLRC. 2005). No. 1989). NLRC. April 18. 1982. 118506. These acts constitute unfair labor practices. the employer is not without recourse. Inc. B. Union of Supervisors [R. No. CIR. The act of an employer in unduly dismissing workers based on union security clause in the CBA. While a strike may result in hardships or prejudice to the school and the studentry. This is an unwarranted interference with the rights of workers to self-organization and to engage in concerted activities. No. R. together with the act of terminating or coercing those who refuse to cooperate with the employer’s scheme. R. Sept. If the employer feels that the action is tainted with illegality. No. G. NLRC. NLRC. as well as the resumption of business barely a month after. The act of the employer in dismissing its employees because of their union activities. L-39154. 156292. 1963). Dismissal of employees in anticipation of an exercise of a constitutionally protected right is not one of them.] NATU vs. the law requires the employer to prove that it suffered substantial actual losses. The act of the employer in putting on “rotation” only the alleged members of the union. June 30. failed to substantiate by any credible evidence. No. 12. (Litex Employees Association. NLRC G. An apprehension that there might be a future strike in the school is not a ground for dismissal of teachers who have attained permanent status. however. chanrobles virtual law library 23. (Mabeza vs. No. 1988). Oct. CIR. The reason invoked by petitioners to justify the cessation of corporate operations was alleged business losses which they. (Me-Shurn Corporation vs. R. the law provides the employer with ample remedies to protect his interest. 31. chanrobles virtual law library 22. Nov. (Samahan ng Manggagawa sa Bandolino-LMLC vs.21. R. (Oceanic Air Products. chanrobles virtual law library 28. No. CIR. 25. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. R. The act of the employer in compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not. 116 SCRA 459. (Rizal Memorial Colleges Faculty Union vs. vs. (Samahan ng Manggagawa sa Bandolino-LMLC vs. L-18704.. 27. The cessation of a company’s operations shortly after the organization of a labor union. vs. . The act of the employer in asking the employees to disclose the names of the members of the union. Me-Shurn Workers Union – FSM. 24. 275 SCRA 633 [July 17. Secretary of Labor and Republic Bank. G. 59012-13. Jan. 271 SCRA 670). 1997]). G. To justify the closure of a business and the termination of the services of the concerned employees. G. vs. R. 68147. 1997. 9. R. (San Carlos Milling Co. 1981). The act of the employer in dismissing the union officers and members on the ground of losses about two years after it has allegedly sustained losses and after the dismissed officers and members became more militant when they demanded for the improvement of their working conditions in the company.

Notre Dame of Greater Manila. L-39603. and said dismissed employees have not figured in similar incidents before or violated company rules in their many years with the company. 31. CIR. No. 34. R. Dismissal of employees because of their act of engaging in valid and legal concerted union activities. (San Miguel Corporation vs. chanrobles virtual law library In the case of Rizal Labor Union vs. No. 19. CIR. (Progressive Development Corporation. Dismissal occasioned by the refusal of employees to give up their union membership. 14 SCRA 953). 36. 255 SCRA 133. NLRC. No. Jan. both the union and management were declared guilty of unfair labor practice when the union requested the dismissal of fifteen (15) employees and management acceded by effecting the dismissal on the ground that the . (Sibal vs.. Camara Shoes. 24. March 15. 30. 108001. 23. Retrenchment would constitute a lame excuse and a veritable smokescreen of the employer’s scheme to bust the union and thus unduly disturb the employment tenure of the employees concerned. G. The act of the employer in effecting discriminatory dismissal where only unionists were permanently dismissed. 1990). 75093. May 19. G. R. chanrobles virtual law library ILLUSTRATIVE CASES WHERE UNION WAS DECLARED GUILTY OF UNFAIR LABOR PRACTICE. 1982). (People’s Bank and Trust Co. 32. L-50985. CIR. Nov. the latter’s formation having been aided and abetted by the company. 1976). Inc. L-51494. No. which dismissal was under the pretext of retrenchment due to reduced dollar allocations. L-19779. vs. (Visayan Bicycle Manufacturing Co. Rizal Cement Co. No. 1982. G. 21 SCRA 226). (Manila Pencil Co. L-19997. No. vs. 115 SCRA 887. G. 35. 30. Dismissal of an employee who had worked for 19 years because he had filed money claims against the employer. Feb. Employees Union. Dismissal occasioned by the implausible and unproved allegation of overpricing of needles the employee was ordered to buy and for alleged tampering of receipts. 33. chanrobles virtual law library 37. Inc. R. G. The mass lay-off or dismissal of 65 employees due to retrenchment absent any losses or financial reverses. Dismissal of employees because of their refusal to resign from their union and to join the union favorable to the employer. 141. 80 SCRA 434). (Republic Savings Bank vs. 13. 1996. Inciong.. NLRC. R. vs. 1977. vs. R. (Judric Canning Corporation vs. This holds true even where business conditions justify a lay-off of employees. 161 SCRA 271 [1988]). Dismissal of an employee because of his act of soliciting signatures for the purpose of forming a union. [G. Aug. G. 1966]. R. R. 14 SCRA 5). R. 1965. L-39546.. National Labor Union and CIR. which act is certainly an unfair labor practice. (Kapisanan ng Manggagawa sa Camara Shoes vs. People’s Bank and Trust Co. The act of the employer in provoking the union officers into a fight by two recently hired employees pursuant to a strategy of the company designed to provide an apparently lawful cause for their dismissal. See also Bataan Shipyard and Engineering Co. G. No.29. July 30. Jan. vs. No.

The dismissed union members were denied due process when they were dismissed for disloyalty to the union based on the union security clause in the CBA. prudence and judiciousness. chanrobles virtual law library In Salunga vs. The Supreme Court ruled that union security clauses are governed by law and by principles of justice. without prejudice to his seniority and/or rights and privileges. except with a high sense of responsibility. without any reasonable ground therefor. R. CIR. The right to disaffiliate is inherent in the contract and the act of disaffiliation was justified by the alleged negligence of the federation in attending to the needs of the local union. [G. with more reason may the law and the courts exercise the coercive power when the employee involved is a long-standing union member who. Union security clauses cannot be used by union officials against an employer. the Supreme Court adjudged both the mother federation and the employer accountable for the dismissal of workers who instigated the disaffiliation of the local union from the federation. R. 1988]. driven to desperation. at least. invoke the rights of those who seek admission for the first time. 4. The union here was declared to have committed unfair labor practice but the company was spared from any liability. fair play and legality. [G. 68147.. and consequently from her job.said employees formed another union. it was an act of self-preservation of workers who. found shelter in the other federation who took the cudgels for them. No. 27. fairness. NLRC. for personal or impetuous reasons or for causes foreign to the closed shop agreement and in a manner characterized by arbitrariness and whimsicality. it was held that the act of some union members of seeking help from another federation cannot constitute disloyalty as contemplated in the CBA. the Supreme Court ruled that it is well-settled that unions are not entitled to arbitrarily exclude qualified applicants for membership and a closed shop provision would not justify the employer in discharging. Petitioners had no idea that they were . At most. June 30. [G. 1975]. nor timely notices of the hearing on the same. No. the dismissed employee was ordered reinstated to his former or substantially equivalent position in the company. NLRC. and cannot arbitrarily be denied readmission. Nonetheless. In Manila Mandarin Employees Union vs. L-22456. much less their own members. Liberty Cotton Mills. Needless to say. and with back pay which should be borne exclusively by the union. There was no impartial tribunal or body vested with authority to conduct disciplinary proceeding under the constitution and by-laws and the expelled union members were not furnished notice of the charge against them. In Liberty Cotton Mills Workers Union vs. Sept. Surely. No. A union member may not be expelled from her union. Inc. Sept. if said unions may be compelled to admit new members who have the requisite qualifications. was impelled to tender his resignation. an employee whom the union thus refuses to admit to membership. or a union in insisting upon the discharge of. the said union member withdrew or revoked his resignation but the union refused to readmit him. the union was held guilty of unfair labor practice when it expelled and demanded and caused the dismissal of a union member based on the union security clause in the CBA. it appearing that the union security clause in the CBA merely provided for a limited closed shop which did not justify the dismissal. upon being advised by the company of the consequence of his resignation which is dismissal from the company. L-22987. which he forthwith withdrew or revoked. he may. owing to provocations of union officers. 1967]. In Rance vs. where the union member resigned from the union but. R. [154 SCRA 369].

the private respondents. provided no basis for the union’s accusation of disloyalty. (AHS/Philippine Employees Union vs. 4. No. (Wise and Co. all aspects of employment.. 75704. vs. G. R. Oct. Employees Union. The promotion of employees to managerial positions is a prerogative of management. The transfer of employees is a prerogative of management such as in one case where the employee who was transferred to a lower position. chanrobles virtual law library Consequently. investigator and judge at the same time. payment of three-year backwages and payment of exemplary damages. Wise and Co. 1989). Even if the petitioners appeared in the supposed investigation proceedings to answer the charge of disloyalty against them. (Rubberworld [Phils. harsh. supervisors and all rank-and-file employees not covered by the CBA is not discriminatory but a valid exercise of management prerogative. The Board of Directors of the union acted as prosecutor. retained his original rank and salary. according to its discretion and judgment.]. 3. Those who came were not only threatened with persecution but also made to write the answers to questions as dictated to them by the union and the company representatives. It is evident that private respondents were in bad faith in dismissing petitioners. The following cases do not involve unfair labor practice: 1. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of employees under special laws or valid agreement and is not exercised in a malicious. July 19. The remedy is an action for reinstatement with prayer for backwages and damages. NLRC. No. Inc. 73721. it does not constitute an unfair labor practice that would justify the staging of a strike. NLRC. The grant of profit-sharing benefits to managers. G. 1989). chanrobles virtual law library CASES NOT INVOLVING UNFAIR LABOR PRACTICES. it could not have altered the fact that the proceedings violated the rule of fair play. it was declared by the High Court that the scandalous haste with which respondent corporation dismissed 125 employees lent credence to the claim that there was connivance between respondent corporation and respondent union.. 1987). R. The proceedings would have been a farce. March 30. No. R. They are entitled to reinstatement to their positions without reduction in rank. vs. Inc.charged with disloyalty. Management has the prerogative to regulate. oppressive. A promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that such a . 2. 87677. In the absence of a showing that the illegal dismissal was dictated by anti-union motives. are guilty of unfair labor practice. the transfer of the employee should be considered legal. In the absence of any evidence which directly reflects interference by the company with the employee’s right to selforganization. G. vindictive or wanton manner or out of malice or spite. 13. Inc. Employees are entitled to due process before they may be expelled from the union on charge of disloyalty. They. The absence of a full blown investigation of the expelled members of the union by an impartial body.

10. 1986). The failure of the employer to comply with the final order of reinstatement cannot be considered unfair labor practice in the light of a government directive which rendered reinstatement an impossibility. G. L-21510. No. As a consequence of the two strikes which were both attended by widespread violence and vandalism. 118 SCRA 422). (Fortich vs. BacolodMurcia Milling vs. Sept. Sanchez. 1979). CIR. 9 SCRA 154). Dismissal of a supervisor who organized a labor union composed of men under his supervision is not unfair labor practice. Honest differences in construction may arise in the actual application of contractual provisions. Mandatory or forced vacation leaves imposed by the employer due to economic crisis and not in a malicious. It is a valid exercise of management prerogative. (Bulletin Publishing Co. Ang Tibay. Greenfield (MSMG-UWP) vs. An error in the interpretation of a provision of the CBA. The dismissal of an employee due to loss of confidence is not unfair labor practice. April 30. R. Ople. Failure to re-admit striking workers at the same time is not unfair labor practice as there exist justifiable reasons not to effect their simultaneous readmission. Feb. 10. is not unfair labor practice. (Samahan ng mga Manggagawa sa M. (Philippine Graphic Arts. R. 5. 12. 102 Phil. CIR. 8. 166 SCRA 118). The dismissal of an employee cannot be considered an unfair labor practice act if it appears that other employees more active than him in the union were retained. R. Oct. vindictive nor wanton manner. G. is not an unfair labor practice act. where the workers were paid while on leave but the same was charged against their respective earned leaves.chanrobles virtual law library 14. G. (Singapore Airlines Local Employees Association vs. 1964). No. Marcelo Enterprises. The act of the employer in refusing to re-admit striking workers after the strike was declared illegal. June 29. 2000. R. (Arrastre Security Association vs. 130 SCRA 472). (Nevans vs. G. There were machines that were not in operating conditions because of long disuse during the strikes. 12. CIR. 7. 127 SCRA 580). after affording them due process. vs. NLRC. Victorias-Manapla Workers. R. harsh. is not an unfair labor practice act. NLRC. 7. L-20044. 13. the business of the employer was completely paralyzed. 9. 1982. 93 SCRA 1). 28. (National Union of Restaurant Workers [PTUC] vs. R. is not unfair labor practice. The decision of the employer to consider the top officers of petitioner union as unfit for reinstatement is not essentially discriminatory and constitutive of an unlawful labor practice of employers under Article 248 of the Labor Code. Inc. (Lakas ng Manggagawang Makabayan vs. Dismissal of workers pursuant to the union security clause in the CBA. No. 74425. No. G. absent any malice or bad faith. G. 113907. No. chanrobles virtual law library 11.promotion was made simply to deprive the union of the membership of the promoted employee. (GOP-OCP Workers Union vs. Discrimination in the context of the Labor Code involves . L-33015. 38258. No. CIR. Malayang Manggagawa vs. 669. Ramos. 6. vs. 1968). oppressive. Nov.

2004+. (Associated Watchmen and Security Union vs. it was declared that if an employer interferes in the selection of the union’s negotiators or coerces the union to exclude from its panel of negotiators a representative of the union. 1999). G. [G. What are the latest cases involving the issue of ULP? Interference in the choice of union’s bargaining panel. Dec. Zamora. The act of the employer in filing a petition for cancellation of the union’s registration is not per se an act of unfair labor practice. If at all. Confesor. Great Pacific Life Assurance Corporation. 107 Phil. and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees. 100342-44. No. 1986). 126717. It must be shown by substantial evidence that the filing of the petition for cancellation of union registration by the employer was aimed to oppress the union. R. Such refusal is legitimate exercise of the right to protect its own interests. Oct. in this case. G. ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. No unfair labor practice is committed by their employer when it accepted their said retirement/resignation from the company. However. The refusal of a shipping agency to hire and employ security guards affiliated with a security agency which does not post a bond is not unfair labor practice.either encouraging membership in any labor organization or is made on account of the employee’s having given or being about to give testimony under the Labor Code. 11. In the case of Standard Chartered Bank Employees Union [NUBE] vs. chanrobles virtual law library Interference in the employees’ right to self-organization. In a case involving the mass “protest retirement/resignation” of pilots. G. Lanting. 114974. (Rural Bank of Alaminos Employees Union [RBAEU] vs. No. (Enriquez vs. the suggestion should be construed as part of the normal relations and innocent communications which are all part of the friendly relations between the union and the bank. chanrobles virtual law library 15. especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with the manager’s suggestion that the bank lawyers be excluded from its negotiating panel. (Great Pacific Life Employees Union vs. There is no ULP if this is not proven by evidence. 29. 51382. The records show that after the initiation of the collective bargaining process. 1999). 16. It cannot be said that they were dismissed. the Supreme Court ruled that such is not a concerted activity which is within the protection of the law as they did not assume the status of strikers. R. the act of the bank’s Human Resource Manager in suggesting the exclusion of the federation president from the negotiating panel was not considered ULP. Feb. 29. June 16. It is not an anti-union conduct from which it can be inferred that the bank consciously adopted such act to yield adverse effects on the free exercise of the right to selforganization and collective bargaining of the employees. No. 275). 17. 60. NLRC. R. . R. with the inclusion of the federation president in the union’s negotiating panel. Nos. the negotiations pushed through.

it failed to give new assignments to petitioners. 146728. Petitioner-security guards have been employed with Fortune Integrated Services. The fact that the resignations of the union members occurred during the pendency of the case before the Labor Arbiter shows the employer’s desperate attempts to cast doubt on the legitimate status of the union. the Supreme Court held that based on the facts. May 30. On February 1. January 28. FTC. the employer is guilty of unfair labor practice. 112661. the use of armed guards to prevent the organizers to come in. chanrobles virtual law library In De Leon vs. This resulted in the displacement of petitioners. R. Petitioners have remained unemployed since then. On October 15. The ill-timed letters of resignation from the union members indicate that the employer had interfered with the right of its employees to selforganization. the Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the employer’s refusal to bargain to its acts of economic inducements resulting in the promotion of those who withdrew from the union. Hence. preterminated its contract of security services with MISI and contracted two other agencies to provide security services for its premises. 2004]. No. NLRC and Fortune Tobacco Corporation. 1991. tasked to provide protection and security in the company premises. it is guilty of unfair labor practice for interfering with the right of its employees to self-organization. Inc. R. Inc. there is sufficient ground to conclude that respondents were guilty of interfering with the right of petitioners to self-organization which constitutes unfair labor practice under Article 248 of the Labor Code.a clear interference in the right of the workers to self-organization.In General Milling Corporation vs. Thus.its main factory plant. All these facts indicate a concerted effort on the part of respondents to remove petitioners from the company and thus abate the growth of the union and block its actions to enforce their demands in accordance with the labor standards laws. No. [G. As MISI had no other clients. The records show that the employer presented these letters to prove that the union no longer enjoyed the support of the workers. No. CA. 2003]. . [G. Moreover. To enforce their rightful benefits under the laws on labor standards. In Hacienda Fatima vs. 2001]. February 11. was a mere instrumentality of FTC. National Federation of Sugarcane Workers – Food and General Trade. and the dismissal of union officials and members. 149440. without any reason. while having its own corporate identity. petitioners formed a union which was later certified as bargaining agent of all the security guards. the stockholders of FISI sold all their participations in the corporation to a new set of stockholders which renamed the corporation Magnum Integrated Services. 1991. FISI also had no other clients except FTC and other companies belonging to the Lucio Tan group of companies. its tobacco redrying plant and warehouse. [G. (FISI) since the 1980’s and have since been posted at the premises of Fortune Tobacco Corporation (FTC) . one cannot but conclude that the employer did not want a union in its hacienda . It appears from the records that FISI. The records show that the two corporations had identical stockholders and the same business address. When termination of union president constitutes interference with the employees’ right to selforganization. the early payslips of petitioners show that their salaries were initially paid by FTC. the Supreme Court considered the act of the employer in presenting the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicative of the employer’s pressure on its employees. R.

1988. G. 2004]. Confesor. February 11.” chanrobles virtual law library “Similarly. a question of the intent of the party in question. No. 146728. (Luck Limousine. and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table. R. the school merely offered the feeble excuse that its Board of Trustees had not yet convened to discuss the matter. It ruled: “The law mandates that the representation provision of a CBA should last for five years. was declared as constitutive of union busting as it interfered with the employees’ right to self-organization. 141471. the petitioner school was declared guilty of unfair labor practice when it failed to make a timely reply to the proposals of the union more than a month after the same were submitted by the union. CA. the Supreme Court declared that the petitioner is guilty of unfair labor practice under Article 248 [g] for refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. 141471. because it was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on December 1. 312 NLRB 770. 114974. (Standard Chartered Bank Employees Union [NUBE] vs. No. the company committed an unfair labor practice under Article 248 of the Labor Code. The resolution of surface bargaining allegations never presents an easy issue. 2000]. in the 2000 case of Colegio de San Juan de Letran vs. September 18. Association of Employees and Faculty of Letran. Hence. 1991. “Surface bargaining” on the part of management. [G. For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. September 18. No. R. chanrobles virtual law library Failure or refusal of management to give counter-proposal. [G.The outright termination for alleged insubordination of the union president. June 16. 2000]. Association of Employees and Faculty of Letran. 2004). In explaining its failure to reply. while the CBA negotiation was on-going. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves. [G. In the 2004 case of General Milling Corporation vs. it was still the certified collective bargaining agent of the workers. its actuation showed a lack of sincere desire to negotiate rendering it guilty of unfair labor practice. “Surface bargaining” is defined as “going through the motions of negotiating” without any legal intent to reach an agreement. The relation between labor and management should be undisturbed until the last 60 days of the fifth year. The factual backdrop of her termination leads to no other conclusion that she was dismissed in order to strip the union of a leader who would fight for the right of her co-workers at the bargaining table. R. at bottom. It was obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA on November 29. chanrobles virtual law library . The union’s proposal was also submitted within the prescribed 3-year period from the date of effectivity of the CBA. 789 [1993]). albeit just before the last day of said period. R. effect. Clearly. in the earlier 2000 case of Colegio de San Juan de Letran vs. No.

10 SCRA 843 [1964]). [G. However. June 16. Signing of CBA does not estop a party from raising issue of ULP. Labor Relations. (Standard Chartered Bank Employees Union [NUBE] vs. While the refusal to furnish requested information is in itself an unfair labor practice and also supports the inference of surface bargaining. there must be proof that the demands made by the union were exaggerated or unreasonable. supra). the parties were not able to agree and reached a deadlock. Refusal to furnish financial information is ULP. the approval of the CBA and the release of signing bonus do not necessarily mean that the union waived its ULP claim against the management during the past negotiations. Consequently. p. R. the parties’ failure to agree does not amount to ULP under Article 248 [g] for violation of the duty to bargain. 114974. The eventual signing of the CBA does not operate to estop the parties from raising ULP charges against each other. the minutes of the meeting show that the union based its economic proposals on data of rank-and-file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the bank in the Asian region. which tend to show that it did not want to reach an agreement with the union or to settle the differences between it and the union. (Arthur A. There can be no surface bargaining. chanrobles virtual law library “Blue-sky bargaining” on the part of union. Hence. Here. admittedly. “Blue-sky bargaining” means making exaggerated or unreasonable proposals. while the signing bonus was included in the CBA itself. G. 2004+. Sloane and Fred Witney. In the same 2004 case of Standard Chartered Bank [supra]. Confesor. it cannot be said that the union was guilty of ULP for blue-sky bargaining. R. it must be emphasized that the duty to bargain “does not compel either party to agree to a proposal or require the making of a concession. as held by the High Court in Standard Chartered Bank [supra]. 7th Edition 1991.According to Standard Chartered Bank Employees Union [NUBE] vs. if the union failed to put its request in writing as required in Article 242 [c] of the Labor Code. After all. absent any evidence that management had done acts. it is the union which has the burden of proof to present substantial evidence to support its allegations of unfair labor practices committed by the employer. exception. 195). .” Hence. chanrobles virtual law library In order to be considered as unfair labor practice. (Tiu vs. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. Confesor. the conclusion of the CBA was included in the order of the Secretary of Labor and Employment. however. both at and away from the bargaining table. Who has the burden of proof in ULP cases? In unfair labor practice cases. CIR. 61. management cannot be held liable for ULP. (See also National Union of Restaurant Workers [PTUC] vs. No. NLRC. surface bargaining involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.

-NAFLU vs. charitable. 140992. b. R. natural or juridical. See also Schering Employees Labor Union [SELU] vs. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. No. self-employed people. May employees in the public service exercise their right to self-organize? Employees of government corporations established under the Corporation Code (without original charters) shall have the right to organize and to bargain collectively with their respective employers.R. medical. May aliens exercise the right to self-organization? General rule: All aliens. 6715. 17. chanrobles virtual law library Any employee. A. (Ibid. Labor Code. if they are nationals of a country which grants the same or similar rights to Filipino workers. G.. Sulpicio Lines. Schering Plough Corporation. prepared by Members of the Senate-House Conference Committee of Congress). and c. rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Inc. 2005. 64. LABOR ORGANIZATIONS COVERAGE OF RIGHT TO SELF-ORGANIZATION 62. 123276. whether operating for profit or not. What are the three categories of employees? a. No. What are the three types of managerial employees? The three (3) types of managerial employees are as follows: . as well as foreign organizations are strictly prohibited from engaging directly or indirectly in all forms of trade union activities without prejudice to normal contacts between Philippine labor unions and recognized international labor centers. 687. 142506. 1997. whether employed for a definite period or not. industrial and agricultural enterprises and in religious. Ambulant. See also Article 277 [c]. or assist labor organizations of their own choosing for purposes of collective bargaining. Aug. as certified by the Department of Foreign Affairs. join. No. Supervisory employees. 277 SCRA 680. March 25. Rank-and-file employees. 10. shall beginning on the first day of his/her service. Who may exercise the right to self-organization? All persons employed in commercial. G. 2004).. intermittent and itinerant workers.No. shall have the right to selforganization and to form. 18. 65. Managerial employees. Samahang Manggagawa sa Sulpicio Lines. chanrobles virtual law library 63. 66. Basic Amendments under R. Feb. Inc. be eligible for membership in any labor organization. or educational institutions. Exception: Alien employees with valid working permits issued by the DOLE may exercise the right to self-organization and join or assist labor organizations for purposes of collective bargaining.

A union with such mixed membership is no union at all. What is the “separation of unions” doctrine? The “separation of unions” doctrine simply means that the affiliation of both the rank-and-file union and supervisory union in the same company with one and the same federation is not allowed if the rankand-file employees are under the direct supervision of the supervisors composing the supervisory union.First-line management. chanrobles virtual law library 70. If not. and 3. Are managerial employees allowed to unionize? How about supervisory employees? As a general rule. confidential employees are not allowed to join any union (as they are treated like managers) when they: (1) assist or act in a confidential capacity. 2000) 67. R. In fact. G.Top management. What is the distinction between managerial employees and supervisory employees? The principal distinction between managerial employees and supervisory employees is: the former have the power to decide and do managerial acts. such employee cannot be considered a confidential employee under this rule. It is considered "legitimate" if duly registered with DOLE. if the confidential information to which an employee has access has nothing to do with labor relations.Middle management. 2. hiring or dismissal of employees and the like. 101738. What is a labor organization? A labor organization is any union or association of employees which exists in whole or in part for the purpose of collective bargaining or for dealing with employers concerning terms and conditions of employment. Laguesma. 68. only top and middle managers are not allowed to join any labor organization. of the Philippines vs. April 12. (2) to persons who formulate. and effectuate management policies specifically in the field of labor relations. LABOR ORGANIZATIONS 71. . Simply put. What is the “confidential employee” doctrine? Under the “confidential employee rule”. It cannot exercise the rights of a legitimate labor organization. said affiliation with one and the same federation is allowed. Otherwise. (See United Pepsi0Cola Supervisors Union vs. the law does not allow mixed membership of both supervisory and rank-and-file employees in one union. chanrobles virtual law library 69.1. they can join a union. First-line managers (or supervisory employees) are allowed to join a supervisory union but not the union of rankand-file employees or vice-versa. 288 SCRA 15 and Paper Industries Corp. determine. Laguesma. if these two conditions do not concur. No. while the latter have the power only to recommend managerial acts such as laying down policy.

142000. registered with the Bureau of Labor Relations. 74. Registration with DOLE makes it legitimate. chanrobles virtual law library CHARTERING AND AFFILIATION 78. What is an affiliate? “Affiliate” refers to: . 73. R. 79. vs. standards and programs. January 22. 2003). No. while a workers' association is organized for the mutual aid and protection of its members but not for collective bargaining purposes. How is a labor organization registered? The application for registration must be supported by at least 20% of the members of the bargaining unit. 75. What is a bargaining unit? A "bargaining unit" is the group or cluster of jobs or positions that supports the labor organization which is applying for registration. Tagaytay Highlands Employees Union-PGTWO (G. What is the distinction between a labor organization and a workers’ association? A labor organization is established principally for collective bargaining purposes. What are the purposes of a labor organization? (1) Collective bargaining. the Supreme Court ruled that the effect of issuance of certificate of registration to a union is that it becomes legitimate and its legal personality can only be attacked through a petition for cancellation of registration and not thru intervention in a certification election petition..72. and (2) Dealing with employers regarding the terms and conditions of the employment relationship. What is a workers’ association? A workers' association is any association of workers organized for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. What is the significance of issuance of Certificate of Registration to a union? In Tagaytay Highlands International Golf Club. What is a national union or federation? “National Union” or “Federation” refers to a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member-unions or for participating in the formulation of social and employment policies. 76. Inc. within the employer’s establishment. 77.

The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president.” 81. What is the proof of affiliation with a federation? The proof of affiliation depends on the nature of the affiliation. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter’s officers. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. or 2. 2005]. it is provided. as amended by R. 83. Under Article 234-A of the Labor Code. national union. 82. A. and (b) The chapter’s constitution and by-laws: Provided. DOLE. a local chapter which was subsequently granted independent registration but did not disaffiliate from its federation. chanrobles virtual law library 80.A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. and the principal office of the chapter. this fact shall be indicated accordingly.Charter certificate issued by the federation or national union.1. Office of the Secretary. their addresses. chanrobles virtual law library . thus: ART. 234-A. [G. it was held that a local or chapter need not be independently registered to acquire legal personality. this is known simply as “local” or “chapter. . What is a chartered local? “Chartered Local” refers to a labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a federation or a national union. 157146. Under the old rule. an independent union affiliated with a federation. Chartering and Creation of a Local Chapter. Thus. That where the chapter’s constitution and by-laws are the same as that of the federation or the national union. . What is an independent union? “Independent Union” refers to a labor organization operating at the enterprise level that acquired legal personality through independent registration under Article 234 of the Labor Code. No. 2008]. Local chapter. Are local chapters required to acquire independent registration in order to have legal personality? In Laguna Autoparts Manufacturing Corporation vs. if: 1. April 29. 9481 [June 14. No. R.

Inciong. January 31. R. [No. Appending the name of the federation to the local union's name does not mean that the federation absorbed the latter. An independently-registered union does not lose its independent legal personality when it affiliates with a federation or national union. (G. L-33987. The local union. The obligation to check-off federation dues is terminated with the valid disaffiliation of the local union from the federation with which it was previously affiliated. In the absence of specific provisions in the federation’s constitution prohibiting disaffiliation or the declaration of autonomy of a local union. is a constitutionallyguaranteed right which may be invoked by the former at any time. What is the effect of affiliation? A labor union which affiliates with a federation or national union becomes subject to the rules and regulations of the latter. 86. In the landmark case of Liberty Cotton Mills Workers Union Vs. that the right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. by disaffiliating from the old federation to join a new federation. Liberty Cotton Mills. 1999). 2002). . What is disaffiliation? The right to disaffiliate by the local union from its mother union or federation. November 16. The federation is the principal and the local union. 121 SCRA 444). 115180. the agent. (G. it was held that there can be no disloyalty to speak of since there is no provision in the federation’s constitution which specifically prohibits disaffiliation or declaration of autonomy. 127374. Which one is liable for damages in case of illegal strike – the local union or federation? In Filipino Pipe and Foundry Corporation vs. No. in one case. Thus. is merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. Absent any enforceable provisions in the federation’s constitution expressly forbidding disaffiliation of a local union. No. (Villar vs. NLRC. a certification election is the most expeditious way of determining which labor organization is to be treated as the exclusive bargaining agent. a local may dissociate with its parent union.contract of affiliation between federation and the union. Independently-registered union. It was held in Philippine Skylanders. Once the fact of disaffiliation has been manifested beyond doubt. a local union may sever its relationship with its parent union. Inc. Disaffiliation should always carry the will of the majority.2. it was held that it is the local union and not the federation which is liable to pay damages in case of illegal strike. vs. 85. R. It cannot be effected by a mere minority group of union members. NLRC. chanrobles virtual law library 84. It is not an act of disloyalty on the part of the local union nor is it a violation of the “union security clause” in the CBA. . Inc.

2002]. Inc. As PSEA had validly severed itself from PAFLU. 87. the Supreme Court upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations. There is nothing shown in the records nor is it claimed by AFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. to secure justice for themselves. Does the act of the union in disaffiliating and entering into a CBA with the employer constitute unfair labor practice? In Philippine Skylanders. the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. chanrobles virtual law library It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. Surely. vs. or an equivalent of 92. The sole essence of affiliation is to increase. No. the same thing may not be said of a union which is not independently-registered (chartered local). 66 SCRA 512].September 4. 31. instead. Upon an application of the afore-cited principle to the issue at hand. 127374. this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation. It cannot file a petition for certification election. Jan. Yet the local unions remain the basic units of association. 121 SCRA 444. distinguished. 1975. Disaffiliation of independently-registered union and chartered local. R. the common bargaining power of local unions for the effective enhancement and protection of their interests. 88. 1983). The disaffiliation of an independently-registered union does not affect its legitimate status as a labor organization. April 20. but it is a case where almost all loca1 union members decided to disaffiliate. (Villar vs. by collective action. and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affi1iation into existence. Admittedly. Such dictum has been punctiliously followed since then. there are times when without succor and support local unions may find it hard. local unions do not owe their creation and existence to the national federation to which they are affiliated but. Inciong. However. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union. As such. there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members. unaided by other support groups. free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation. NLRC. the mother federation with which the local union was formerly affiliated instituted a complaint for unfair labor practice against the . Once a chartered local disaffiliates from the federation. it ceases to be entitled to the rights and privileges granted to a legitimate labor organization. to the will of their members.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. [G. the impropriety of the questioned Decisions becomes clearly apparent.

90. and consequently. it is entirely reasonable for it to enter into a CBA with the local union which is now affiliated with a new federation.employer (which refused to negotiate a CBA with said federation because the local union had already effectively and validly disaffiliated from it). As far as the employer is concerned. there exists no sufficient basis to terminate the employment of said employees. [Feb. it loses . chartered local and workers' association may be cancelled by the Regional Director. For without such registration. it was pronounced that the union security clause in the CBA cannot be used to justify the dismissal of the employees who voted for the disaffiliation of the local union from the federation. 20. The Supreme Court ruled that there was no such unfair labor practice committed. As the local union had validly severed itself from the old federation. the local union and their respective officers. The cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. having been filed by a party which has no legal personality to institute the complaint. 89. R. there would be no restrictions which could validly hinder it from subsequently affiliating with the new federation and entering into a CBA in behalf of its members. Inc. the complaint for unfair labor practice was instituted against the wishes of workers who are members of the local union whose interests it was supposedly protecting. Tropical Hut Food Market. and the local union and their respective officers because of the act of the local union in disaffiliating from the mother federation and in entering into a CBA with the employer without its participation. the registration of any legitimate independent labor union. The union is indisputably entitled to be heard before a judgment could be rendered canceling its certificate . Ibid. chanrobles virtual law library Subject to the requirements of notice and due process. Book V. More so in a case where the CBA imposes dismissal only in case employees are expelled from the union for their act of joining another federation or for forming another union or if they failed or refused to maintain membership therein. The complaint for unfair labor practice lodged by the federation against the employer. 40-03. [G. as amended by Department Order No. 17. L-43495-99. (Section 1. the federation ceases to have any personality to represent the local union in the CBA negotiation. What is cancellation proceedings against labor organization or workers’ association? “Cancellation Proceedings” refer to the legal process leading to the revocation of the legitimate status of a union or workers’ association. Rule I. should have been dismissed at the first instance for failure to state a cause of action. However. In the second place.. In the first place. there can be no violation of the union security clause in the CBA. by the Bureau Director.its rights under the Labor Code. therefore.as a rule . national or industry unions and trade union centers. 1990]. in a situation where it does not involve the withdrawal of merely some employees from the union but the whole union itself withdraws from the federation with which it was affiliated.CGW. No. Jan. Rules to Implement the Labor Code. Rule XIV.). upon the filing of an independent complaint or petition for cancellation. 2003]). Book V. the disaffiliation was held valid and. Series of 2003. (Section 1 *g+. or in the case of federations. Is disaffiliation a violation of union security clause? In Tropical Hut Employees Union . vs.

(Itogon-Suyoc Mines vs. March 11. 2007]. . In case of cancellation. vs. R. G. 47). (Samahan ng Manggagawa sa Pacific Plastic vs. R. at the time of the filing of the case. 108625. chanrobles virtual law library Under Article 238-A of the Labor Code. Aguilizan. (Philippine Land-Air-Sea Labor Union [PLASLU]. as amended by R. May registration of a labor organization be cancelled due to non-compliance with reportorial requirements? Where a registered labor organization in the private sector failed to submit the reports required under Rule V *Reporting Requirements of Labor Unions and Workers’ Associations+. however. (Alliance of Democratic Free Labor Organization [ADFLO] vs. 92. G. A. No. 1996). Laguesma.A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. No. Book V of the Rules to Implement the Labor Code. it has juridical personality and the respondent court had validly acquired jurisdiction over the case. In David vs. [94 SCRA 707. Whatever decision. 93. Inc. The pendency alone of cancellation proceedings does not affect the right of a labor organization to sue. 31. What is the effect of cancellation during the pendency of a case? In case cancellation of a union registration is made during the pendency of a case. 238-A. vs. No. the labor organization whose registration is cancelled may still continue to be a party to the case without necessity for substitution. Laguesma. CIR. may be rendered therein shall only be binding on those members of the union who have not signified their desire to withdraw from the case before its trial and decision on the merits. Jan. nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts. 93 Phil. Sangilo-Itogon Workers Union. 713-714 (December 14. For as long as there is no final order of cancellation. 1997). 24 SCRA 873). Inc. chanrobles virtual law library The non-renewal of registration or permit does not result in the dismissal of a case pending with the Department of Labor and Employment. 111245. the labor organization whose registration is sought to be cancelled shall continue to enjoy said rights. Sangilo-Itogon Workers Union. Such pendency cannot also bar the conduct of a certification election. for five (5) consecutive years despite notices for compliance .. as amended. 1979)]. (Itogon-Suyoc Mines. The reason is that. 24 SCRA 873). What is the effect of filing or pendency of a cancellation proceeding? The filing or initiation of a cancellation proceeding against a labor organization does not have the effect of depriving it of the rights accorded to a legitimate labor organization. 9481 [June 14. it was held that a decision rendered without any hearing is null and void. Effect of a Petition for Cancellation of Registration.of registration. 91. it is provided as follows: ART.

Book V. or its notices were returned unclaimed. Voluntary recognition of union. chanrobles virtual law library . however. Rule XV. certification election. 17. Rules to Implement the Labor Code. . (Section 1. 95. Book V. or 4.). (Section 5. shall be cancelled administratively by the Bureau of Labor Relations due to non-compliance with the reportorial requirements unless: (a) non-compliance is for a continuous period of five (5) years. and (c) the labor organization concerned has not responded to any of the notices sent by the Bureau. how determined. Ibid.sent by the Labor Relations Division or the Bureau of Labor Relations. run-off election. voluntary recognition in cases where there is only one legitimate labor organization operating within the bargaining unit. 2003]). What is meant by “sole and exclusive bargaining agent”? The term “sole and exclusive bargaining agent” refers to any legitimate labor organization duly recognized or certified as the sole and exclusive bargaining agent of all the employees in a bargaining unit. Rule XV. (b) the procedures laid down in the Implementing Rules were complied with. chanrobles virtual law library CERTIFICATION ELECTION & REPRESENTATION ISSUES 94. [Feb. Definition of terms. 96. for purposes of collective bargaining. or 3. as amended by Department Order No. upon its own initiative or upon complaint filed by any party-in-interest. consent election.refers to the process of determining through secret ballot the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit. 40-03. for purposes of collective bargaining. No registration of labor organization. Four (4) ways of determining a bargaining agent: 1. chanrobles virtual law library Certification election. This is allowed when there is only one union operating in the bargaining unit. .Voluntary recognition of bargaining agent is the free and voluntary act of the employer of extending and conferring full recognition to a union as the sole and exclusive bargaining representative of the employees in an appropriate bargaining unit. Series of 2003. or 2. Exclusive bargaining representative. the latter may cause the institution of the administrative process for cancellation of its registration.

that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast. 100. chanrobles virtual law library 97. comprised of all or less than all of the entire body of employees in the employer unit or any specific occupational or geographical grouping within such employer unit. provided. how determined. . What is a bargaining unit? A “bargaining unit” refers to a group of employees sharing mutual interests within a given employer unit. same duties and responsibilities and substantially similar compensation and working conditions. with or without the intervention of the Department of Labor and Employment. Bargaining unit. 3. chanrobles virtual law library 2. to determine the issue of majority representation of all the workers in the appropriate collective bargaining unit. SUBSTANTIAL MUTUAL INTERESTS RULE: Under the substantial mutual interests rule. What is the distinction between consent election and certification election? Consent election is a separate and distinct process and has nothing to do with the import and effort of a certification election in the sense that the purpose of the latter is to determine the sole and exclusive bargaining agent of all the employees in the bargaining unit. Collective bargaining history. the employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they perform. .refers to the election voluntarily agreed upon by the parties. Consent election.Run-off election. It is characterized by similarity of employment status. Globe doctrine [will of the employees]. Substantial mutual interests principle or community or mutuality of interests rule. 98. . 4. Employment status. 99. Is direct certification allowed? Direct certification of union is not allowed.refers to an election between the labor unions receiving the two (2) highest number of votes when a certification election which provides for three (3) or more choices results in no choice receiving a majority of the valid votes cast. There are no specific criteria under the law but any of the following four (4) modes may be used: chanrobles virtual law library 1.

Laguna and the Visayas were allowed to participate in a certification election. 100485. sales and dispensary departments perform work which have nothing to do with production and maintenance. In Alhambra Cigar and Cigarette Manufacturing Co. San Miguel Corporation Supervisors and Exempt Employees Union vs. 1994]. R. it would not be for the best interests of these employees if they would further be fractionalized. a different legal principle applies. Laguesma. another unit. 20. 19. cigar. Padre Faura. Quezon City. [211 SCRA 451 (1992)]. Laguesma. L-13573. The distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. 110399. Feb. the fact that the three plants comprising the bargaining unit are located in three different places.which is the progress of their company and their desire to share equitably in the profits or fruits of their endeavors. R. 277 SCRA 370. Said the Court: “What greatly militates against this position (of the company) is the meager number of sales personnel in each of the Magnolia sales office in Northern Luzon. Los Banos. [G. there should be a logical basis for the formation of the bargaining unit. August 15. 85343. 380-381]. accountants. No. another unit. September 21. hence. Certainly. Metro Manila. it is highly fragmentatious for typists and clerks to organize one bargaining unit. Surely. There is commonality of interest among them . Manila. chanrobles virtual law library Since it is impossible for all employees in one company to perform exactly the same work. 98). Sept. On the part of the company. where all non-academic rank-and-file employees of the University of the Philippines in Diliman. The adage ‘there is strength in number’ is the very rationale underlying the formation of a labor union. 1989).” In another case involving the same company. No. No.. Even the bargaining unit sought to be represented by respondent union in the entire North Luzon sales area consists only of approximately fifty-five (55) employees. they are all needed and important for its continued existence and smooth operations. employees in the administrative. 1997. R. Alhambra Employees Association-PAFLU. Bureau of Labor Relations. and in San Fernando. namely. in Cabuyao. Pandacan. vs. chanrobles virtual law library In the case of San Miguel Corporation vs. another unit. contrary to the position taken by the company that each sales office consists of one bargaining unit. No. janitors. 262 SCRA 81. cigarette. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. But in the case of employees of two (2) companies. packing. 111262. [G. Ferrer-Calleja. [G. it was held that they can form their own bargaining unit separate and distinct from those involved in the production and maintenance such as those employed in the raw leaf. engineering and maintenance departments. Pampanga was declared immaterial. G. and so on. messengers. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in University of the Philippines vs. Laguna.(San Miguel Corporation Employees Union-PTGWO vs. R. 1996. in Otis. R. (Philtranco Service Enterprises vs. Confesor. Although the businesses of two companies are related and the employees of one were originally the employees of the . G. 1969]. No. in one company. the Supreme Court applied this principle in a petition of the union which seeks to represent the sales personnel in the various Magnolia sales offices in Northern Luzon. June 28.

[3 NLRB 294 (1937)] where it was ruled. the dissimilarity of interests between monthly-paid and daily-paid workers . the administrative. Nov. Nos. [G. No. R. The Honorable Secretary of Labor. 3. Inc. Nov. In a case involving a film outfit. it was ruled that the 149 qualified voters should be used to determine the existence of a quorum during the election. Also. R. construction and transportation employees of the Tandang Sora campus and not on all the employees in St. a certification election should be held separately to choose which representative union will be chosen by the workers. [1 SCRA 132 (1961)]. No. 107610. the employees of both companies cannot be treated as one bargaining unit because they are employed by two separate and distinct entities. 1994]. (Diatagon Labor Federation Local 110 of the ULGWP vs. 102130.. Calica.R. teaching and office personnel are not members of the union. respondent union sought to represent the rank-and-file employees (consisting of the motor pool. They do not belong to the bargaining unit that the union seeks to represent. hence. James School of Quezon City vs. Ople. The computation of the quorum should be based on the rank-and-file motor pool. it was ruled that there is no commonality of interest between the employees in the garment factory and cinema business. teaching and office personnel in its five (5) campuses. 96490. vs. GLOBE DOCTRINE: The Globe doctrine [will of the employees] is was enunciated in the United States case of Globe Machine and Stamping Co. LVN Pictures. [G. Philippine Musicians Guild. 1994]. 1980. James School of Quezon City. as three (3) separate and distinct bargaining units. July 26. The motor pool.where the former primarily perform administrative or clerical work. construction and transportation employees) of petitioner-school’s Tandang Sora campus. Inc. Consequently. Petitioner-school opposed it by contending that the bargaining unit should not only be composed of said employees but must include administrative. 151326. 101 SCRA 534. Feb. Moreover. In Cruzvale. Samahang Manggagawa sa St. that in a case where the company’s production workers can be considered either as a single bargaining unit appropriate for purposes of collective bargaining or. while the latter mainly work in the cultivation of bananas in the field – was held proper basis for the formation of a separate and distinct bargaining unit for the monthly-paid rank-and-file employees. 3.. No. 2005]. 23. Since a majority or 84 out of the 149 qualified voters cast their votes. Indophil Textile Mill Workers Union-PTGWO vs. Thus. vs. chanrobles virtual law library In St. R. in defining the appropriate bargaining unit. their separation into two (2) distinct bargaining units was declared proper. R. construction and transportation employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election. Dec. the determining factor is the desire of the workers themselves. vs. G. in Golden Farms. . 25. L-44493-94. G. No. Inc.other. Laguesma. 1992). [G. James’ five (5) campuses. The Supreme Court disagreed with said contention. it was pronounced following the substantial mutual interests test. a quorum existed during the certification election. that there is substantial difference between the work performed by musicians and that of other persons who participate in the production of a film which suffices to show that they constitute a proper bargaining unit.

despite the collective bargaining history of having a separate bargaining unit for each sales office. vs. And in another case.(See also Mechanical Department Labor Union sa Philippine National Railways vs. Hence. (Philips Industrial Development. they cannot be allowed to be included in the rank-and-file bargaining unit. the Supreme Court ruled that foreign-hired teachers do not belong to the same bargaining unit as the local-hires because the former have not indicated their intention to be grouped with the latter for purposes of collective bargaining. the collective bargaining history of the school also shows that these groups were always treated separately. L-14656. 2000]. R. their inclusion in the bargaining unit composed of the latter employees is not justified. Laguesma. 30. June 1. June 25. This. persons who exercise managerial functions in the field of labor relations. In the case of International School Alliance of Educators [ISAE] vs. 21. No. according to the Supreme Court in Philippine Land-Air-Sea Labor Union vs. Quisumbing. Hence. assist and act in a confidential capacity to. As such. the determination of appropriate bargaining unit based thereon is considered an acceptable mode. 1994]. [G. 100485. National Association of Free Trade Unions vs. 128845. No. Nov. G. Inc. (San Miguel Corporation vs. 1960]. COLLECTIVE BARGAINING HISTORY: The principle called collective bargaining history enunciates that the prior collective bargaining history and affinity of the employees should be considered in determining the appropriate bargaining unit. No. chanrobles virtual law library For instance. No. 1990]. (Rothenberg on Labor Relations. 21. R. Golden Farms. G. the Supreme Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. 482-510). 88957. assist or join a labor union equally applies to them. R. by the very nature of their functions. However. [G. EMPLOYMENT STATUS DOCTRINE: Under the doctrine of employment status. declared that there is mutuality of interest among the workers in the sawmill division and logging division as to justify their formation of a single bargaining unit. infra. For instance. [G. despite the history of said two divisions being treated as separate units and notwithstanding their geographical distance. casual employees and those being employed on a day-to-day basis. NLRC. 175 SCRA 471). R. Aug. the rationale behind the ineligibility of managerial employees to form. or have access to confidential matters of. Ferrer-Calleja. the Supreme Court applied the principle of mutuality or commonality of interests in holding that the appropriate bargaining unit is comprised of all the sales force in the whole of North Luzon. 1989. L-28223. infra). R. CIR. Mainit Lumber Development Company Workers Union. 1968). Dec. No. [G. R. July 19. the Supreme Court in National Association of Free Trade Unions vs. do not have the mutuality or community of interest with regular and permanent employees. . pp. Moreover. No. 79526. No. 78755. Mainit Lumber Development Company Workers Union. Confidential employees. R. CIR. Sept. 29. San Miguel Corporation vs. Laguesma. Inc. 1992. vs. G.

public policy or morals. The union can also become company-dominated with the presence of managerial employees in union membership. due to the nature of the business in which its livestock-agro division is engaged. Application of foregoing 4 factors in one case. and home leave travel allowance. the latter might not be assured of their loyalty to the union in view of evident conflict of interest. In Belyca Corporation vs. June 1. the Supreme Court disallowed the inclusion of foreign-hired teachers in the bargaining unit composed of locally-hired teachers. hours of work. such as housing. the noted differences are: their working conditions. 1103). foreign-hires are accorded certain benefits not granted to local-hires. In so holding.The rationale for this inhibition is if these managerial employees would belong to or be affiliated with a union. Definitely. rates of pay. (See also Democratic Labor Association vs. and justify the exclusion of the former from the latter. Although foreign-hires perform similar functions under the same working conditions as the local-hires. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. Undeniably. The collective bargaining history in the School also shows that these groups were always treated separately. To lump all the employees of petitioner in its integrated business concerns cannot result in an efficacious bargaining unit comprised of constituents enjoying a community or mutuality of interest. 144 SCRA 628). 29. [G. thus: chanrobles virtual law library “It does not appear that foreign-hires have indicated their intention to be grouped together with localhires for purposes of collective bargaining. R. Sanchez. planting of agricultural crops and operation of supermarts and cinemas. transportation. vs. No. which involves a corporation engaged in piggery. (Bulletin Publishing Co.” 101. the rank-and-file employees of the livestock-agro division fully constitute a bargaining unit that satisfies both requirements of classification according to employment status and of the substantial similarity of work and duties which will ultimately assure its members the exercise of their collective bargaining rights. local-hires enjoy security of tenure. No. it used all the four (4) factors mentioned above. 2000]. are reasonably related to their status as foreign-hires. Such transformation of the companies is a management prerogative and business judgment which the courts cannot look into unless it is contrary to law. taxes. very few of its employees in the division are permanent. 128845. poultry raising. Cebu Stevedoring. 103 Phil. they have very little in common with the employees of the supermarts and cinemas. As stated by petitioner corporation in its position paper. 1988]. in the case of International School Alliance of Educators [ISAE] vs. . Ferrer-Calleja. [G. Quisumbing. As earlier mentioned. the Supreme Court ruled that it is beyond question that the employees of the livestock and agro division of the corporation perform work entirely different from those performed by employees in the supermarts and cinemas. 77395. Among others. Nov. including the categories of their positions and employment status. What is the effect on the bargaining unit of spin-off of business? The employer may validly effect a spin-off of some of its divisions to operate as distinct companies. These benefits.. Foreign-hires have limited tenure. R. shipping costs. the overwhelming majority of which are seasonal and casual and not regular employees.

March 5. 101766. that the petition is supported by the written consent of at least twenty-five percent (25%) of all employees in the bargaining unit. No. they are not confidential employees and should. the parties may not only renew the existing CBA but may also propose and discuss modifications or amendments thereto. During the freedom period. based on the nature of their duties. they became distinct entities with separate juridical personalities. See also Borbon vs. after a careful consideration of the pleadings filed. As to the discipline officers. De la Salle University Employees Association. More so in this case where. 102. (San Miguel Corporation Employees Union-PTGWO vs. Considering the spin-offs. the service record of a computer operator reveals that his duties are basically clerical and non-confidential in nature. . the Supreme Court declared that after the said spin-off. Laguesma. Confesor. 1996. 262 SCRA 81. chanrobles virtual law library 2. 2000]. the alleged confidential nature of the said employees’ functions (as computer operator and discipline officers) were proven to be incorrect. 1993). wages. 19. No. May employees of one entity join the union in another entity? In the same case of De la Salle [supra]. April 12. 109002. and other conditions of employment. [101 SCRA 534 (1980)]. Thus. and 3. 1. G. the Supreme Court affirmed the findings of the Voluntary Arbitrator that the employees of the College of St. R. Benilde should be excluded from the bargaining unit of the rank-and-file employees of De la Salle University. No. hours of work. What are the requisites for certification election in organized establishments? The following are the requisites for certification election in organized establishments. 103. Sept. May excluded employees be included in the bargaining unit under the new CBA. because the two educational institutions have their own separate juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate fiction. Interests of employees in the different companies perforce differ. G. As carefully examined by the Solicitor General. the employees cannot belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP vs. 111262. R. In De la Salle University vs. that a petition questioning the majority status of the incumbent bargaining agent is filed before the DOLE within the 60-day freedom period. that such petition is verified. Ople. [G. it was held that the express exclusion of certain employees from the bargaining unit of rank-andfile employees in the past CBA does not bar any re-negotiation for the future inclusion of the said employees in the bargaining unit. therefore. 104.In one case involving the spin-off by a corporation of two of its divisions. be included in the bargaining unit of rank-and-file employees. the companies would consequently have their respective and distinctive concerns in terms of the nature of work. R.

or 2. it must be emphasized that the petitioner-union should have a valid certificate of registration. or 3. it has no legal personality to file the petition for certification election. the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. in the absence of a collective bargaining agreement duly registered in accordance with Article 231 of the Labor Code. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature. general rule. No. a petition for certification election may be filed at any time. Republic Act No. Employer as Bystander. whether the petition for certification election is filed by an employer or a legitimate labor organization. contract-bar rule. a legitimate labor organization. . 9481 [June 14. certification year-bar rule. Who may file petition for certification election? A petition for certification election may be filed by: 1.105. However. 109. otherwise. ROLE OF EMPLOYER IN CERTIFICATION ELECTION CASES: R. but only when requested by a labor organization to bargain collectively and the status of the union is in doubt. 2007). 2007] amended the Labor Code by introducing the following provisions: Article 258-A. What is certification year-bar rule? . an employer. (As amended by Section 12. 106. 108. A. and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition. When to file petition for certification election. 107. What is the requirement for certification election in unorganized establishments? In unorganized establishments. What are the exceptions to the general rule? The exceptions when no certification election may be held are as follows: 1. 2007 and became effective on June 14. 9481 which lapsed into law on May 25.In all cases. 2. certification election shall be "automatically" conducted upon the filing of a petition for certification election by a legitimate labor organization. bargaining deadlock-bar rule. The general rule is.

neither may a representation question be entertained if: 1. a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been submitted to conciliation or arbitration or had become the subject of valid notice of strike or lockout. R. 1997.Under the certification year-bar rule. respondent union. The reasons are: . no CBA was executed. Under the circumstances. [G. the duly recognized or certified union has commenced negotiations with the employer within the one-year period from the date of a valid certification. February 4. charging the employer with unfair labor practice and conducting a strike in protest against the employer’s refusal to bargain. hence. the bargaining deadlock-bar rule was applied. 267 SCRA 503]. take any action to legally compel the employer to comply with its duty to bargain collectively. No. where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively.” 111. e. the bargaining deadlock-bar rule was not applied because the duly certified exclusive bargaining agent of all rank-and-file employees did not. What is bargaining deadlock-bar rule? Under the bargaining deadlock-bar rule.g. a certification election petition may not be filed within one (1) year: (1) from the date of a valid certification. i. It is only just and equitable that the circumstances in this case should be considered as similar in nature to a ‘bargaining deadlock’ when no certification election could be held. for more than four (4) years. September 9.e. 118915. before the filing of a petition for certification election. or (2) from the date of voluntary recognition... consent or run-off election or from the date of voluntary recognition. R. Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance. Section 3. a certification election may be validly held. This is also to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any certified bargaining agent from negotiating a CBA. What is a contract-bar rule? Under the contract-bar rule. whose factual milieu is similar to said case of Kaisahan. had taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively. Trajano. Laguesma. 1991. But in the case of Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers vs. The Supreme Court ratiocinated. the Bureau of Labor Relations shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreements affecting the parties. or 2. consent or run-off election. nor did it file any unfair labor practice suit against the employer or initiate a strike against the latter. [G. there was proof that the certified bargaining agent. thus: “This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case. 110. 75810. Thus. No. Rule V. chanrobles virtual law library In the case of Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] vs. 201 SCRA 453 (1991)].

4. not bad faith. • Making a promise during the CBA negotiation is not considered bad faith. when the documents supporting its registration are falsified. when the CBA. • The DOLE Secretary cannot order inclusion of terms and conditions in CBA which the law and the parties did not intend to reflect therein. chanrobles virtual law library 114. • Adamant stance resulting in impasse. What are the exceptions to the contract-bar rule? The exceptions to the contract-bar rule are as follows: 1.when the collective bargaining agreement is not complete as it does not contain any of the requisite provisions which the law requires. What are the legal principles applicable to Collective Bargaining Agreement (CBA)? • A proposal not embodied in CBA is not part thereof. 2. fraudulent or tainted with misrepresentation. when the collective bargaining agreement was entered into prior to the 60-day freedom period. Its provisions are construed liberally. although registered. wiped out with signing of CBA. 3. 115. when there is a schism in the union resulting in an industrial dispute wherein the collective bargaining agreement can no longer foster industrial peace. Is the collective bargaining procedure in Article 250 mandatory? . What is a Collective Bargaining Agreement (CBA)? Collective Bargaining Agreement (CBA) refers to the negotiated contract between a legitimate labor organization and the employer concerning wages.no effect if its contents are not incorporated in the CBA. hours of work and all other terms and conditions of employment in a bargaining unit. COLLECTIVE BARGAINING AGREEMENT (CBA) 113. during the 60-day freedom period. 6. chanrobles virtual law library 5. chanrobles virtual law library 7. • Allegations of bad faith. • Minutes of CBA negotiation . not demandable under the law. contains provisions lower than the standards fixed by law. • Signing bonus.112. when the CBA is not registered with the BLR or DOLE Regional Offices. The CBA is deemed the law between the parties during its lifetime.

Its excuse that it felt the union no longer represented the workers. 146728. there has been a shift in the interpretation of the provision of Article 250. CA.” Consequently. 2000]. as amended in 2003.. 1996. Inc. Consequently. Multi-employer bargaining. No. More than a month after the proposals were submitted by the union. What are the kinds of bargaining under the latest implementing rules? The Rules to Implement the Labor Code. was mainly dilatory as it turned out to be utterly baseless. 186 (1986)+ where the company’s refusal to make any counter-proposal to the union’s proposed CBA was declared as an indication of its bad faith. [10 SCRA 843]. petitioner still had not made any counter-proposals. there is a clear evasion of the duty to bargain collectively. 116. petitioner-school was declared to have acted in bad faith because of its failure to make a timely reply to the proposals presented by the union. 78 SCRA 10. Recently. Association of Employees and Faculty of Letran. R. 117. CIR. The requirement under the law that a party should give its reply within said period is merely procedural and non-compliance therewith is not unfair labor practice. 15 [1977]). R. Where the employer did not even bother to submit an answer to the bargaining proposals of the union. In Colegio de San Juan de Letran vs. 2004]. 141471. the procedure in collective bargaining prescribed by the Labor Code under Article 250 is mandatory because of the basic interest of the State in ensuring lasting industrial peace. The school’s refusal to make a counter-proposal to the union’s proposed CBA is an indication of its bad faith. NLRC. [141 SCRA 179. the employer’s failure to make a timely reply to the proposals presented by the union is indicative of its bad faith and utter lack of interest in bargaining with the union. chanrobles virtual law library The same holding was made in Kiok Loy vs. What is single enterprise bargaining? . September 18. (See also The Bradman Co. This inaction on the part of petitioner prompted the union to file its second notice of strike on March 13. It underscored the fact that the other party upon whom the proposals was served “shall make a reply thereto not later than ten (10) calendar days from receipt of such notice. the employer in this case was held guilty of unfair labor practice under Article 248 [g] of the Labor Code. [G. [G. provide for two (2) kinds of bargaining. and 2. February 11. Petitioner could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse for failing to file its reply. Single-enterprise bargaining. No. Its actuation shows a lack of sincere desire to negotiate rendering it guilty of unfair labor practice. it was held that failure to reply within ten (10) calendar days does not constitute refusal to bargain.In National Union of Restaurant Workers vs. According to the pronouncement in General Milling Corporation vs. namely: chanrobles virtual law library 1. This is a clear violation of Article 250 of the Labor Code governing the procedure in collective bargaining. vs. Court of Industrial Relations. however.

Single-enterprise bargaining involves negotiation between one certified labor union and one employer. 40-03. chanrobles virtual law library 120. Book V. provided: (a) only legitimate labor unions which are incumbent exclusive bargaining agents may participate and negotiate in multi-employer bargaining.). should be followed by the employer and the representatives of the employees in their collective bargaining efforts. among other pertinent provisions. as amended by Department Order No. the duty to bargain collectively shall mean that neither party shall terminate nor modify such agreement during its lifetime. (b) only employers with counterpart legitimate labor unions which are incumbent bargaining agents may participate and negotiate in multi-employer bargaining. Ibid. Any voluntarily recognized or certified labor union may demand negotiations with its employer for terms and conditions of work covering employees in the bargaining unit concerned. Any legitimate labor unions and employers may agree in writing to come together for the purpose of collective bargaining. Series of 2003. [Feb. They are free to take positions on anything. 2003]). Accordingly. (Section 5. Rule XVI. The basic requisites of collective bargaining such as the existence of employer-employee relationship. convene and confer for collective bargaining purposes. The advantage of negotiating a CBA for the first time lies in the fact that both parties are not restricted or encumbered by any previous agreement on any of the issues that may be raised in the course thereof. It shall be the duty of both parties to keep the status quo and to continue in full force and effect . 17. Rule XVI. majority status of the bargaining union and the demand to negotiate an agreement. What is meant by “duty to bargain collectively” when there has yet been a CBA? Article 251 contemplates a situation where there is yet no CBA or other voluntary arrangements or modes providing for a more expeditious manner of collective bargaining. (Section 3. without having to worry about possible past agreements affecting the current ones for discussion. the duty to bargain in this situation still requires the performance of the obligation by the employer and the union to meet. Book V. the law itself mandates that the procedures in collective bargaining laid down in the Labor Code. Rules to Implement the Labor Code. Essentially. What is meant by “duty to bargain collectively” when there exists a CBA? When there is a collective bargaining agreement. 118. However. should likewise be fully satisfied before such negotiations may be validly held. specifically Article 250 thereof. either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. and chanrobles virtual law library (c) only those legitimate labor unions which pertain to employer units which consent to multi-employer bargaining may participate in multi-employer bargaining. What is multi-employer bargaining? Multi-employer bargaining involves negotiation between and among several certified labor unions and employers. 119.

(Section 7. 17. Rules to Implement the Labor Code. Series of 2003. 22. G. ratification and registration of the CBA? a. Registration of CBA. chanrobles virtual law library 121. What is the consequence of refusal of party to negotiate the CBA? The refusal of the employer to bargain with the collective bargaining representative. Posting is responsibility of employer. by ignoring all notices for negotiations and requests for counter-proposals so much so that the union had to resort to conciliation proceedings. 17. May 5. 77282. Rules to Implement the Labor Code. G. 122. L-75321. The general rule is that the CBA is required to be posted in two (2) conspicuous places in the work premises. The CBA shall be registered with the Department of Labor and Employment in accordance with the Rules to Implement the Labor Code. June 20.the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Rule XVI. two (2) signed copies of the CBA should be posted for at least five (5) days in two (2) conspicuous areas in each workplace of the employer units concerned. as amended by Department Order No. 2003]). [Feb. R. The ratification of the CBA should be made not by the majority of the members of the bargaining union but by the majority of the members of the bargaining unit which is being represented by the bargaining union in the negotiations. What are the mandatory requisites of publication. (Section 7. In the case of multi-employer bargaining. This requirement on the posting of the CBA as above-described is considered a mandatory requirement. (Kiok Loy vs. (Associated Labor Union [ALU] vs. (Associated Trade Unions [ATU] vs. c. 141 SCRA 179). Rule XVI. Series of 2003. Ratification by majority of the members of the bargaining unit. 40-03. 54334. Posting is mandatory. No. Said CBA shall affect only those employees in the bargaining units who have ratified it. may indicate bad faith. Trajano. Non-compliance therewith will render the CBA ineffective. NLRC. b. Posting of CBA. [Feb. 2003]). e. as amended by Department Order No. No. Jan. No. Book V. The posting of copies of the CBA is the responsibility of the employer which can easily comply with the requirement through a mere mechanical act. 1988). . 1989). Book V. Ferrer-Calleja. chanrobles virtual law library d. for a period of at least five (5) days prior to its ratification. R. G. as amended in 2003. 40-03. 1986. R.

2002]. “In this case. R. 320 F 2d. In affirming the finding of the Court of Appeals that there was still no new CBA because the parties had not reached a meeting of the minds. [G. 146291. the DOLE Secretary. Feb. No. the management’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation is an indication of its bad faith. The Supreme Court disagreed. 595+. no CBA could be concluded because of what the union perceived as illegal deductions from the 70% employees’ share in the tuition fee increase from which the salary increases shall be charged. the petitioner presented to the union a draft of the CBA allegedly embodying all the terms and conditions agreed upon during the conciliation sessions held by the NCMB. who assumed jurisdiction on January 23. Such refusal is considered unfair labor practice. among other reasons. Although it is true that the university and the union may have reached an agreement on the issues raised during the collective bargaining negotiations. chanrobles virtual law library According to Colegio De San Juan De Letran vs. Where the employer did not even bother to submit an answer to the bargaining proposals of the union. 18. vs. 1995 only was set to resolve the distribution . What is the effect of the refusal of party to sign the CBA? A party to a fully-concluded CBA may be compelled to sign it. As held in General Milling Corporation vs. (Roadway Express vs. the Supreme Court ratiocinated. Secretary of Labor and Employment. thusly: “As in all other contracts. especially if said refusal to sign is the only remaining hitch to its being implemented. [G. R. “Petitioner insisted that a new collective bargaining agreement was concluded through the conciliation proceeding before the NCMB on all issues specified in the notice of strike. 124. the company commits an unfair labor practice act under Article 248 [g] of the Labor Code (violation of the duty bargain collectively). chanrobles virtual law library 123. General Teamster.For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA. the manner of computing the net incremental proceeds was yet to be agreed upon by the parties. [G. Sept. Also. 340 SCRA 587. there must be clear indications that the parties reached a meeting of the minds. 859). January 23. But the employer failed in its duty under Article 252. there is a clear evasion of the duty to bargain collectively. What is the effect if there is no meeting of the minds? In University of the Immaculate Concepcion. No. What it did was to devise a flimsy excuse. The Hon. still no agreement was concluded by them because. Petitioner contended that the union was bound to comply with the terms contained in the draft-CBA since said draft allegedly contains all the items already agreed upon before the NCMB. 11. 2004]. No. CA. 2000. the union lived up to this obligation when it presented proposals for a new CBA to the management within three (3) years from the effectivity of the original CBA. by questioning the existence of the union and the status of its membership to prevent any negotiation. 141471. Inc.R. 146728. Association of Employees and Faculty of Letran.

has lately consistently ruled that the CBA. the DOLE Secretary. 1996. in the exercise of his powers under Article 263 [i] of the Labor Code to decide and resolve labor disputes. [G. Oct. therefore. Inc. Can a CBA proposed by the union be imposed lock. And since it refused to bargain without valid and sufficient cause. the plain and natural presumption is that the employer would resume operations after six (6) months and. pursuant to the applicable provisions of the Labor Code. neither can the employer evade its obligation to bargain with the union. the employer-employee relationship is merely suspended (and not terminated) for the duration of the temporary suspension. using the cessation of its business as reason therefor. The Supreme Court said in the same case of San Pedro Hospital [supra] that it cannot impose upon the employer the directive to enter into a new CBA with the union for the very simple reason that to do so would be to compel the employer to continue its business when it had already decided to close shop. as already indicated above.” 125. they still have the duty to negotiate a new collective bargaining agreement in good faith. properly granted the wage increase and imposed the union shop provision. 263 SCRA 98]. as proposed by the union. stock and barrel on employer who refused to negotiate a CBA? The Supreme Court. 126. it follows that a new CBA will be needed to govern the employment relations of the parties. No. It shows abuse of this option and bad faith on the part of the employer. illegal and invalid. 1994 conference. following the provision of Article 253 which imposes on both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period [prior to its expiration date] and/or until a new agreement is reached by the parties. Consequently. vs. The Court of Appeals found that ‘there are many items in the draft-CBA that were not even mentioned in the minutes of the July 20. Can a CBA be negotiated and concluded in case of closure of business? An employer which has already decided to close shop cannot be compelled to enter into a new CBA. 127. that while the employer cannot be forced to abandon its suspension of operations even if said suspension be declared unjustified. it was held in San Pedro Hospital of Digos. Using the suspension as an excuse to evade the duty to bargain is further proof of its illegality. and that would be judicial tyranny on its part. Can a CBA be negotiated and concluded during suspension of operation? There is no legal basis to claim that a new CBA should not be entered into or that collective bargaining should not be conducted during the effectivity of a temporary suspension of operations which an employer can lawfully do under Article 286 of the Labor Code.of the salary increase of the covered employees. In the absence of any other information. For. 104624.’ “Considering the parties failed to reach an agreement regarding certain items of the CBA. 11. the old one having already expired. may be unilaterally imposed on the employer in the event the latter fails to discharge its duty to bargain collectively by . Secretary of Labor. R.

the employer which violates the duty to bargain collectively. No. January 22. To rule otherwise. Feb. a departure from the general rule is warranted. when one of the parties abuses this grace period by purposely delaying the bargaining process. The general rule is that when a CBA already exists. Thus. Article 253 basically mandates the parties to keep the status quo while they are still in the process of working out their respective proposals and counter proposals. Kiok Loy vs. that neither party is guilty of bad faith. Secretary of Labor and Employment. 1992]. the High Tribunal upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. 11. It ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. 141 SCRA 179.refusing to make any counter-proposals to the proposals of the union or engaging in bad faith bargaining. 2004]. the Supreme Court imposed on the employer the draft CBA proposed by the union for two years commencing from the expiration of the original CBA. [G. too. In the case of Kiok Loy vs. That is. loses its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union. September 11. chanrobles virtual law library General Milling Corporation vs. Secretary of Labor and Employment. the Supreme Court deemed it proper to apply in General Milling the rationale of the doctrine in the said two cases. 1986. Hence. L-54334. there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban.lock. 146728. NLRC. refused to submit any counter proposal to the CBA proposed by its employees’ certified bargaining agent. Likewise. chanrobles virtual law library Under this situation. the proposals of the union may be adopted as the CBA and. [No. 188]. Sweden Ice Cream Plant. imposed on the employer. the Supreme Court found that petitioner therein. CA. lock. However. In General Milling Corporation vs. CA. [213 SCRA 759. Thus. in Divine Word University of Tacloban vs. the High Court did not hesitate to impose on the erring company the CBA proposed by its employees’ union . its provision shall continue to govern the relationship between the parties until a new one is agreed upon. Divine Word University of Tacloban vs. . Nonetheless. stock and barrel. As strictly distinguished from the facts of General Milling [supra]. NLRC. stock and barrel. consequently. disregarded. This was because of the employer’s refusal to counter-propose to the union’s proposals which constitutes unfair labor practice under Article 248 [g] of the Labor Code. would be to allow General Milling to have its cake and eat it. The rule necessarily presupposes that all other things are equal. R. Distinction between the aforesaid cases. petitioner therein refused to perform its duty to bargain collectively. according to the Court.

267 SCRA 303. (ALU vs. Noriel. 179 SCRA 127 [1989]).128. March 31. 116751. No. L-45057. 1978. . Calleja. 75 SCRA 450). 31. the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. 1977. It is well-settled that the sixty-day freedom period based on the original CBA shall not be affected by any amendment. with a pending petition for certification. chanrobles virtual law library 129. (Vassar Industries Employees Union [VIEU] vs. 82 SCRA 280. It is also the time when the majority status of the bargaining union or agent may be challenged by another union by filing appropriate petition for certification election. Bureau of Labor Relations. 1998. L-46562. R. What is “freedom period”? “Freedom period” is the last sixty (60) days of the lifetime of a collective bargaining agreement immediately prior to its expiration It is so called because it is the only time when the law allows the parties to serve notice to terminate. 131. G. 28. 130. alter or modify the existing agreement. 28. 1997. Secretary of Labor and Employment. any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. Jan. Laguesma. 288. it was held that an agreement prematurely signed by the union and the company during the freedom period does not affect the petition for certification election filed by another union. [159 SCRA 387 (1988)]. extension or renewal of the CBA for purposes of certification election. What is “automatic renewal clause”? “Automatic renewal clause” means that at the expiration of the freedom period. G. In the case of Warren Manufacturing Workers Union [WMWU] vs. Aug. (See also Oriental Tin Can Labor Union vs. 111245. 294 SCRA 640). Estrella. Today’s Knitting Free Workers Union vs. R. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them. 310). The reason is. No. No. (Samahan ng Manggagawa sa Pacific Plastic vs. What is the term (lifetime) of a CBA? Representation aspect (sole and exclusive status of certified union): . Feb.The term is 5 years which means that no petition questioning the majority status of the incumbent bargaining agent shall be entertained by DOLE and no certification election shall be conducted outside of the 60-day freedom period. What is the effect of CBA renewal or registration before or during 60-day period? The representation case shall not be adversely affected by a CBA registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation case.

ratiocinated. includes the right to suspend it. The right to free collective bargaining. the parties shall agree on the date of effectivity thereof.All other provisions (which refer to both economic and non-economic provisions except representation): Shall be renegotiated not later than three (3) years after its execution. chanrobles virtual law library “In the instant case. 2. No. (G. it was PALEA. NLRC or Voluntary Arbitrator (Jurisprudence varies). thus: “The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer.135547. promoted the shared responsibility between workers and employers. b. 2002). and they exercised voluntary modes in settling disputes. Rule involving CBAs concluded by the parties through negotiation (not concluded through arbitral award). The other is to assign specific timetables wherein negotiations become a matter of right and requirement. with the peculiar and unique intention of not merely promoting industrial peace at PAL. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation. Nothing in Article 253A. including conciliation to foster industrial peace. One is to promote industrial stability and predictability . May CBA negotiations be suspended for 10 years? Yes. Rule involving CBAs concluded through arbitral awards by DOLE Secretary. in the case of Rivera vs. January 23. . The collective bargaining agreement or other provisions of such agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement shall retroact to the day immediately following such date.R. that voluntarily entered into the CBA with PAL.". The agreement afforded full protection to labor. 133. If any such agreement is entered into beyond six (6) months. What is meant by “retroactivity” of CBA? a. prohibits the parties from waiving or suspecting the mandatory timetables and agreeing on the remedies to enforce the same. but preventing the latter's closure. The Supreme Court. 132. said agreement satisfies the first purpose of Article 253-A. as the exclusive bargaining agent of PAL 's ground employees. We find no conflict between said agreement and Article 253-A of the Labor Code. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Espiritu. chanrobles virtual law library “The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not contravene the "protection to labor" policy of the Constitution. 1. after all. Article 253-A has a two-fold purpose. Either case was the union's exercise of its right to collective bargaining.

Torres. vs. Inc. What are the remedies in case of CBA deadlock? In case of a deadlock in the negotiation or renegotiation of the collective bargaining agreement. per its February 22. January 27. It is a complaint or dissatisfaction arising from the interpretation or implementation of the CBA and those arising from interpretation or enforcement of personnel policies. vs.e.. the effective date of the new CBA should be the date the Secretary of Labor and Employment has resolved the labor dispute. 3. the effectivity date was made retroactive to the date of the expiration of the previous CBA. 127598. DOLE. the Supreme Court ruled that retroactivity of CBA in arbitral awards is subject to the discretion of the DOLE Secretary chanrobles virtual law library 134. the Supreme Court ruled: chanrobles virtual law library In St.Declaration of a strike or lockout. 1999. What is a grievance? “Grievance” is 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 provisions of the CBA or company personnel policies.Conciliation and mediation by the NCMB. Luke's Medical Center. i. 209]. the parties may exercise the following rights under the Labor Code: 1. 2. GRIEVANCE AND VOLUNTARY ARBITRATION 135. the retroactivity of the CBA provided under Article 253-A of the Labor Code (enumerated above) has no application. 307 (1995)]. No. Referral of case to compulsory or voluntary arbitration. 1996 to May 31. [241 SCRA 294. 2000 ruling which was rendered after a Motion for Partial Reconsideration was filed by Meralco. It held that the arbitral award should retroact to the first day after the six-month period following the expiration of the last day of the CBA. What is grievance machinery? . Thus. Inc. Later. [223 SCRA 779 (1993)]. (G. 302 SCRA 173. Roldan-Confesor. chanrobles virtual law library LATEST RULING: In the case of LMG Chemicals Corporation vs. 2000 ruling in the same case which was rendered upon motion for reconsideration. 2001). No. 1998. as the case may be. [G. the Supreme Court finally changed the effectivity date thereof. the effectivity of the CBA was made retroactive. Secretary of DOLE. R. chanrobles virtual law library 136. R. In Manila Electric Company vs.In case of arbitral awards. But later. Quisumbing. 1999 ruling. from June 1. the effectivity date was made prospective per its January 27. April 17. 127422. In Pier 8 Arrastre and Stevedoring Services. in its August 1.

Rule II. It is part of the continuing process of collective bargaining. What is grievance procedure? “Grievance procedure” refers to the internal rules of procedure established by the parties in their CBA with voluntary arbitration as the terminal step. or one chosen by the parties with or without the assistance of the Board. pursuant to the selection procedure agreed upon in the CBA. the NCMB shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators. 17. What is voluntary arbitration? “Voluntary arbitration” refers to the mode of settling labor-management disputes by which the parties select a competent."Grievance machinery" refers to the mechanism for the adjustment and resolution of grievances arising from the interpretation or implementation of a CBA and those arising from the interpretation or enforcement of company personnel policies. at the level of the top union and company officials. The term includes panel of Voluntary Arbitrators. Section 1. when necessary. Rule II. Who is a Voluntary Arbitrator? “Voluntary Arbitrator” refers to any person who has been accredited by the NCMB as such. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators. (Section 1 [d]. 15. All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of their submission shall automatically be referred to voluntary arbitration prescribed in the CBA. 40-03. . or any person named or designated in the CBA by the parties as their Voluntary Arbitrator. preferably from the listing of qualified Voluntary Arbitrators duly accredited by the NCMB. It refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement. Rule I. 2004]. See also Article 212 [n]. which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above. 139. 15. NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [Oct. It usually consists of successive steps starting at the level of the complainant and his immediate supervisor and ending. (Section 1 [e]. 137. parties to a CBA shall name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators. as amended by Department Order No. or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators. which are intended to resolve all issues arising from the implementation and interpretation of their CBA. [Feb. 2004]). as may be necessary. Labor Code. Rules to Implement the Labor Code. For this purpose. pursuant to a selection procedure agreed upon in the CBA or one appointed by the Board in case either of the parties to the CBA refuses to submit to voluntary arbitration. trained and impartial third person who shall decide on the merits of the case and whose decision is final and executory. Book V. NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases). 2003]. Rule III. Section 1 [27]. Series of 2003. 138.

R. in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators. What is a lockout? A lockout is any temporary refusal of an employer to furnish work as a result of an industrial or labor dispute. mass leaves. upon motion of any interested party. placards and banners intended to inform the public about the dispute. the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides. Saornido. namely: 1. may issue a writ of execution requiring either the sheriff of the NLRC or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision. (Ludo & Luym Corporation vs. and chanrobles virtual law library 2. How is the decision of a Voluntary Arbitrator enforced? Under Article 262-A of the Labor Code. 140. 142. there are two kinds of Voluntary Arbitrators. destroy or sabotage plant equipment and facilities and similar activities. No. 140960. “Permanent Arbitrator” referring to the Voluntary Arbitrator specifically named or designated in the CBA by the parties as their Voluntary Arbitrator. What is a strike? A strike is any temporary stoppage of work by the concerted action of the employees as a result of an industrial or labor dispute. 143. order or award. chanrobles virtual law library STRIKES. G. 20. 2004]. for any reason. changing . fixing maintaining.A Voluntary Arbitrator is not part of the government or of the Department of Labor and Employment. LOCKOUTS AND PICKETING 141. What is picketing? “Picketing” or “peaceful picketing” is the right of workers to peacefully march to and fro before an establishment involved in a labor dispute generally accompanied by the carrying and display of signs. 2003). But he is authorized to render arbitration services provided for under labor laws. What is an industrial or labor dispute? An industrial or labor dispute includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating. Under the NCMB Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings [October 15. It consists not only of concerted work stoppages but also slowdowns. Jan. sitdowns. “Ad-Hoc Arbitrator” referring to the Voluntary Arbitrator chosen by the parties in accordance with the established procedures in the CBA or the one appointed by the Board in case there is failure in the selection or in case either of the parties to the CBA refuses to submit to voluntary arbitration. 144. attempts to damage.

Interphil Laboratories. in relation to a labor dispute. 142824.” a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer.one called to protest against the employer’s acts of unfair labor practice enumerated in Article 248 of the Labor Code as amended. 19. in the same case. overtime pay. Wildcat strike . What are the various forms of strikes? a. Economic strike . Slow down strike . if for a valid purpose. ULP strike . the Supreme Court. because while the employees “continue to work and remain at their positions and accept the wages paid to them.one where the workers stop working but do not leave their place of work. Dec. e.one staged without the workers quitting their work but by merely slackening or by reducing their normal work output.one called for a valid purpose and conducted through means allowed by law. 145.” 146. No. c. an activity by which workers.or arranging the terms and conditions of employment. “select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly. retard production or their performance of duties and functions to compel management to grant their demands.one staged for a purpose not recognized by law. Discussing work slowdown. 2001]. at the same time. regardless of whether the disputants stand in the proximate relation of employer and employee. Sit down strike . to the employer’s damage. chanrobles virtual law library d. What are the procedural but mandatory requisites of a lawful strike or lockout? There are seven (7) mandatory requisites. they “work on their own terms. [G. g. It is a “strike on the installment plan.. overtime boycott was considered a form of illegal strike. declared that it is an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract. Valid grounds: There are only two (2). Such a slowdown is generally condemned as inherently illicit and unjustifiable..one declared to demand higher wages. etc.one declared and staged without the majority approval of the recognized bargaining agent. to do other work. vacation pay. namely: First requisite: Valid and factual ground a. conducted through means not sanctioned by law. b. Legal strike . namely: .” In other words. It is one which is declared for the purpose of forcing wage or other concessions from the employer which he is not required by law to grant. without a complete stoppage of work. including gross violation of the collective bargaining agreement (CBA) and union-busting. Illegal strike . or. In Interphil Laboratories Employees Union-FFW vs. f. Inc. or statute or rule. R.” they. holiday pay.

it was held that a strike is illegal because of the failure to exhaust all the steps in the grievance machinery/voluntary arbitration provided for in the CBA. No.. Issues already brought before grievance machinery or voluntary arbitration. Violation of collective bargaining agreements. 150166. 2004). 72]. 1990). chanrobles virtual law library For example. chanrobles virtual law library 4. Under Article 261.. Thus. 88710-13. b. NLRC. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMF-LMLC]. Dec. Phil. where the union. therefore. G. No other grounds are allowed except the two mentioned above. Nestle Philippines. the issues involved in said labor dispute can no longer be invoked by the union in staging a strike or by management in conducting a lockout. The following grounds. the Supreme Court ruled that for failing to exhaust all the steps in the CBA. filed a notice of strike. simple violation of the CBA is no longer treated as unfair labor practice but as mere grievance which should be processed through the grievance machinery in the CBA. petitioner declared a bargaining deadlock. Inter-union or intra-union disputes. The reason is these issues are resolved following the medarbitration procedures prescribed by law and not through the staging of a strike/lockout. [91 Phil. G. 2. (Filcon Manufacturing Corporation vs. and (2) Unfair labor practice (ULP). a strike declared more on the ground of inter-union and intra-union conflict which is a nonstrikeable issue is patently illegal pursuant to the provision of paragraph [b] of Article 263 of the Labor Code. July 26. 99266. No. the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. March 2. No. Issues already assumed by the DOLE Secretary or certified by him to the NLRC for compulsory arbitration. R. in San Miguel Corporation vs. chanrobles virtual law library In a plethora of case. 1999]. except those which are gross in character. R. R. It becomes an unfair labor practice only when it is gross in nature which means that there is flagrant and/or malicious refusal to comply with the economic provisions of such agreement by either the employer or the union. chanrobles virtual law library Once the Secretary of Labor and Employment assumes jurisdiction over a labor dispute affecting national interest or certifies the same to the NLRC for compulsory arbitration. may not be properly cited as valid grounds for a strike or lockout in view of the pertinent provisions of the Labor Code. (Union of Filipro Employees.(1) CBA Deadlock. and thereafter. chanrobles virtual law library 3. Inc. vs. In the case of Liberal Labor Union vs. authoritative labor issuances and jurisprudence: 1. Can Co. the Supreme Court declared as illegal the strike staged by the union for not complying with the . 19. instead of asking the CBA’s Conciliation Board composed of five representatives each from the company and the union to decide the conflict. [G.

San Miguel Corporation vs. Issues involving legislated wage orders. The legislative intent that solution to the problem of wage distortions shall be sought by voluntary negotiation or arbitration. April 5. Insular Sugar Refining Corp. 144 SCRA 428).grievance procedure provided in the CBA. 119293. a strike or lockout is illegal if declared while a certain case is pending involving the same grounds for the strike or lockout. In view of the provisions of the second paragraph of Article 264 [a] of the Labor Code. G.. No. Sanchez. especially when they provide for conclusive arbitration clauses. Issues involving labor standards. (Filsyn Employees Chapter vs. The law provides for certain procedures in case of labor standards violations. is made clear in the rules implementing Republic Act No. (Bulletin Publishing Corporation vs. These agreements must be strictly adhered to and respected if their ends have to be achieved.” (Citing Insurefco Paper Pulp & Project Workers’ Union vs. Respondent union. 2003]. June 10. Second requisite: Notice of strike or notice of lockout a. Issues already brought before compulsory arbitration. however. resorted to force without exhausting all available means within its reach. ruling that: “xxx the main purpose of the parties in adopting a procedure in the settlement of their disputes is to prevent a strike. When to file notice: . Thus. xxx Strikes held in violation of the terms contained in the CBA are illegal. R. NLRC. and not by strikes. chanrobles virtual law library 6. No. Drilon. 95 Phil. This procedure must be followed in its entirety if it is to achieve its objective.” In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA. As declared long ago: “Strikes held in violation of the terms contained in a CBA are illegal especially when they provide for conclusive arbitration clauses. private respondent union violated the mandatory provisions of the CBA. a strike conducted during the pendency of the compulsory arbitration proceedings on a labor dispute certified to the NLRC for compulsory arbitration is illegal. 761 (1954). 7. 5. [G. As in the abovecited case. These agreements must be strictly adhered to and respected if their ends have to be achieved. Such infringement of the aforecited CBA provisions constitutes further justification for the issuance of an injunction against the strike. 82225. The above ruling was reiterated in the 2003 case involving the same employer . 6727 otherwise known as the Wage Rationalization Act. 6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the said law. petitioner company evinced its willingness to negotiate with the union by seeking for an order from the NLRC to compel observance of the grievance and arbitration proceedings. a strike is illegal if based on alleged salary distortion. R. xxx. 1989). lockouts or other concerted activities of the employees or management. Under Republic Act No.

Where to file notice: . to supervise the strike vote.(1) In case of ULP: 15 days from intended date of strike/lockout (2) In case of CBA Deadlock: 30 days from intended date thereof b. Fifth requisite: Strike vote report or lockout vote report a. to give it ample time to prepare for the deployment of the requisite personnel.strike or lockout is illegal . informing said office of the decision to conduct a strike vote/lockout vote. chanrobles virtual law library Fourth requisite: Strike vote or lockout vote a. [G. NLRC. The failure of a union to comply with the requirement of the giving of notice to the NCMB at least 24 hours prior to the holding of a strike vote meeting will render the subsequent strike staged by the union illegal.at least 7 days prior to strike or lockout.NCMB Third requisite . DOLE . c. and the date. place.A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the taking of the strike/ lockout vote by secret balloting. and time thereof. R. Inc. and time thereof. April 26. 2005. as the case may be. b. vs. and (c) should the NCMB decide on its own initiative or upon the request of an interested party including the employer. and (2) Employer in case of lockout. the NCMB cannot determine for itself whether to supervise a strike vote meeting or not and insure its peaceful and regular conduct. Effect of non-submission of strike vote to NCMB. and the date. place. When to submit strike or lockout vote report . No. in case of strike. This is the newest requisite added by the Supreme Court per its 2005 ruling in Capitol Medical Center. Majority approval of strike or lockout is required b. This requisite is designed to: chanrobles virtual law library (a) inform the NCMB of the intent of the union to conduct a strike vote.). (Ibid. including peace officers if need be. Strike vote still necessary even in case of union-busting. (b) give the NCMB ample time to decide on whether or not there is a need to supervise the conduct of the strike vote to prevent any acts of violence and/or irregularities attendant thereto. Unless and until the NCMB is notified at least 24 hours of the union’s decision to conduct a strike vote. Parties who may file notice: (1) Certified union. 147080.

Summary of principles governing strikes: 1. 147. 3. it being mandatory unlike the cooling-off period which may be dispensed with.30 days (2) In case of ULP . Exception: In the case of union-busting where the cooling-off period need not be complied with. the strike is illegal. chanrobles virtual law library Sixth requisite: Cooling-off period a. Cooling-off period and waiting period. General rule: (1) In case of CBA Deadlock . chanrobles virtual law library b.c. Purpose of the cooling-off period: for the parties to settle the dispute. distinguished. . Strike vote report in case of union-busting . chanrobles virtual law library c. Deficiency of even one day of the 7-day strike ban (or cooling off period) is fatal. A strike or lockout is illegal if any of the legal requisites (enumerated above) is not complied with.g. 2. d. When cooling-off period starts: from the time the notice of strike/lockout is filed with NCMB..15 days b. A strike or lockout is illegal if the issues involved are already subject of compulsory or voluntary arbitration or conciliation or the steps in grievance machinery are not exhausted. Seventh requisite: 7-day waiting period or strike ban a. c. chanrobles virtual law library d. Purpose of the 7-day waiting period: To ensure that the strike vote was indeed taken and that the majority of the members approved of it. inter-union or intra-union disputes or wage distortion). Cooling-off period is counted from the filing of the Notice of Strike/Lockout with NCMB. Procedural requirements are mandatory. Hence.still necessary. Waiting period is counted from the time of submission of strike vote report to NCMB. DOLE. Effect on 7-day waiting period if filed within cooling-off period: the 7-day waiting period shall be counted from the day following the expiration of the cooling-off period. A strike or lockout is illegal if it is based on non-strikeable issues (e.

violence. 193 SCRA 223] where the strike was declared illegal for lack of a valid notice of strike. A strike or lockout is illegal if the notice of strike or notice of lockout is already converted into a preventive mediation case. Inc. vs. A strike or lockout is illegal if unlawful means were employed or prohibited acts or practices were committed (e. blockades and obstructions of ingress to [entrance] or egress from [exit] the company premises).’ The effect of that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the docket of notice of strikes. The strike which the union mounted. The Supreme Court reasoned. January 23.” The NCMB has the authority to convert a notice of strike filed by the union into a preventive mediation case if it finds that the real issues raised therein are non-strikeable in character. Secretary of Labor and Employment.g. there is a remedy called “preventive mediation. as if there was no notice of strike. What is the effect of conversion of the notice of strike/lockout into a preventive mediation case? chanrobles virtual law library Under the NCMB rules. R. A case in point is Philippine Airlines. The local union and not the federation is liable to pay damages in case of illegal strike. 9. coercion. 5. 8.. a strike/lockout can no longer be legally staged based on the same notice. Barricades.. thus: “The NCMB had declared the notice of strike as ‘appropriate for preventive mediation. The conversion has the effect of dismissing the notice. as provided in Rule 41 of the NCMB Rules. threats.’” (Emphasis supplied) . Use of force. [G.4. etc.g.. A strike or lockout is illegal if staged in violation of the “No-Strike. it will be dropped from the docket of notices of strikes/lockouts. 1991. Once dropped therefrom. A strike is illegal if staged by a minority union. chanrobles virtual law library 7. 148. No-Lockout” clause in the collective bargaining agreement. in view of the NCMB’s conversion of the notice therein into a preventive mediation case. 6. (See further discussion below).. 88201. was aptly described by the petitioner as ‘an ambush. No. while preventive mediation proceedings were ongoing. During the pendency of preventive mediation proceedings no strike could be legally declared. A strike or lockout is illegal if conducted for unlawful purpose/s (e. Once a notice of strike/lockout is converted into a preventive mediation case. A strike or lockout is illegal if staged in violation of a temporary restraining order or an injunction or assumption or certification order. Such authority is in pursuance of the NCMB’s duty to exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably and in line with the state policy of favoring voluntary modes of settling labor disputes.: Strike to compel dismissal of employee or to compel the employer to recognize the union or the so-called “Union-Recognition Strike”) 10.

No. People’s Industrial and Commercial Employees and Workers Organization *FFW+ vs. (Samahan ng mga Manggagawa sa M. the Supreme Court said: “Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not ULP. Feb. been committed. 2000) Jurisprudence abounds in its enunciation that such no-strike provision in the CBA only bars strikes which are economic in nature. but not strikes grounded on unfair labor practices. R. [G. NLRC. R. Ramos. therefore. 1995. Ramos. (Filcon . it is not essential that the unfair labor practice act has. chanrobles virtual law library The Supreme Court consistently ruled in a long line of cases that a strike is illegal if staged in violation of the “No Strike/No Lockout Clause” in the CBA stating that a strike. hence not ‘strikeable. citing Master Iron Labor Union vs. 4. the strike is illegal. G. 113907. 2003]. which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings. June 10. a strike can no longer be staged based on said notice for the reason that upon such conversion.’ The refusal of the petitioners to heed said proscription of the NCMB is reflective of bad faith. (Panay Electric Company. no lockout” provision in the CBA is a valid stipulation although the clause may be invoked by an employer only when the strike is economic in nature or one which is conducted to force wage or other concessions from the employer that are not mandated to be granted by the law itself. Inc. the union had thereupon lost the notice of strike it had filed. chanrobles virtual law library In a situation where ULP is alleged. Greenfield (MSMG-UWP) vs. when the NCMB orders the preventive mediation in a strike case. What is the “NO-STRIKE. the notice of strike filed by the union was also converted into a preventive mediation case. the union thereupon loses the notice of strike it had filed.Clearly. 119293. NLRC 219 SCRA 47 [1993]). People’s Industrial and Commercial Corporation. there is no more notice of strike to speak of. It has heretofore been held that a “no-strike. is illegal. In the case of NUWHRAIN vs. 112 SCRA 430). When the NCMB ordered the preventive mediation. NO-LOCKOUT” clause in the CBA? The right to strike is not absolute. 102672. G. R. NLRC. if it still defiantly proceeded with the strike while mediation was ongoing. especially when such terms provide for conclusive arbitration clause. in fact. 28. NLRC. which is in violation of the terms of the CBA. 149. applying the aforecited ruling. Consequently. it suffices that the striking workers are shown to have acted honestly on an impression that the company has committed such unfair labor practice and the surrounding circumstances could warrant such a belief in good faith. Oct. In the 2003 case of San Miguel Corporation vs. After such conversion. 326 SCRA 428 (2000). No. (MSMG-UWP vs.” Such disregard of the mediation proceedings is deemed a blatant violation of the Implementing Rules. [287 SCRA 192 (1998)] where the petitioner-union therein similarly defied a prohibition by the NCMB. vs. No.

likewise. pursuant to the second paragraph of Article 264 of the Labor Code. 119360. The loss of employment results from the striking employees’ own act . What is the effect of a strike conducted in violation of a temporary restraining order or injunction? A strike is illegal if it violates a temporary restraining order (TRO) or injunction issued for the purpose of enjoining the union and/or its members from obstructing the company premises. 2001+. from the moment a worker defies a return-to-work order. 1968]. No labor dispute which will justify the conduct of a strike may exist between the employer and a minority union. vs. R. an act in violation of the law and in defiance of authority. (Philippine Airlines. Marcopper Mining Corporation vs. No. Julian. 305 SCRA 219). G. during the existence of the CBA. Can a strike be staged by a union whose legitimacy is in question? In the 2004 case of Stamford Marketing Corp. R. chanrobles virtual law library Thus. February 24. vs. 2004). are deemed to have lost their employment status for having knowingly participated in an illegal strike. To permit the union’s picketing activities would be to flaunt at the will of the majority. 2004]. 145496. (Association of Independent Unions in the Philippines vs. Brillantes. 10. 287. Oct. R. Under Article 263 [c]. 120505. 283 SCRA 275. as a result. 1997). and ordering the removal therefrom of all the barricades. No. The union officers and members. 153. 150166. [G. G. Interphil Laboratories. 254 SCRA 595). 142824. Brillantes. 1997. in Interphil Laboratories Employees Union-FFW vs.an act which is illegal. to stage a strike or engage in slowdown or interruption of work. Inc. Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center [LMFLMLC]. the Supreme Court had occasion to rule that a strike conducted by a union which has not been shown to be a legitimate labor organization. having abandoned their employment. R. [G. Inc. Case law. he is deemed to have abandoned his job. December 18. 15. the Supreme Court considered the conduct of “overtime boycott” and “work slowdown” by the employees as constitutive of illegal strike and a violation of the CBA which prohibits the union or employee. is illegal. Can a minority union lawfully stage a strike? In United Restauror’s Employees & Labor Union-PAFLU vs. NLRC. Torres. provides that by staging a strike after the assumption or certification for arbitration.Manufacturing Corporation vs. only a legitimate labor organization is . NLRC. Stated differently. December 19. 151. What is the effect of a strike staged in violation of an assumption or certification order? A strike that is undertaken after the issuance by the Secretary of Labor and Employment of an assumption or certification order becomes a prohibited activity and thus illegal. [26 SCRA 435. July 26. No. 152. (National Federation of Labor vs. the workers forfeit their right to be readmitted to work.. No. Dec. it was held that a strike conducted by a minority union is patently illegal. No.. 150. R. 1999. G. March 25.

entitled to file a notice of strike on behalf of its members. While the right to strike is specifically granted by law, it is a remedy which can only be availed of by a legitimate labor organization. Absent a showing as to the legitimate status of the labor organization, said strike would have to be considered as illegal. 154. What are the examples of a strike conducted for unlawful purposes? a. Strike for unlawful purpose is illegal. Strike, not being an absolute right, comes into being and is safeguarded by law only if the acts intended to render material aid or protection to a labor union arise from a lawful ground, reason or motive. But if the motive which had impelled, prompted, moved or led members of a labor union to stage a strike, even if they had acted in good faith in staging it, be unlawful, illegitimate, unjust, unreasonable or trivial, the strike may be declared illegal. (Filcon Manufacturing Corporation vs. Lakas Manggagawa sa FilconLakas Manggagawa Labor Center [LMF-LMLC], G. R. No. 150166, July 26, 2004; Interwood Employees Association vs. Interwood Hardwood and Veneer Company of the Philippines, 52 O.G. 3936). chanrobles virtual law library b. Strike to compel dismissal of employee. For instance, a strike staged for the purpose of unreasonably demanding the dismissal of a factory foreman is illegal. (Luzon Marine Department Union vs. Roldan, G. R. No. L-2660, May 30, 1950, 86 Phil. 507). c. Union-recognition-strike, illegal. A strike staged by a union to compel the employer to extend recognition to it as the bargaining representative is illegal. A union-recognition-strike, as its legal designation implies, is calculated to compel the employer to recognize one’s union, and not the other contending group, as the employees’ bargaining representative to work out a CBA despite the striking union’s doubtful majority status to merit voluntary recognition and lack of formal certification as the exclusive representative in the bargaining unit. (Association of Independent Unions in the Philippines vs. NLRC, G. R. No. 120505, March 25, 1999, 305 SCRA 219). If the majority status of a union is in doubt, a strike cannot be declared by reason of non-recognition by management of said union for purposes of collective bargaining. It is only when the union’s majority status is established through appropriate certification election, that the employer’s refusal to the demand for collective bargaining negotiations becomes illegal. Hence, the union may lawfully stage a strike based on such refusal which, under Article 248 [g] constitutes an unfair labor practice act. But if the strike is triggered not only by the desire for recognition by the union but also because of the unfair labor practices committed by the employer, the same may not be considered illegal. In Caltex Filipino Managers and Supervisors Association vs. CIR, [44 SCRA 351], the strike of the Association was declared not just for the purpose of gaining recognition but also for bargaining in bad faith on the part of the company and by reason of the unfair labor practices committed by its officials. Even if the strike were really declared for the purpose of recognition, the concerted activities of the officers and members

of the Association in this regard may not be said to be unlawful nor the purpose thereof as trivial. Significantly, in the voluntary return-to-work agreement entered into between the company and the Association thereby ending the strike, the company agreed to recognize for membership in the Association the position titles mentioned in Annex “B” of said agreement. This goes to show that striking for recognition is productive of good result insofar as a union is concerned. d. Trivial and puerile purpose. If a strike is declared for a trivial, unjust or unreasonable purpose or if carried out through unlawful means, the law will not sanction it and the court will declare it illegal. (Luzon Marine Department Union vs. Roldan, G. R. No. L-2660, May 30, 1950, 86 Phil. 507). e. Premature strike. A strike is illegal if staged without giving the employer reasonable time to consider and act on the demands made by the union. (Almeda vs. CIR, 96 Phil. 306; Insurefco Paper vs. Insurefco, 95 Phil. 761). f. Strike to circumvent contracts and judicial orders. A strike is illegal if used as a means to circumvent valid contractual commitments (Manila Oriental Sawmills vs. NLU, 91 Phil. 28) or to circumvent judicial orders lawfully issued. (ALPAP vs. CIR, 76 SCRA 274). 155. What is a good faith strike? It is a well-established policy enunciated in several labor cases that a strike does not automatically carry the stigma of illegality even if no unfair labor practice were committed by the employer. It suffices if such belief in good faith is entertained by labor as the inducing factor for staging a strike. (PNOC Dockyard and Engineering Corporation vs. NLRC, G. R. No. 118223, June 26, 1998, 291 SCRA 231; PepsiCola Labor Union vs. NLRC, 114 SCRA 930, 939, June 29, 1982). chanrobles virtual law library Indeed, the presumption of legality prevails even if the allegation of unfair labor practice is subsequently found to be untrue provided that the union and its members believed in good faith in the truth of such averment. (Samahan ng mga Manggagawa sa M. Greenfield (MSMG-UWP) vs. Ramos, G. R. No. 113907, Feb. 28, 2000; Master Iron Labor Union vs. NLRC, 219 SCRA 47, 60, Feb. 17, 1993). For instance, a strike based on a “non-strikeable” ground is generally an illegal strike; corollarily, a strike grounded on ULP is illegal if no such acts actually exist. As an exception, however, even if no ULP acts are committed by the employer, if the employees believe in good faith that ULP acts exist so as to constitute a valid ground to strike, then the strike held pursuant to such belief may be legal. As a general proposition, therefore, where the union believed that the employer committed ULP and the circumstances warranted such belief in good faith, the resulting strike may be considered legal although, subsequently, such allegations of unfair labor practices were found to be groundless. (National Union of Workers in Hotels, Restaurants and Allied Industries vs. NLRC, G. R. No. 125561, March 6, 1998, 287 SCRA 192; Panay Electric Co., Inc. vs. NLRC, G. R. No. 102672, Oct. 4, 1995, 248 SCRA 688).

However, good faith cannot be invoked as a defense if the ocular inspection by the labor authorities of the employer’s facilities yields no semblance of such good faith. (PASVIL/Pascual Liner, Inc. Workers Union - NAFLU vs. NLRC, G. R. No. 124823, July 28, 1999). chanrobles virtual law library It is, therefore, an established caveat that a mere claim of good faith would not justify the holding of a strike if the circumstances would not warrant such belief. It is not enough that the union believed that the employer committed acts of ULP when the circumstances clearly negate even a prima facie showing to sustain such belief. (National Union of Workers in Hotels, Restaurants and Allied Industries vs. NLRC, supra; Tiu vs. NLRC, G. R. No. 123276, Aug. 18, 1997). In Samahang Manggagawa sa Sulpicio Lines, Inc. – NAFLU vs. Sulpicio Lines, Inc., [G. R. No. 140992, March 25, 2004], the petitioner union claimed that the strike was legal for it was done in good faith, having been staged in response to what its officers and members honestly perceived as unfair labor practice or union-busting committed by respondent company. The Court, however, was unconvinced because it found the accusation of union-busting bereft of any proof. Scanning the records very carefully failed to indicate any evidence to sustain such charge. Hence, the strike was declared illegal in the light of the ruling in Tiu vs. NLRC, [G.R. No. 123276, August 18, 1997, 277 SCRA 680, 687] that it is the union which had the burden of proof to present substantial evidence to support its allegations (of unfair labor practices committed by management). The facts and the evidence did not establish even at least a rational basis why the union would wield a strike based on alleged unfair labor practices it did not even bother to substantiate during the conciliation proceedings. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. 156. May strikers be dismissed in cases of “good faith” strikes? In case the strike is declared by the union upon the belief in “good faith” that the employer has committed unfair labor practices, the strikers cannot be said to have lost their status as employees of the company although they did not wait for the cooling-off period to lapse before staging the strike. (Ferrer vs. CIR, 17 SCRA 353; Cebu Portland Cement Company vs. Cement Workers Union, 25 SCRA 504). However, as held in Reliance Surety and Insurance Co., Inc. vs. NLRC, [G. R. No. 86917-18, Jan. 25, 1991], if the strike conducted was violative of the mandatory legal requirements, was attended by acts of harassment and violence, was prompted by no actual, existing unfair labor practice committed by the employer, and there was no semblance of good faith, the strike is illegal. The ruling in Bacus vs. Ople, [G. R. No. L-56856, October 23, 1984] where the Supreme Court held that the finding of illegality attending a strike does not justify the wholesale dismissal of strikers who were otherwise impressed with good faith, cannot be applied here. chanrobles virtual law library Thus, as pronounced in National Federation of Labor vs. NLRC, [283 SCRA 275, 287-288, Dec. 15, 1997], even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no notice of strike and a strike vote were conducted, the said strike is illegal. (See also First City Interlink Transportation Co. vs. Confesor, G. R. No. 106316, May 5, 1997).

157. What is “improved offer balloting”? Improved offer balloting. - In case of a strike, the Regional Branch of the NCMB shall, at its own initiative or upon the request of any affected party, conduct a referendum by secret balloting on the improved offer of the employer on or before the 30th day of the strike. When at least a majority of the union members vote to accept the improved offer, the striking workers shall immediately return to work and the employer shall thereupon readmit them upon the signing of the agreement. 158. What is “reduced offer balloting”? Reduced offer balloting. - In case of a lockout, the Regional Branch of the NCMB shall conduct a referendum by secret balloting on the reduced offer of the union on or before the 30th day of the lockout. When at least a majority of the board of directors or trustees or the partners holding the controlling interest in the case of partnership, vote to accept the reduced offer, the workers shall immediately return to work and the employer shall thereupon readmit them upon the signing of the agreement. 159. What is the power of the DOLE Secretary to assume jurisdiction over a labor dispute or certify it to the NLRC for compulsory arbitration? The DOLE Secretary may assume jurisdiction over a labor dispute, or certify it to the NLRC for compulsory arbitration, if, in his opinion, it may cause or likely to cause a strike or lockout in an industry indispensable to the national interest. (NOTE: The President may also exercise the power to assume jurisdiction over a labor dispute). 160. What is the effect of such assumption or certification of labor dispute to the NLRC? a. On intended or impending strike or lockout - automatically enjoined even if a Motion for Reconsideration is filed. chanrobles virtual law library b. On actual strike or lockout - strikers or locked out employees should immediately return to work and employer should readmit them back. c. On cases filed or may be filed - All shall be subsumed/absorbed by the assumed or certified case except when the order specified otherwise. The parties to the case should inform the DOLE Secretary of pendency thereof. In the 2005 case of University of Immaculate Concepcion, Inc. vs. The Honorable Secretary of Labor, [G. R. No. 151379, January 14, 2005], the University contends that the Secretary cannot take cognizance of an issue involving employees who are not part of the bargaining unit. It insists that since the individual respondents had already been excluded from the bargaining unit by a final and executory order by the panel of Voluntary Arbitrators, then they cannot be covered by the Secretary’s assumption order. Said the Supreme Court:

“This Court finds no merit in the UNIVERSITY’s contention. In Metrolab Industries, Inc. v. RoldanConfessor, (254 SCRA 182, 188-189 [1996]), this Court declared that it recognizes the exercise of management prerogatives and it often declines to interfere with the legitimate business decisions of the employer. This is in keeping with the general principle embodied in Article XIII, Section 3 of the Constitution, (Article XIII, Section 3 of the Constitution) which is further echoed in Article 211 of the Labor Code. However, as expressed in PAL v. National Labor Relations Commission, (225 SCRA 301, 308 [1993]), this privilege is not absolute, but subject to exceptions. One of these exceptions is when the Secretary of Labor assumes jurisdiction over labor disputes involving industries indispensable to the national interest under Article 263(g) of the Labor Code. xxx. “When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual respondents, the Secretary did not exceed her jurisdiction, nor did the Secretary gravely abuse the same. It must be pointed out that one of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. In her Order dated March 28, 1995, the Secretary of Labor rightly held: “It is well to remind both parties herein that the main reason or rationale for the exercise of the Secretary of Labor and Employment’s power under Article 263(g) of the Labor Code, as amended, is the maintenance and upholding of the status quo while the dispute is being adjudicated. Hence, the directive to the parties to refrain from performing acts that will exacerbate the situation is intended to ensure that the dispute does not get out of hand, thereby negating the direct intervention of this office. “The University’s act of suspending and terminating union members and the Union’s act of filing another Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with the status quo ante. By any standards[,] these acts will not in any way help in the early resolution of the labor dispute. It is clear that the actions of both parties merely served to complicate and aggravate the already strained labor-management relations. chanrobles virtual law library “Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents from their employment became the impetus for the UNION to declare a second notice of strike. It is not a question anymore of whether or not the terminated employees, the individual respondents herein, are part of the bargaining unit. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation and should not be allowed.” chanrobles virtual law library 161. May picketing be enjoined? Are there exceptions? As a general rule, injunction cannot be issued against the conduct of picketing by the workers. Under our constitutional set up, picketing is considered part of the freedom of speech duly guaranteed by the constitution. (Mortera vs. CIR, 79 Phil. 345). However, excepted from this legal proscription are the following situations: 1. where picketing is carried out through the use of illegal means (Mortera vs. CIR, 79 Phil. 345); or

2. where picketing involves the use of violence and other illegal acts (PAFLU vs. Barot, 99 Phil. 1008; Caltex vs. CIR, 44 SCRA 350); or 3. where injunction becomes necessary to protect the rights of third parties (PAFLU vs. Cloribel, 27 SCRA 465). 161. May an injunction be issued in strike or lockout cases? As a general rule, strikes and lockouts validly declared, enjoy the protection of law and cannot be enjoined unless illegal acts are committed or threatened to be committed in the course of such strikes or lockouts. Ordinarily, the law vests in the NLRC the authority to issue injunctions to restrain the commission of illegal acts during the strikes and pickets. This policy applies even if the strike appears to be illegal in nature. The rationale for this policy is the protection extended to the right to strike under the constitution and the law. It is basically treated as a weapon that the law guarantees to employees for the advancement of their interest and for their protection. (Caltex vs. Lucero, 4 SCRA 1196). However, in some cases, injunctions issued to enjoin the conduct of the strike were held to be valid. In the 2003 case of San Miguel Corporation vs. NLRC, [G. R. No. 119293, June 10, 2003], the Supreme Court ruled that injunction may be issued not only against the commission of illegal act in the course of the strike but the strike itself. In this case, the notice of strike filed by the union has been converted into a preventive mediation case. Having been so converted, a strike can no longer be staged based on said notice. Upon such conversion, the legal effect is that there is no more notice of strike to speak of. When the NCMB ordered the preventive mediation the union had thereupon lost the notice of strike it had filed. However, the NCMB which effected the conversion, has, under the law, no coercive powers of injunction. Consequently, petitioner company sought recourse from the NLRC. The NLRC, however, issued a TRO only for free ingress to and egress from petitioner’s plants, but did not enjoin the unlawful strike itself. It ignored the fatal lack of notice of strike consequent the conversion thereof into a preventive mediation case. Article 264(a) of the Labor Code explicitly states that a declaration of strike without first having filed the required notice is a prohibited activity, which may be prevented through an injunction in accordance with Article 254. Clearly, public respondent should have granted the injunctive relief to prevent the grave damage brought about by the unlawful strike. (See also PAL vs. Drilon, 193 SCRA 223 [1991]). chanrobles virtual law library In the earlier case of San Miguel Corporation vs. NLRC, [304 SCRA 1(1999)] where the same issue of NLRC’s duty to enjoin an unlawful strike was raised, the Supreme Court ruled that the NLRC committed grave abuse of discretion when it denied the petition for injunction to restrain the union from declaring a strike based on non-strikeable grounds. In IBM vs. NLRC, *198 SCRA 586 (1991)+, it was held that it is the “legal duty and obligation” of the NLRC to enjoin a partial strike staged in violation of the law. Failure promptly to issue an injunction by the NLRC was likewise held therein to be an abuse of discretion. chanrobles virtual law library

In Bulletin Publishing vs. Sanchez, [G. R. No. 74425, Oct. 7, 1986], injunction was allowed against a strike which was staged to compel the employer to ignore the law. The reason is when trade unionism and strikes are used in violation of the law, misuse thereof can be the subject of judicial intervention. 162. What is meant by “return-to-work” order? A return-to-work order is an indispensable consequence of the assumption or certification order issued by the DOLE Secretary in national interest cases. It is automatic in nature which means that it may be enforced even if it is not expressly stated in the assumption or certification order because it is considered the logical and legal effect of the issuance of said order. Violation thereof, even for one day, would make the strike illegal. This holds true even if a Motion for Reconsideration of the assumption or certification order is filed. (Telefunken Semiconductors Employees Union-FFW vs. CA, G. R. Nos. 14301314, Dec. 18, 2000). Thus, it is error for striking workers to continue with their strike alleging absence of a return-to-work order. Article 263 [g] is clear. Once an assumption/certification order is issued, strikes are enjoined or, if one has already taken place, all strikers should immediately return to work. (Ibid.; id.). Returning to work, therefore, on the part of a worker, is “not a matter of option or voluntariness but of obligation.” (Marcopper Mining Corporation vs. Brillantes, G. R. No. 119381, March 11, 1996, 254 SCRA 595, 602; Cf. St. Scholastica’s College vs. Torres, 210 SCRA 565 *1992+; Federation of Free Workers vs. Inciong, 208 SCRA 157 [1992]). 163. What is meant by the phrase “all striking or locked-out employees” and “readmit all workers” within the context of a return-to-work order? Under Article 263 [g], once an assumption or certification order is issued, the consequence thereof is clear, thus: “Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked-out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout.” (Emphasis supplied) In the 2005 case of PLDT vs. Manggagawa ng Komunikasyon sa Pilipinas, [G. R. No. 162783, July 14, 2005], Secretary of Labor and Employment Patricia Sto. Tomas certified the labor dispute to the NLRC for compulsory arbitration. In her order, she directed the return to work of all strikers “except those who were terminated due to redundancy.” In setting aside this “qualified” return-to-work order for being contrary to law, the Court of Appeals observed that: “The phrase ‘all striking or locked-out employees’ and ‘readmit all workers’ does not distinguish or qualify and emphatically is a catch-all embracing enumeration of who should be returned to work. ‘Where the law does not distinguish, courts should not distinguish (Recaña v. Court of Appeals, 349 SCRA 24 *2001+ ).’”

2004]. R. the employer is restricted from exercising its generally unbounded right to transfer or reassign its employees. Inc. 145428. Records show that the strike occurred on December 23.. firing. Court of Appeals. must be maintained. [254 SCRA 182 (1996)]. [G. In this case. Since the strike was held on the aforementioned date.R. always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. This is the status quo that must be maintained.. pursuant to Article 263 [g]. When a labor dispute has in fact occurred and a general injunction .The Supreme Court affirmed said ruling of the CA. Pending resolution of said dispute. . . Inc. The Court upheld said order of the Secretary of Labor as it quoted the assailed resolution therein. Undoubtedly. it was held: chanrobles virtual law library “. 2002 due to alleged redundancy were still employed by the petitioner and holding their respective positions.: “. Article 263 [g] directs that the employer must readmit all workers under the same terms and conditions prevailing before the strike. 145428.-Unlicensed Crews Employees UnionAssociated Labor Unions (Tasli-Alu) vs. 2002. No. The Secretary of Labor declared the layoff illegal and ordered the company to reinstate the employees. Inc. or as in this case the certification of the same to the NLRC for compulsory arbitration. on December 22. 2002. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. then the condition prevailing before it. And to the extent that Article 263 [g] calls for the admission of all workers under the same terms and conditions prevailing before the strike. In the 2004 case of Trans-Asia Shipping Lines. No. G. the 383 members of the private respondent-union who were dismissed on December 31. What is meant by the phrase “under the same terms and conditions prevailing before the strike” within the context of a return-to-work order? Article 263 [g] constitutes a limitation or exception to the management prerogative of hiring. The case of Metrolab Industries. the Secretary of Labor. What is meant by “status quo ante” within the context of a return-to-work order? In the same 2005 PLDT case [supra]. Roldan-Confesor. demotion and promotion of employees. CA. July 07. As Article 263 [g] is clear and unequivocal in stating that ALL striking or locked-out employees shall immediately return to work and the employer shall immediately resume operations and readmit ALL workers under the same terms and conditions prevailing before the strike or lockout. which was the condition present on December 22. then the unmistakable mandate must be followed by the Secretary. (TransAsia Shipping Lines. vs. Inc. July 7. 2004). is particularly instructive. viz. transfer. assumed jurisdiction over the labor dispute at Metro Drug. 2002.” 164. Assumption of jurisdiction over a labor dispute. – Unlicensed Crews Employees Union – Associated Labor Unions [TASLI-ALU] vs. the company laid-off ninetyfour (94) of its rank-and-file employees invoking the exercise of management prerogative. the Supreme Court had occasion to describe what status quo prior to the strike means. 165.

[G. R.” Instead of fully complying therewith by allowing the faculty members to teach in the classroom. No. It said: “With respect to the Secretary’s Order allowing payroll reinstatement instead of actual reinstatement for the individual respondents herein. directed the university to “readmit all its faculty members. chanrobles virtual law library In Trans-Asia Shipping Lines. [G. The respondent is mandated. an amendment to the previous Orders issued by her office.” The Court ruled therein that the grant of substantially equivalent academic assignments could not be sustained because it could not be considered a reinstatement under the same terms and conditions prevailing before the strike. 2005]. where the Secretary of Labor. they are hereby ordered placed under payroll reinstatement until the validity of their termination is finally resolved. Tomas vs.” The order simply means that the employees should be returned to their ship assignments as before they staged their strike. This is consistent with the idea that any work stoppage or slowdown in that particular industry can be detrimental to the national interest. including the sixteen (16) union officials. to issue embarkation orders to the employees to enable them to report to their ship assignments in compliance with the Order of the Secretary of Labor. Is “payroll reinstatement” proper to implement a return-to-work order? The Supreme Court. July 7. NLRC. it was ruled that the respondent company cannot rightfully exercise its management’s prerogative to determine where its employees are to be assigned or to determine their job assignments in view of the explicit directive contained in the return-to-work orders of the Secretary of Labor to accept the striking workers back “under the same terms and conditions prevailing prior to the strike. [190 SCRA 758 (1990)]. 2004]. instead of actual reinstatement. Brillantes said: chanrobles virtual law library ‘Anent the Union’s Motion. pay or privilege. January 14. pursuant to Article 263 *g+. The Honorable Secretary of Labor. 145428. The phrase “under the same terms and conditions” makes it clear that the norm is actual reinstatement. Court of Appeals. the university gave some of them “substantially equivalent academic assignments without loss in rank. Inc. then Acting Secretary of Labor Jose S. Hence.’ chanrobles virtual law library . R. we find that superseding circumstances would not warrant the physical reinstatement of the twelve (12) terminated employees. 151379. – Unlicensed Crews Employees Union – Associated Labor Unions [TASLI-ALU] vs. under the same terms and conditions prevailing prior to the present dispute. “ Likewise apropos is the case of University of Sto. “In ordering payroll reinstatement in lieu of actual reinstatement. Inc. vs. Article 263(g) of the Labor Code aforementioned states that all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. allowed payroll reinstatement in University of Immaculate Concepcion. under the said order. No. 166. the same is usually not allowed.has been issued restraining the commission of disruptive acts. management prerogatives must always be exercised consistently with the statutory objective.

It observed that the NLRC was only trying its best to work out a satisfactory ad hoc solution to a festering and serious problem. In the Manila Diamond Hotel case. appears justified as an exception to the rule until the validity of their termination is finally resolved. However. Here. It distinguished the case from the earlier case of University of Santo Tomas (UST) vs. the Supreme Court found that it was merely an error of judgment.” (University of Immaculate Concepcion. which is not correctible by a special civil action for certiorari. No. Inc.“As an exception to the rule. Secretary of Labor. the High Court disallowed the payroll reinstatement of workers who were ordered to return to work by reason of the assumption order. 151379. (Manila Diamond Hotel Employees Union vs. The Supreme Court affirmed the validity of such an order and ruled that NLRC did not commit grave abuse of discretion in providing for the alternative remedy of payroll reinstatement. payroll reinstatement must rest on special circumstances that render actual reinstatement impracticable or otherwise not conducive to attaining the purposes of the law. vs. The Hon. 16. faced with a situation where the striking teachers were entitled to a return-to-work order. The payroll reinstatement in lieu of actual reinstatement ordered in these cases. NLRC. 190 SCRA 758 [1990]). Furthermore. G. 14. 140518 [Dec. in Manila Diamond Hotel Employees’ Union vs. No. December 16. The same holding was made in the earlier case of University of Santo Tomas [supra]. however. the NLRC provided payroll reinstatement for the striking teachers as an alternative remedy to actual reinstatement. the Secretary assumed jurisdiction over the labor dispute between striking teachers and the university. NLRC. UST vs. therefore. Jan. in a subsequent order. there was no showing that the facts called for payroll reinstatement as an alternative remedy. but the university could not immediately reinstate them since it would be impracticable and detrimental to the students to change teachers at that point in time. R. The Hon. 2004]. 167. G.R. thereby rendering their actual and physical reinstatement impracticable and more likely to exacerbate the situation. the issue has not been raised by any party in this case. The NLRC was. This Court sees no grave abuse of discretion on the part of the Acting Secretary of Labor in ordering the same. [190 SCRA 758 (1990)] (supra) in the light of one very important fact: the teachers in the latter case could not be given back their academic assignments since the order of the Secretary for them to return to work was given in the middle of the first semester of the academic year. The petitioner-union correctly pointed out that labor disputes naturally . CA. For instance. No. Court of Appeals. He ordered the striking teachers to return to work and the university to accept them under the same terms and conditions. *G. chanrobles virtual law library “The ‘superseding circumstances’ mentioned by the Acting Secretary of Labor no doubt refer to the final decision of the panel of arbitrators as to the confidential nature of the positions of the twelve private respondents. R. payroll reinstatement was not allowed by the Supreme Court. Moreover. 2005). therefore. 140518. 2004]. The High Tribunal declared that a strained relationship between the striking employees and management is no reason for payroll reinstatement in lieu of actual reinstatement. When is “payroll reinstatement” not proper? In some cases.

As a consequence of the above findings. [G. (Insurefco Pulp vs. vs. 102 Phil. 266 SCRA 713 [1997]) 169. G. CIR. None appears to have been established in this case. or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. Inc. 168. Insurefco. the relations between the strikers and the non-strikers will similarly be tense. July 7. and that in most strikes. a return-to-work order does not have the effect of rendering as moot and academic. However.B. 761). chanrobles virtual law library However. . NLRC. 122743 and 127215. according to Unlicensed Crews Employees Union – Associated Labor Unions [TASLI-ALU] vs. especially if national interest is involved. Nevertheless. 283 SCRA 145). the issue of the legality of the strike. CA. R. Inc. vs. (Bisaya Land Transportation Co. Secretary of Labor and Employment. Such act of returning to work only meant that they desisted from the strike which desistance is a personal act of the strikers and cannot be used against the union and interpreted as a waiver by it of its original demands for which the strike was adopted as a weapon. 2004]. the Supreme Court in Manila Diamond Hotel declared the Secretary’s subsequent order for mere payroll reinstatement as constitutive of grave abuse of discretion amounting to lack or excess of jurisdiction. as in the UST case aforementioned. The reason is simple: a return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration. the government must still perform its function and apply the law. the “great breadth of discretion” by the Secretary once he assumes jurisdiction over a labor dispute is recognized. Bitter labor disputes always leave an aftermath of strong emotions and unpleasant situations.involve strained relations between labor and management. (Telefunken Semiconductors Employees Union-FFW vs. (Reformist Union of R. payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable.. Nos. 95 Phil. Does the filing of a Motion for Reconsideration affect the return-to-work order? The filing of a motion for reconsideration does not affect the immediate executory character of the return-to-work order issued as a consequence of an assumption or certification order. during a conference before the Chairman of the NLRC. Liner. 438). an employer may be considered to have waived its right to proceed against the striking employees for alleged commission of illegal acts during the strike when. Dec. In the same breadth. Indeed. R. Are the demands of the union deemed waived upon a voluntary return to work? The act of strikers in voluntarily returning to work does not result in the waiver of their original demands. 145428. 1997. it agreed to reinstate them and comply fully with the return-to-work order issued by the Secretary of Labor and Employment. 12. No.

even criminal prosecution against him. Effect on employers in case of lockout. G. Rules of Procedure of the NLRC. Under Article 264. Grand Boulevard Hotel vs. paragraph [a]. 1990).To say that the effectivity of the return-to-work order must wait affirmance in a motion for reconsideration is not only to emasculate it but indeed to defeat its import. can no longer be affirmed insofar as the time element is concerned. Inc. No. a. 18. R. as amended by NLRC Resolution No. University of Santo Tomas vs. the deadline fixed for the return-to-work would.. (See also Grand Boulevard Hotel vs. damages and other positive or affirmative reliefs. NLRC. Inc. No. 143013-14. b. they may be subjected to immediate disciplinary action. Rule IX. for by then. Rules of Procedure of the NLRC. c. (No. May 28. is considered an illegal act committed in the course of the strike or lockout. Effect on strikers in case of strike. have already passed and. (Article 263[g]. In case of non-compliance by the employer with the return-to-work order issued in connection with the assumption/certification of the labor dispute. 18. CA. Guidelines Governing Labor Relations). 2003). Dec. 2004). from the date of actual refusal until the workers are re-admitted. Series of 2002. 01-02. upon filing of proper petition for the payment of wages and other benefits. It is already in itself knowingly participating in an illegal act. he may be held liable to pay backwages. 2000). 170. Section 4. R. [Hospital]. 153664-65. Genuine Labor Organization of Workers in Hotel Restaurant and Allied Industrial [GLOWHRAIN]. Rule IX. Oct. G. Employers who refuse to re-admit returning workers may be liable. Telefunken Semiconductors Employees Union-FFW vs. in the ordinary course. The strike becomes a prohibited activity under the same provision. 143341. July 18. 38 SCRA 372. (See Section 4. Dacanay. San Juan de Dios Educational Foundation. Labor Code. as amended by NLRC Resolution No. including dismissal or loss of employment status and even to criminal prosecution. hence. Effect on the legality of strike. it is clear that from the moment a worker defies a return-to-work order. Nos.R. Nos. Series of 2002). . 01-02. 24. 89920. R. The Supreme Court held in the 2004 case of San Juan de Dios Educational Foundation Employees Union – AFW vs. Philippine Airlines. (Philippine Airlines Employees Association vs. he is deemed to have abandoned his job. that in case of non-compliance by the strikers with return-to-work order issued in connection with the assumption/certification by the Secretary of Labor and Employment. G. What is the effect of defiance of assumption or certification order or return-to-work order? Non-compliance with the assumption/certification order of the Secretary of Labor and Employment or a return-to-work order issued pursuant thereto by either the Secretary or the NLRC to which a labor dispute is certified. (G.

The Secretary of Labor and Employment may cite the defiant party in contempt pursuant to the power vested in him under the provisions of the Labor Code. No. The Supreme Court is aware of this difficulty of serving said orders on striking unions and their members who invariably view the DOLE’s process servers with suspicion and hostility. [G..” (Navale vs. 143013-14. Can Co. 253 SCRA 705). Nestle Philippines. 91 Phil. CA. therefore. Petitioners here claimed that the assumption and return-to-work orders issued by the Secretary of Labor were allegedly inadequately served upon them. The Supreme Court. Precisely. Nos. would all be put to naught. as described by the Supreme Court in one case. Any further continuation thereof would be fatal as it may result in the loss of employment status of the defiant strikers. chanrobles virtual law library Where the return-to-work order is issued pending the determination of the legality of the strike. Primer on Strike. 22. The aversion to receive such orders is understandable. G. 2000]. through the simple expediency of refusing to acknowledge receipt thereof. Inc. 31. Nov. Picketing and Lockout). If a strike has not yet been staged. the purpose of the return-to-work order is to maintain the status quo while the determination is being made. No.. L-8197. found this contention untenable in the light of what had already been clearly established in this case. “an apparent attempt to frustrate the ends of justice. 72. on the ground that they are still legally employed although actually engaged in activities inimical to their employer’s interest. chanrobles virtual law library Such being the case. R. Otherwise. R. Refusal to acknowledge receipt of assumption order. The refusal to receive such orders and other processes is. vs. (Union of Filipro Employees. receipt of the order would mean that the strike can no longer push through. PALEA. (No. 19. December 18. Dec. Worse. presents a good study on this point. 035. 1990. 88728. No. d. If a strike is on-going. Liberal Labor Union vs. Admittedly. Oct. 88710-13. receipt of such order would mean that the strike has to end. NLRC. 1958). CA.The strike is illegal because of the brazen disregard of the return-to-work order of the Secretary. The 2000 case of Telefunken Semiconductors Employees Union-FFW vs. it is difficult to serve assumption or certification orders. R. All preparations. however. Contempt citation. R. the workers who contend that the strike is legal can refuse to return to their work and use a standstill in the company operations while retaining the positions they refuse to discharge or allow the management to fill. it is not correct to say that it may be enforced only if the strike is legal and may be disregarded if the strike is illegal. the Supreme Court said that it cannot allow the union to thwart the efficacy of the assumption and return-to-work orders issued in the national interest. 1989]. they will also claim payment for work not done. in many instances. e. to wit: . G. said the Supreme Court in Asian Transmission Corporation vs. [G. Phil. PAL vs.

“x x x. “Records also show that the Order of 16 September 1995 was served at the strike area with copies left with the striking workers. seasonal. What is the extent of the application of security of tenure? Security of tenure does not exclusively apply to regular employment only. similarly refused to acknowledge receipt of the 8 September 1995 Order on 9 September 1995 at 1:25 p. PART . the reports of the DOLE process server.m. much less disputed with clear and convincing evidence. The Union’s counsel of record. “The foregoing clearly negate the Union’s contention of inadequate service of the Orders dated 8 and 16 September 1995 of Acting Secretary Brillantes. 189 SCRA 767 [1990]). and on 11 September 1995 at 9:30 a. of 18 September 1995. (PLDT vs. The Federation of Free Workers officially received a copy as acknowledged by a certain Lourdes at 3:40 p. 158232. however. it would be stretching the limits of credibility if We were to believe that the Union was unaware of the said Orders during all the conciliation conferences conducted by the NCMB-DOLE. Furthermore. chanrobles virtual law library MANAGEMENT RIGHTS AND PREROGATIVES. Atty. 143171. No. although a certain Virgie Cardenas also refused to acknowledge receipt. Maglutac vs. 2004). 21. Allan Montano. R. Sept. NLRC.m. G. “Likewise. chanrobles virtual law library The fact that one is a managerial employee does not by itself exclude him from the protection of the constitutional guarantee of security of tenure. R. The principle of security of tenure applies not only to rank-and-file employees but also to managerial employees. the DOLE process server’s discharge of his function is an official act carrying the presumption of regularity in its performance which the Union has not disproved.IV LAW ON TERMINATION OF EMPLOYMENT SECURITY OF TENURE 1. (Fujitsu Computer Products Corporation of the Philippines vs. 2005.m. per the process server’s return. No. The latter. It also applies to probationary. shows that the Notice of Order of 8 September 1995 was actually served on the Union President.m. G. project and other forms of employment during the effectivity thereof. Managerial employees also enjoy security of tenure. . Tolentino.). April 8. CA. refused to acknowledge receipt of the same on two separate occasions (on 8 September 1995 at 7:15 p.

R. G. July 7. NLRC. 115785. 289 SCRA 86). No. 149974. NLRC. whenever exigencies of the service so require. June 15. (Mendoza vs.R. time. processes to be followed. 155421. Inc. March 9.R. every aspect of its business. supervision of workers. 2000). G. G. 2000). Rural Bank of Lucban. Transfer. The exercise of management prerogative is subject to the limitations imposed by law or by CBA. G. A transfer means a movement (1) from one position to another of equivalent rank. generally without restraint. transfer of employees. chanrobles virtual law library Thus. working methods. Such aspects of employment include hiring. according to its own discretion and judgment. (Philippine Industrial Security Agency Corporation vs. R. work supervision. No.2. Jr. Inc. 4. vs. time. (Deles. labor laws discourage interference in employers’ judgment concerning the conduct of their business. (Philippine Airlines. 119205. chanrobles virtual law library 5. Aug. lay-off of workers and the discipline. (The Philippine American Life and General Insurance Co. No. R. level or salary. vs. 2004). place and manner of work. G. place. Gramaje. G. No. concept and meaning. 15 April 1998. employment contract. 4. . (Sime Darby Pilipinas.R. as held in one case. 156963. 155421. vs. dismissal and recall of workers. vs. Mendoza vs. What are the limitations on the exercise of management prerogatives? Needless to state. In fact. work assignments. the exercise of management prerogative is not absolute. NLRC. tools to be used. 11. 2004). No. courts often decline to interfere in legitimate business decisions of employers. 07 July 2004). chanrobles virtual law library This privilege is inherent in the right of employers to control and manage their enterprise effectively. manner and other aspects of work? Employers have the freedom and prerogative. Aguinaldo. according to their discretion and best judgment. No. management retains the prerogative. to regulate and control all aspects of employment in their business organizations. employer policy or practice and general principles of fair play and justice. 3. What is the extent of management’s prerogative to prescribe working methods. What is the extent of management’s prerogative to transfer or re-assign workers? a. For this reason. Nov. R. 121348. to change the working hours of its employees. 2005. G. No. working regulations. What is the extent of the rights and prerogatives of management? Our laws recognize and respect the exercise by management of certain rights and prerogatives. Rural Bank of Lucban. An employer can regulate.

it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. More so when the contemplated transfer was from a higher position to a much lower one. July 7. 122468. No. vs. Should the employer fail to overcome this burden of proof. 112752. Sept. inconvenient or prejudicial to the employee. 2005]. Inc. The employer tried to recall the termination when it was learned that she was going to file a complaint with the NLRC for illegal dismissal. made in bad faith. and the action is not motivated by discrimination. R. But like all other rights. vs. R. the latter never heard from the former again. the employee’s transfer is tantamount to constructive dismissal. it was held that the several offers made by the employer to transfer an employee was indicative of bad faith. and other privileges. Gramaje. R. R. G. Certainly. Test to determine validity of transfer. there are limits. G. R. c. Florendo-Flores. vs. 1998). No. No. R. vs. No. [G. Nov. 2000]. NUWHRAIN – Dusit Hotel Nikko Chapter. In particular. Having the right should not be confused with the manner that right is exercised. In OSS Security & Allied Services. or (2) from one office to another within the same business establishment. NLRC. Transfer of employees. the offers made could not have the effect of validating an otherwise arbitrary dismissal. No vested right to position. 2002). March 9. G. No. [G. 158606.. the employer must be able to show that the transfer is not unreasonable. G. Thus.without a break in the service. 2004. 3. (Mendoza vs. NLRC. Globe Telecom. 11. 27. Benguet Electric Cooperative vs. Inc. Sept. G. Further. Feb. the offers were made after said employee was dismissed due to redundancy under a Special Early Retirement Program (SERP). benefits. 156963. No. August 9. good faith cannot be attributed on the part of the hotel. No. 9. 2004). In Dusit Hotel Nikko vs. the High Court ruled that an employee has a right to security of tenure but this does not give her such a vested right in her position as would deprive the employer of its prerogative to change her assignment or transfer her . Fianza. The Supreme Court has recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment. b. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. or effected as a form of punishment or demotion without sufficient cause. Rural Bank of Lucban. More importantly. inherent right of management. 2004. chanrobles virtual law library d. (The Philippine American Life and General Insurance Co. provided there is no demotion in rank or diminution of salary. This is a privilege inherent in the employer’s right to control and manage its enterprise effectively. Inc. Six months from the time the employer made the offers to her. the offers were made to the employee but she had not been transferred to another position at all. 160391. 150092. 155421. As a ploy to stave off the filing of said case. (Sentinel Security Agency. R.

Fianza. 1987]. in their application for . 75656. (See also Tan vs. NLRC. NLRC. vs. The mere specification in the employment contract of the position to be held by the employee is not such stipulation. (Westin Philippine Plaza Hotel vs. the employer knowing fully well that they were working students. G. 2002]. He argued that management cannot transfer him because his “Special Contract of Employment” which was executed after his retirement at age 60 to extend his service. Shipping and Marine Department. NLRC. May 3. an employee complained that his right was violated by the transfer effected by management. the fact that petitioners. Hon. No. in the case of Zafra vs. the dismissal of a medical representative who acceded in his employment application to be assigned anywhere in the Philippines. is guilty of insubordination. [G. Inc. 76959. No. 1990]. the transfer from the province to Manila was made after classes started. in Yuco Chemical Industries. R. His transfer to the Sugar Sales Department. caused him inconvenience and was unreasonable. but later refused to be transferred from Manila to a provincial assignment. 1994]. chanrobles virtual law library e. when such transfer is valid. October 12. their refusal to be transferred from Cebu to Manila which was made a condition for their training abroad (Germany) was held valid. R. The refusal of the employees to be transferred may be held justified if there is a showing that the transfer was directed by the employer under questionable circumstances. Inc. [G. June 2. vs. R. 121621. despite the petitioneremployees’ agreement in their application for employment to be transferred or assigned to any branch. 180 [1998]). when he applied and was accepted for the job. For instance. CA. NLRC. 1999). was held valid. No. G. the employees were being transferred during the height of union concerted activities in the company where they were active participants. But. Rendering the transfer more questionable is the fact that there was no showing that the company cannot hire employees in Manila who can perform the job assigned to the employees sought to be transferred. R. according to him. The Supreme Court overruled his argument. 2004). Sugar. [G. According to the High Court. No. September 17. (Benguet Electric Cooperative vs.where her service will be most beneficial to the employer’s client. In Chu vs. 158606. No. The reason is. chanrobles virtual law library In Abbott Laboratories. 139013. An employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogatives to change his assignment or transfer him where he will be most useful. No. March 9. Refusal to transfer. which job did not require any special dexterity which only said employees can perform. R. he agreed to the policy of the company regarding assignment anywhere in the Philippines as demanded by his employer’s business operation. [G. 106107. It constitutes willful disobedience of a lawful order of an employer. Further. An employee who refuses to be transferred. 299 SCRA 169. stipulated that his position is “Head” of the Warehousing. May 28. Ministry of Labor and Employment. R.

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

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

in its Manual of Regulations for Banks and Other Financial Intermediaries requires the rotation of bank personnel. supra). Transfer pursuant to company policy. 17. Transfer of an employee to avoid conflict of interest is a valid exercise of management prerogative and does not constitute constructive dismissal. l. Rotation among bank employees. 162994. Transfer due to standard operating procedure of management.” Consequently. (Castillo vs. unannounced and long enough to permit disclosure of any irregularities or manipulations. Transfer to avoid conflict of interest. No. The Bangko Sentral ng Pilipinas. 18 SCRA 1071 [1996]). the medical representative’s transfer of assignment was held valid as the same was necessitated by a possible conflict of interest since his wife holds a sensitive supervisory position in a competitor firm who takes an active participation in the market war characterized as it is by stiff competition among pharmaceutical companies. For example: in Duncan Association of Detailman-PTGWO vs. m. 320 SCRA 124. 127421. Dec. securities and bookkeeping records should be rotated” and that such rotation “should be irregular. The employer has the right to transfer an employee to another office in the exercise of sound business judgment and in accordance with pre-determined and established office policy and practice. 138). CIR. CA. 1999. n. . 2004+.. 39 SCRA 81). is legal. No. an employee who had been on a day shift for sometime may be transferred to the night shift. Transfers can be effected pursuant to a company policy to transfer employees from one place of work to another place of work owned by the employer to prevent connivance among them. Dapiton. Stage and Radio Entertainment Free Workers vs. *G.j. Sept. Inc. R. G. Glaxo Welcome Philippines. Particularly so when no illicit. legally required. (Philippine Industrial Security Agency vs. improper or underhanded purpose can be ascribed to the employer and the objection to the transfer was solely on the personal inconvenience or hardship that will be caused to the employee by virtue of the transfer. (Cinema. (Allied Banking Corporation vs. 8. k. Transfer in accordance with pre-determined and established office policy and practice. CIR. The Manual directs that the “duties of personnel handling cash. Where the rotation of employees from the day shift to the night shift was a standard operating procedure of management.R. the standard practice of a bank in constantly transferring its officers and personnel with accounting responsibilities from one branch to another among its more than a hundred branches throughout the country primarily for internal control and to enable its employees to gain the necessary experience for eventual promotion.

(Philippine Industrial Security Agency Corporation vs. will not efface such privilege if only to protect the person holding that office. [G. June 15. Inc. The abolition of a position deemed no longer necessary is a management prerogative and absent any findings of malice and arbitrariness on the part of management. No. vs. March 9. 2005]: “In constructive dismissal. bad faith. insensibility or disdain by an employer becomes unbearable to the employee. has assigned the security guard to at least four (4) different establishments. The transfer of an employee may constitute constructive dismissal when it amounts to “an involuntary resignation resorted to when continued employment is rendered impossible. [G.R. Transfer may constitute constructive dismissal. the position was abolished because the functions of the position had become redundant and unnecessary. 2004]. November 11. 158606. 150092. No. If the employer cannot . R. Transfer occasioned by abolition of position. 155421. 2005. Gramaje. No. discrimination. The employer must be able to show that the transfer is not unreasonable. and disdain towards respondent were already displayed by petitioner leading to the conclusion by the court that she was constructively dismissed. G. [G. effect. or when a clear discrimination. 149974. inconvenient. R. As the High Court explained in Globe Telecom. in a span of less than three (3) months. rather. (Benguet Electric Cooperative vs. July 7. it was held that such frequent transfers to different posts on short periods of time were indirect ways of dismissing him. chanrobles virtual law library In The Philippine American Life and General Insurance Co. Fianza. R. A transfer from one position to another occasioned by the abolition of the position is valid. R. No. 155264. 390 SCRA 201] and in Philippine Industrial Security Agency Corporation vs. vs. Aguinaldo. No. 156963. the Supreme Court declared the transfer of the respondent Assistant Vice-President from the Pensions Department to the Legal Department as not a legitimate exercise of management prerogative on the part of petitioner-employer. 2002.o. unreasonable or unlikely. The position may not be said to have been abolished because the employee was the occupant thereof. supra). the employer has the burden of proving that the transfer and demotion of an employee are for just and valid grounds such as genuine business necessity. Florendo-Flores. R. q. Mendoza vs. Rural Bank of Lucban. chanrobles virtual law library p. May 6. In a case where the security agency. G. Frequent transfers of short duration. 2004). It must not involve a demotion in rank or a diminution of salary and other benefits. NLRC. G. 2004). or prejudicial to the employee. when there is a demotion in rank and/or a diminution in pay. Dapiton. September 27. leaving him uncertain as to when and where his next assignments would be. No.” (Floren Hotel vs. Before the order to transfer was made.

any person who willfully causes loss or injury to another in a manner that is contrary to morals. (Hongkong and Shanghai Banking Corporation Employees Union vs. the employee’s demotion shall be tantamount to unlawful constructive dismissal. good customs or public policy shall compensate the latter for the damage. 126230. [G. 7. 18. R. No. Promotion. 1997. Nov. or a substantially equivalent. De la Salle University Employees Association. Promotion is the advancement from one position to another involving increase in duties and responsibilities as authorized by law. G. If the purpose of a reorganization is to be achieved.. in a number of cases. in addition to reinstatement. 2002]. To insist on one’s old position and ranking after a reorganization would render such endeavor ineffectual. may be recovered for illegal transfer. (Ibid. No. The illegal transfer of an employee to a functionless office is clearly an abuse on the part of the employer of its right to control the structure of its organization. NLRC. R. 330 SCRA 363 [2000]). Subido. Inc. It is hard to accept the claim that an employer would go through all the expenditure and effort incidental and necessary to a reorganization just to dismiss a single employee whom they no longer deem desirable.overcome this burden of proof. 154072. In the case of Paguio vs. chanrobles virtual law library 6. the Supreme Court ordered the payment in his favor of moral and exemplary damages as well as attorney’s fees. Damages.). NLRC. (Millares vs. No. Philippine Long Distance Telephone Co. where there was no clear justification for the transfer of the employee except that it was done as a result of his disagreement with his superiors with regard to company policies. 279 SCRA 326). (Arrieta vs. 6. 1997). the employee was ordered reinstated to his former. has recognized and affirmed the prerogative of management to implement a job evaluation program or a reorganization for as long as it is not contrary to law. December 3. G. 125038. defined. 20 SCRA 954). changes in the positions and rankings of the employees should be expected. And with the finding that the transfer was illegal. position without loss of seniority rights. R.” chanrobles virtual law library r. Under Article 21 of the Civil Code. (De la Salle University vs. morals or public policy.. Sept. chanrobles virtual law library . An employee who was illegally transferred is entitled to damages. and increase in compensation and benefits. What is the extent of management’s prerogative to reorganize? The Supreme Court. What is the extent of management’s prerogative to promote? a.

139251.Apparently. Home Insurance & Guaranty Corporation. R. advancement or reduction or a transfer that aims to lure the employee away from his permanent position cannot be done without his consent. There is demotion where there is reduction in position. or willful disobedience of a lawful order of the employer. c. Distinction between transfer and promotion. employees cannot be dismissed on that basis. R. CA. Aug. July 20. CA. No. July 5. G. the indispensable element for there to be a promotion is that there must be an “advancement from one position to another” or an upward vertical movement of the employee’s rank or position. (Philippine Wireless. Transfer. without his consent. 29. supra). Consequently. Inc. 8. No. What is the extent of the employer’s prerogative to demote? a. G. involves lateral movement from one position to another of equivalent level. the exercise by the employees of their right cannot be considered in law as insubordination. b.). supra). even if merely as a result of a transfer. There is no law which compels an employee to accept a promotion. rank or salary as a result of a transfer. No.R. (Millares vs. Promotion denotes a scalar ascent of an officer or an employee to another position. Concept. G. Such refusal to be promoted is a valid exercise of such right and he cannot be punished therefor. (Philippine Telegraph & Telephone Corporation vs. Sept. therefore. 112963. 152057. R. Hence. 29. (Ibid. (Philippine Telegraph & Telephone Corporation vs. G. Subido. rank or salary. chanrobles virtual law library An employee. A transfer that results in promotion or demotion. 2003). the concomitant elevation to the higher positions. See also Erasmo vs. (Dosch vs. 1983. Any person may refuse to accept a gift or reward. [Pocketbell] vs. cannot be promoted. on the other hand. No. An employee has the right to refuse promotion. This can be likened to the upgrading of salaries of government employees without conferring upon them. 51182. Refusal to be promoted. 2002). 1999). NLRC. higher either in rank or salary. NLRC. Any increase in salary should only be considered incidental but never determinative of whether or not a promotion is bestowed upon an employee. Promotion is in the nature of a gift or reward. legal effect. chanrobles virtual law library There is demotion when an employee occupying a highly technical position requiring the use of an .

No. When the employee concerned succeeds in meeting the quota again. (Leonardo vs. (Blue Dairy Corporation vs. The employer has the right to demote and transfer an employee who has failed to observe proper diligence in his work and incurred habitual tardiness and absences and indolence in his assigned work. supra). 1999). G. 2005). 155264. Hence. NLRC. non-compliance may be visited with a penalty even more severe than demotion. chanrobles virtual law library For instance. NLRC. whereupon his supervisor’s allowance will be withdrawn and be given to the individual who takes his place. No. NLRC. and in fact. a transfer from a workplace where only highly trusted authorized personnel are allowed to access to a workplace that is not as critical is another reason enough for the employee to howl a protest. 1986). In addition to the comparison involving nature of work. [G. under the same terms and conditions. he is re-appointed supervisor and his allowance is restored. on a per square-meter basis in the company’s premises .employee’s mental faculty. Aug. the same is also applicable to demotions as the latter likewise affect the employment of a worker whose right to continued employment. R. 29. b. R. June 16. An employer is entitled to impose productivity standards for its workers. chanrobles virtual law library 9. also a punitive action. 14. What is the extent of the employer’s prerogative to discipline and/or dismiss erring employees? a. Definitely. G. there is also demotion if there is a change in the workplace such as in the case of transfer of an employee from the laboratory . like dismissal. its employees are required to comply with a monthly sales quota. Should a supervisor such as the employee (Fuerte) fail to meet his quota for a certain number of consecutive months. June 16. Blue Dairy Corporation vs. supra). Right to discipline. R. Under this scheme. Simply put. Aquino.the most expensive work area. NLRC. the employer claims that the employee was demoted pursuant to a company policy intended to foster competition among its employees. (Petrophil Corporation vs. R. Due process principle in termination cases applies to demotions. G. No. is also protected by law. considering that demotion is. he will be demoted. (Blue Dairy Corporation vs. 2000] and Fuerte vs. NLRC. [G.virtually a transfer from a position of dignity to a servile or menial job. in the consolidated cases of Leonardo vs. No. 126937. the employee being demoted should. Moreover. No.to the vegetable processing section which involves processing of vegetables alone. Sept. is transferred to another position where she performed mere mechanical work . supra. R. be given a chance to contest the same. another aspect of comparison to determine the existence of demotion is the workplaces themselves. NLRC. . While due process required by law is applied in dismissals. May 6. 129843. 125303. 2000]. (Floren Hotel vs. even the employer’s right to demote an employee requires the observance of the twinnotice requirement. L-64048. as in cases of dismissals. The Supreme Court said that this arrangement appears to be an allowable exercise of company rights. NLRC.

NRLC. R. the employer. NLRC. are entitled to respect and enforcement in the interest of simple fair play. for the deserving. upon erring employees. The law. Out of its concern for those with less privileges in life. Inc. as such. 1998). according to its own discretion and judgment. employees. commensurate to the offense involved and to the degree of the infraction. Right to dismiss. NLRC. 2000). 1989). 145280. Feb. vs. 11. 121348. NLRC. chanrobles virtual law library c. 119205. 2001. the Supreme Court has inclined more often than not towards the worker and upheld his cause with his conflicts with the employer. authorizes neither oppression nor self-destruction of the employer. No. PLDT vs. March 9. 2000]. The right of the employer to dismiss its erring employees is a measure of self-protection. G. (Shoemart. G. The employer cannot be compelled to maintain in his employ the undeserving. subject to reasonable regulation by the State in the exercise of its police power. Consolidated Food Corporation vs. vs. Management may lawfully impose reasonable penalties such as dismissal upon an employee who transgresses the company rules and regulations. 139 [1999]). However. rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties. R. (Sime Darby Pilipinas. 4. No. when prescribed. G. Dec. petitioner’s infraction is punishable by dismissal. [G. Michael’s Institute vs. Aug. Management also has its own rights which. chanrobles virtual law library Instilling discipline among its employees is a basic management right and prerogative. subject to police power. February 10. alleged that under its rules. R. 10. however. in protecting the rights of the laborer. No. (Deles. No. No. 48705. 74229. (Reyes vs. b. if not undesirable. Feb. The employer’s inherent right to discipline is. including dismissal. vs. 1989). however. 315 SCRA 129. Jr. RCPI. 133259. No. 9.The employer’s right to conduct the affairs of his business. While the constitution is committed to the policy of social justice and the protection of the working class. Such favoritism. (Associated Labor Unions-TUCP vs. R. In the case of Farrol vs. 120450. Santos. Minister of Labor. NLRC. CA. The only criterion to guide the exercise of its management prerogative is that the policies. G. R. NLRC. Inc. 276 SCRA 1 [1997]). the Supreme Court said that the employer’s rules cannot preclude the State from inquiring whether the strict and rigid application or . has not blinded the Court to rule that justice is. it should not be supposed that every labor dispute will be automatically decided in favor of labor. to be dispensed in the light of the established facts and applicable law and doctrine. R. April 15. 1999. (St. This is a management prerogative where the free will of management to conduct its own affairs to achieve its purpose takes form. Right to discipline and/or dismiss. G. includes the prerogative to instill discipline in its employees and to impose penalties. in every case.

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

vs. the dismissal meted out on private respondent for allegedly sleeping on the job. those directives. Even when an employee is found to have transgressed the employer’s rules.” respectively. Inc. No. R. was also declared too harsh a penalty considering that they are being held liable for a first time offense and despite long years of unblemished service. In Permex. R. cannot be considered proper grounds for dismissal as the same were first infractions which merit only “warning” and “one-month suspension. the Supreme Court said that while an employer enjoys a wide latitude of discretion in the promulgation of policies. R. January 19. No. NLRC. 130957. In the case at bar. [G. however. after nine (9) long years of unblemished service. it was his first offense committed without malice and committed also by others who were not equally penalized. rules and regulations on work-related activities of the employees. considering that he was being held liable for the first time. where the managerial employee . 2004]. vs. January 24.to the depravity of the malfeasance. In a similar case. whatever missteps may have been committed by the employee ought not to be visited with a consequence so severe such as dismissal from employment. Inc. In China Banking Corporation vs. NLRC. [G. The matter of imposing the appropriate penalty depends on the employer. must always be fair and reasonable. violation or crime being punished. [G. chanrobles virtual law library In VH Manufacturing. 2000]. under said rules. and the corresponding penalties. due consideration must still be given to his length of service and the number of violations committed during his employment. in the actual imposition of penalties upon the erring employee. Where a penalty less punitive would suffice. 2001]. Right to choose which penalty to impose. Jan. Michael’s Institute vs. the dismissal of the employee accused of serious misconduct of falsification or deliberate misrepresentation. the Supreme Court ruled that the employee’s violations of the company rules against sleeping on post and quarrelling with a co-worker. [G. aside from absence of substantiation of the alleged offense. R. 19. Santos. NLRC. when prescribed. R. No. was considered too harsh a penalty in the light of the fact that it was not supported by the evidence on record and it was an unintentional infraction. vs. 145280. No. No. December 4. under the attendant circumstances. 107320. under the attendant factual antecedents in St. 156515. Inc. Dismissal is the most severe penalty an employer can impose on an employee. 2000]. 2000]. A grave injustice is committed in the name of justice when the penalty imposed is grossly disproportionate to the wrong committed. Moreover. in the application of such punishment. Oct. It goes without saying that care must be taken and due regard given to an employee’s circumstances. A’ Prime Security Services. [G. Borromeo. for dereliction of duty for one school day when they participated in a rally denouncing school authority. appears to be too harsh a penalty. involving the dismissal of an employee for sleeping on the job. 19. The dismissal meted out on the teachers. 125031. must be commensurate to the offense involved and to the degree of the infraction. for an alleged offense which caused no prejudice to the employer. g.

R. despite the heavier penalty provided therefor by the Labor Code. chanrobles virtual law library In Cruz vs. Right to impose heavier penalty than what the company rules prescribe. [G. rape. Company Rules and Regulations cannot operate to altogether negate the employer’s prerogative and responsibility to determine and declare whether or not facts not explicitly set out in the rules may and do constitute such serious misconduct as to justify the dismissal of the employee or the imposition of sanctions heavier than those specifically and expressly prescribed. No. petitioner was also suspended for his involvement in vehicular accidents which caused damage to another car and an outlet store. was held not to be a valid excuse. No employer may rationally be expected to continue in employment a person whose lack of morals. The employer has the right to impose a heavier penalty than that prescribed in the company rules and regulations if circumstances warrant the imposition thereof. In 1990 and 1991.. its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected. petitioner was found to have deliberately misrepresented on two occasions the total number of empties and was consequently suspended for six (6) days. e. admittedly. June 15. regard for his employer’s rules. the company rules violated by petitioner are punishable. No. 165586. However. the Supreme Court affirmed the validity of the dismissal because respondent company has presented evidence showing that petitioner has a record of other violations from as far back as 1986.” it was ruled that the employer’s Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously. h. In Stanford Microsystems. the fact that the offense was committed for the first time. vs. Inc. The employer-bank was left with no other recourse but to impose the ancillary penalty of restitution. respect and loyalty to his employer. for the first offense. in view of his voluntary separation from the employer-bank.questioned the imposition of the accessory penalty of restitution on him without imposing the principal penalty of “Written Reprimand/Suspension. the imposition of the penalty of reprimand or suspension would be futile. petitioner has been investigated for shortages in remittances of collections from customers. literally applied. otherwise. grave offenses. On several occasions. effect when management tolerates violation of company policy. would be penalized by mere suspension. the rules. 74187. or otherwise dictated by common sense. i... These misdemeanors are aggravated by several AWOLS which petitioner had taken in the course of his employment. NLRC. or has not resulted in any prejudice to the company. Jan. Rule in case of first offense. would result in absurdity. This is dictated by logic. [G. with the penalty of suspension. 1988]. In 1991. R. .g. Inc. and appreciation of the dignity and responsibility of his office. Like all other business enterprises. has so plainly and completely been bared. 2005]. Coca-Cola Bottlers Phils. 28. It was certainly within the employer-bank’s prerogative to impose on the respondentemployee what it considered the appropriate penalty under the circumstances pursuant to its company rules and regulations. this.

2004]. the penalty imposable on first offenders necessarily depends on such factors as gravity of the offense. the Supreme Court held the dismissal as too harsh a penalty for an unintentional infraction. has two aspects: substantive. the 2004 case of Agabon vs. NLRC.As a general rule. or extent of injury or damage. In case there is a set of company rules and regulations describing certain offenses and the corresponding penalty for violation thereof. liberty or property without due process of law. 125031. No. and committed also by others who were not actually penalized.. nor shall any person be denied the equal protection of the laws” (Section 1. 158693 November 17. the Due Process Clause in Article III. “Due process under the Labor Code. distinguished constitutional due process and statutory due process.e. the penalty prescribed thereunder for first offenders should be followed. Article III [Bill of Rights]. Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Victory Employees and Laborers’ Association. chanrobles virtual law library In Permex. then the same could not serve as a basis for termination. person aggrieved. however. R. it being a basic constitutional tenet that “no person shall be deprived of life. *85 Phil. . it was ruled that. No. not to mention that it was his first offense committed without malice. i. where the employee was dismissed on the charge of serious misconduct of falsification or deliberate misrepresentation involving alleged false entry in his daily time record which was not supported by the evidence on record and wherein he was not afforded an opportunity to be heard. (Ibid. And where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. and procedural. Jan. 24.). 1987 Constitution). to wit: chanrobles virtual law library “To be sure. R. i.e. the valid and authorized causes of employment termination under the Labor Code. It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Inc. 166 (1949)]. among others. Moreover. What is due process? Contrary to the time-honored principle that the right to due process of law is a constitutionallyguaranteed right. Due process is that which comports with the deepest notions of what is fair and right and just. like Constitutional due process. 2000]. vs. where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management.. NLRC. [G. DUE PROCESS 10. [G. then the same could not serve as a basis for termination. vs. as early as Tide Water Associated Oil Co.

otherwise known as the Labor Code of the Philippines in Book VI. What are “just causes” and “authorized causes”? Just causes and authorized causes. 9 and 10. . 2. civil or administrative proceedings. to wit: 1. Therefore.. Rule I.As mentioned in Article 279. 9 took effect on 21 June 1997.” chanrobles virtual law library 11. What are the twin requirements of notice and hearing? The twin requirements of notice and hearing constitute the essential elements of the procedural due process and neither of these elements can be eliminated without running afoul of the procedural mandate. “Authorized causes” which refer to those instances enumerated under Articles 283 *Closure of establishment and reduction of personnel] and 284 [Disease as ground for termination] of the Labor Code. “Just causes” which refer to those instances enumerated under Article 282 [Termination by employer] of the Labor Code. Department Order No. as amended by Department Order Nos.D.chanrobles virtual law library “Constitutional due process protects the individual from the government and assures him of his rights in criminal. while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. Two notices and a hearing required. 10 took effect on 22 June 1997). thus: (1) Substantive aspect. Procedural due process requirements for dismissal are found in the Implementing Rules of P. . Breaches of these due process requirements violate the Labor Code. 12. as amended. 442. What is the two-fold due process requirement? Two-fold due process requirement.the manner of dismissal. 2.The requirement of due process is two-fold. statutory due process should be differentiated from failure to comply with constitutional due process. and (2) Procedural aspect. (Department Order No. Sec. there are two (2) kinds of causes or grounds to terminate employment by employer. 13.

” (See also PNB vs. No. 157010. and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. the notice should specifically mention which company rules. Mamac. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them. Lastly. Millares vs. for an authorized cause under Article 283.R. Cabansag. What are the six (6) situations in termination disputes? The rules on termination of employment in the Labor Code and pertinent jurisprudence are applicable to six (6) different scenarios. Nos. Moreover. vs. 2007]. this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. G.The Supreme Court. No. explained the due process requirement in Genuino vs. the employees are given the chance to defend themselves personally. No. R. if any. . in order to enable the employees to intelligently prepare their explanation and defenses. June 29. are violated and/or which among the grounds under Article 282 is being charged against the employees. namely: 1. and (2) grounds have been established to justify the severance of their employment.The first written notice to be served on the employees should contain the specific causes or grounds for termination against them. reiterating its earlier holding in King of Kings Transport. Moreover. gather data and evidence. Inc. R. (3) Second written notice. and due process was observed – THE DISMISSAL IS LEGAL. consult a union official or lawyer.After determining that termination of employment is justified. During the hearing or conference. 14273233. G. PLDT. . “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. December 4. [G. the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. thus: chanrobles virtual law library (1) First written notice. or for health reasons under Article 284. The dismissal is for a just cause under Article 282. with the assistance of a representative or counsel of their choice. .After serving the first notice. [G. 2005. the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered. 166208. (2) present evidence in support of their defenses. May 6. June 21. 14. chanrobles virtual law library 2. and decide on the defenses they will raise against the complaint. 2005). the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them. 2007]. (2) Hearing required. NLRC. 154078. A general description of the charge will not suffice. The dismissal is without just or authorized cause but due process was observed – THE DISMISSAL IS .R. and (3) rebut the evidence presented against them by the management.

on the other. [G. the Supreme Court. chanrobles virtual law library In connection with situation No. the employees were terminated due to valid retrenchment but it was effected without Jaka complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. HENCE.00. The dismissal is for a cause which later on is proven to be non-existent – THE DISMISSAL IS NOT EFFECTIVE. The dismissal is not supported by evidence – NO DISMISSAL TO SPEAK OF. R. respondents were dismissed due to retrenchment. the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case.000. Pacot. The dismissal is for just or authorized cause but due process was not observed – THE DISMISSAL IS LEGAL BUT THE EMPLOYER IS LIABLE TO PAY INDEMNITY IN THE FORM OF NOMINAL DAMAGES (PER AGABON CASE). some violation against the employer. 4. 6. THE AMOUNT OF NOMINAL DAMAGES VARY FROM CASE TO CASE. Thus. or is guilty of.00 to distinguish it from the Agabon case where the penalty was P30. is guilty of some fraud against the employer. in the 2005 case of Jaka Food Processing Corporation vs. 5. we note that there are divergent implications of a dismissal for just cause under Article 282. distinguished the legal effects and consequences of termination for just cause but without due process (as in the Agabon case) and termination for authorized cause but also without due process. the High Court declared: chanrobles virtual law library “The difference between Agabon and the instant case is that in the former. 2005]. 4 above. . it can be said that the employee himself initiated the dismissal process. “A dismissal for just cause under Article 282 implies that the employee concerned has committed.000. 3. and a dismissal for authorized cause under Article 283. In this case.e. “At this point. THE EMPLOYER IS NOT LIABLE TO PAY ANY BACKWAGES OR DAMAGES.ILLEGAL. THE EMPLOYEE SHOULD BE REINSTATED. the employee has committed some serious misconduct. or. March 28. i. which is one of the authorized causes under Article 283 of the same Code. THE EMPLOYER IS NOT LIABLE TO PAY ANY BACKWAGES OR DAMAGES. The dismissal is without just or authorized cause and there was no due process – THE DISMISSAL IS ILLEGAL. he has neglected his duties. SO EMPLOYEE SHOULD BE REINSTATED (BUT NOT AS A RELIEF). 151378. as in Agabon. In awarding a “stiffer” sanction of P50. on one hand.

301 SCRA 189+ is an example of a case where the employees’ conclusion that they were dismissed was unsubstantiated as there was no evidence that they were dismissed from employment by their employer nor were they prevented from returning to work. no backwages should be awarded since the same is proper only if an employee is unjustly or illegally dismissed. R. NLRC. payment of separation pay. Instead.” contemplated under situation No. 2001]. Nov. . The case of Asia Fancy Plywood Corporation vs. 1985).e. a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. the law requires payment of separation pay. absent the reason which gave rise to his separation from employment. their employer has. “For these reasons. R. and when based on one of the authorized causes under Article 283. 1999. Example is when the employee is terminated due to his detention by the military for alleged subversive act which later was not proven and the case dismissed for lack of evidence. “The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first. as a rule. 226 SCRA 723 [1993]). the dismissal process is initiated by the employer’s exercise of his management prerogative. as in this case. the employer does not intend to dismiss the employee but the dismissal was effected nonetheless for a specific cause which turns out to be non-existent. i. (Pepito vs. Inc.” chanrobles virtual law library In “termination for non-existent cause. 63370. R. NLRC. 113099. 20. 6 above. when the employer opts to install labor saving devices. 18. reinstatement is in order. Hence. is not required. January 26. he undertakes to implement a retrenchment program. the employee was not actually dismissed but nonetheless has filed an illegal dismissal case. Secretary of Labor. Under situation No.“On another breath. No. The employees should simply be ordered to report for work and for the employer to accept them to their former or substantially equivalent position without backwages. vs. [G. (Magtoto vs. Jan. G. NLRC. where the Supreme Court found that petitioner did not dismiss respondent security guards. while in the second. there is no intention on the part of the employer to dismiss the employee concerned. No. NLRC. expressed its willingness to accept them back to their former positions. there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282. when he decides to cease business operations or when. 96 SCRA 454). 114316. in fact. Accordingly. In such a case. No. [G. 5 above. and that the latter did not abandon their employment. Reinstatement without backwages was also ordered in the 2001 case of Security and Credit Investigation. (See also Indophil Acrylic Manufacturing Corporation vs. Here.

petitioners would not have continued with the investigation. If she was indeed dismissed on said date. it was she who signified her intention not to report for work when she filed the instant case. and he should be happy that his employer is accepting him back. The Supreme Court ruled that she was not dismissed. except his self-serving assertion. No. R. R. No. The common denominator of those instances where payment of separation pay is warranted is that the employee was dismissed by the employer. the employee was placed under preventive suspension for 20 days for unauthorized encashment of check. cannot likewise be ordered paid to the employees who were not dismissed by the employer. In Jo Cinema Corporation vs. Both the Labor Arbiter and the NLRC found that Alfredo was not dismissed and their findings of fact are entitled to great weight. There is no proof at all. No. she filed a case for illegal dismissal. the Supreme Court also ordered the reinstatement but without backwages of the employee (Fuerte) who was not deemed to have abandoned his job nor was he constructively dismissed. 2000]. the employee pre-empted the outcome of the investigation by filing a complaint for illegal dismissal. 126937. Alfredo Roco. No notice of termination was given to him by CALS. the Supreme Court found that respondent employee has not established convincingly that he was dismissed. R. [G. therefore.In the consolidated cases of Leonardo vs. 1996 to resume his work. In fact. each party must bear his own loss. [G. 150660. No. 2001. No. NLRC. in a case where the employee’s failure to work was occasioned neither by his abandonment nor by a termination. The employee should instead be ordered reinstated . was properly dismissed by the Labor Arbiter for lack of merit as Alfredo was not dismissed. It must be emphasized that the right of an employee to demand for separation pay and backwages is always premised on the fact that the employee was . R. she even attended said investigation where she admitted having encashed the checks. Abellana. His complaint for illegal dismissal. [G. CALS notified him in a letter dated March 12. chanrobles virtual law library Case where the employee filed illegal dismissal case to pre-empt lawful dismissal. March 26.not as and by way of relief proceeding from illegal dismissal but as and by way of a declaration or affirmation that the employee may return to work because he was not dismissed in the first place. 2000] and Fuerte vs. Undoubtedly. In fact. 1997. But in Cals Poultry Supply Corporation vs. June 16. 125303. the payment of separation pay and backwages are not in order. June 16. Having thus determined that the employee was not dismissed from the service. R. 270 SCRA 488]. June 28. 1996. In a case where there was no dismissal at all. it was he who unilaterally severed his relation with his employer. NLRC. Separation pay. separation pay should not be awarded. As pointed out by the Court. [G. She could not have been dismissed on the day she was preventively suspended because a formal investigation was still being conducted. as she claims. Thus. 117378. Aquino. [G. 2002]. 132837. July 30. according to Capili vs. Before the lapse of said period and while the investigation was on-going. the burden of economic loss is not rightfully shifted to the employer. that he was prevented from working after the end of his leave of absence on January 18.

if the dismissal is with malice or effected in bad faith). In an analogous instance in the case of Pizza Hut/Progressive Development Corporation vs. under such situation. [252 SCRA 531. but he refused to receive it. whichever is higher.Damages (moral. No.Other benefits or their monetary equivalent. 125303. 2000). it was held that an employee’s refusal to sign the minutes of an investigation cannot negate the fact that he was accorded due process. 536 (1996)]. he was given a memorandum asking him to explain the incident in question. chanrobles virtual law library In case reinstatement is not possible. he only became the subject of an investigation in which he was apparently loath to participate. Case where employee refused to be investigated. no factual and legal bases.Attorney’s fees (10% of all monetary awards). NLRC. R. the petitioner-employee protests that he was never accorded due process. . 4.terminated either legally or illegally. however. So should it be here. The reliefs mentioned above are not available to a legally dismissed employee. [NOTE: Nos. Any order of reinstatement and award of backwages have. G. June 16. payment of separation pay in lieu thereof may be awarded. 2000]. for he was never terminated. the computation is up to the time of finality of decision]. (Philippine Airlines. If reinstatement is not possible. What are the reliefs available to an illegally dismissed employee under the Labor Code and the Civil Code? The following reliefs may be awarded: 1. No. [G. NLRC. on the other hand. Inc.Reinstatement without loss of seniority rights and other privileges. NLRC. vs. Separation pay. 2. 5. August 4. 15.Full backwages. 3. is awarded as an alternative to illegally dismissed employees where reinstatement is no longer possible. According to the Supreme Court. The award of backwages belongs to an illegally dismissed employee by direct provision of law and it is awarded on grounds of equity for earnings which a worker or employee has lost due to illegal dismissal. 2 and 3 above are computed from the time the compensation was withheld from the employee (date of dismissal) up to the time of his actual reinstatement. exemplary. 115785. inclusive of allowances. In Leonardo vs. this begs the question. computed at one month or one month pay per year of service. R. As testified to by the personnel manager.

G.16. For termination based on authorized causes under Article 283. grounds have been established to justify his termination. G. and (c) A written notice of termination (second notice) served on the employee indicating that upon due consideration of all the circumstances. 2001). R. a. 2005. present his evidence or rebut the evidence presented against him. CA. 9. and giving to said employee reasonable opportunity to explain his side. May 6. R. No. which were prescribed by the Department of Labor and Employment that may be used as simple guideposts to gauge whether due process was indeed observed in a given case or situation]. June 21. however. Mira. Due process under Article 282 means compliance with the following requirements of two (2) notices and a hearing: (a) A written notice (first notice) served on the employee specifying the ground or grounds for termination. and (2) the appropriate Regional Office of the Department of Labor and Employment at least thirty (30) days . Nov. the due process requirement had been interpreted in so many ways. Concorde Hotel vs. The requirements of due process is deemed complied with upon the service of a written notice to: (1) the employee. For termination based on just causes under Article 282. vs. While the twofold requirement of substantive and procedural due process as well as the twin requirements of notice and hearing are the well-known and well-entrenched features thereof. 144089. 154078. chanrobles virtual law library b. (b) A hearing or conference (or at least an opportunity to be heard) during which the employee concerned. Inc. is given opportunity to respond to the charge. How should the due process requirement under the law be standardized? [NOTE: For years. No. chanrobles virtual law library The following is an attempt at standardizing the due process requirement under the different situations contemplated under the law. Aug. 21. R. Millares vs. G. with the assistance of counsel if the employee so desires. No. chanrobles virtual law library These requirements are mandatory. R. non-compliance with which renders any judgment reached by management void and inexistent. 2002. 144314. No. G. (Skippers Pacific. there had been no clear-cut standards. (PNB vs. 157010. Cabansag. PLDT. 2005).

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

In reversing said CA ruling. That the employee was able to present. Consistent with San Miguel Corporation vs. the notice served on the employee merely asked him to explain why he should not be administratively dealt with for his refusal to comply with a valid order of his superior. with longer time to prepare their case. vs. R. and. a written explanation did not excuse the fact that there was a complete absence of the required notice. August 7. he refused. December 28. petitioner took into consideration the explanations they had offered. In arriving at the decision to dismiss them. Nagkakaisang Empleyado ng Wellcome-DFA. The Memoranda specified the acts that constituted gross insubordination. and with greater opportunity to take care of the financial needs of their family pendente lite. Federico Nuez. as he did not even know which particular acts or omissions should be . was the company driver. 2005]. Thereafter. there was no necessity for an actual hearing. chanrobles virtual law library In the earlier case of Nuez vs. [408 SCRA 478.In the 2005 case of Glaxo Wellcome Phils.. He was ordered by a superior officer to drive some of the employees to the head office. which in fact they did. the employee was not apprised of the particular acts for which his employment was terminated. 2003]. but it was still deemed sufficient compliance with the notice required under the Implementing Rules. Without a doubt. No. different and effective first level of remedy (which was to surrender the vehicles) to protect their jobs. why they should not be dismissed for gross insubordination. with the aid of their counsel. In his written reply. Furthermore. must be differentiated from Loadstar vs. why they had refused to return the vehicles. His explanations were futile. an opportunity to defend themselves. and that what was asked of him was not an emergency that warranted the charge of disobedience. bare as it was. the High Tribunal ruled that the three (3) Memoranda served on the errant employees were sufficient compliance with the due process rule. However. they were still able to file a Complaint with the Labor Arbiter. March 11. Ubaldo [supra]. Moreover. they were nonetheless given adequate opportunity to answer the charge. the Court of Appeals held that the dismissal and suspension meted upon two employees of petitioner company were not legal because they were not accorded the benefit of a proper charge. the company vice president issued a Memorandum to Nuez terminating the latter’s employment for insubordination. and a formal investigation. It must be noted that in this case. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. The factual milieu in Glaxo. Under the circumstances. petitioner’s Memoranda amply gave them a distinct. To each Memorandum. respondents were able to reply and explain. The Memoranda served the purpose of informing them of the pending matters beclouding their employment and of extending to them an opportunity to clear the air. respondents in Glaxo deliberately disregarded or disobeyed a company policy. [239 SCRA 518. He was dismissed immediately after he had submitted his written explanation to his employer. NLRC. [G. however. he was required to explain why he should not be administratively dealt with for disobeying the order of an officer. in effect. the errant employee. In this case. Mesano. Inc. with better knowledge of the cause of their dismissal. The notice did not state that the employee was being dismissed. Nuez said that he had a previous engagement. Thus. 149349. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. 1994].

All that petitioner tendered to respondent was a notice of her employment termination effective the very same day. 103209. chanrobles virtual law library . Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation. No. An employee cannot be dismissed if the charges mentioned in the notice for which he was required to explain and for which he was heard. G. July 25. (Bondoc vs. NLRC. 276 SCRA 288). The notice to the employee should embody the specific charges for which he is being asked to explain. 2005]. together with the equivalent of a one-month pay. 106027. 1994). were different from the ones cited for his termination. one month notice upon confirmation or the equivalent of one (1) day’s or month’s salary in lieu of notice. chanrobles virtual law library Thus. In dismissing employees. the employment contract between the parties stipulated. When notice alone will not suffice. 18. a memorandum advising an employee of his dismissal but which does not “clearly” cite the reason for the dismissal does not comply with the second kind of notice required prior to dismissal. R.explained. respondents’ explanations were in response to specific acts and grounds that had duly been stated with clarity. One of her fundamental rights is that she may not be dismissed without due process of law. the employer must furnish them the two written notices. thus: “6. In the Glaxo case. It has already been held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days’ salary. a memorandum to an employee which does not state with particularity the acts and omission for which he is being charged does not comply with the first kind of notice preparatory to his dismissal. The twin requirements of notice and hearing constitute the essential elements of procedural due process. 19. At any rate. The evidence in this case is crystal-clear. June 21. R. [G. Neither was she given any chance to be heard. R. she could not have defended herself effectively. 1997. July 28. even if she were given the opportunity to be heard. as required by law. benefits and privileges provided under our labor laws. There is here a deprivation of procedural due process. In the same vein. respondent was entitled to all rights. Respondent was not notified of the specific act or omission for which her dismissal was being sought. without citing any ground. G. No. the employee was terminated by a mere notice. (BPI Credit Corporation vs. 157010. In Philippine National Bank vs. for she knew no cause to answer to. Notice to explain must correctly and fully inform the employee of the charges against him. No.” chanrobles virtual law library After probationary period. and neither of these elements can be eliminated without running afoul of the constitutional guarantee. NLRC. The Supreme Court said that as a regular employee. among others. Cabansag.

The first notice dated July 27. their abandonment. NLRC. and warned them in the form of a reminder that such absence is a ground for separation or dismissal from the company. the petitioners were guilty of both abandonment and dishonesty or misconduct. 2005]. The first notice issued in this case merely stated that respondent is being charged of dispensing and drinking beer on December 5. chanrobles virtual law library In Artemio Labor vs. he could not be expected to adequately defend himself as he was not fully or correctly informed of the charges against him which management intended to prove. The dismissal of an employee must be based on the same grounds cited in the first notice given to him to explain. The employee must be dismissed based on the same grounds mentioned in the first notice. The letters cum notice cannot be considered to include dishonesty or misconduct. petitioner was not sufficiently apprised of the gravity of the situation he was in. R. 2005]. It would be a gross violation of the workers’ right to due process to dismiss them for that cause of which they were not given notice or . 1995]. where it sought an explanation from them on their alleged absence without official leave or. 154315. in short. 165586. NLRC. No. R. around 11:30 to 11:45 p. Sept. Inc. Nagkakaisang Empleyado ng Wellcome-DFA.In the 2005 case of Cruz vs. Coca-Cola Bottlers Phils. It is less than fair for management to charge an employee with one offense and to dismiss him for having committed another offense with which he had not been charged and against which he was unable to adequately defend himself. supra). 20. according to the Supreme Court. Inc. A cursory reading of this notice likewise shows that it does not state that petitioner was in fact facing a possible dismissal from the company. chanrobles virtual law library In Philippine Pizza. For in this situation.. supra. BPI Credit Corporation vs. 14. May 9. petitioners violated respondent’s right to due process. [G. [G. the Supreme Court declared that there was no abandonment or commission of dishonest acts by the dismissed workers when the employer merely sent notices individually addressed to the workers on 6 September 1991. and nothing more. R.. particularly the requirement of first notice because the offense notice petitioners gave to respondent is insufficient since it did not comply with the requirement of the law that the first written notice must apprise the employee that his termination is being considered due to the acts stated in the notice. 110388.m. vs.. If an employee is dismissed based on grounds different from those cited in said notice.. vs. then the company should have put them down in black and white. the notices given to petitioner were declared legally deficient. The notice was also couched in general terms that it only mentions the specific sections and rule numbers of the Red Book that was violated without defining what such violation was. Inc. No. Consequently. he is deemed to have been deprived of procedural due process. 1998. No. did not contain the particulars of the charges nor the circumstances in which the violation happened. Bungabong. [G. June 15. Nothing was mentioned therein about dishonesty or any other misconduct on the part of the petitioners. 1997. (Glaxo Wellcome Phils. chanrobles virtual law library If indeed.

NLRC. Book VI. CAINGAT is no longer connected with RS Night Hawk Security and Investigation Agency and with RS Maintenance and Services. it was shown that on July 31.” (Underscoring supplied) The Supreme Court ruled that neither the public notice in the Philippine Daily Inquirer. not sufficient. NLRC. a newspaper of general circulation. 1996. 2005]. G. vs. No. Inc. [G. the following appeared in the Philippine Daily Inquirer: “NOTICE TO THE PUBLIC “This is to notify the public that as of June 20. (See also Imperial Textile Mills. March 10. the same day he was suspended. G. In the position paper. 1996. MR. No. R. Series of 1997. 217 SCRA 237 [1993]. however. 22. A dismissal must not only be for a valid or substantial cause. as amended by Article III. the respondent-employer denied it dismissed the complainant. Notice in a newspaper. 10. (Shoppers Gain Supermart vs. chanrobles virtual law library 21. San Miguel Corporation vs.R. 154308. the notices shall be served on the employee’s last known address. 1996 are no longer honored by these offices. NLRC. In the 2005 case of Caingat vs. Nov. 222 SCRA 818 [1993]). . (Section 2. 1996. July 26. The mere posting of the notice to terminate the employee’s employment on the employees’ bulletin board is not sufficient compliance with the statutory requirement.for a charge for which they were never given an opportunity to defend themselves. 158693. not sufficient. Rule I. NLRC. 17. Department Order No. The order for petitioner to submit a written explanation under oath was just a formality. Rules to Implement the Labor Code. 259 SCRA 411). 2004). In case of termination. chanrobles virtual law library 24. 110731. The termination was a fait accompli. Notice should be served at employee’s last known address. Notice posted in bulletin board. nor the demand letter could constitute substantial compliance. R. 23. The pro-forma notice made even more glaring management’s intent to separate him from the companies’ service. the employer must also observe the procedural aspect of due process in giving the employee notice and the opportunity to be heard to defend himself. Caingat after June 20. No.service by registered mail to last known address. Remedy if employee refused to receive notice . chanrobles virtual law library “All transactions with Mr. What the public notice did was to inform the public that petitioner was already separated as of June 20. BERNARDINO A.” On record. 1996. NLRC. Agabon vs. it stated that “there is no evidence that respondents dismissed the complainant.

305 SCRA 592 [1999]). The law does not specify what constitutes reasonable period within which an employee being cited administratively must submit his answer or explanation. [G. 26. considered the two-day period given to petitioner to explain and answer the charges against her as most unreasonable. 2001]. NLRC. (IBM Philippines. Moreover. No. petitioner was also made to answer for loitering and wasting company time. The law mandates that every opportunity and assistance must be accorded to the employee by the management to enable him to prepare adequately for his defense. 23 half-days and 108 tardiness). 129329. R. What is hearing requirement in termination for cause? The essence of due process is simply an opportunity to be heard. [G. chanrobles virtual law library 25. 157603. Inc.In the 2005 case of Nueva Ecija Electric Cooperative [NEECO] II vs. How should answer be made in case of termination for just cause? The worker may answer the allegations stated against him in the first notice within a reasonable period from receipt of such notice. 1999). the Supreme Court. NLRC. vs. R. petitioner could have easily remedied the situation by the expediency of sending the memorandum to private respondent by registered mail at his last known address as usually contained in the Personal Data Sheet or any personal file containing his last known address. Non-compliance therewith is fatal because these requirements are conditions sine qua non before dismissal may be validly effected. in the case of Asuncion vs. 124382. or as applied to administrative proceedings. some of which were allegedly committed almost a year before. considering that she was charged with several offenses and infractions (35 absences. 16. (Austria vs. NLRC. Apart from chronic absenteeism and habitual tardiness. June 23. No. This is in consonance with the express provision of the law on the protection to labor and the broader dictates of procedural due process. chanrobles virtual law library For instance. The decision to dismiss must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative. The reasonableness of the period necessarily depends on the distinctive circumstances of each case. if he so desires. not to mention the fact that the charges leveled against her lacked particularity. No. NLRC. 2005]. A formal or trial-type hearing is not at all times and in all instances . July 31. R. G. Aug. it was held that the allegation on the part of the petitioner-employer that the respondentemployee refused to receive the memorandum that is why it was not served to him is too self-serving a claim in the absence of any showing of the signature or initial of the proper serving officer. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. Hon. getting salary of an absent employee without acknowledging or signing for it and disobedience and insubordination.

Outright termination violates due process. The Supreme Court ruled that the composition of the fact-finding committee 22 days after the employee was first terminated was obviously an afterthought to give a semblance of compliance with the 30-day notice requirement provided by law. July 30. however. 305 SCRA 592). 2005]. 1997. 1997. G. Hon. show that he was not afforded due process. Inc. (IBM Philippines. R. but he was not given a fair and reasonable opportunity to confront his accusers and defend himself against the charge of theft. 124166. No. Bungabong. What is frowned upon is the absolute lack of notice and hearing. May 9. nothing that respondent could say or do would have changed the decision to dismiss him. (Valiao vs. vs. 1999] presents an extreme case of illegal dismissal. 154315. was already final. Such failure by petitioners to give respondent the benefit of a hearing and an investigation before his termination constitutes an infringement of respondent’s constitutional right to due process. 146621.essential. Cindy & Lynsy Garment vs. In Philippine Pizza. Gorombalem. July 5. NLRC and Felizardo A. 2004. R. 117221. No. [G. No. [G. while there was just cause for the employee’s dismissal. When dismissal was already a foregone conclusion. vs. his termination was tinged with bad faith. . (Robusta Agro Marine Products. G. the opportunity to explain or present his side. 1989). 80500. No. Benguet Corporation vs. April 13. NLRC. He was able to submit his explanation denying that he stole beer from the company dispenser. Indeed. vs. There should be no outright termination of his employment without due process. R. Thus. The employee who had served the company for more than two decades was first dismissed on the basis of an anonymous letter. Bizarre case of employee illegally dismissed twice. NLRC. Inc. 1999. R. at that point. The employer should give an employee who committed an act considered lawful cause for his dismissal. R. The termination letter was issued by the HRD Vice President on December 15. as the due process requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. even before respondent could present his side and refute the charges against him. November 16. CA. chanrobles virtual law library “Ample opportunity” means every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense including legal representation. Inc. Clearly then. Guianan. Otherwise. G. The employer investigated him 22 days after the first dismissal and was again served with a termination letter for the second time sometime later. 284 SCRA 38 [1998]). No. it will be a violation of his right to security of tenure and due process of law. one day before respondent went to the HRD Office for the alleged investigation. the records of the case. the decision to terminate respondent which was made effective on December 19. It was merely a token gesture to cure the obviously defective earlier dismissal.

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

[G. Nov. May 16. where the employer prohibited its employees against personal or marital relationships with employees of competitor companies. Cabal vs. 1962). 162994. G. May the right to equal protection of the laws be asserted in administrative proceedings? In the case of Duncan Association of Detailman-PTGWO vs. Construction Supply. Obviously. R. the exclusionary rule under said provision of the Bill of Rights of the 1987 Constitution applies only to admissions made in a criminal investigation but not to those made in an administrative investigation. such an invasion gives rise to both criminal and civil liabilities. if the hearing partakes of the nature of a criminal proceeding because of the nature of the penalty that may be imposed for the offense. vs. 16. NLRC. If the investigation is merely an administrative investigation conducted by the employer and not a criminal investigation. N. No. C. Board of Medical Examiners. (Waterous Drug Corporation vs. the admissions made during such investigation may be used as evidence to justify dismissal. It is not true that the citizens have no recourse against such assaults. Jr. Kapunan. Marti. R. Dec.. (Manuel vs. 2004]. Therefore. 127553. Custodial investigation is the stage where the police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a particular suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit incriminating statements. 282 SCRA 326). Glaxo Welcome Philippines. (Pascual. 113271.The answer is in the affirmative. however. G. No. On the contrary.. the Supreme Court declared that it finds no reason to revise the doctrine laid down in People vs. that the Bill of Rights does not protect citizens from unreasonable searches and seizures perpetrated by private individuals. The only exception occurs when the state. Indeed. [193 SCRA 57 (1991)]. 31. G. the company actually enforced the policy after repeated requests to the employee to comply with the policy. No. chanrobles virtual law library 32. 1969. chanrobles virtual law library 33. 29. May the right to counsel be asserted in administrative proceedings? The right to counsel under Section 12 of Article III [Bill of Rights] of the 1987 Constitution is meant to protect a suspect in a criminal case under custodial investigation. No. this exception is not present in this case. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority. 28. in any of its manifestations or actions. No. has been found to have become entwined or involved in a wrongful private conduct. it was held that such prohibition is reasonable under the circumstances because relationships of that nature might compromise the interests of the company and the same does not violate the equal protection clause in the Constitution. Significantly. 280 SCRA 735). Jr. Oct. The right to counsel attaches only upon the start of such investigation. R. R. 1997. May the right against unreasonable searches and seizures be invoked in administrative proceedings? As applied to labor cases. . L-19052. L-25018. G. 1997. September 17. It is that point when questions are initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. R. Inc.

When may the effects of termination be suspended? Grounds. or 2. chanrobles virtual law library 34. from the wordings of the contractual provision and the policy in its employee handbook. the employee should be paid his wages during the period of extension. In any event. Justification for imposition of preventive suspension (not a penalty). The Labor Code does not contain any provision on preventive suspension. the termination is in implementation of a mass lay-off. the absence of malice or the fact that the employee is a first offender. the termination may cause a serious labor dispute. What is preventive suspension? a. suspension is deemed sufficient penalty. (Ibid. The employer may place the worker concerned under preventive suspension for a period of 30 days if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. . •Period of preventive suspension must be definite. But if the 30-day period is extended because the employer has not finished its investigation of the case. During the said period. only 15 days. (Article 277 [b]) 35.). •Extension of period must be justified.the application of the said policy was made in an impartial and even-handed manner. . chanrobles virtual law library •Preventive suspension of workers in the construction industry. inter alia. period. with due regard for the lot of the employee. Legal basis. The legal basis for the valid imposition thereof is found in the Rules to Implement the Labor Code. chanrobles virtual law library b. 36. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. the employee is not entitled to his wages. it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. What is suspension as a penalty? When dismissal is too harsh a penalty due to certain mitigating factors such as.The Secretary may suspend the effects of termination pending resolution of the case in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom the dispute is pending that: 1.

Considering the factual backdrop in this case. Reinstatement under Article 279 presupposes that the judgment has already become final and executory. However. 27. no demonstration of such moral perverseness as would have justified the claimed loss of confidence attendant to the job. 148205. What is reinstatement? a. 37. may be availed of as soon as the Labor Arbiter renders a judgment declaring that the dismissal of the employee is illegal and ordering said reinstatement. according to Manipon vs.. At most. the respondent-employee was dismissed for dishonesty. There was no dishonesty. and. Consequently.In the 2005 case of Coca-Cola Bottlers. or even violated.The consequence of illegality thereof is reinstatement without loss of seniority rights and with full backwages (inclusive of allowances and other benefits computed from the time his compensation was withheld up to the time of his actual reinstatement). and he cannot be deprived thereof without due process and unless it was commensurate to his acts and degree of moral depravity. Reinstatement when not prayed for. 1994]. then a reprimand or even a suspension. The failure to allege reinstatement as one of the reliefs in the complaint for illegal dismissal is not fatal. although the . negligence and blatant disregard of or deviation from established control and other policies and procedures. 2005]. NLRC. 105338. Reinstatement under Articles 279 and 223 of the Labor Code. to be not inexcusable under the circumstances. effect. the petitioneremployer failed to adduce clear and convincing evidence that the respondent had committed said acts. which appears to have been fully explained. Consequently. it was ruled that for his infractions. falsification of company records/data/documents/reports. distinguished. there is nothing left to be done except the execution thereof. chanrobles virtual law library Perhaps. R. certain company rules of internal control procedures. conspiring or conniving with. chanrobles virtual law library • In case of illegal dismissal . individual petitioner should first have been given a mere warning. in fact. but to say that it was deliberate is gratuitous. R. One must keep in mind that a worker’s employment is property in the constitutional sense. the respondent-employee should be meted a suspension of two (2) months instead of dismissal. Dec. [G. and inefficiency in the performance of duties. In the interest of justice. The company must bear a share of the blame for entrusting a mere driver-helper with a highly fiduciary task knowing that he did not possess the required skills. Reinstatement under Article 223 of the Labor Code. more specifically for violation of the company policy on fictitious sales transactions. [G. No. but certainly not outright dismissal from employment. Kapisanan ng Malayang Manggagawa sa Coca-ColaFFW. it was ruled that the extreme penalty of dismissal was too harsh and manifestly disproportionate to the infraction committed. Inc. Phils. February 28. vs. or directing others to commit fictitious transactions. It may be availed of even pending appeal. No. however. the employee failed to comply with.

the petitioner therein would have been entitled to reinstatement as a consequence of his illegal dismissal from employment. 20. from the time of his illegal dismissal up to the finality of this judgment. No. 2003]. NLRC. 299 SCRA 1. 219 SCRA 549 [1993]). Bondesto. 151026. [G. R. so the petitioner maintains. by expressly asking for separation pay. The employee who files an illegal dismissal case may choose between reinstatement and payment of separation pay in lieu of reinstatement. R. the Supreme Court recognizes an exception. However. 2005+. chanrobles virtual law library Employee ordered reinstated may. he is entitled to separation pay equivalent to one month pay for every year of service. 2004]. No. chanrobles virtual law library In the 2003 case of Solidbank Corporation vs. Nov.issue of the grant of separation pay was never contested even at the level of the Labor Arbiter nor assigned as error at the NLRC level. chanrobles virtual law library In Pheschem Industrial Corporation vs. If ordered reinstated later on after the end of the proceedings. A different rule. the Labor Arbiter’s ruling where he granted petitioner separation pay instead of ordering his reinstatement should be corrected. CA. where the respondent was assigned. No. opt for separation pay instead. 13]. Reinstatement should be granted although he failed to specifically pray for the same in his complaint. Moldez. he is deemed to have opted for separation pay in lieu of reinstatement. 25. where the employee explicitly prayed for an award of separation pay in lieu of reinstatement. It is a settled principle that technicalities have no place in labor cases as rules of procedure are designed primarily to give substance and meaning to the objectives of the Labor Code to accord protection to labor. 139847. [266 SCRA 713. after more than a year after the respondent was placed on payroll reinstatement. Aug. it was constrained to discontinue the respondent’s payroll reinstatement. as an alternative to reinstatement. applies in a case where reinstatement was not prayed for in the complaint but the payment of separation pay in lieu thereof. he forecloses reinstatement as a relief by implication. March 5. 728-729 (1997)] to the effect that separation pay is awarded as an alternative to reinstatement. 1998. He is bound by the relief he prayed for in his complaint. NLRC. [G. No. R. 161158. Clearly. the company’s Tondo Plant. he has no other option but to abide thereby. Consequently. at the end of the proceeding. In the 2004 case of Procter and Gamble Philippines vs. however. was shut down. . May 9. [G. However. Reinstatement when what is prayed for is separation pay. As pronounced in Dela Cruz vs. Since the respondent’s employment could not be maintained at the Tondo Plant. (See also General Baptist Bible College vs. R. respondent’s omission to pray for reinstatement in his position paper before the Labor Arbiter was not considered as an implied waiver to be reinstated. NLRC. It was considered a mere procedural lapse which should not affect his substantive right to reinstatement. 121288. This is the tenor of the holding in Reformist Union vs. the Supreme Court said that by so doing. *G.

the same cannot be awarded in instances where it is no longer feasible as in a case where private respondent is already over-aged. An illegally dismissed employee is entitled to be reinstated to his former position. he should be awarded separation pay at the rate of one (1) month for every year of service as an alternative. 1996. 124166. 1986). Rules to Implement the Labor Code. (Benguet Corporation vs. Rule I. G. Vicente. Leogardo. No. 142759. in the event that the previous positions of petitioners may no longer be open or available. Book VI. Dec. Inc. 1994]. NLRC. In such a case. he should be given a substantially equivalent position in the same establishment without loss of seniority rights. No. July 27. in which case. R. However. Guianan.the respondent is entitled to reinstatement. 112678. While reinstatement is a relief mandated in illegal dismissal cases. 10. it failed to indicate the absence of an unfilled position more or less of a similar nature as the one previously occupied by the respondent at its other plant/s. Meris. (See also RCPI vs. Book VI. No. unless such position no longer exists at the time of his reinstatement. 06. (Section 4[b]. 73352. the proper remedy is to award separation pay in lieu of reinstatement. G. 30. 210 SCRA 222. 3.. chanrobles virtual law library Reinstatement not possible due to old age. NLRC. R. Jr. separation pay equivalent to at least one (1) month pay for every year of service. following settled jurisprudence. R. NLRC. 16. 2004). Philtread Tire & Rubber Corporation vs. R. 8. chanrobles virtual law library 2. No. R. No. Rules to Implement the Labor Code. in lieu of reinstatement and in addition to the three-year back salaries. 1986). vs. 435). Rule I. 197 SCRA 471). 73334. Nov. Closure of the business of the employer. G. if the respondent no longer desires to be reinstated. R. No. Jan. Castro. (Bagong Bayan Corporation vs. Ople. R. Reinstatement should no longer be ordered when it is rendered moot and academic by reason of supervening events such as: 1. 70361. without loss of seniority rights to another position of similar nature in the company. 2004). G. No. Declaration of insolvency by the court. [G. chanrobles virtual law library Reinstatement when position no longer exists. Dec. However. Pedroso vs. as held in Tanduay Distillery Labor Union vs. NLRC and Felizardo A. It should be stressed that while the petitioner manifested the closure of the Tondo Plant. Fire which gutted the hotel and resulted in its total destruction. chanrobles virtual law library Reinstatement rendered moot and academic by supervening events. Espejo vs. . (Section 4. (Electruck Asia. Torillo vs. Nov. March 29. G. G. 147031. considering that more than ten (10) years have since elapsed from the date of their dismissal. 255 SCRA 430. 1999. private respondentemployer has to pay.

No. Litigation. chanrobles virtual law library 38. (Paguio Transport Corporation vs. No. 70615. Rule I. does not give rise to strained relations that may justify non-reinstatement. Strained relations must be raised before the Labor Arbiter. 28. otherwise. the Supreme Court has been consistent in its holding that the existence of strained relations between the employer and the illegally dismissed employee may effectively bar reinstatement of the latter. the filing of the complaint for illegal dismissal does not by itself justify the invocation of this doctrine. 14. R. by itself. 74531. b. R. (Paguio Transport Corporation vs. Strained relations must be demonstrated as a fact. [292 SCRA 109 (1998)]. NLRC. R. No. to his status quo ante dismissal. 2005. chanrobles virtual law library As a rule. Book VI. . CA. No. the Supreme Court ruled that the existence of strained relations is a factual issue which must be raised before the Labor Arbiter for the proper reception of evidence. (Callanta vs. Take over of the business of the employer by another company and there is no agreement regarding assumption of liability by the acquiring company. 5. Carnation Philippines. What is the doctrine of “Strained Relations”? In a plethora of cases. (Section 4[b]. 2004). while the grant of backwages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. R. In Quijano vs. Feb.4. an employee who asserts his right could be easily separated from the service by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. If the issue of strained relations is raised only in the appeal from the Labor Arbiter’s decision.e. 158759. Aug. Pizza Inn vs. R. i. supra). Mercury Drug Corporation. PLDT vs. Sept. 21. 2005). (Cabatulan vs. 119500. May 26. G. G. No. 1986). NLRC. No strained relations should arise from a valid and legal act of asserting one’s right. G. Oct. NLRC. 1998). No. Non-existence of the employee’s former position at the time of reinstatement for reasons not attributable to the fault of the employer. Tolentino.. June 28. 28. 143171. G. the same may not be allowed. (Sagum vs. a. Buat. Rules to Implement the Labor Code. 147142. 1988). G. What is the distinction between reinstatement and backwages? Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed. R. G. 39.

No. if the strained relations engendered as a result of litigation are sufficient to rule out reinstatement. chanrobles virtual law library As held in the Quijano vs. this doctrine was not applied in the 2002 case of Abalos vs. 2005. R. but not in every instance does such an atmosphere of antagonism exist as to adversely affect the efficiency and productivity of the employee concerned. vs.” It appears from the Supreme Court rulings involving the doctrine of “strained relations” that the common denominator which bars reinstatement is the nature of the position of the employee. whatever antagonism occasioned by the litigation should not be taken as a bar to reinstatement. requires the trust and confidence of the employer upon the employee occupying it as would make reinstatement adversely affect the efficiency.” chanrobles virtual law library In the same breadth. 161158. vs. 140374. 507 [1992]). 215 SCRA 501. Bondesto. the complainants are mere rank-and-file workers consisting of cooks. 156893. No. helpers and mechanics of the respondent company. (Procter and Gamble Philippines vs. material in determining validity of “strained relations. Daniel. Hence. If the nature of the position. especially when they themselves have not indicated any aversion to returning to work. No. Philex Mining Corporation. CA. R. (Coca-Cola Bottlers Phils. productivity and performance of the latter. November 27. May 9. G. then. Here. Nature of position. R. It is only normal to expect a certain degree of antipathy and hostility to arise from a litigation between parties. June 21.(Globe-Mackay Cable and Radio Corporation v. No. chanrobles virtual law library . March 5. this doctrine should not be applied to a situation where the employee has no say in the operation of the employer’s business. Every labor dispute almost always results in strained relations and the phrase cannot be given an overarching interpretation. Indeed. Pheschem Industrial Corporation vs. then. reinstatement would thus become the exception rather than the rule in cases of illegal dismissal. otherwise an unjustly dismissed employee can never be reinstated. 139847. miners. 1992).. 2004). strained relations will justify non-reinstatement. c. therefore. No. Mercury Drug case [supra]: “To protect labor’s security of tenure. we emphasize that the doctrine of strained relations should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. [G. R. 82511. 2005). G. 2002] to deprive the workers of their right to reinstatement. G. chanrobles virtual law library This doctrine should not be used so indiscriminately as to bar the reinstatement of illegally dismissed workers. Inc. (Maranaw Hotels and Resorts Corp. March 3. G. Moldez.R. NLRC. Absent this circumstance.

et al. NLRC. in view of the strained relations between him and management. In lieu thereof. Acesite [Philippines] Hotel Corporation. Inc. (See also Asiaworld Publishing House. the complainant and his employer failed to settle their dispute amicably does not prove that the relationship between them is already too strained as to be beyond redemption. No. Inc. 27. R. NLRC. R. chanrobles virtual law library e. R. (RDS Trucking. Sept. No. No. Feb. indicates strained relations. The position of manager is an important consideration in determining the validity of reinstatement. gives rise to no other conclusion than the categorical fact that antagonism already caused a severe strain in the relationship between them. 1998). Non-settlement of dispute after long period of time does not indicate strained relations. NLRC. 105758-59. This was the holding in Golden Donuts. he being in charge of the over-all security of said hotel. No. 1995]. exception. chanrobles virtual law library g. 2005]. R. it was held that the fact that for six years. vs. No. An officer in such a key position can work effectively only if she enjoys the full trust and confidence of top management. the fact that the employee was charged by his employer with qualified theft and was even coerced into withdrawing the labor case filed by the former against the latter. [G. Buat. Jan. f. R. Non-reinstatement of a managerial employee. d. 2005]. Aug. vs. If the employee is a laborer. there would be no problem in ordering her reinstatement with facility. 1987). staff and their properties according to company policies and local laws. indicate the existence of strained relations. Nos. in Acesite Corporation vs. (Sentinel Security Agency. R. 147142. [G. chanrobles virtual law library As held in Cabatulan vs. . 21. G. R. 1998). 3. vs. Refusal to be reinstated. 113290-91. [G. G. G. A person holding a managerial position may not be ordered reinstated if strained relations exist. by itself. 152308 and Gonzales vs. where the employee was the Chief of Security of the hotel whose duty was to “manage the operation of the security areas of the hotel to provide and ensure the safety and security of the hotel guests. July 23. management. 1994]. R. Inc. Aug. NLRC. the hotel is liable to pay separation pay of one (1) month for every year of service. G. 122468. The refusal of the employees to be reinstated is indicative of strained relations. 123941.Thus. Criminal prosecution indicates strained relations. Long period of time that elapsed without any settlement of the case does not. reinstatement is no longer possible. L-56398. 14. clerk or other rank-and-file employee. No. Criminal prosecution confirms the existence of “strained relations” which would render the employee’s reinstatement highly undesirable. NLRC. vs. But she was a Vice President for Marketing of the company. 3. In Palmeria vs. 152321. [G. Ople. 26.” the Supreme Court ruled that such position is one of trust and confidence. No. Feb. visitors. Hence.

No. when termination is due to disease under Article 284. [G. Hence. the Supreme Court. Inc. thereby making such award of separation pay appropriate. reinstatement should be ordered. 2004]. in Philippine Long Distance Telephone Company vs. Tolentino. No. vs. in fact. the same do not exist now between him and the new owner. chanrobles virtual law library h. 4. the length of time respondent-employee has been out of petitioners’ employ. [G. 139430. considered as additional ground for ordering payment of separation pay in lieu of reinstatement. NLRC. 3. This fact makes reinstatement feasible. the Supreme Court ordered the reinstatement of the managerial employee despite allegation of existence of strained relations inasmuch as the same were not adequately proven by the employer which had the burden of doing so. chanrobles virtual law library . R. 40. Inc. vs. when resignation pay or separation pay (or sometimes called “financial assistance”) is required under a unilaterally promulgated voluntary policy or practice of the employer or under an agreement such as a Collective Bargaining Agreement. Strained relations must be proven as a fact. Reinstatement is proper if strained relations existed with former owner but not with new owner. The new owner. in the case of EDI Staff Builders International. June 20. In addition to existence of strained relations. i. 143171. when ordered as substitute for reinstatement in illegal dismissal cases. (See also Jardine Davies. What is separation pay? The only instances under the Labor Code and pertinent jurisprudence where the employer is liable to pay separation pay are the following: chanrobles virtual law library 1. the alleged strained relations can no longer be invoked since there has been a change in the ownership and control of the company. has absolutely nothing to do with the controversy involved in the case. R. 2001]. absent any competent evidence in the records to support the employer’s assertion that a peaceful working relationship with the employee is no longer possible. 311 SCRA 289 [1999]). when termination is due to closure of establishment or reduction of personnel under Article 283. 2. In the same case of PLDT [supra]. the latter must be reinstated. September 21.chanrobles virtual law library But if the alleged strained relations between a managerial employee and his employer was not adequately proven. Length of time may prevent reinstatement. Thus. While strained relations may have existed between the employee and the former owner of the company. Magsino.

Jan. This is not allowed.. the services of a househelper prior to the expiration of the fixed-term employment under Article 149. the Supreme Court was constrained not to disturb the award of separation pay in this case because respondent company did not interpose an appeal from said award. In line with the 2002 case of San Miguel [supra]. 148410. No. February 28. 2002] and was further expounded the 2005 decision in Philippine Commercial International Bank vs. Hence. A party in a case who did not appeal is not entitled to any affirmative relief. surely. still awarded the complainant separation pay of P106. Despite this holding. though. [433 Phil. reversed said award based on the afore-mentioned case of PLDT. As stated in San Miguel. Lao. 890. chanrobles virtual law library The San Miguel test. 2005]. NLRC and Abucay. it was declared that while it would be compassionate to give separation pay to a salesman if he were dismissed for his inability to fill his quota. [G.00 allegedly by reason of several mitigating factors mentioned in its assailed Decision. A reading of Article 279 in relation to Article 282 of the Labor Code reveals that an employee who is dismissed for cause after appropriate proceedings in compliance with due process requirements is not entitled to an award of separation pay. It ruled that an employee who was legally dismissed from employment is not entitled to an award of separation pay. R. In Gustilo vs. chanrobles virtual law library 41. he does not deserve such generosity if his offense is the misappropriation of the receipts of his sales. however. where the cause for the termination of employment cannot be considered as one of mere inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a palpable breach of trust reposed in him. Inc. (Etcuban. Abad. 2004]. No. the grant of separation benefits is hardly justifiable. however.. despite its finding that the dismissal was legal. Inc. October 4.. Sulpicio Lines. 897. however. it is now a matter of established rule that the question . however. [G. 149629. May separation pay be awarded despite lawful dismissal for cause? An employee who is dismissed for just cause is generally not entitled to separation pay. 158045. 2005). In some cases. G. no affirmative relief can be extended to it. R. the Supreme Court awards separation pay to a legally dismissed employee on the grounds of equity and social justice. when the employer terminates without just cause. In PLDT vs. Wyeth Phils. R. the Court of Appeals.890. Jr. [164 SCRA 671]. chanrobles virtual law library This equitable principle was emphasized again lately in the 2002 case of San Miguel Corporation vs. vs.5. 6. when employment is deemed terminated after the lapse of six (6) months in cases involving bonafide suspension of the operation of business or undertaking under Article 286. The Supreme Court. July 11. 17. No. when the employee has been dismissed for serious misconduct or some other causes reflecting on his moral character or personal integrity.

chanrobles virtual law library Incidentally. Moreover. R. Simply stated. Abad. the next query shifts to whether the alleged wrongful act was reflective of the moral character of the employee. G. in the light of the plight of respondent who has spent the best years of his useful life with petitioner. If the answer is in the negative. if the dismissal does not fall under the first qualification (serious misconduct). that petitioner will heed the Court’s call for compassion. 158045. in San Miguel. or (2) the dismissal reflected on the employee’s moral character. 2005). say loss of trust and confidence. separation pay may “exceptionally” be awarded as a “measure of social justice. chanrobles virtual law library Separation pay. 466. NLRC. however. separation pay may be awarded to him. supra). (See also PCIB vs. What is the amount of separation pay in lieu of reinstatement? Separation pay is only proper to substitute for reinstatement (not for backwages)]. separation pay may be awarded to the employee. in lieu of reinstatement. an employee’s lack of moral depravity could evoke compassion and thereby compel an award of separation pay. 344 Phil. 28.” Indeed. it reiterated its wish in the decretal portion of the decision when it said: “It is hoped. (PCIB vs. No. the sympathy of the Supreme Court towards the workingmen is best exemplified in this case. Feb. 12. Sept. 460. shall include the amount equivalent at least to one (1) month salary or to one (1) month salary for every year of service. Abad. There had been jurisprudence granting separation pay for dismissals based on this ground. whichever is higher.” provided that the dismissal does not fall under either of two circumstances: (1) there was serious misconduct. 42.of whether separation pay should be awarded depends on the cause of the dismissal and the circumstances of each case. 1997). (Camua vs. Under the San Miguel test. the High Court “commiserate(d) with him but it can do no more than to appeal to an act of compassion by SMC and to ask it to see its way clear to affording some form of financial assistance to respondent who has served it for almost three decades with no previous blemished record. if the employee is dismissed due to some grounds other than serious misconduct. notwithstanding a valid dismissal. a fraction of at least six .” While the Supreme Court did not mention any amount of such financial assistance. the High Court reversed the decision and resolution of the Court of Appeals insofar as it decreed the payment of retirement benefits or separation pay to respondent but. Consequently.

3. 301 SCRA 223). Aug. chanrobles virtual law library Other benefits must be paid in addition to backwages. 43. Inc. (Fernandez vs. 1987. No. Following several decisions of the Supreme Court. irrelevant in the award of backwages. current wage level of the employee’s position. R. vs. 23. Jan. (Blue Dairy Corporation vs. 5. 20. G. 14. G. (Consolidated Rural Bank [Cagayan Valley]. 27. 285 SCRA 149). G. No. (Maranaw Hotels & Resort Corporation vs. NLRC. 123810. R.any other allowances and benefits or their monetary equivalent. increases in compensation and other benefits. No. No. Sept. 31. (St. 120677. 26. 6. 152308. No. Dismissed employee’s ability to earn. 1998. Sept. No. supra). 1999).(6) months being considered as one (1) whole year including regular allowances. 1999). vs. NLRC. 300 SCRA 360). What are backwages? Full Backwages have to be paid by an employer as part of the price or penalty he has to pay for illegally dismissing his employee. 123880. G. Inc. Oct. 4. holiday pay. 1987). should be taken into account in the computation of backwages. L-75510. NLRC. car and representation allowances. 1998. R. G. On service incentive leave. 7. NLRC. G. 28. R. R. just share in the service charges. fringe benefits or their monetary equivalent. 74214. (Acesite Corporation vs. Other benefits must be paid in addition to backwages. R. NLRC. 2005). G. . NLRC. G. NLRC. 105892. not included. (Food Traders House. 1999. Jan. Louise College of Tuguegarao vs. R. including 13th month pay. gasoline. see Fernandez vs. G. No. NLRC. 1989. 21. No. NLRC. (Santos vs. R. in addition to the basic salary. Dec. transportation and emergency allowances. 2. vacation and sick leaves and service incentive leaves. R. 21. 129843. 76721. Soriano vs. NLRC. If not regular. Feb. The computation should be based on the wage rate level at the time of the illegal dismissal and not in accordance with the latest. if applicable: 1. Jan. The computation of said benefits should be up to the date of reinstatement as provided under Article 279 of the Labor Code. the following benefits. No.

1997. is based simply on expectancy or his assumption that. Inc. he had been consistently given by the company annual salary increases on account of his above-average or outstanding performance. the presumption of innocence until his guilt is proved beyond reasonable doubt. even if he ranked higher and performed better than they during the past years. Thus. 152568. in the interim. from June 10. CA. Feb. throughout his employment until his illegal transfer in 1997.The award of backwages is not conditioned on the employee’s ability or inability to. chanrobles virtual law library Salary increase during period of demotion. .. No. 1996 up to July 5. the employee has. vs. It ruled: “Petitioner’s claim. 2004]. petitioner has now been left behind career-wise. A classic case to illustrate this legal principle is the 2004 case of Tomas Claudio Memorial College.00 equivalent to 16% of his monthly salary increase starting from January 1997 on the fact that. Petitioner likens his claim to that for backwages in illegal dismissal cases. and from November 21. 1996. The Supreme Court was unconvinced. R. He argued that justice and equity requires that he be given the monetary award deleted by the Court of Appeals from the decision of the NLRC. 2002]. is whether petitioner is entitled to an amount equal to 16% of his monthly salary representing his salary increase during the period of his demotion. ruled that the illegally dismissed employee is entitled to backwages even during the period of his incarceration noting that the first criminal case was dismissed for lack of probable cause and the second has yet to be finally decided. however. in his favor. Petitioner claims that there is a high probability that he would have been granted the increase had he not been transferred from the Garnet Exchange of respondent PLDT. Philippine Long Distance Telephone Co. [G. however. Undeniably. Raised as an issue in Paguio vs. it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. The petitioner-employer took the position that it cannot be lawfully compelled to pay backwages for the period of time that the private respondent-employee was twice incarcerated in jail on account of his violation of the Dangerous Drugs Act. December 3. Inc. R. earn any income. Petitioner averred that this would not have taken place had he not been illegally transferred. 1996 up to February 17. not covered by backwages.000. hence. as evaluated according to a specified criteria. The Supreme Court. this particular award which petitioner is seeking is not based on any wage order or decree but on an employee’s performance during a certain period. He claims that his contemporaries now occupy higher positions as they had been promoted several times during the course of this case. Petitioner based his right to the award of P384.. [G. No. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. 16. 154072.

2004]. When backwages should not only be for one (1) year. Dec. it was ruled that the award of backwages should be computed up to said age. 2001+. R. therefore. his claim is tantamount to saying that he had a vested right to remain as Head of the Garnet Exchange and given salary increases simply because he had performed well in such position. following the mandate of Article 279 on the payment of full backwages to an illegally dismissed employee. If the dismissed employee has already reached sixty (60) years of age. and thus he should not be moved to any other position where management would require his services. the mere fact that petitioner had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and. April 4. NLRC. in limiting to one (1) year the backwages awarded to petitioners. 4. No. NLRC. 139847. how computed when dismissed employee has reached 60 years of age. the Supreme Court. 255 SCRA 430. where the dismissed employee has already reached the compulsory retirement age of 65. Furthermore. 1993 when she reached 60 years of age cannot be subscribed. No. while affirming the illegality of the dismissal of the employee. 60 years is the optional retirement age. 435). how computed when company has already ceased operations. considered it patently erroneous. qualify for the said increase later. Under Article 287. March 5. chanrobles virtual law . tantamount to grave abuse of discretion on the part of the NLRC. grant full backwages. this contention is based merely on speculation. But in the 2001 case of St. Full backwages. 108405. G. 2003]. The view of the employer that payment of backwages to the illegally dismissed teacher should be computed only up to December 11. R.“In contrast to a grant of backwages or an award of lucrum cessans in the civil law. March 29. Bondesto. 112678. [G. No. however. In Viernes vs. [G. R. (Espejo vs. 145280.” chanrobles virtual law library When backwages should only be for one (1) year. 1996. R. *G. Santos. however. it assumes that in the other position to which he had been transferred petitioner had not been given any performance evaluation. chanrobles virtual law library Full backwages. how computed when dismissed employee has reached 65 years of age. Full backwages. It agreed with the findings of the NLRC and the Court of Appeals that in view of the respondentemployee’s absences that were not wholly justified. No. did not. What is more. Michael’s Institute vs. In Procter and Gamble Philippines vs. he should be entitled to backwages which should be limited to one (1) year. the Supreme Court. As held by the Court of Appeals. the backwages should only cover the time when he was illegally dismissed up to the time when he reached 60 years.

In computing the backwages. June 29. respondent Paras should be paid full backwages from the date of his illegal dismissal up to March 25. This rule holds true even if the employer is found guilty of unfair labor practice in dismissing the employee. [G. the Supreme Court directed the payment thereof from the time of his illegal dismissal on March 29. the employee’s dismissal on the ground of abandonment was declared illegal but he was found guilty of absence without official leave (AWOL) for which he was ordered suspended for three (3) months. Chrysler Philippines Labor Union. the computation of backwages was . As held in the case of Pizza Inn/Consolidated Foods Corporation vs. 119724. 1998. 2004]. No. R. 162 SCRA 773]. However. 2005]. No. 26. 25. May 31. L-74531. 1990 to June 26. [G. and including allowances and other benefits or their monetary equivalent. or to at least one-half month pay for every year of service. To allow the computation of the backwages to be based on a period beyond that would be an injustice to the employer. full backwages should be computed only up to the date of the closure. NLRC. In reckoning the backwages. deductible from backwages. such non-reinstatement was not considered a sufficient ground to deny him his backwages. 152308. less backwages for three (3) months corresponding to the period of his suspension for the period March 29. R. he should be paid separation pay equivalent to one (1) month salary. 1998 and made effective one month therefrom. inclusive. R. where the employer the Manila Chronicle . [G. NLRC. the illegally dismissed employee was no longer ordered reinstated because of the occurrence of a supervening event – that of retrenchment which covered him because he was a newly regularized employee at the time of his termination.R. a fraction of at least six months to be considered as one (1) year. Nov.library In Chronicle Securities Corporation vs. No deductions therefrom were allowed for the earnings derived elsewhere by the employee during the period of his illegal dismissal. 28 June 1988. chanrobles virtual law library In Acesite Corporation vs. an employer found guilty of unfair labor practice in dismissing his employee may not be ordered so to pay backwages beyond the date of closure of business where such closure was due to legitimate business reasons and not merely an attempt to defeat the order of reinstatement. 1999+. 157907. whichever is higher. the Supreme Court considered the date of effectivity of the retrenchment as the date when backwages should be reckoned. chanrobles virtual law library Full backwages.” chanrobles virtual law library Period of suspension. In Mitsubishi Motors Philippines Corporation vs. how computed when valid retrenchment supervened. Pursuant to Article 283 of the Labor Code. 2004]. [G. Inc. [G. NLRC. 1990. No. No. Thus: “Considering that notices of retrenchment were mailed on February 25. vs. R.had already permanently ceased its operations. Jan. No. 148738. NLRC. In Metro Transit Organization. his termination being illegal. 1990 up to the time of his actual reinstatement.

G. The Hon. 1996. 2002]. If the petitioner (employer) were sincere in its intention to reinstate the private respondent (dismissed employee). chanrobles virtual law library Therefore. R. January 28. Only then could observance of labor laws be promoted and social justice upheld. 122078. from May 13. G. Inc. 1999. after the supposed offer was made.made subject to deduction for the three (3) days when the employee was under suspension. Nos. up to the date of the finality of this judgment. 222 SCRA 707). Such formula runs counter to the letter and spirit of the Labor Code. Backwages should include period of preventive suspension. R. In conformity with Article 279. In the 2002 case of Buhain vs. Mere offer to reinstate a dismissed employee. The petitioner should thus be held liable for the entire amount of backwages due the private respondent from the day he was illegally dismissed up to the date of his reinstatement. (Philippine Rabbit Bus Lines. Consolidated Broadcasting System. No. R. in light of the Voluntary Arbitrator’s conclusion that reinstatement is no longer possible. R. the Supreme Court ruled that this does not suffice to provide complete relief to the painful socio-economic dislocation of the employee and his family. July 2. backwages were limited by the NLRC from the date of the employee’s dismissal up to the time when the employer allegedly offered to reinstate him. 1993. In Condo Suite Club Travel. NLRC. No. petitioner should be given full backwages and all the benefits accruing to him from the first day of his preventive suspension. can no longer be attributed to the fault of the employer. In reversing the NLRC. [G. an employee who is unjustly dismissed is entitled to his full backwages computed from the time his compensation was withheld from him up to the time of his reinstatement. What are the distinctions between separation pay and backwages? . [G. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. 143709. May 28. May 13. 125671. vs. in case of refusal of employer to reinstate. 99054-56. CA. No. This period covers only a total of eight days. Full backwages. petitioner should have at the very least reinstated him in its payroll right away. chanrobles virtual law library Employer’s offer to reinstate does not forestall payment of full backwages. 44. It explained that the failure of the employee to work. 1996. vs. is not enough. April 21. 306 SCRA 155). the payment of backwages by petitioner to respondent employee for the period he was not reinstated despite the alias writ of execution up to the time he opted for separation pay in lieu of reinstatement is equitable and justified under the law. the Supreme Court ruled that the Court of Appeals committed a reversible error in merely fixing the backwages from the time he was placed under preventive suspension up to the time he was illegally dismissed. given the circumstances in this case. (Medina vs. Inc. As previously stated. NLRC. 1996 to May 21. 2000].

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

Inc.” (Underscoring supplied) In Skippers Pacific. and separation pay at the rate of one (1) month's pay for every year of service computed from the date he was first employed until the finality of the decision. if his contract is for a period of at . a. by R. G. This is so because the OFWs are contractual employees whose rights and obligations are governed primarily by the Rules and Regulations of the POEA and. it was held that an overseas Filipino worker who is illegally terminated shall be entitled to his salary equivalent to the unexpired portion of his employment contract if such contract is less than one year. Monetary awards to illegally dismissed OFWs. Section 10 of Republic Act No. R. 1995. Ltd. G. with interest at 12% per annum from the date of promulgation of the decision until actually paid.In another 1998 case. 8042. No. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term. (See Ravago vs. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) provides: “In case of termination of overseas employment without just. et al. MONETARY AWARDS. the Supreme Court has imposed interest at the legal rate on the full backwages awarded to an illegally dismissed employee computed from the time she was temporarily laid off until she is fully paid her separation pay. A. whichever is less. backwages were made subject to interest of 6% per annum for the period from the date the employee was illegally dismissed from service until the decision becomes final and executory. more importantly.. No. R. [392 SCRA 371 (2002)]. 1997). G. NLRC. (Gu-Miro vs. R. 121288. No. 119536. vs. are not available to OFWs. R. NLRC. As early as the 1995 case of Coyoca vs. the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum. A. 2004). Mira. TERMINATION OF EMPLOYMENT OF OVERSEAS FILIPINO WORKERS (OFWs). February 17. No. No. 15). Aug. 47. [G. the Supreme Court had already declared that a seafarer. Esso Eastern Marine..R. Adorable. NLRC. 20. (De la Cruz vs. the remedies provided for under Article 279 such as reinstatement. chanrobles virtual law library b. November 20. In a 1997 case. G. 160952.. et al. March 31. 2005). (Dela Cruz vs. or separation pay in lieu of reinstatement or full backwages. 113658. is not entitled to separation or termination pay. 8042 and not Article 279 of the Labor Code. the interest rate shall be 12% per annum until the amounts due are actually paid or satisfied. 158324. OFWs are not entitled to the reliefs under Article 279. 243 SCRA 190 (1995)]. valid or authorized cause as defined by law or contract. how reckoned. 1998. No. after which time. The proper basis for the monetary awards of the overseas Filipino workers (OFWs) is Section 10 of R. March 14. not being a regular employee. 299 SCRA 1. However. No. Consequently.

Employ Services and Resources. comes into play only when the employment contract concerned has a term of at least one (1) year or more. R. Consequently. chanrobles virtual law library As held in Athenna International Manpower Services. or three months’ salary for every year of the unexpired term. 2004). Ut res magis valeat quam pereat. vs. the OFW having worked for only 21 days of the 1-year period. Villanos. 2004). is entitled only to an amount corresponding to her three (3) months salary. care should be taken that every part or word thereof be given effect since the lawmaking body is presumed to know the meaning of the words employed in the statute and to have used them advisedly. November 12. April 15. (Phil. 144786. NLRC. i. whether his salaries for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term. R. for the computation of the lump-sum salary due an illegally dismissed overseas employee. an illegally dismissed overseas Filipino worker whose actual employment was only for twenty-one (21) days of her 1-year contract. April 15. Inc. he is entitled to receive his salaries equivalent to the unexpired portion of his contract. A. which involves a one-year contract and yet. said the High Court. OFW who worked for only 21 days of her 1-year contract. G. vs. Inc. This is evident from the words “for every year of the unexpired term” which follows the words “salaries xxx for three months. 8042 [supra] clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker comes into play only when the employment contract has a term of at least one (1) year or more. It was ruled therein that a plain reading of said provision clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker. April 15. 148407.” To follow petitioners’ thinking that private respondent is entitled to three (3) months salary only simply because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. 144786.. 8042. No. whichever is less. This is contrary to the well-established rule in legal hermeneutics that interpreting a statute. a plain reading of the provision of Section 10 of Republic Act No. 2005]. [G. OFW who worked for only a month of his contract for 1 year. Inc. R. [313 SCRA 88 (1999)]. R.e. 10 months and 28 days. G. No. 2003]. which is obviously less than her salaries for the unexpired portion of her one-year employment contract.least one year. Inc. No. Noteworthy is the holding of the Supreme Court in Olarte vs. 151303. Paramio. there are two clauses as points of reckoning: first is the cumulative salary for the unexpired portion of his employment. . the Supreme Court explained when an OFW is entitled to the three (3) months salary mentioned in the aforequoted Section 10 of R. [G. whichever is lower. it was ruled therein that the 3-month salary principle should be applied thereto. Paramio. vs. Employ Services and Resources. whichever is lesser. chanrobles virtual law library In the earlier case of Marsaman Manning Agency. To reiterate. (See also Phil. No. vs. No. and the other is the grant of three months salary for every year of the unexpired term. Nayona.

840 = NT$95.000. Award of backwages and separation pay to OFWs. But the applicable clause is not the first but the second: three months salary for every year of the unexpired term. CA. Under Section 15 of R. allowed the refund for the repatriation plane ticket of the OFW. upheld. Thus.000 on the agreement that the balance of P64. the same award of full reimbursement of the OFW’s placement fee with interest at twelve percent (12%) per annum was ordered by the Supreme Court. All the costs attendant thereto should be borne by the agency concerned and/or its principal. with the qualification. [G. however. 2001]. April 15. This was by reason of the illegality of his dismissal.. since respondent was dismissed after only one month of service. ten months and twentyeight days. (Ibid. 8042. 2004]. The case of Sevillana vs. R. [International] Corp. In the case of ATCI Overseas Corporation vs. Paramio. In Phil. He is only entitled to the reimbursement of the amount of placement fee he actually paid. No. that while respondent was assessed P94. in addition to the monetary award. as the lesser amount. R. 99047. 143949. No. in Athenna *supra+.). chanrobles virtual law library Reimbursement of repatriation expenses such as return airfare.The OFW in Athenna was contracted to render work in Taiwan for one year. No. Inc. vs. where the two (2) . hence it is what is due the respondent. subject to proper conversion to Philippine currency by Labor Arbiter Cresencio Iniego. which is the P30. terminated after only a month of service. April 16.040. [G. A. respondent cannot be granted reimbursement of the entire assessed amount of P94. Note that the fraction of nine months and twenty-eight days is considered as one whole year following the Labor Code.000 he gave as downpayment plus interest at twelve percent (12%) per annum. the unexpired portion of his contract is admittedly one year. Employ Services and Resources. OFW’s monetary awards include reimbursement of placement fee. 2001]. Consequently.T. August 9. Hence. nine months and twenty-eight days. He was. the repatriation of the worker and the transport of his personal belongings are the primary responsibilities of the agency which recruited or deployed the overseas contract worker. the Supreme Court. I. he paid only P30. Likewise. [G.000 in placement fee. respondent’s lump-sum salary should be computed as follows: 3 months x 2 (years)= 6 months worth of salary 6 months x (NT$) 15. R. No. had granted full reimbursement of the placement fee with 12% interest per annum.000 would be paid on a monthly salary deduction upon his deployment. 144786. however.

in addition to attorney’s fees of ten percent (10%) of the aggregate monetary awards.000 in moral damages and P50. the monetary award equivalent to the salary for the unexpired portion should be paid at its . The illegally dismissed employee is granted separation pay in order to provide him with ‘the wherewithal during the period that he is looking for another employment. But more significantly. inclusive of allowances. as an alternative to reinstatement. the High Tribunal ruled that because of the breach of contract and bad faith alleged against the employer and the petitioner recruitment agency. the Supreme Court awarded them backwages and separation pay in lieu of reinstatement. 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. In the same 2005 case of Athenna [supra]. Likewise.000 as exemplary damages. the award of P50. in lieu of reinstatement. Therefore. US Dollars) as in the case of OFWs. chanrobles virtual law library Monetary awards in foreign currency. We concur for this is the amount which private respondents would have received had they not been unlawfully dismissed. “As to the second remedy granted by Article 279.” Entitlement to moral and exemplary damages and attorney’s fees. they are entitled to a separation pay equivalent to one-sixth of their monthly salary. any order of reinstatement issued by this Court will be difficult for private respondents to enforce against the Ministry of Public Health of Kuwait. must be sustained. Article 279 provides that the illegally dismissed employee shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. the award of attorney’s fees equivalent to ten percent (10%) of the total award was held legally and morally justified as the OFWs were compelled to litigate and thus incur expenses to protect their rights and interests.’ Prevailing jurisprudence dictates that the employee be given one month pay for every year of service. Considering that private respondents herein have only worked for two months.private respondent-OFWs were declared as regular employees. The High Court ruled: chanrobles virtual law library “In order to give substance to the constitutional right of labor to security of tenure. In case the salary of an illegally dismissed employee is in foreign currency (say. in the case of ATCI Overseas *supra+. The POEA held that the backwages to be awarded to private respondents should be computed from the time they were illegally dismissed until the expiration of their contract of employment. chanrobles virtual law library “The award of backwages is intended to restore to the employee the earnings which he lost due to his illegal dismissal. private respondents are entitled to separation pay. or from 17 October 1991 to 19 August 1993. how paid. nowhere in the records does it appear that private respondents desire to be reinstated to their former employment.

No. and to confuse legitimate issues. only the employer-corporation. the parties may agree that the obligation or transaction shall be settled in any other currency at the time of payment. 1997). No. April 15. backwages. 24. No. association or any other entity. Private employment or recruitment agencies are jointly and severally liable with its principal. April 20. Even assuming that the respondent company officials are also officers and incorporators of the satellite companies. Inc. 117593. The documents attached to petitioners’ motion . Oct. However. R. Greenfield [MSMG-UWP] vs. As a general rule. NLRC. (Reahs vs. NLRC. and not its officers. Ramos. 1998). G. partnership. PERSONAL LIABILITY OF STOCKHOLDERS OR CORPORATE OFFICERS FOR CLAIMS OF EMPLOYEES. R. 113363. G. No. Aug. Asia World Recruitment. NLRC.prevailing peso equivalent at the time of payment in accordance with Republic Act No. 1999).T. Empire Insurance Company vs. 294 SCRA 263). (Brent Hospital.. To justify solidary liability. there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees or a showing that the officers indiscriminately stopped its business to perpetrate an illegal act as a vehicle for the evasion of existing obligations. G. responsibility for the payment of separation pay in lieu of reinstatement. 04. Thus. No. in circumvention of statutes. attorney’s fees and other monetary awards in an illegal dismissal case devolves upon the employer-corporation. 1994). vs. R. R. 8183 which provides in its Section 1 that “*a+ll monetary obligations shall be settled in the Philippine currency which is legal tender in the Philippines. Joint and solidary obligation of local agency and foreign principal. Concept and legal basis. [G. for all claims filed by recruited workers which may arise in connection with the recruitment agreements or employment contracts. (Sevillana vs. such circumstance does not in itself amount to fraud. the foreign-based employer. 48. moral and exemplary damages. it was held in Malayang Samahan ng mga Manggagawa sa M. NLRC. I. chanrobles virtual law library Hence. R. 113907. 88795. 8183 entitled “An Act Repealing Republic Act Numbered Five Hundred Twenty-Nine Entitled ‘An Act to Assure the Uniform Value of Philippine Coin and Currency’”. 2001]: “Petitioners’ claim that the jobs intended for the respondent company’s regular employees were diverted to its satellite companies where the respondent company officers are holding key positions is not substantiated and was raised for the first time in this motion for reconsideration. vs. which may be held liable for illegal dismissal of employees or for other wrongful acts. supra. [International] Corp. NLRC. Inc. a. G. 117473. July 10.” (Republic Act No. (Seaborne Carriers Corporation vs.

NLRC. Substantial identity of incorporators between respondent company and these satellite companies does not necessarily imply fraud. March 22. 2003]. (Citing Del Rosario vs. [L-69494. 146267. In such a case. G. 142 SCRA 269]. 26. R. [G. (Gudez vs. Ransom Labor Union-CCLU vs. C. No. NLRC. respondent company’s corporate personality remains inviolable. it was ruled that a corporation is the employer only in its technical sense. chanrobles virtual law library d.” If not so included.” according to Article 212 *e+ of the Labor Code. there must be a natural person who should be acting for its interest. “includes any person acting in the interest of an employer. 183023. 152308. the employees will have no recourse if corporate employers will evade the payment of their lawful claims. Jan. 187 SCRA 777). Being an artificial person. Pursuant to prevailing jurisprudence. NLRC. When the company ceased to operate. The term “employer. R. particularly the president. the manager cannot be exonerated from her joint and several liability in the payment of monetary award to the illegally dismissed employee in her capacity as manager and responsible officer of the company.” The Supreme Court disagreed and reversed the said finding of the NLRC considering that the “records of the case do not show any inhuman treatment of the (illegally dismissed employee) and the allegation of bad faith or malice was not proven. No. the officers. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. the Supreme Court. When officers are solidarily liable. . No.” chanrobles virtual law library In Acesite Corporation vs. Ransom [supra]. [G. NLRC. chanrobles virtual law library In A. chanrobles virtual law library In NYK International Knitwear Corporation Philippines vs. conformably with its ruling in A. June 10. held the manager as falling within the meaning of an “employer” as contemplated under Article 212 [e] of the Labor Code. may be held liable for the payment of the employee’s claims. NLRC. That the superiors just happened to be foreigners is of no moment. February 17.for reconsideration show that these satellite companies were established prior to the filing of petitioners’ complaint against private respondents with the Department of Labor and Employment on September 6. Rule when company ceased operations. the NLRC declared the corporate officers of a hotel solidarily liable in order “to deter other foreign employer*s+ from repeating the inhuman treatment of their Filipino employees who should be treated with equal respect especially in their own land and prevent further violation of their human rights as employees. 1989 and that these corporations have different sets of incorporators aside from the respondent officers and are holding their principal offices at different locations. c. 2005]. directly or indirectly. The corporate officer must be identified as such to hold him liable. R. 1990). b. 1986. C.

chanrobles virtual law library Coca-Cola Bottlers Phils. R. 2004]. either jointly or severally with the corporation. had already become final and executory. Corporate officers cannot be held liable absent any finding in the decision to that effect. [G. 273 SCRA 352+. Daniel. the president of the company who actively manages the business. e. chanrobles virtual law library In the absence of a clear identification of the officer directly responsible for failure to pay backwages or other monetary claims. R. 1997.that the dismissal was attended with malice or bad faith. for failure of the parties to appeal therefrom. 156893.. [G. the corporate officer cannot be held liable for the said monetary awards. chanrobles virtual law library The reason is simple: as held in Kay Products. declares that the mere fact that the president and chief executive officer. . 2005]. More so in a case where the decision of the Labor Arbiter. June 21. Inc. vs. R. In this situation. 116123. Inc. for the monetary award in favor of the employee. July 28. No. citing Naguiat vs. assistant vice-president and general manager. R. No. Timbal. CA. 144089. 162472. R. June 13. Equitable [supra] pronounced that it is the Vice-President of the company who should be held liable being the highest and most ranking official of the corporation next to the complaining President. [G. Tan vs. July 14. March 13. No. falls within the meaning of an “employer” as contemplated by the Labor Code. 2005]. and plant security officer were impleaded in the case does not make them solidarily liable . NLRC. Aug. 102467. Absence of clear identification of officer directly responsible. NLRC. 269 SCRA 564]. chanrobles virtual law library g. says that if the Labor Arbiter neither made any finding in his decision that the corporate officer acted with malice or bad faith in ordering the suspension or dismissal of the employee nor did he hold the said corporate officer liable. No. G. chanrobles virtual law library f. 2001). vs. chanrobles virtual law library The rule. CA. It appears that the only reason they were impleaded was the fact that they were officers and/or agents of petitioner company. 9. Jr. that the President of the corporation should be considered as the “officer” who should be held liable. (Concorde Hotel vs.. 141926. the President or highest officer should be held liable. Decision must state in its fallo that the obligation is solidary. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. [G. of course. is different if it was the President who was dismissed and who filed the claim for unpaid wages. A person cannot be held jointly and severally liable for the obligations of the company arising from illegal dismissal if the dismissed employee failed to establish that such person is a stockholder or an officer thereof. R. No. 1997.absent any showing as in this case . it was held in Equitable Banking Corporation vs. [G.The rule is clear. No.

chanrobles virtual law library b. Moreover. 101723.which is substantial . the correction . The fallo expressly states the parties liable without mentioning therein that their liability is solidary. none of them may be compelled to satisfy in full said judgment. even granting that the Labor Arbiter has committed a mistake in failing to indicate in the dispositive portion that the liability of respondents therein is solidary. Jr. it is removed from the power or jurisdiction of the court which rendered it to further alter or amend it. [G. vs. chanrobles virtual law library In the dispositive portion of the Labor Arbiter’s decision in the 2000 case of Industrial Management International Development Corp. (Inciong. c. 3. “Seasonal employment” where the work or service to be performed by the employee is seasonal in nature and the employment is for the duration of the season. What are the kinds of employment? 1. chanrobles virtual law library REGULAR EMPLOYMENT 49. CA. the word “solidary” does not appear.can no longer be allowed because the judgment has already become final and executory. chanrobles virtual law library When it is not provided in a judgment that the defendants are liable to pay jointly and severally a certain sum of money. when the law so provides or when the nature of the obligation so requires.There is a solidary liability only when the obligation expressly so states. notwithstanding any written or oral agreement between the employer and the employee to the contrary: a. 2000+. “Project employment” where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. No. whether such service is continuous or broken. NLRC. R. May 11. the employee has rendered at least one year of service. 2. vs. “Regular employment” where. Once a decision or order becomes final and executory. In this case. the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. . 257 SCRA 578 [1996]). with respect to the activity in which he is employed and his employment shall continue while such activity exists. the employee is allowed to work after a probationary period. their liability should merely be joint.

There is casual employment where an employee is engaged to perform a job. 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. No. “Fixed-period employment” contracts are not limited to those by nature. vs. (Tan vs. 151228. work or service which is merely incidental to the business of the employer. 2002). the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. seasonal or for specific projects with pre-determined dates of completion provided under the Labor Code. effect. Hence. and such job. the employment is also considered regular but only with respect to such activity and while such activity exists. R. regular or voluntary form of employment with hours of work substantially shorter than those considered as normal in the establishment. “Probationary employment” where the employee is on trial by an employer during which the employer determines the qualification of the employee for regular employment. even if the performance is not continuous or merely intermittent. that any employee who has rendered at least one year of service. July 28. 51. When does a casual employee become a regular employee? a. (Kay Products. CA. project or seasonal employment as these kinds of employment are defined under Article 280 of the Labor Code.4. Repeated rehiring. 6. R. G. What is the concept of regular and casual employment? Once it is established that the employees are regular under the first paragraph of Article 280 (regularity of employment by nature of work). work or service is for a definite period made known to the employee at the time of engagement. 2005). If the employee has been performing the job for at least one year. chanrobles virtual law library 5. have assigned a specific date of termination. chanrobles virtual law library b. 15. 7. Aug. No. G. Lagrama. Inc. whether such service is continuous or not. The status of regular employment attaches to the casual worker on the day immediately after the end of the first year of service. “Casual employment” which is not in the nature of a regular. there is no more need to dwell further on the question of whether or not they had rendered one (1) year of service (regularity of employment by period of service) under the second paragraph thereof which applies only to casual employees. They also include contracts to which the parties by free choice. 162472. . chanrobles virtual law library 50. provided. Casual employee becomes regular after one year of service by operation of law. "Part-time employment” is a single.

G. the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved. (Magcalas vs.52. the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. G. show that as masons. Regular employment is inconsistent with project employment. 269 SCRA 453. No. 201 SCRA 332). 762 (1997)]. carpenters and fine graders in petitioner’s various construction projects. The two exceptions mentioned therein following the general description of regular employees refer to either project or seasonal employees. 22. and (2) The tasks performed by the alleged “project employee” are vital. R. 79869. 5. (See also Imbuido vs. 1991. vs. G. the employment of project employees is not severed but merely suspended after the completion of the project. 120969. NLRC. March 13. As held in Violeta vs. Article 280 states that regular employees are those whose work is necessary or desirable to the usual business of the employer. March 31. or a clear agreement on. necessary and indispensable to the usual business or trade of the employer. The employees are. Sept. No. 125837. (Maraguinot. R. NLRC. 556 (1998)]. 1997. Regular employees cannot certainly be at the same time project employees. R. they performed work which was usually necessary and desirable to petitioner’s business which involves construction of roads and bridges. It is not enough that an employee is hired for a specific project or phase of work. may acquire the status of a regular employee when the following factors concur: (1) There is a continuous (as opposed to intermittent) rehiring of project employees even after cessation of a project for the same tasks or nature of tasks. No. When may a project employee become regular employee? A project employee. The term “project employee” has also been equated to seasonal employee where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. There must also be a determination of. vs. [G. Court of Appeals. G. the petitioner-employer insisted that the employees were project employees. strictly speaking. R. 468). 114734. 2000). however. Jr. (Mercado vs. October 6. 1998). according to Maraguinot. Jan. R. In Chua vs. The facts. NLRC. NLRC. to be exempted from the presumption of regularity of employment. Jr. Like regular seasonal employees. chanrobles virtual law library Project employment is akin to seasonal employment. [284 SCRA 539. . 100333. NLRC. not separated from service but merely on leave of absence without pay until they are reemployed in another project. No. 2004]. [345 Phil. NLRC. No.

G. in the construction industry. Puente. NLRC. E. 385 SCRA 306 [2002]). 2000]. Upon completion of the project or a phase thereof. Normally. Sept. . not to project employees. relates to casual employees. December 18. Series of 1993). not determinant of regularity of employment. [G.’” In Cioco vs. Consunji. citing Rada vs. Department Order No. [G.[a] and [b]. however.3. R. the project employee may be re-hired for another undertaking provided. the completion of a phase of the project is considered the completion of the project for an employee employed in such phase. For this reason. 19. NLRC. 1996). No. [205 SCRA 69. 2004]. [348 SCRA 441. 2005] where the employee involved was employed with the company for ten (10) years in various projects. R. Inc. 114290. Construction Corporation. Sept.M. 8. (Section 2. C. No. January 9. Some phases of the project are completed ahead of others. those employed in a particular phase of a construction project are also not separated at the same time. Inc. In D. 156748. the last day of service with the employer in the preceding project should be indicated in the employment agreement. it was emphasized that the fact that the workers have been employed with the company for several years on various projects. did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code. The second paragraph of Article 280 of the Labor Code providing that an employee who has served for at least one (1) year shall be considered a regular employee. the employees of a particular project are not separated from work at the same time. the Supreme Court ruled that “the length of service of a project employee is not the controlling test of employment tenure but whether or not ‘the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. vs. No. The simple fact that the employment as project employees has gone beyond one (1) year does not detract from. 1992+. (See also Millares vs. Inc. In such a case. NLRC. It did not change their status as project employees. their status as project employees. NLRC. Series of 1993. The practice was dictated by the practical consideration that experienced construction workers are more preferred. March 18. less and less employees are required as the phase draws closer to completion. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. 19. When length of service of project employee indicates regularity of employment. 447. R. makes specific exception with respect to project employment. (Raycor Aircontrol Systems. vs. The Supreme Court said that such length of time did not ipso facto make him a regular employee or change his status as a project employee. that such rehiring conforms with the provisions of law and Department Order No.Moreover. Length of service. 9. 153832. vs. or legally dissolve. Meanwhile. the longest being nine (9) years. The same holding was made in Filipinas Pre-Fabricated Building Systems [Filsystems].

C. good customs or public order. it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital. vs. vs. 100518. Nos. the employees are removed from the scope of project employees and they shall be considered regular employees. Dec. private respondent had been a project employee several times over. Being project employees whose nature of employment they were fully informed about at the time of their engagement. 1994). August 9. supra. 5. in contrast. NLRC. G. [G. Thus. NLRC. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee. 234 SCRA 678). NLRC.Where the employment of project employees. R. distinguished. Repeated extensions of the employment contracts long after the completion of the project for which they were allegedly hired will make them regular employees. 152427. they should be struck down as contrary to public policy. Jan. G. however. (Magcalas vs. not required. R. is extended long after the supposed project had been finished. E. vs. Construction Corporation. (Tomas Lao Construction. chanrobles virtual law library Termination of employment of project and regular employees. Sept. NLRC. ALU-TUCP vs. 2004). The services of project employees are coterminous with the project and may be terminated upon the end or completion of the project for which they were hired. Notice of termination. G. For while length of time may not be a controlling test for project employment. 2005]. morals. No. 156748. (Phesco. necessary and indispensable to the usual business or trade of the employer as when the employees had already gone through the status of project employees and their employments became non-coterminous with specific projects when they started to be continuously re-hired due to the demands of the employer’s business and were re-engaged for many more projects without interruption. This is because completion of the work or project automatically terminates the employment. 24. Abella. 104444-49. Sept. their employment legally ends upon completion of said project. his employment was held to have ceased to be coterminous with specific projects when he was repeatedly re-hired due to the demands of petitioner’s business. 8. R. Inc. No. 2000). Consequently. (Cioco vs. R. No. (Association of Trade Unions [ATU] vs. NLRC. Inc. in Integrated Contractor and Plumbing Works. The termination of their employment could not be regarded as illegal dismissal. No. G. 1997). are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 27. . 116781. No prior notice of termination is required if the termination is brought about by completion of the contract or phase thereof for which the worker has been engaged. report to DOLE necessary. R. Regular employees.

even if the contract provides for an unlimited period.or the phase of work therein to which respondent had been assigned . vs. 24. May OFWs acquire regularity of employment? No. instead. NLRC. Adelantar. the same is not valid as it contravenes the explicit provision of the said POEA Rules and Regulations on fixed period employment.is thus in order. No.can no longer be reinstated. G. Here.computed from the date of his dismissal until his reinstatement .. R. NLRC. (Millares. inclusive of allowances and other benefits or their monetary equivalents . 1999. until the date of the completion of the World Finance Plaza project. March 18. did not eradicate the notice requirement but.was already completed by October 1. August 20. E. R. No. 53. [G. [G. they can never become regular employees because their employment contract is for a fixed term. (Cioco vs. hence. There is no allegation or proof. vs. 8. And as held in Pentagon International Shipping. 2004). C. et al. 2004] and in the 2005 case of Ravago vs. R. petitioners claim that respondent-employee’s services were terminated due to the completion of the project. he shall be entitled to the payment of his salary and other benefits corresponding to the unexpired portion of his employment. instead of the notice of termination to the affected project employees upon completion of the project. Construction Corporation. then respondent .Policy Instructions No. vs. Inc. G. R. 1999. 2005]. March 14. Legal consequences of termination of project employment. 110524. in which one is employed. the date when he was dismissed. Instead. G. if indeed the World Finance Plaza project has already been completed during the pendency of this suit. the termination was illegal. [April 1. Accordingly. 158324. however. July 27. specifically from the time of the termination of his employment on October 1. 19. No. 157373. July 29. Puente. [G. 20 required the employer-company to report to the nearest Public Employment Office the fact of termination of project employees as a result of the completion of the project or any phase thereof. Reinstatement with full back wages.being a project employee . 160952. 114671. The legal effects of termination of project employees is best exemplified by the 2005 case of Filipinas Pre-Fabricated Building Systems [Filsystems]. Inc. No. R. Adorable. (Salinas vs. Esso Eastern Marine. However. R. That overseas Filipino workers cannot acquire regularity of employment was reiterated in the 2004 case of Gu-Miro vs. No. chanrobles virtual law library . [G. 1999). that the World Finance Plaza project . 2002). enshrined it as one of the “indicators” that a worker is a project employee. The inescapable presumption is that his services were terminated for no valid cause prior to the expiration of the period of his employment. Department Order No. Nov. 2005]. the law merely requires that the employer should render a report to the DOLE on the termination of the employment. No. 1993] which superseded said Policy Instructions. 153832. Ltd. 2004]. 156748. Sept. R. No.

the contract had an object. [G. because its object was allegedly absent. chanrobles virtual law library In OSM Shipping Philippines. effect. However. 2002. supra. No. OFWs’ employment automatically cease upon the expiration of their contracts. The claim of petitioner that it processed the contract of private respondent with the POEA only after he had started working is also without merit. NLRC. A contract cannot be novated by the will of only one party. petitioner was preferred because of practical considerations – namely. it argues that since he was not deployed overseas. the petitioner does not deny hiring private respondent Guerrero as master mariner. Esso Eastern Marine. Ltd. Clearly.OFWs do not become regular employees by reason of nature of work. March 5. 2000). (Gu-Miro vs. the Supreme Court ruled that OFWs can become regular employees]. Inc. 138193. which was the rendition of service by private respondent on board the vessel. In the same Gu-Miro case [supra]. 2003]. Petitioner contends that using the vessel in coastwise trade and subsequently chartering it to another principal had the effect of novating the employment contract. What is regular seasonal employment? Is it valid? Yes. vs.. Contrary to petitioner’s contention. 54. The exigencies of their work necessitates that they be employed on a contractual basis. supra). (Ravago vs. R. Millares vs. If at all. The Supreme Court was not persuaded by this argument. Not being considered regular or permanent employees under Article 280. this does not alter the status of his employment from being contractual. [Note: in the first decision in the same case (March 14. chanrobles virtual law library The contracts of OFWs cease upon expiration thereof. Adorable. it was stated that even with the continued re-hiring by the company of the OFW to serve as Radio Officer on board the employer’s different vessels. his employment contract became ineffective. NLRC. this should be interpreted not as a basis for regularization but rather as a series of contract renewals sanctioned under the doctrine set down by the second Millares case [supra] rendered on July 29. an OFW cannot be considered a regular employee notwithstanding the fact that the work he performs is necessary and desirable in the business of the company. as clearly expounded in the abovementioned cases. The non-deployment of the ship overseas did not affect the validity of the perfected employment contract. The validity of regular seasonal employment has been affirmed by the Supreme Court in a plethora . Petitioner cannot use its own misfeasance to defeat his claim. However. his experience and qualifications. supra). Hiring of seaman for overseas employment but assigning him to local vessel. After all. the decision to use the vessel for coastwise shipping was made by petitioner only and did not bear the written conformity of private respondent.

the workers have become regular employees. Inc. then. For respondent-workers to be excluded from those classified as regular employees. duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent. The refusal of the employer to furnish work to regular seasonal workers would amount to illegal dismissal. but not of the second. [G. The fixed period of employment was knowingly and voluntarily agreed upon by the parties.Food and General Trade. the employer does not deny that the workers have served for several years already. R. April 15. (Hacienda Fatima vs. R. [G. 151827. 149440. If the evidence proves the existence of the first. the general rule of regular employment is applicable. (Philips . (See also Hacienda Bino/Hortencia Starke. without any force. to wit: 1. reiterated this rule. January 28. R. 1993]. No. R. They must have also been employed only for the duration of one season. No. chanrobles virtual law library Seasonal workers who are called to work from time to time and are temporarily laid off during offseason are not separated from the service in said period. Therefore. National Federation of Sugarcane Workers-Food and General Trade (G. the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause. (Hacienda Fatima vs. Where there is no showing of clear. NLRC. What are the criteria for fixed conracts of employment? In the case of Philippine National Oil Company-Energy Development Corporation vs. chanrobles virtual law library 55. April 29. March 31. No.employees. This is so because although the employer had shown that the employees performed work that was seasonal in nature. or 2. G. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. but are merely considered on leave until reemployed. chanrobles virtual law library Failure to re-hire regular seasonal employee for next season amounts to illegal dismissal. it is not enough that they perform work or services that are seasonal in nature. 2005. January 28. they are regular . 2003) The 2003 case of Hacienda Fatima vs./Hortencia L. the former failed to prove that the latter worked only for the duration of one particular season. condition. 2003]. Cuenca. 150478. Hence. Starke vs. 97747. In fact. Evidently. National Federation of Sugarcane Workers . Benares vs. No. 149440. valid and legal cause for the termination of employment.of cases. 2005). R. the Supreme Court set down two (2) criteria under which fixed contracts of employment cannot be said to be in circumvention of security of tenure. [G. supra).not seasonal . No. Pancho. petitioners employed respondents for more than one season. National Federation of Sugarcane Workers – Food and General Trade. The fact that the employees repeatedly worked as sugarcane workers for petitioner-employer for several years is not denied by the petitioners.

Philippine Veterans Bank. effect if duties are usually necessary or desirable in the employer’s usual business. Fadriquela. 2004]. it may hire and retire workers on fixed terms. the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties. vs. there was no illegal dismissal when the petitioners’ services were terminated by reason of the expiration of their contracts. It should be noted that it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer. No. (Pangilinan vs. No. chanrobles virtual law library In the 2000 case of Medenilla vs. Fadriquela. R. R. 1985. 2004]. their services were terminated as a result of the liquidation of PVB pursuant to the order of the Monetary Board of the Central Bank embodied in MB Resolution No. July 12. 141717. domestic and international. The respondent GMC is a domestic corporation engaged in the production and sale of livestock and poultry. they cannot be said to be regular employees. 141717. R. 2004). March 13. While the petitioners’ employment as chicken dressers is necessary and desirable in the usual business of the respondent. 1985. the petitioners were employees of the Philippine Veterans Bank (PVB). However. the petitioners were hired as “emergency workers” and assigned as chicken dressers.]. On the same day of their termination. but are merely “contractual employees. No. 612 dated June 7.]. since their employment was limited to a fixed period. Inc. hence.Semiconductors [Phils. 127673. General Milling Corporation. depending upon the needs of its customers. they were employed on a mere temporary basis. April 14. chanrobles virtual law library If the foregoing criteria are not present.” Consequently. packers and helpers at the Cainta Processing Plant of General Milling Corporation (GMC). 2004). G. G. all of them were required to sign employment contracts which provided that “*t+he employment shall be on a strictly temporary basis and only for the duration of the particular undertaking for which you are hired and only for the particular days during which actual work is available as determined by the Liquidator or his . Fixed-term employment. any worker hired by it for fixed terms of months or years can never attain regular employment status. General Milling Corporation. chanrobles virtual law library In the 2004 case of Pangilinan vs. and is a distributor of dressed chicken. [G. petitioners were re-hired through PVB’s Bank Liquidator. vs. On June 15. R. 149329. No. July 12. April 14. Inc. 2000]. In Philips Semiconductors [Phils. ad infinitum. [G. the contract should be struck down for being illegal. As such. No. 149329. Under the petitioner’s submission. R. the Supreme Court rejected petitioner’s submission that it resorted to hiring employees for fixed terms to augment or supplement its regular employment “for the duration of peak loads” during short-term surges to respond to cyclical demands. [G.

1990. Later. 1992. claiming that he was constructively dismissed because of the refusal of the latter to renew his contract. April 4. The Supreme Court ruled that after October 31. The Supreme Court ruled against the complainant. 105033. 218 SCRA 366 [1993]). General Milling Corporation. lack of notice of termination is of no consequence because when the contract specifies the period of its duration. NLRC. which was promulgated on January 2. No. In the 2004 case of Viernes vs. vs. PNOC and Philippine Village Hotel [supra]. 1990. 108405. R. In the case of Philippine Village Hotel vs. No. (Pangilinan vs. he filed against the company a complaint for illegal dismissal. After October 31. “An Act to Rehabilitate Philippine Veterans Bank”. he figured in a vehicular mishap. holding that his termination was justified and that the one-month fixed-term contract was valid following the consistent rulings in the cases of Brent School. Fifteen (15) years later. was re-hired on a fixed-term contractual basis of one (1) month.” The Supreme Court interpreted this stipulation as a valid form of fixedterm employment. they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. 1994]. After investigation. NLRC. NLRC.representatives since the work requirements of the liquidation process merely demand intermittent and temporary rendition of services. Fifteen days into his one-month employment. he was dismissed and his contract was no longer renewed. long time ago. the Supreme Court ruled that the fact that the private respondents therein were required to render services necessary or desirable in the operation of the petitioner’s business for the duration of the one month dry-run operation period. [G. a bus driver was. 1990. Blancaflor vs. Furthermore. supra. chanrobles virtual law library In the case of Pantranco North Express. A contract for employment for a definite period terminates by its own term at the end of such period. NLRC. Inc. [G. Notice to terminate not necessary in fixed-term employment. February 28. dismissed by the bus company for cause. December 16. chanrobles virtual law library Employees allowed to work beyond fixed term become regular employees. R. [G. 2003]. 1994]. 106654. the petitioner-employees were initially employed on a fixed-term basis as their employment contracts were only for October 8 to 31. R. he reappeared and out of generosity. The complexion of the . it terminates on the expiration of such period. however. the employment of the employees should no longer be treated as being on a fixed-term basis. In a fixed-period employment. did not in any way impair the validity of the contractual nature of private respondents’ contracts of employment which specifically stipulated that their employment was only for one month. it is evident from the records that the subsequent re-hiring of petitioners which was to continue during the period of liquidation and the process of liquidation ended prior to the enactment of RA 7169 entitled. No.

Dec.employment relationship of the employees and private respondent-employer is thereby totally changed. is definitely a regular employee. she had attained the regular status of her employment and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code. then. NLRC. R. holiday pay. The continuing need for her services is sufficient evidence of the necessity and indispensability of her services to the company’s business. vs. No. Fadriquela. 12. Work rendered for more than one year. 2004]. it was ruled that an employee who has been engaged to perform work which is necessary or desirable in the business or trade of the company and whose original contract of employment had been extended or renewed for four (4) times ranging from two to three months over a period of one year and twentyeight days to the same position.]. effect. 274 SCRA 147. Petitioner-employees have attained the status of regular employees. NLRC. helpers and maintenance workers. and 13th month pay. R. the scheme of the employer in hiring workers on a uniformly fixed contract basis of 5 months and replacing them upon the expiration of their contracts with other workers with the same employment status was found to have been designed to prevent the “casual” employees from attaining the status of a regular employee. 283 SCRA 133]. Inc. No. In resolving the issue of whether they had become regular employees. Such re-employment was but a catch-all excuse to prevent her regularization. the private respondent-workers were hired as gardeners. R. 122653. [G. June 19. It was a clear circumvention of the employee’s right to security of tenure and to other benefits like minimum wage. [G. . 1997. with the same chores and who remained in the employ of the company without any interruption. since petitioners are already regular employees at the time of their illegal dismissal from employment. In Pure Foods Corporation vs. not only an employment relationship is deemed to exist between them but the workers. effect. chanrobles virtual law library Hiring of employees on a 5-month period basis. not merely as probationary employees (since they never were engaged on probationary basis). would give them work from 5 to 10 days as the need arose and there were periodical gaps in the hiring of employees. Reinstatement means restoration to a state or condition from which one had been removed or separated. In the 2004 case of Philips Semiconductors [Phils. Hence. the Supreme Court pronounced that even if there was a contrary agreement between the parties. Successive renewal of fixed-period contracts. In hiring laborers. By operation of law. April 14. 1997. 156]. they are entitled to be reinstated to their former position as regular employees. 109224. sick leave. No. had been converted into regular employees by the sheer length of service they had rendered for the employer by virtue of the proviso in the second paragraph of Article 280. cost-of-living allowance. 141717. [G. although hired initially as contractual employees. petitioner whose business is contracting out general services. In Megascope General Services vs. if the worker has worked for more than a year and there is a reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.

engaged the services of respondent workers as “sales route helpers” for a limited period of five months. 1992. the employer’s general and catch-all submission that its policy for a specific and limited period on an “as the need arises” basis is not prohibited by law or abhorred by the Constitution. R. No. 71664.. 28. is a contract which has the purpose of circumventing the employee’s security of tenure.O. R. demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness between labor and capital. NLRC. No. short of the normal six-month probationary period of employment. According to petitioner company. After five months. was rejected and . Any obvious circumvention of the law cannot be countenanced. More so here where the Court of Appeals has found each of respondents to have worked for at least one year with petitioner company. the workers would then be paid their wages at the end of the day. If thus hired. The pernicious practice of having employees. Inc. [G. (Baguio Country Club Corporation vs. 21. respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. Ultimately. In the same 2004 case of Philips Semiconductors *supra+. In declaring that the workers have become regular employees. he became a regular employee. vs. thereafter. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their security of tenure. The court rigorously disapproves such contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection sanctioned by the Labor Code. 1989).Employment on a “day-to-day basis for a temporary period. De Leon vs. Petitioner company refused. and.W. No. chanrobles virtual law library Employment on “as the need arises” basis. and that there is nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties. May 9. Inc. respondent workers were employed by petitioner company on a day-to-day basis. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company.). respondent workers asked petitioner company to extend to them regular appointments. Aug.” A contract which states that the employment of the worker “shall be on a day-to-day basis for a temporary period” and that the same may be terminated at any time without liability to the employer other than for salary actually earned up to and including the date of last service. National Organization of Working Men (N. the Supreme Court reasoned that the repeated rehiring of respondent 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 petitioner company. one year after he was employed. NLRC G. G. In the 2003 case of Magsalin & Coca-Cola Bottlers Phils. mocks the law. Coca-Cola Bottlers Phils. Feb. Owing to the worker’s length of service with the company and considering that the nature of his work is usually necessary or desirable in the usual trade or business of the company. workers and laborers. 70705. engaged for a fixed period of few months.. 148492.. 2003]. R.M. by operation of law. to be hired on a day-to-day basis.

struck down by the Supreme Court for being contrary to law. Illegal dismissal of fixed-term employee, liability is only for salary for unexpired portion. As held in the case of Medenilla vs. Philippine Veterans Bank, [G. R. No. 127673, March 13, 2000], if the contract is for a fixed term and the employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of the employment contract. 56. May part-time workers attain regularity of employment? Yes. Probationary employment of part-time employees. Using the legal principles enunciated in Article 281 of the Labor Code on probationary employment visà-vis Article 13 of the Civil Code on the proper reckoning of periods, a part-time employee shall become regular in status after working for such number of hours or days which equates to or completes a sixmonth probationary period in the same establishment doing the same job under the employment contract. Once a part-time employee becomes a regular employee, he is entitled to security of tenure under the law and he can only be separated for a just or authorized cause and after due process. Indicators of regular employment of part-time employees. One may know if a part-time worker is a regular employee if any of the following conditions exist: a.the terms of his employment show that he is engaged as regular or permanent employee; b.the terms of his employment indicate that he is employed for an indefinite period; chanrobles virtual law library c.he has been engaged for a probationary period and has continued in his employment even after the expiration of the probationary period; or d.the employee performs activities which are usually necessary or desirable in the usual business or trade of the employer.

On the other hand, where the employment contract is fixed or for a definite period only as contemplated by law, part-time employees are likewise entitled to tenurial rights during the entire period of their fixed employment. In other words, they cannot be separated from work without just or

authorized cause. In the 2003 case of Philippine Airlines, Inc. vs. Pascua, [G. R. No. 143258, August 15, 2003], involving the regularization of part-time workers to full-time workers, the Supreme Court ruled that although the respondent-employees were initially hired as part-time employees for one year, thereafter the over-all circumstances with respect to duties assigned to them, number of hours they were permitted to work including overtime, and the extension of employment beyond two years can only lead to one conclusion: that they should be declared full-time employees. PROBATIONARY EMPLOYMENT 57. Who is a probationary employee? A probationary employee is one who, for a given period of time, is on observation, evaluation and trial by an employer during which the employer determines whether or not he is qualified for permanent employment. During the probationary period, the employer is given the opportunity to observe the skill, competence, attitude and fitness of the employee while the latter seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. (De la Cruz, Jr. vs. NLRC, G. R. No. 145417, Dec. 11, 2003). The word “probationary” is appropriately used to underscore the objective or purpose of the period, and not its length which is immaterial. (International Catholic Migration Commission vs. NLRC, G. R. No. 72222, Jan. 30, 1989). The length of time is immaterial in determining the correlative rights of both the employer and the employee in dealing with each other during said period. (Escorpizo vs. University of Baguio, 306 SCRA 497, 507 [1999]). 58. What is the period of probationary employment? General rule. - Probationary period should not exceed six (6) months from the date the employee started working. One becomes a regular employee upon completion of his six-month period of probation. Exceptions. - The six (6) months period provided in the law admits of certain exceptions such as: 1. when the employer and the employee mutually agree on a shorter or longer period; chanrobles virtual law library 2. when the nature of work to be performed by the employee requires a longer period; 3. when a longer period is required and established by company policy.

In Buiser vs. Leogardo, (G. R. No. L-63316, July 13, 1984), the Supreme Court considered the probationary period of employment of eighteen (18) months as valid since it was shown that the company needs at least 18 months to determine the character and selling capabilities of the employees as sales representatives. 59. May probationary employment be extended? Extension of probationary period. - Probationary period of employment may be extended provided there is mutual consent thereto by the employer and the employee. Employer’s act of rehiring a probationary employee, effect. The act of the employer in repetitively rehiring a probationary employee negates the former’s claim that the latter failed to qualify as a regular employee. As held in Octaviano, vs. NLRC, [G. R. No. 88636, Oct. 3, 1991], these successive hirings and firings are a ploy to avoid the obligations imposed by law on employers for the protection and benefit of probationary employees who, more often than not, are kept in the bondage, so to speak, of unending probationary employment without any complaint due to the serious unemployment problem besetting the country. If no stipulation on probationary period, employment is deemed regular. In the case of ATCI Overseas Corporation vs. CA, [G. R. No. 143949, August 9, 2001], it was ruled that in the absence of any evidence that there is a provision in the employment contract providing for a probationary period, or that the employees were apprised of the fact that they were to be placed on probationary status and the requirements that they should comply with in order to qualify as regular employees, no other conclusion can be drawn but that they were regular employees at the time they were dismissed. Probationary employment cannot be ad infinitum. In the 2005 case of Voyeur Visage Studio, Inc. vs. CA, [G. R. No. 144939, March 18, 2005], the Supreme Court had occasion to reiterate its earlier ruling in Bernardo vs. NLRC, [310 SCRA 186 (1999)] that “Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum. The contract signed by petitioners is akin to a probationary employment during which the bank determined the employees’ fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees.” (Emphasis supplied) 60. How should the six-month probationary period be computed?

The computation of the 6-month probationary period should be reckoned from the date of appointment up to the same calendar date of the 6th month following. (Cals Poultry Supply Corp. vs. Roco G.R. No.150660. July 30, 2002). However, in the 2004 case of Mitsubishi Motors Philippines Corporation vs. Chrysler Philippines Labor Union, [G. R. No. 148738, June 29, 2004], the Supreme Court, in reckoning the probationary period, applied to the letter, Article 13 of the Civil Code which basically states: chanrobles virtual law library “Article 13. When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise.

“If months are designated by their name, they shall be computed by the number of days which they respectively have. chanrobles virtual law library “In computing a period, the first day shall be excluded, and the last day included.”

In this case, the respondent employee (Paras) was employed as a management trainee on a probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996. As per the company’s policy, the probationary period was from three (3) months to a maximum of six (6) months. Applying said Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days. chanrobles virtual law library As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. Consequently, when the termination letter dated November 25, 1996 was served on respondent Paras at 3:00 a.m. of November 26, 1996, he was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code. chanrobles virtual law library But in the earlier case of Cebu Royal vs. Deputy Minister of Labor, [153 SCRA 38 (1987)], the 6-month probationary period was reckoned from the date of appointment up to the same calendar date of the 6th month following. The 2002 case of Cals Poultry Supply Corporation vs. Roco, [G. R. No. 150660, July 30, 2002], followed

the said reckoning/computation enunciated in the Cebu Royal case [supra]. In this case, the probationary employee was hired on May 16, 1995 and her services were terminated on November 15, 1995. The Court of Appeals set aside the NLRC ruling on the ground that at the time the probationary employee’s services were terminated, she had attained the status of a regular employee as the termination on November 15, 1995 was effected four (4) days after the 6-month probationary period had expired, hence, she is entitled to security of tenure in accordance with Article 281 of the Labor Code. Petitioner Cals argues that the Court of Appeals’ computation of the 6-month probationary period is erroneous as the termination of the probationary employee’s services on November 15, 1995 was exactly on the last day of the 6-month period. Citing Cebu Royal [supra], the Supreme Court agreed with petitioner Cals’ contention as upheld by both the Labor Arbiter and the NLRC that the probationary employee’s services were terminated within and not beyond the 6-month probationary period. 61. Standards should be made known to employee at start of engagement. The rudiments of due process demand that an employee should be apprised beforehand of the conditions of his employment and the basis for his advancement. (Servidad vs. NLRC, G. R. No. 128682, March 18, 1999; Orient Express Philippines, vs. NLRC, G. R. No. 113713, June 11, 1997). If standards are not made known to the employee at start of employment, he is deemed a regular employee from day one. According to the Rules to Implement the Labor Code, in all cases of probationary employment, the employer should make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he should be deemed a regular employee. (Section 6 [d], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article V, Department Order No. 10, Series of 1997). This rule was applied in the 2005 case of Clarion Printing House, Inc. vs. NLRC, [G. R. No. 148372, June 27, 2005], where it was held that since at the time the employee was hired on probationary basis she was not informed of the standards that would qualify her as a regular employee, she was deemed to have been hired from day one as a regular employee. (See also Cielo vs. NLRC, 193 SCRA 410, 418 [1991]). However, in the case of Aberdeen Court, Inc. vs. Agustin, Jr., [G. R. No. 149371, April 13, 2005], the Supreme Court cautioned that the above rule should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met. In this case, the electrical engineer undergoing

probationary employment was dismissed because he failed in the performance of his task as such. Quoting with approval the findings of the NLRC, the Supreme Court ruled: “It bears stressing that even if technically the reading of air exhaust balancing is not within the realm of expertise of the complainant, still it ought not to be missed that prudence and due diligence imposed upon him not to readily accept the report handed to him by the workers of Centigrade Industries. Required of the complainant was that he himself proceed to the work area, inquire from the workers as to any difficulties encountered, problems fixed and otherwise observe for himself the progress and/or condition/quality of the work performed. chanrobles virtual law library

“As it is, We find it hard to believe that complainant would just have been made to sign the report to signify his presence. By saying so, complainant is inadvertently degrading himself from an electrical engineer to a mere watchdog. It is in this regard that We concur with the respondents that by his omission, lack of concern and grasp of basic knowledge and common sense, complainant has shown himself to be undeserving of continued employment from probationary employee to regular employee.”

62. What is the effect of allowing an employee to work beyond the probationary period? An employee who is allowed to work after a probationary period is considered a regular employee. (Article 281, Labor Code; Philippine National Bank vs. Cabansag, G. R. No. 157010, June 21, 2005). chanrobles virtual law library An employee who is allowed to work after a probationary period shall be considered a regular employee. Thus, in one case, an employee was considered already on permanent status when he was dismissed four (4) days after he ceased to be a probationer. (Cals Poultry Supply Corp. vs. Roco G.R. No.150660. July 30, 2002). 63. What are the grounds to terminate probationary employment? Under Article 281, a probationary employee may be terminated on two (2) grounds, to wit: (a) for a just cause; or (b)when employee fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the start of the employment. (Aberdeen Court, Inc. vs. Agustin, Jr., G. R. No. 149371, April 13, 2005).

Assignment to a job different from that applied for. In the 3005 case of Athenna International Manpower Services, Inc. vs. Villanos, [G. R. No. 151303, April

15, 2005], the OFW was terminated while, as alleged by petitioner, still undergoing probationary employment for a period of forty (40) days. In declaring the termination as illegal, the Supreme Court ruled that even assuming respondent was a mere probationary employee as claimed by petitioner, respondent could only be terminated for a pertinent and just cause, such as when he fails to qualify as a regular employee in accordance with reasonable standards of employment made known to him by his employer at the time of his engagement. Here, it appears that the petitioner failed to prove that, at the time of respondent’s engagement, the employer’s reasonable standards for the job were made known to respondent. Moreover, in this case, respondent was assigned to a job different from the one he applied and was hired for. Termination due to poor performance; effect of high performance rating after temporary reinstatement. A probationary employee was dismissed in Lucero vs. CA, [G. R. No. 152032, July 3, 2003], for unsatisfactory performance prior to the expiration of his probationary employment. He was ordered reinstated by the NLRC while the case was pending appeal. During the period of his reinstatement, he was given a high rating of “very satisfactory” in his work performance. The Supreme Court, however, did not give any weight to said high rating. It ruled: “It would be difficult to sustain the stand taken by petitioner that the Court of Appeals erred in ignoring his subsequent high performance rating. The high rating of “very satisfactory” obtained by petitioner after his reinstatement, in compliance with the order of the NLRC, was not controlling, the point in question being his performance during the probationary period of the employment.” Peremptory termination of probationary employment. In the 2003 case of Cebu Marine Beach Resort vs. NLRC, [G. R. No. 143252, October 23, 2003], the respondents-probationary employees, while undergoing special training in Japanese customs, traditions, discipline as well as hotel and resort services of the newly opened resort, were suddenly scolded by the Japanese conducting the training and hurled brooms, floor maps, iron trays, fire hoses and other things at them. In protest, respondents staged a walk-out and gathered in front of the resort. Immediately, the Japanese reacted by shouting at them to go home and never to report back to work. Heeding his directive, respondents left the premises. Eventually, they filed a complaint for illegal dismissal and other monetary claims against petitioners. chanrobles virtual law library The Supreme Court, in holding that the dismissal of the probationary employees were illegal, ruled that the respondents could not have failed to qualify for their positions since at the time they were dismissed, they were still in a “trial period” or probationary period. Being in the nature of a “trial period,” the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment

No. In the 2005 case of Aberdeen Court.R. shall apply. No. . vs. Agabon doctrine applies if dismissal of probationary employee is without due process. Consequently. 149371. and (e) Other causes analogous to the foregoing. (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives. Agustin. petitioners peremptorily dismissed them from the service. What are the just causes for termination of employment under Article 282 of the Labor Code? An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. Jr.000. To reiterate. NLRC. [G. What is serious misconduct? Requisites.For misconduct or improper behavior to be a just cause for dismissal: (a) it must be serious. 65. 158693. November 17. R. TERMINATION OF EMPLOYMENT BY THE EMPLOYER JUST CAUSES FOR TERMINATION OF EMPLOYMENT 64.. it was held that if a probationary employee was dismissed for just cause but without affording him the required notice. 2004]. in the case at bar. April 13. far from allowing the respondents to prove that they possessed the qualifications to meet the reasonable standards for their permanent employment. G.which obviously were made known to him. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.. and (c) it must show that the employee has become unfit to continue working for the employer. the employer is liable for nominal damages in the amount of P30. (b) it must relate to the performance of the employee’s duties. Inc. the doctrinal ruling in the leading case of Agabon vs. 2005]. (b) Gross and habitual neglect by the employee of his duties.

may constitute serious misconduct. 149629. the act must have been done in relation to the performance of his duties as would show him to be unfit to continue working for his employer. 2000).In the 2005 case of Fujitsu Computer Products Corporation of the Philippines vs. Throwing a stapler and uttering invectives against a plant manager. 2004). In the 2003 case of Roquero vs. (Piedad vs. No. G. when considered together or in their entirety. she cannot be held in violation therefor. R. when put together. in order to consider it a serious misconduct that would justify dismissal under the law.. 158232. 153 SCRA 500). valid ground to terminate employment. a valid ground to terminate employment. R. The acts complained of. Oct. R. chanrobles virtual law library Series of irregularities. Her employment identification card discloses the nature of her employment as a nurse and no other. No. Also. 73735. the Supreme Court ruled in a 2000 case that the act of the employee in throwing a stapler and uttering abusive language upon the person of the plant manager may be considered from a layman’s perspective as a serious misconduct. No. the Supreme Court ruled that his dismissal from the service is in order. However. R. [G. No. CA. (Philippine Aeolus Automotive United Corporation vs. 1987. in order to consider it a serious misconduct that would justify dismissal under the law. Hence. Inc. NLRC. Use of shabu.. chanrobles virtual law library In a 2004 case where the employee was shown to have committed various violations of the company’s rules and regulations. April 8. 4. There is no question that the possession and use by an employee of methampethamine hydrochloride or shabu is a just cause to terminate employment as it constitutes serious misconduct under Article 282 of the Labor Code. the respondent’s act of sending an e-mail message as an expression of sympathy for the plight of a superior can hardly be characterized as serious misconduct as to merit the penalty of dismissal. a series of irregularities when put together may constitute serious misconduct. [G. Wyeth Phils. To reiterate. the Supreme . April 22. Aug. G. An employee’s fitness for continued employment cannot be compartmentalized or taken in isolation from one act to another. Lanao del Norte Electric Cooperative. 2005+. 152329. Inc. There is no showing that the sending of such e-mail message had any bearing or relation on respondent’s competence and proficiency in his job. the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse. R. 124617. (Gustilo vs.. No. it must have been done in relation to the performance of her duties as would show her to be unfit to continue working for her employer. April 28. A series of irregularities. did not in any way pertain to her duties as a nurse. under the circumstances they were done. Philippine Air Lines. 31. G. may constitute serious misconduct. 2003].. Applying the foregoing standards. Inc. Indeed.

(Santos. even if he was instigated to take drugs he has no right to be reinstated to his position. such behavior amounts to immorality. Jr. G. As a general rule. The exception is when such immoral conduct is prejudicial or detrimental to the interest of the employer. Therefore. the dismissal of the supervisor who maintained a concubine and practically drove his family away because of his illicit relationship was held legal. His failure to do his job can mean great loss of lives and properties. The act of sexually harassing a co-employee within the company premises (ladies’ dormitory) even after office hours is a work-related matter considering that the peace of the company is thereby affected. He took the drugs fully knowing that he was on duty and more so that it is prohibited by company rules. He cannot discharge that duty if he is a drug user.Court affirmed the validity of the dismissal of petitioner who was caught red-handed possessing and using methampethamine hydrochloride or shabu in a raid conducted inside the company premises by PAL security officers and NARCOM personnel. the same including sexual misconduct. For instance. 4515). chanrobles virtual law library Immoral act committed beyond office hours. The Code of Employee Discipline is very clear that immoral conduct “within the company premises regardless of whether or not [it is] committed during working time” is punishable.” Immorality. . when a teacher engages in extra-marital relationship. In another case. 101875. No. As supervisor. Roquero was tasked with the repair and maintenance of PAL’s airplanes. (Sanchez vs. immorality is not a just ground to terminate employment. R. 54 O. G. Hence. March 6. July 14. (Navarro III vs. 287 SCRA 117). NLRC. Damasco. the gravity and seriousness of the charges against the teacher stem from his being a married man and at the same time a teacher. he failed to set a good example to the several personnel under him. 1998. vs. Thus. Instigation is only a defense against criminal liability. The standard to be used to determine whether the immoral conduct adversely affects the interest of the employer is whether the immoral act is of such nature which may be considered calculated to undermine or injure such interest or which would make the worker incapable of performing his work. It cannot be used as a shield against dismissal from employment especially when the position involves the safety of human lives. No. 115795. 1995). Said the Supreme Court: “It is of public knowledge that drugs can damage the mental faculties of the user. justifying his termination from employment. G. Sexual intercourse inside company premises constitutes serious misconduct. especially when the parties are both married. in a case involving a teacher. Ang Tibay. R. immorality was defined as a course of conduct which offends the morals of the community and is a bad example to the youth whose ideals a teacher is supposed to foster and to elevate.

(Flores vs. while the other guard pretended to be asleep during all the time that the lustful act was commenced until consummated. NLRC. Inc. is not an immoral act which would justify the termination of her employment. NLRC. G. 21. 28. NLRC. chanrobles virtual law library In one case where the fisticuffs between an employee and a security guard occurred in a store within the company auxiliary compound. 109362. May 15. does not necessarily mean that the former was the aggrieved party. The act of a 30-year old lady teacher. (Solvic Industrial Corp. R. This is especially true when the employee concerned did not instigate the fight and was in fact the victim who was constrained to defend himself. G. the Supreme Court ruled that the penalty of dismissal was not commensurate with the misconduct. Fighting within work premises may be deemed a valid ground for the dismissal of an employee. Aug. not immoral. G. Aug. Sept. vs. No. Jan. No. If the two eventually fell in love despite the disparity of their ages and academic levels. 1987). (Garcia vs. R. disrupts operations and creates a hostile work atmosphere. (North Camarines Lumber Co. And in another case where the fight occurred outside the work premises and did not lead to any disruption of work or any hostile environment in the work premises. 1990). 125548. G. The school utterly failed to show that petitioner took advantage of her position to court her student. however. and allowed two female security guards to come inside the Security Office and had sexual intercourse with one of them on top of the desk of the Security Head. No. Inc. 25. But. 30. 3. 1988). Not every fight. G. (Chua-Qua vs.A security coordinator committed serious breaches of company rules when he caused the introduction of intoxicating liquor into the premises which he drank with another guard on duty. The fact that an employee filed a criminal case against the other employee involved in a fight while the latter did not. considering the length of service and the surrounding circumstances of the incident. No. NLRC. definitely. Sept. The deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores. 256 SCRA 735). The act of a lady teacher in falling in love with a student. about 15 meters from the gate. this only lends substance to the truism that the heart has reasons of its own which reason does not know. Barreda. G. No. chanrobles virtual law library Fighting as ground for termination. 1999). within company premises in which an employee is involved would warrant his dismissal. 116568. R. Such act adversely affects the employer’s interests for it distracts employees. R. 1996. vs. vs. R. L-74187. the dismissal of the employee who . L-49549. 1998). R. yielding to this gentle and universal emotion is not to be so casually equated with immorality. No.. (Stanford Microsystems. 75436. Clave. of falling in love with her student whose age is 16.

” “anti-Filipino. the act of the employee in calling his supervisor “gago ka” and taunting the latter by saying “bakit anong gusto mo. This attitude towards a supervisor amounted to insubordination and conduct unbecoming of an employee which should merit the penalty of dismissal.” The Supreme Court declared the dismissal of said employee based on these malicious statements valid and legal. The act of an employee in hurling obscene. In De la Cruz vs. the dismissed employee circulated several letters to the members of the company’s board of directors calling the executive vice-president and general manager a “big fool. 1998. said employee’s dismissal was held legal in view of these utterances. NLRC. you have to give a goat. 1997. [142 SCRA 79 (1986)]. No. 117453. In Bondoc vs. .figured in the fight was considered too harsh a penalty. September 15. 177 SCRA 626]. Magingat ka sa paglabas mo sa Silahis Hotel. contemptuous attitude to labor. you must give anything to your foreman. patawa tawa ka pa.” was held to constitute insubordination and conduct unbecoming an employee which should warrant his dismissal. 441). (Solvic Industrial Corp. 1998. R. R.Unggoy xxx ulol” were held unquestionably as partaking the form of grave threat or coercion which justified the dismissal of the offender. R. 291 SCRA 219. 228). Deputy Minister of Labor. 228]. If you want to remain in this company. 82703. In Asian Design and Manufacturing Corporation vs. NLRC. 276 SCRA 288].” – “Sige lang. vs. dictatorial policies. June 26. R. Eslava. No. 117453. G. In Autobus Workers’ Union vs. 125548. *G. the dismissed employee therein likewise posted a notice in the comfort room of the company premises which read: “Notice to all Sander – Those who want to remain in this company. 103209. No. the dismissed employee made false and malicious statements against the foreman (his superior) by telling his co-employees: “If you don’t give a goat to the foreman.” As a result of this. bilang na ang araw mo. anti-Filipino utterances and activities. one-man rule. In Reynolds Philippine Corporation vs. No. July 28. No. ‘tang ina mo” was held sufficient ground to dismiss the former. NLRC. 291 SCRA 219. you will be terminated. [G. 296 SCRA 432. inefficiency. [137 SCRA 259 (1985)]. [G.” and accusing him of “mismanagement.” Further. 1989. the act of an employee in hurling invectives at a company physician such as “sayang ang pagka-professional mo” and “putang ina mo. eh bilang na bilang na ang araw mo. petty favoritism. G. utterances on different occasions towards a co-employee of the following: -”Di bale bilang na naman ang araw mo. NLRC.” – “Matakot ka sa Diyos. Utterance of obscene. June 26. NLRC. 1998. Failure to do so will be terminated – Alice 80. but also constitutes gross misconduct which is one of the grounds provided for by law to terminate the services of an employee. R. lack of planning and foresight. insulting or offensive words constitutes serious misconduct. insulting or offensive language against his superior is not only destructive of the morale of his co-employees and a violation of the company rules and regulations. . 25. (Autobus Workers’ Union vs. Sept.

121806. a serious misconduct. the following utterances: “Si EDT (referring to Epitacio D. joined a drinking spree at a birthday party of a co-guard in a sari-sari store near the FTI security office. 211 SCRA 717). July 23. No. No. Sept. The reason cited was the fact that the company rules and regulations merely provided for suspension for first . the lesser penalty of 30-day suspension. 2. vs. (Sanyo Travel Corporation vs. the dignity of his position and the surrounding circumstances of the intoxication. G. while off-duty. Oct. G. 85490. R. failing which. The Supreme Court justified said finding by distinguishing this case from the De la Cruz. 1989). For instance. Club Filipino. G. G. intoxication of an employee which interferes with his work. In one case.” and “sabihin mo kay EDT. constitutes serious misconduct. May 24. Gambling within company premises. (Del Val vs. No. 25. 1983). General Manager and President of the company). R.But in Samson vs. April 12. 83854. 121449. The incident occurred with his full knowledge that his co-pilots have flight duties as early as 7:10 a.m. an employee was validly terminated when he was caught gambling within the company premises. No. must be taken into account. in that the said offensive utterances were not made in the presence of the employee’s superior. that the company’s rules and regulations merely provide for “verbal reminder” for first offenders. [G. 2000+. six bottles of beer each.” “sabihin mo kay EDT yan. of forcing two co-pilots with the rank of First Officers. vs. 121035. R. NLRC. R. (Philippine Airlines. NLRC.m. In another case involving two (2) security guards who. not dismissal. The act of a pilot with the rank of captain. L62961. to drink one evening at the coffee shop of a hotel in Cebu City. G. 1998. chanrobles virtual law library Intoxication as ground for termination. It is well-settled by jurisprudence that serious misconduct in the form of drunkenness and disorderly or violent behavior is a just cause for the dismissal of an employee. Titong. NLRC. was the penalty held to be appropriate under the circumstances. Secretary of Labor. bullshit yan” while making the “dirty finger” gesture. No. However. (Dimalanta vs. As a general rule. he ordered them to stand erect and were hit on the stomach. Sept. Asian Design and Reynolds cases [supra]. No. R. the act of a managerial employee of reporting for work under the influence of liquor and sleeping while on duty reflect his unworthiness of the trust and confidence reposed on him. Sebastian. was held as constitutive of serious misconduct. the nature of the employee’s work. it being a prohibited act carrying the penalty of termination under the Company Rules. were not held to be sufficient to merit the dismissal of the employee. 2. Autobus. NLRC. 1992. 296 SCRA 283). 1997. within thirty minutes. R. Inc. bullshit yan. the next day and as late as 12:00 p. Inc. and that the penalty of dismissal was unduly harsh considering his 11 years of service to the company.

it was pronounced that to cite that sleeping on the job is always a valid ground for dismissal is misplaced not only because the same was not substantiated by any convincing evidence other than the bare allegation of the employer but most significantly. 31. because the authorities cited. and A’ Prime Security Services. 1995).” If indeed the Night Manager chanced upon respondent-employees sleeping on the job. R. NLRC. 2004]. 130957. No. Eating while at work. [220 SCRA 142 (1993)]. NLRC. Inc. why he did not at least rouse some or all of them to put them on notice that they were caught in flagrante defies understanding. coupled with gross insubordination. constitute serious misconduct. vs. 282 [1] of the Labor Code for purposes of terminating employment. (Padilla vs. (Tanduay Distillery Labor Union vs. Dec. Dec. (Quiňones vs. In the 2004 case of Electruck Asia. No. 06. vs. G. Urinating in the workplace.offenders. in the 2000 case of VH Manufacturing. In Luzon Stevedoring Corporation vs. In a 2002 case. under the attendant circumstances of the case. R. G. However. 147031. [G. the doctrine laid down in those cases is not applicable to the case at bar. Dismissal is too harsh a penalty for the offense of eating while at work. Luzon Stevedoring *supra+ and A’ Prime [supra]. 105763. 1997. Meris. [G. Inc. No. where more than fifty employees were alleged to have slept at the same time. R. NLRC. dereliction of duty and challenging superiors to a fight. 2000]. The pressure and influence exerted by a teacher on his colleague to change a failing grade of a student to a passing one. are not applicable in this case since the function involved in said cases was “to protect the company from pilferage or loss. July 27. R. 1995). 1965+. L-18683. CIR. June 13. 273 SCRA 457). as well as his misrepresentation that the student is his nephew. 114764. Jan. NLRC. No. 19. 73352. the Supreme Court found it “highly unlikely and contrary to human experience that all fifty-five employees including respondents were at the same time sleeping. July 14. G. Inc. [G. but the same must be shown by evidence. was held as serious misconduct. vs. Sleeping while on duty as a ground for termination. An employee cannot be terminated based on this ground if there is . Pressure exerted by a teacher upon a colleague to change a failing grade of a student. the act of an employee of sleeping in his post. No. NLRC. R. which is a valid ground for dismissing an employee. No. R. it was held that urinating in a workplace other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art.” Accordingly.

education or training-related sexual harassment is committed by any employer.no evidence that he did urinate in a place other than a rest room in the premises of his work.” (Villarama vs. Ibid. demands. approved on February 14. No. requests or otherwise requires any sexual favor from another. Work. or 2. trainor. Republic Act No. work-related. agent of the employer. 2002). instructor. caressing her nape and telling other people that the subordinate was the one who hugged and kissed or .). teacher. Lagrama. he provides a justifiable ground for his dismissal for lack of trust and confidence. 15. 7877. supra). the act of the manager in “touching a female subordinate’s hand and shoulder. training-related. R. A. having authority. chanrobles virtual law library In another case. (Section 3. professor. (Section 3. shall also be held liable under the law. or any other person who. supervisor. Sexual Harassment. coach. Ibid. Aug. Inc. No. 151228. Who may be liable for sexual harassment.). manager. G.. education or training environment. or who cooperates in the commission thereof by another without which it would not have been committed. regardless of whether the demand. Ibid. or 3. nay. And when such moral perversity is perpetrated against his subordinate. (Section 3. NLRC and Golden Donuts. 7877 punishes sexual harassment if the same is: 1. the Supreme Court said: “As a managerial employee. In a sexual harassment case involving a manager. education-related.). It is the right. employee. chanrobles virtual law library Any person who directs or induces another to commit any act of sexual harassment as defined in the law. (Tan vs. 1995. He failed to live up to this higher standard of responsibility when he succumbed to his moral perversity. 66. influence or moral ascendancy over another in a work or training or education environment. petitioner is bound by a more exacting work ethics. the duty of every employer to protect its employees from over-sexed superiors. otherwise known as the “Anti-Sexual Harassment Act of 1995” declares sexual harassment unlawful in the employment. request or requirement for submission is accepted by the object of said act. chanrobles virtual law library R.

the narration of the respondent even corroborated the subordinate’s assertion in several material points. R. NLRC.00 by way of. Likewise. moral damages and exemplary damages. (Libres vs. he was ordered to indemnify the offended party. the delay did not detract from the truth derived from the facts. No. chanrobles virtual law library Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer’s sexual impositions. Additionally. scandal. Republic Act No. it was held that the delay of more than four (4) years to expose the manager’s sexual harassment is of no moment. Not many women. and more importantly.00) Pesos. NLRC. April 28. R. in the 2002 case of Philippine Aeolus Automotive United Corporation vs. 7877). 2002] where the Supreme Court affirmed the Sandiganbayan’s decision finding Dr. a delay of one (1) year in instituting the complaint for sexual harassment is not an indicium of afterthought. An illustrative criminal case involving sexual harassment is the 2002 case of Dr. 124617. 7877. 2000]. there is no time period within which he or she is expected to complain through the proper channels. are made of the stuff that can endure the agony and trauma of a public. According to Libres vs.that she responded to the sexual advances” was considered act of sexual harassment for which he was penalized by the company with a 30-day suspension which the Supreme Court affirmed. May 28. [G. are all realities that the subordinate had to contend with. People of the Philippines. respectively. The delay could be expected since the respondent was the subordinate’s immediate superior. 1999]. Rico Jacutin y Salcedo guilty of the crime of Sexual Harassment defined and punished under Republic Act No. The gravamen of the offense in sexual harassment is not the violation of the employee’s sexuality but the abuse of power by the employer. [G.000. Prescription of action. Juliet Yee. with subsidiary imprisonment in case of insolvency. In fact. circumstances. in the amount of P30.00 and P20. If petitioner corporation had not . Strictly speaking. male or female. NLRC. No.000. Delay in filing the case for sexual harassment. Any employee. particularly Sections 3 and 7 thereof. R. March 6. Fear of retaliation and backlash.000. even corporate. the emotional threshold of the employee. 140604. He only raised issue on the complaint’s protracted filing. Jacutin vs. may rightfully cry “foul” provided the claim is well substantiated. No. Jacutin vs. 123737. Any action arising from sexual harassment shall prescribe in three (3) years. not to forget the social humiliation and embarrassment that victims of this human frailty usually suffer. [G. and penalizing him with imprisonment of six (6) months and to pay a fine of Twenty Thousand (P20. especially in this country. Moreover. Rico S. The time to do so may vary depending upon the needs. supra). People. (Section 7.

sufficiently known to the employee. his act should be deemed . willful breach of trust and confidence. Rule where violation of the rules was tolerated by employer. 2004]. vs. (Ibid. the employee’s assailed conduct must have been willful or intentional. so to speak. As held in the 2004 case of Coca-Cola Bottlers Philippines.’ and 2. 13. Moreover. Where a violation of company policy or breach of company rules and regulations was found to have been tolerated by management. 154384. namely: chanrobles virtual law library 1. lawful and reasonable. . said orders. or instructions must be: 1. fraud. if an employee was merely following the instructions of his supervisor. in connection with the duties which the employee has been engaged to discharge. The dearth of quality employment has become a daily “monster” roaming the streets that one may not be expected to give up one’s employment easily but to hang on to it. few persons are privileged indeed to transfer from one employer to another. What legal ground/s may be cited for acts of dishonesty? An act of dishonesty may constitute either of the following grounds: serious misconduct. we could only speculate how much longer she would keep her silence. 2. 67. regulations or instructions of the employer may constitute a just cause for terminating his employment. the order violated must have been reasonable and lawful and made known to the employee and must pertain to the duties which he had been engaged to discharge. Vital. Sept. [G. regulations.For the ground of “willful disobedience” to be considered a just cause for termination of employment. the same could not serve as a basis for termination. chanrobles virtual law library 68. and 3. Requisites of lawful dismissal on the ground of willful disobedience.).issued the third memorandum that terminated the services of private respondent. the following requisites must concur. by all tolerable means. What are the requisites to validly invoke willful disobedience of lawful orders as a just ground to terminate employment? In order that the willful disobedience by the employee of the orders. Inc. No. R. the willfulness being characterized by a ‘wrongful and perverse attitude.

It provides: “10. and the right against.in good faith. May 23. (Zialcita vs. Inc. A company policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of. when valid. you agree to resign voluntarily from the Company as a matter of Company policy. discriminate or otherwise prejudice a woman employee merely by reason of her marriage. hence. R.” The Supreme Court ruled that this stipulation is a valid exercise of management prerogative. NLRC. It is likewise an unlawful act of the employer. [G. decided by the Office of the President). Clearly. The provision in a contract between an airline company and a flight attendant which states that “flight attendant-applicants must be single and that they shall be automatically separated from employment in the event they subsequently get married” is a null and void provision. You agree to disclose to management any existing or future relationship you may have. No. Marinduque Mining Industrial Corporation. June 28. as a condition of employment or continuation of employment. 2004]. R. In the 2004 case of Duncan Association of Detailman-PTGWO vs.. Glaxo Welcome Philippines. The prohibition against personal or marital relationships with employees of competitor-companies upon its employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. September 17. Feb. Philippine Airlines. discrimination afforded all women workers by our labor laws and by no less than the Constitution. RO4-3-398-76. Rules to Implement the Labor Code.. (PT&T vs. (See also Section 13 [e]. the employer only aims to protect its interests against the possibility that a competitor company will gain access to its . cannot be enforced for being contrary to Article 136 of the Labor Code and the protection-to-labor clause in the Constitution. No. In laying down the assailed company policy. G. Should it pose a possible conflict of interest in management discretion. 1997). his dismissal from the service on the ground of willful disobedience or violation of company rules and regulations is not justified. 162994. R. to actually dismiss. Gualberto vs. Rule XII. 118978. Article 136 of the Labor Code considers as an unlawful act of the employer to stipulate. Inc. C. 52753-R. Rule against marriage. A.-G. No. a woman employee shall be deemed resigned or separated. or that upon getting married. 20. when not valid. that a woman employee shall not get married. the contract of employment expressly prohibited an employee from having a relationship with an employee of a competitor company. 1977. either by consanguinity or affinity with co-employees or employees of competing drug companies. Case No. Rule against marriage. 1978). Book III. discharge.

Abandonment of work is a valid ground to terminate an employment. To put it otherwise. to wit: chanrobles virtual law library . in doing the alleged negligent act. *G. 2003]. • Element of habituality may be disregarded if totality of evidence justifies dismissal. • Element of actual loss or damage. Test to determine negligence. Maxim’s Tea House. and 2. According to the Supreme Court in the 2003 case of Reyes vs. Clearly. February 27.secrets and procedures. petitioner’s dismissal is illegal. .The notice required consists of two (2) parts to be separately served on the employee in his last known address. To hold that petitioner was grossly negligent under the circumstances goes against the factual circumstances shown. This is the more determinative factor being manifested by some overt acts. • Habitual tardiness or habitual absenteeism may be a ground for termination. . the test to determine the existence of negligence is as follows: Did the employee. 69. two (2) elements must concur. To constitute abandonment. There being no clear showing that petitioner was culpable for gross negligence. petitioner did not insist on his right of way. What constitutes the ground of gross and habitual neglect of duties? • Element of habituality may be disregarded where loss is substantial. a clear intention to sever the employer-employee relationship. the collision took place as the ten-wheeler careened on the wrong lane. the failure to report for work or absence without valid or justifiable reason. Requirement of notice before declaring abandonment. not an essential requisite. chanrobles virtual law library 70. Still. use that reasonable care and caution which an ordinarily prudent person would use in the same situation? chanrobles virtual law library In this case involving a vehicular collision leading to the dismissal of the petitioner-employee on the ground of gross negligence. It appears that he was more a victim of a vehicular accident rather than its cause. the Supreme Court found that the petitioner tried to turn left to avoid a collision. No. What are the requisites to validly invoke abandonment of work? Requisites. notwithstanding the green light in his lane. petitioner exerted reasonable effort under the circumstances to avoid injury not only to himself but also to his passengers and the van he was driving. 140853. R. namely: chanrobles virtual law library 1.

133573. NLRC. R. R. the filing of such complaint the very next day after the employee was removed (Anflo Management & Investment Corp. This notice requirement is not a mere technicality but a requirement of due process to which every employee is entitled to insure that the employer’s prerogative to dismiss or lay-off is not abused or exercised in an arbitrary manner. 27. 1989) or six (6) days (Masagana Concrete Products vs. vs. R. R. No. No. however. Dante Emilia. 25. . G. (Hodieng Concrete Products vs. 1999) or four (4) days from the time the employees were prevented from entering their workplace. the notices should be served at the worker’s last known address. Feb. No. G. is an indication that they have not abandoned their work. For instance. it was ruled that the immediate filing of complaint for illegal dismissal by the employees praying for their reinstatement. No. In a 2004 case. 1995). June 20. thus negating the employer’s charge of abandonment. 63185. NLRC. Sept. Nov. 4. Unfortunately for the employer. G. Nov. NLRC. R. while the validity of the dismissal based on abandonment was upheld. G. 14. R. 154689. No. Sept. No. 149180. 14. it should be held liable for non-compliance with the procedural requirements of due process. subsequent notice to inform him of the employer’s decision to dismiss him. (Unicorn Safety Glass. 158693. where sent. [G. No. An employee who had truly forsaken his job would not have bothered to file a complaint for illegal dismissal. 2004]. 2000). G. (Artemio Labor vs. Oct. G. 17. Inc. R. notice to apprise the employee of the particular acts or omissions for which his dismissal is sought. be said to have abandoned their work. G. the employer was deemed to have violated due process when it did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Feb. vs. for as the Supreme Court had consistently ruled.1. by any reasoning. 106916.R. (Icawat vs. Thus. Notices in abandonment cases. NLRC. In the 2004 case of Agabon vs. 2004). this is not a valid excuse because the law mandates the twin notice requirements be sent to the employee’s last known address. 2002) or two (2) days after receiving the termination letter (EgyptAir. Bolanio. vs. negates the finding of abandonment. Basarte. 2005). 3. No. They cannot. and 2. 110388. In case of abandonment of work. 141608. Immediate filing of complaint negates abandonment. NLRC. the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return to work.

The Supreme Court did not likewise consider the lapse of nine (9) months (Kingsize Manufacturing Corp. Offer of reinstatement during proceedings before Labor Arbiter. However. Under the law. A strong indication of the intention of the complainants to resume work is their allegation that on several dates. No. But in Sentinel Security Agency. the petitioners extended the offer in its position paper filed with the Labor Arbiter but was likewise rejected by the respondent. the petitioners made an offer to reinstate him to his former position. 24. It goes without saying that the prayer for separation pay. NLRC. but were not given any. (Pare vs. There was no abandonment as the latter is not compatible with constructive dismissal. When refusal to return to work does not constitute abandonment. consequence of failure to pray for reinstatement. No. he was asking for reinstatement. 128957. Gramaje. 2004]. That he was illegally dismissed is belied by his own pleadings as well as contemporaneous conduct. Nos. 1998]. 16. G. Feb. 2. She did not comply leading to her being declared as having abandoned her work. (Jo vs. for reinstatement. Nov. the Supreme Court ruled that the there could not have been an abandonment since at the time she was being asked to report to her new assignment. the employee has four (4) years within which to institute his action for illegal dismissal. vs. R. September 27. Abandonment has recently been ruled to be incompatible with constructive dismissal. would be absurd. No. Sept. being the alternative remedy to reinstatement. R. For the employer to anticipate the employee to report for work after the latter already filed a case for illegal dismissal before the NLRC. Nov. G. In the 2004 case of The Philippine American Life and General Insurance Co. contradicts private respondent-employee’s stance. vs. 156963. CA. vs. [G. When filing of complaint does not negate abandonment. NLRC. vs. R. The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable to a case where the complainant does not pray for reinstatement and just asks for separation pay instead. No. effect. Nov. 3. The two requisites for abandonment are not present here. R. Inc. R. 110452-54. 1994) or six (6) months before filing the complaints for illegal dismissal as an indication of abandonment. she had already filed a case for illegal dismissal against her employer. The respondent-employee in the 2002 case of Hantex Trading Co. No. Inc. NLRC. 11. Again. 1999). 122468. but he “defiantly” refused the offer despite the fact that in his complaint. The . 2002]. R. the contention of complainants was that the Agency constructively dismissed them. among others. 121605. accused of abandoning his work. filed a complaint and prayed therein. 148241. during the initial hearing before the Labor Arbiter. G. In fact. the fact that complainants did not pray for reinstatement was considered by the Supreme Court as not sufficient proof of abandonment. [G. NLRC.. 2000). However. the Assistant Vice-President was directed to report to her new assignment and submit to a medical examination. [G. they reported to the Security Agency for reassignment.

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

a driver. he committed a transgression that betrayed the trust and confidence of his employer . 2004]. Commission of fraud or deceit leading to loss of trust and confidence. 1997 requiring him to explain why no disciplinary action should be taken against him for his absence without official leave. R. vs. Lack of damage or losses not necessary in fraud cases. NLRC. 2003]. What constitutes the ground of fraud? Commission of fraud by an employee against the employer will necessarily result in the latter's loss of trust and confidence in the former. the petitioner was holding a managerial position in which he was tasked to perform key functions in accordance with an exacting work ethic.reimbursing his family’s personal travel expenses out of company funds. In Diamond Motors Corporation vs.dismissed but was only asked to go on extended leave from July 10 to August 10. [December 11. Subcontracting for another company indicates abandonment. 2003] and in the earlier case of . 1. The said letter clearly shows that respondent Oripaypay was waiting for the return of petitioner unlike in Ranara. 1997. CA. 145417. thus confirming his dismissal without proper notice. 151981. As found by the court a quo. Proof of loss is not required under this ground. November 17. the Supreme Court held that the act of the petitioners who were frequently absent to engage in subcontracting work for another company clearly shows the intention to sever the employer-employee relationship with their employer. 1997 because when petitioner reported for work on July 10. In Agabon vs. In the 2003 case of De la Cruz. However. [G. Petitioner failed to present any persuasive evidence or argument to prove otherwise. after more than six months of sick leave. His act amounted to fraud or deceit which led to the loss of trust and confidence of his employer. NLRC. this obviously did not cover acts for his own personal benefit. No. 1998). 158693. NLRC. after petitioner’s extended leave expired. wherein petitioner Ranara. No. upon reporting for work. 71. [G. 129413. R. While petitioner could exercise some discretion. G. R. was surprised to find some other person who replaced him in handling the vehicle previously assigned to him. thus Oripaypay could readily see that petitioner was not yet ready and physically well to perform his usual assignment as master fisherman. No. His position required the full trust and confidence of his employer. Hence.R. (Villanueva vs. No. respondent Oripaypay noticed that petitioner’s left arm down to his left limb was paralyzed. July 27. he did not return to work which prompted private respondent Oripaypay to send him a letter dated August 16. The fact that the employer did not suffer losses from the dishonesty of the dismissed employee because of its timely discovery does not excuse the latter from any culpability. Dec. Jr. G. they are guilty of abandonment.

149416. San Miguel Corporation. Where there was a series of unauthorized encashments of personal checks.. June 29. The Supreme Court has reiterated this rule in Santos vs. No. 2003]. NLRC. January 22. 2001]. in order to validly dismiss an employee on the ground of loss of trust and confidence under Article 282. [G. March 26. No. [G. NLRC and Pepsi-Cola Products. It must be stressed that actual defraudation is not necessary in order that an employee may be held liable under the company rule against fraud. nor incur any shortage relative to the funds in their possession. Macaraeg. the Supreme Court held that. R. 126805. Hence. immaterial. Respondent de Vera accepted payments from petitioner’s consumers while respondent Macaraeg received remittances for deposit at petitioner’s bank. They are entrusted with a considerable amount of cash.Philippine Airlines. Lack of misappropriation or shortage. Phils. This was not the reason for the termination of his employment in the company but the anomalous scheme he engineered to cover up his past due account which constitutes a clear betrayal of trust and confidence. No. Deputy Minister of Labor and Employment. the following guidelines must be followed: . What are the requisites for the ground of willful breach of trust? In the 2004 case of Charles Joseph U. Inc. That the dismissed employee attempted to deprive the employer of its lawful revenue is already tantamount to fraud against the company which warrants dismissal from the service. No. vs. March 16. 72. 2004].R. [G. [G. it was ruled that the fact that the employer failed to show it suffered losses in revenue as a consequence of the employee’s act is immaterial. As teller and cashier. even if the shortages have been fully restituted. March 14. The betrayal of this trust is the essence of the offence for which an employee is penalized.. In Gonzales vs. 131653. (See also San Miguel Corporation vs. Inc. ruled that it is not material that the teller and cashier did not “misappropriate any amount of money. 203-204 [1986]). vs.” The basic premise for dismissal on the ground of loss of confidence is that the employees concerned hold positions of trust. They did not live up to their duties and obligations. Ramos vs. No. the fact that the employee has misappropriated company funds is a valid ground to terminate the services of an employee of the company for loss of trust and confidence. 145 SCRA 196. 2000] involving the commission of fraud against the company. 145800. R. the Supreme Court in Central Pangasinan Electric Cooperative. [G. The Honorable Court of Appeals and Union Bank of the Philippines. 145405. Inc. it was held that the fact that the employer ultimately suffered no monetary damage as the employee subsequently settled his account is of no moment. R. Restitution does not have absolutory effect. The respondents here held positions of utmost trust and confidence. they are expected to possess a high degree of fidelity. 2003]. R.

No. the position of project controller . It should be genuine and not simulated. R. No. caprices or suspicion. 22. G. . G. PLDT. 3. R. June 8. vs.the position of respondent at the time of his dismissal . However. The loss of confidence must not be simulated. It must rest on substantial grounds and not on the employer’s arbitrariness. 2005). improper or unjustified. R. whims. 2002). [G. the act complained of should be “work-related” and must show that the employee concerned is unfit to continue to work for the employer.]. otherwise. 151370.required trust and confidence. For instance. 2005]. his act allegedly constituting breach of trust and confidence (referring to the unlawful scheme by PNCC of using its employees as ‘dummies’ for the acquisition of vast tract of land in Bukidnon and thereafter compelling them to assign all rights over same properties in favor of PNCC – a scheme by PNCC which is a flagrant violation of the Constitution as regards the maximum area of real property which a corporation can acquire under the CARP Law) was not in any way related to his official functions and responsibilities as controller. the employee would eternally remain at the mercy of the employer. Gulde. Matias. Feb. and 5. (Tolentino vs. the questioned act pertained to an unlawful scheme deliberately engaged in by petitioner in order to evade a constitutional and legal mandate. May 6. in the 2005 case of Philippine National Construction Corporation vs. 156283. 1998). May 21. It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. 4. 149930. 4. undeniably. nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for causes which are improper. No. Breach must be willful and without justifiable excuse. to justify earlier action taken in bad faith. (Asia Pacific Chartering [Phils. G. No. It should not be used as a subterfuge for causes which are illegal. Farolan.1. not a mere afterthought. (Atlas Consolidated Mining & Development Corporation vs. The employee involved holds a position of trust and confidence. G. In fact. Breach must be work-related. In order to constitute a just cause for dismissal. No. It has never been intended to afford an occasion for abuse because of its subjective nature. vs. Loss of trust and confidence must be based on a willful breach and founded on clearly established facts. 2002). illegal or unjustified. R. 2. Inc. for it related to the handling of business expenditures or finances. Dec. It must be genuine. (Sulpicio Lines. 160404. NLRC. 122033. Inc. R.

loss of trust and confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. 154308. This situation also holds in the case of supervisory personnel occupying positions of responsibility. not an excuse for wrongful act. 2005). No. In Santos vs. 165586. Petitioners failed to prove the existence of a valid cause for the dismissal of respondent. as Finance Director. 2003]. vs. Inc. 2003). R. The betrayal of this trust is the essence of the offense for which an employee is penalized. petitioners simply allege that respondent’s failure to report to the quality control head the batch that did not meet the minimum standard showed connivance to sabotage petitioners’ business. [G. could not and did not suffice as a basis for a finding of willful breach of trust. R. or care and protection of the employer’s property. G. R.Employee’s position must be reposed with trust and confidence. Coca-Cola Bottlers Phils. Inc. Jan. however. it is an instance of arguing non sequitur. This includes managerial personnel entrusted with confidence on delicate matters. (Caingat vs. 22. such as the custody. As firmly entrenched in our jurisprudence. 145800. Llamera. No. In Limketkai Sons Milling. [G. Inc. Petitioner’s willful and deliberate acts were in gross violation of respondent company’s policy against encashment of personal checks of its personnel. 152514. Macaraeg. G. The Supreme Court ruled that not only is petitioners’ logic flawed. R. R. 149416. March 10. No. While it is true that loss of trust and confidence is one of the just causes for termination. it was held that prolonged practice of encashing personal checks among payroll personnel does not excuse or justify petitioner’s misdeeds. March 14. 149416. R. It is sufficient that there must only be some basis for such loss of confidence or that there is reasonable ground to believe if not to entertain the moral conviction that the concerned employee is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. 2005). have some basis. cannot feign ignorance of such policy as she is duty-bound to keep abreast of company policies related to financial matters within the corporation. G. 2003). There must be “some basis” for the loss of trust and confidence. She. Proof beyond reasonable doubt is not required. (Central Pangasinan Electric Cooperative. G. San Miguel Corporation. San Miguel Corporation.. . March 14. No. July 12. Said allegation alone. (Santos vs.. hence illegal. the dismissal must be deemed contrary to the provisions of the Labor Code. No. without proven facts to back it up. such loss of trust and confidence must. vs. June 15. 2005]. No. Therefore. chanrobles virtual law library Prolonged practice. NLRC. handling. (Cruz vs.

As pointed out earlier. when deemed inconsequential. should be taken against him. found no merit in the petitioner’s contention: “We are not unmindful of the foregoing doctrine. second. R. [G. 355 SCRA 195 [2001]). where the employer alleged inefficiency and loss of trust and confidence as grounds for termination of employment. January 17. Inc. he had no previous derogatory record. the petitioner theorizes that even assuming that there was evidence to support the charges against him. if it is to be considered at all. Inc. 1995]. In Etcuban. lastly. chanrobles virtual law library “xxx . Jr. R. are not necessarily the same as those applicable to the termination of employment of ordinary employees. he appeals for compassion and requests that he be merely suspended.. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. 112230. considering the following: first. NLRC. the amount involved is miniscule. 219 SCRA 350 [1993]). generally. the rules on termination of employment. harsh and is not commensurate to his misdeeds. vs. “The fact that the petitioner has worked with the respondent for more than 16 years. and. The infraction that he committed. vs. If an employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal. Employers. chanrobles virtual law library Long years of service. NLRC. than in the case of ordinary rank-and-file employees. July 17. however. his dismissal from the service is unwarranted. In Norkis Distributors. the employees involved were all rank-and-file or ordinary workers. or at the very least.Grant of promotions and bonuses negates loss of trust and confidence. it will actually become a prize for disloyalty. NLRC. Sulpicio Lines. given separation pay for his length of service. Loyalty that he should have strengthened instead of betrayed. vis-à-vis his long years of service with the company. the High Tribunal said that these are negated by the fact that the evidence shows that the employee received several promotions since his employment in 1986 and was given bonuses for his collection efforts and a compensation adjustment for his excellent performance. reflects a regrettable lack of loyalty. his 16 long years of service with the company. the Court is convinced that the petitioner’s reliance thereon is misplaced. No. (Citing Flores vs. [G. No. 148410. but after a careful scrutiny of the cited cases. It must be stressed that in all of the cases cited. 2005]. The Supreme Court. insofar as fiduciary employees are concerned. penalties for infractions. are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer’s trust and confidence. absence of derogatory record and small amount involved. Citing jurisprudence. (Citing Gonzales vs. no loss or damages was suffered by the company since the tickets were unissued. third.

petitioner argues that assuming there was evidence to support the charges against him. 2003]. vs. 29 SCRA 293 [1969]). for the law. disagreed. Fairness dictates that the respondent should not be allowed to continue with the employment of the petitioner who has breached the confidence reposed on him. once lost. the case at bar involves dishonesty and pilferage by petitioner which resulted in respondent’s loss of confidence in him. petitioner was not an ordinary rank-and-file employee. [G. It would be oppressive and unjust to order the respondent to take him back. Well to emphasize. 148766. (Citing Gonzales vs. if not impossible. 115 SCRA 329 [1982]). Philippine National Bank. his dismissal from service is unwarranted. in protecting the rights of the employee.“It cannot be over-emphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. January 22. and this is the first time that either of them has been administratively charged. 395 SCRA 729 [2003]). trust in an employee. he had over-all control of the care. In Salvador vs. Inc. harsh and grossly disproportionate to his act. “In the case at bar. considering his long years of service with the company. 2003]. authorizes neither oppression nor self-destruction of the employer. the teller and cashier (who were charged and dismissed for unauthorized encashments of checks) have been employed with the petitioner-electric cooperative for 22 and 19 years of continuous service. Macaraeg. It cannot be overemphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. The Supreme Court. length of service is taken into consideration in imposing the penalty to be meted an erring employee. 145800. trust in an employee. No. NLRC. However. No. respectively. R. Unlike other just causes for dismissal. There can be no doubt that the petitioner’s continuance in the extremely sensitive fiduciary position of Chief Purser would be patently inimical to the respondent’s interests. employers are allowed wider latitude of discretion in terminating the employment of managerial employees as they perform functions which require the employer’s full trust and confidence. R. once lost is difficult. their reinstatement is neither sound in reason nor just in principle.” (San Miguel Corporation vs. is difficult. In another case. a managerial employee. thusly: “To be sure. January 22. supervision and operations of respondent’s entire plant. He occupied a high position of responsibility. Moreover. if not impossible. Central Pangasinan Electric Cooperative. Unlike other just causes for dismissal. Fairness dictates that respondent should not be allowed to continue with the employment of petitioner who has breached the confidence reposed on him. NLRC. (Citing Galsim vs. their dismissal was held justified considering the breach of trust they have committed. As foreman and shift boss. As a general rule. the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of discipline in the company. 355 SCRA 195 [2001]). Philippine Mining Service Corporation. for breach . Nonetheless. the longer an employee stays in the service of the company. Considering that they have mishandled the funds of the cooperative and the danger they have posed to its members. however. to regain. respondent has every right to dismiss petitioner. to regain. Philippine Mining Service Corporation. It is irreconcilable with trust and confidence that has been irretrievably lost. (Citing Salvador vs. [G.

and thus he is bound by more exacting work ethics. vs.. it has long been held that the longer an employee stays in the service of the company. No. NLRC. For instance. Jan. it must be shown that the employee is a managerial employee since the term “trust and confidence” is restricted to said class of employees. Coca-Cola Bottlers Phils. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. Dec. the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of discipline in the company. 2000). loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question. No. involving the spiriting out of thirty (30) cases of canned soft drinks loaded on petitioner’s truck without the required documentation. 219 SCRA 350 [1993]). G. should be taken against him. Phils. Jr. Thus. 20. G. NLRC and Pepsi-Cola Products.. 148410. 121327. No. R. (Citing Flores vs. Indeed. and that mere uncorroborated assertions and accusations by the employer will not be sufficient. vs. No. 121348. it being sufficient that there is some basis for such loss of confidence. Hence. in cases of this nature. (De los Santos vs. with respect to rank-and-file personnel. The rules on termination of managerial employees are different from those applicable to rank-and-file employees. such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct. the task of a janitor. Inc. 2005). March 26. any transgression on her part gives the employer a wider latitude of discretion in terminating her services. said the Supreme Court. NLRC. 131653.” In Cruz vs. As a managerial employee. But as regards a managerial employee. G..of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. March 9. [G. Sulpicio Lines. if to be considered at all. . NLRC. the doctrine of loss of trust and confidence may not be appropriately applied. R. a managerial employee is tasked to perform key and sensitive functions. and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. proof beyond reasonable doubt is not required. (Etcuban. (Gonzales vs. the Supreme Court took his long years of service as militating against his claim of good faith. 2001). (Deles. Obviously. works against his favor in this case. R. 17. R.. the fact that petitioner has been employed with the respondent for a long time. in the case of managerial employees. Jr. 165586. instead of betrayed. This distinction has been underscored by the Supreme Court in recent decisions involving the application of the doctrine of loss of trust and confidence. No. does not fall squarely under this category. June 15. different from rank-and-file. R. Inc. If what is involved in a case is a rank-and-file employee. The reason is. Inc. G. It is thus important that in termination based on this ground. Petitioner’s length of service (as driver/helper). which spans almost fifteen (15) years.. 2005]. the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. 2001). Rules on termination of managerial employee.

No. Bungabong. 2005]. vs. There is a high degree of trust and confidence reposed on them. are reposed with trust and confidence. But in another case involving the same company. Despite his additional duties. R. No. as held in Coca-Cola Bottlers Philippines.. 28. R. That he figured in several accidents prejudicial to petitioner cannot serve as basis for the loss of trust and confidence. it was held that a non-managerial position such as a bus driver does not hold a position of trust and confidence. when respondent drank stolen beer from the dispenser of Pizza Hut-Ermita on Decem¬ber 6. for only three days. No. NLRC. Examples of cases where rank-and-file employees may not be dismissed based on loss of trust and confidence. it was pronounced that the temporary assignment as route salesman for a period of three (3) days of an employee who was employed as driver-helper does not automatically make him an employee on whom his employer reposed trust and confidence. for breach of which he shall be meted the penalty of dismissal. [172 SCRA 751 (1989)]. deal with customers and are entrusted with large assets and funds and property of the employer. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW. by reason of the nature of their positions. For example. While generally. the relationship of the employer and the employee necessarily involves trust and confidence. the employer may take proper disciplinary action on them. the doctrine of loss of trust and confidence may only be invoked against managerial employees. 154315. Inc. [G. if such crime or offense is committed against any of the following persons: chanrobles virtual law library . In Vallacar Transit. [G. there are instances when the doctrine may also be successfully invoked against rank-and-file employees who. and when such confidence is breached. 1995]. Feb. vs. the Supreme Court. [G. 73. said employee remained a driver-helper of the petitioner. 1997. Hence. May 9. What constitutes the ground of commission of crime or offense? The commission of a crime or offense by the employee may justify the termination of his employment. Coca-Cola Bottlers. NLRC. R. 109809. Inc. Phils. did not automatically make him an employee holding a position of trust and confidence. of some of the duties of a route salesman on orders of his employer. route salesmen are rank-and-file employees but they are highly individualistic personnel who roam around selling products. ruled that where the employee has access to the employer’s property in the form of merchandise and articles for sale. In holding that the dismissal of the food attendant was valid. he gave cause for his termination and his termination was within the ambit of Article 282 of the Labor Code. 2005]. 148205. Inc. he cannot be dismissed based on loss of trust and confidence. vs. Inc. in Philippine Pizza.When rank-and-file employees may be dismissed based on loss of trust and confidence. July 17. vs. The assumption by said employee. Thus.

2. 2. 4. 76. equipment or device and the consequent termination of employment of those affected thereby. What are the requisites for the ground of installation of labor-saving devices? In order to validly invoke this ground.The grounds cited in Articles 283 and 284 are technically called the authorized causes for termination of employment. redundancy. The ground of inefficiency. any immediate member of his employer’s family. 5. What are the authorized causes for termination of employment? Grounds. They are: chanrobles virtual law library 1.. the introduction of the machinery. the 30-day notice requirement under Article 283 should be complied with. 3. there is no other option available to the employer than the introduction of the machinery. Violation of safety rules. 74. AUTHORIZED CAUSES FOR TERMINATION OF EMPLOYMENT. retrenchment. and 5. closure or cessation of business. What are other analogous causes under Article 282 of the Labor Code? Instances considered analogous causes. his employer’s duly authorized representative. equipment or other devices must be done in good faith. the following requisites must concur: 1. 4. his employer. 1. Ban on one’s employees imposed by another company. 2.1. 2. 3. there should be reasonable and fair standards or criteria in selecting who to terminate such as nature . or 3. disease. 75. Violation of the company code of conduct or company rules and regulations. chanrobles virtual law library 3. installation of labor-saving devices. enhance efficiency and other justifiable economic reasons. the purpose for such introduction must be valid such as to save on cost. 4.

whichever is higher. In Philippine Sheet Metal Workers Union vs. [83 Phil. 2004]. in installation of labor-saving devices. and 4. was declared valid. separation pay under the law or company policy or Collective Bargaining Agreement or similar contract. temporary employee]. the following requisites must be present: 1. (b) efficiency. among other considerations. No. g. In the 2004 case of Abapo vs. CA. Proof of losses. Sept. As earlier mentioned. efficiency rating and seniority.of work.. must be paid to the affected employees. there is no need for the employer to show proof of losses or imminent losses. 3. and (c) seniority]. payment of separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service. 433]. experience. [G. status of the employee (whether casual. The Supreme Court held that the installation of labor-saving devices at its Mandaue plant was a proper ground for terminating employment. 2. 142405. . CIR. Installation of machines for more economy and efficiency. 77. not required. and 6. good faith in abolishing the redundant positions. when appropriate. the termination of employment of the affected employees due to the introduction of machinery in the manufacture of its products for purposes of effecting more economy and efficiency. chanrobles virtual law library Modernization program through introduction of machines. It then brought into its Mandaue plant high-speed machines to be used in the manufacture of its beer. written notice served on both the affected employees and the Department of Labor and Employment at least one (1) month prior to the intended date of termination. What are the requisites for the ground of redundancy? For redundancy to be a valid ground to terminate employment. the company (San Miguel Corporation) conducted a viability study of its business operations and adopted a modernization program. temporary or regular). 30. R. fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished [such as less preferred status [e.

the characterization of the services of the employee who was terminated for redundancy is an exercise of business judgment of the employer. Inc. The only exception is when there is a showing that the same was done in violation of law or attended with arbitrary and malicious action. said that this argument cannot be accepted. was an exercise of .” “abusers” and “worst performers” as another indicia of petitioner’s bad faith. under the guise of invoking its prerogative. In Dole Philippines. In that case. exception. not subject to review. [G. vs. respondent Pepsi. [G.. however. ease out employees and defeat their constitutional right to security of tenure. July 5. 2001]. In the 2001 case of Santos vs.. sales quotas. Pepsi-Cola Products Phils. based on the fact that its Metro Manila Sales Operations were not meeting its sales targets. 141947. No. 82249. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. R. The Supreme Court. abusers and worst performers through redundancy. arguing that it is more logical to implement new procedures in physical distribution. 2001]. It may be argued that the elimination of the so-called “undesirables” was merely incidental to the redundancy program or that past transgressions could have been part of the criteria in determining who among the redundant employees is to be dismissed. February 7. Similarly. NLRC. R. for a company to merely declare that it has become overmanned. NLRC. the private respondent-employees point to references in petitioner’s studies of the redundancy program to the elimination of “undesirables. wanted to restructure its organization in order to include more complex positions that would either absorb or render completely unnecessary the positions it had previously declared redundant. however. As a general rule. It is not enough. Sept. and other policies aimed at improving the performance of the division rather than to reduce the number of employees and create new positions. and on the fact that new positions were subsequently created. vs.Elimination of undesirables. Inc. CA. 120009. the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown. 1991. No. [G. No. While it is true that management may not. in Wiltshire File Co. therefore.. properly terminable. The Supreme Court. Inc. 193 SCRA 665]. ruled that it is not too keen on attaching such a sinister significance to these allusions. 13. therefore. not an indication of bad faith. The wisdom or soundness of such characterization or decision is not subject to discretionary review by the Labor Arbiter or the NLRC and the Court of Appeals.R. it was held that the characterization of private respondent’s services as no longer necessary or sustainable and. Characterization of service as redundant by employer. The soundness of this business judgment of Pepsi has been assailed by petitioners. petitioner company effected some changes in its organization by abolishing the position of Sales Manager and simply adding the duties previously discharged by it to the duties of the General Manager to whom the Sales Manager used to report.

vs. G.business judgment on the part of petitioner company. 1999). Clearly there was here no abolition of position to achieve a reduction in the number of electricians employed by the UIC. the latter’s employment was terminated and the student-trainee took the vacated position. Abolition of position or department. Just like installation of labor-saving devices. May 28. NLRC. vs. That there is need for an electrician is shown by the fact that his work is being performed by the student-scholar. In other words. Redundancy and retrenchment are not synonymous but distinct and separate grounds under Article 283.I. . “Redundancy Program. Rather. Inc. vs. “Retrenchment. U. Redundancy and retrenchment. R. There is no showing that there were two (2) positions for school electricians. When the time came that the studenttrainee became capable of performing his functions. 2001].” while denominated as such. supra). Teaching and Non-Teaching Personnel and Employees Union. 127516. not required. (Atlantic Gulf and Pacific Company of Manila. [AG & P]. NLRC. (Dole Philippines. No. R. [G. distinguished. the facts show that there was only one position for electrician which was occupied by respondent. “Redundancy” exists when the services of an employee are in excess of what is required by an enterprise. July 31. Petitioners do not claim that the position of school electrician has become useless or redundant such that it had to be abolished. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. one position for electrician was abolished resulting in one position for school electrician and the consequent termination of the employment of the person occupying the position. is more precisely termed “retrenchment” if it was primarily intended to prevent serious business losses. It is the burden of the employer to prove the factual and legal basis for the dismissal of its employees on the ground of redundancy. 144702.” on the other hand. But the above rule was not applied in the 2001 case of University of the Immaculate Concepcion.C. Burden of proof in redundancy rests on the employer. No. the student-trainee merely replaced respondent as school electrician because petitioners found it to their advantage to let the work be done by the student for free. Inc. Evidence of losses. and that in order to achieve a reduction in personnel. the ground of redundancy does not require the exhibition of proof of losses or imminent losses.

NLRC. R. No. held valid. It ruled that an employer’s good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and efficiency. No. 99266.The abolition of departments or positions in the company is one of the recognized management prerogatives. An employer is not precluded from adopting a new policy conducive to a more economical and effective management. chanrobles virtual law library Reorganization through redundancy. Jr. In De Ocampo vs. 149 SCRA 641 [1987]). the act of the employer of phasing-out its security section and the hiring of an independent security agency to perform its task constitutes a legitimate business decision. G. NLRC. March 25. vs. R. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. the Supreme Court will not interfere with the exercise of judgment by an employer. NLRC. In Asian Alcohol Corporation vs. 1999). (Cosico. Inc. the Supreme Court cannot erase that initiative simply to protect the person holding the position. No. the Supreme Court upheld the termination of employment of water pump tenders and their replacement by independent contractors. R. (San Miguel Corporation vs. [G. September 13. (International Harvester Macleod. May 23. Reorganization as a cost-saving device effected through redundancy is acknowledged as valid by jurisprudence. the management of a company cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. [213 SCRA 652 (1992)]. Indeed. 120009. 2001] submit that the subsequent hiring of casual employees to replace the dismissed regular employees on . No. R. 117040. In Serrano vs. (Serrano vs. G. vs. Hiring of casuals after redundancy. NLRC. Contracting out of abolished position to independent contractors held valid. No. 1999]. NLRC. Private respondent-employees in Dole Philippines. absent proof that management acted in a malicious or arbitrary manner. 2000]. NLRC. valid. it is presumed that it acted in good faith. the Supreme Court upheld the termination of employment of three mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. In valid abolition of positions. January 27. vs. Consequently. In the absence of proof that the act of the employer was ill-motivated. 1997). eventually deference is to be made to what management decides. NLRC. March 2. [G. 131108. [G. 118432. While there should be mutual consultation. supra). IAC. R. Inc.

it would be surprising to find duplication of work and two (2) or more people doing the work of one person. [G. That no other person was holding the same position that private respondent held prior to the termination of his services.. NLRC. what is contemplated in the LIFO rule is that when there are two or more employees occupying the same position in the company affected by the retrenchment program. Petitioner further asserts that the number of casuals remained relatively constant after the implementation of the redundancy program. the reason why there was no violation of the LIFO rule was amply explained by public respondent in this wise: . Indeed. Inc. No. The Court finds the foregoing explanation sufficient to negate the allegations of bad faith by its former employees. 1994]. involving termination due to redundancy. R. does not show that his position had not become redundant. “Last In. December 28. First Out” *LIFO+ rule. the employer may terminate the excess personnel and retain only one. 106256. Redundancy in an employer’s personnel force. however. the last one employed will necessarily be the first to go. Verily. Petitioner explains. that it has always hired casuals to augment the company’s manpower requirements in accordance with the demands of the industry. NLRC. Article III. (Wiltshire File Co. . supra). in any well-organized business enterprise. In holding that the employer did not violate said rule. In the case of Maya Farms Employees Organization vs. First Out *LIFO+” rule embodied in the CBA which states: “Section 2.the ground of redundancy is an indication of bad faith. Petitioner company does not deny that they hired casual employees after the implementation of the redundancy program. however. chanrobles virtual law library Duplication of work. as shown by the graph appended as Annex “J” of its supplement to the motion for reconsideration before the NLRC. “Moreover.In all cases of lay-off or retrenchment resulting in termination of employment in the line of work. the Last-In-First-Out (LIFO) Rule must always be strictly observed. Where two or more persons are performing the same work which may be effectively accomplished by only one. does not necessarily or even ordinarily refer to duplication of work. the Supreme Court declared: “It is not disputed that the LIFO rule applies to termination of employment in the line of work. CBA). one of the issues raised was the validity of application of the “Last In. vs. LIFO RULE.” (Section 2.

there were 3 Asst. A host of relevant factors come into play in determining cost efficient measures and in choosing the employees who will be retained or separated to save the company from closing shop. Such criteria was not shown to be whimsical nor capricious. 106256. NLRC. she could ‘already take care of the operations of the other sections. Superintendent for packing and Asst. In determining these issues. In the same case of Maya Farms [supra]. 1961) and [sic] Lydia Bandong (July 9. Last out” *FILO+. De la Salle University Employees Association. exception. This contemplates a situation where employees occupying the same position in the company are to be affected by the retrenchment program. Since there ought to be a reduction in the number of personnel in such positions. the nature of work and experience were correctly taken into account by management. management has to enjoy a pre-eminent role. The LIFO rule under the CBA is explicit. thus: “We cannot sustain the union’s argument. 28. 1994). It is indeed true that Roberta Cabrera was employed earlier (January 28. No law mandates the so-called rule of “Last in. not controlling. In the 2000 case of De la Salle University vs. The union pointed out that the employee who was retained by management was employed on a much later date than the other employee. First out” *LIFO+ or “First in. the Asst. The reason advanced by the company in retaining Bandong was that as Asst. Superintendents assigned as head of the 3 sections thereat. Superintendent for meat processing. No. such that the employee who has a longer period of employment will be retained. supra). . LIFO or FILO rule. However. chanrobles virtual law library LIFO rule. Superintendent for meat processing. as employer has prerogative to choose who to terminate. The provision speaks of termination in the line of work. R.‘xxx. G. it is maintained that in the meat processing department.” (Maya Farms Employees Organization vs. And the reason is simple enough. The Supreme Court affirmed the ruling of the NLRC which declared that despite the LIFO rule. [G. the employee who was employed on the latest date must be the first one to go. no basis in law. R. NLRC. and both were Assistant Superintendents. No. (Asian Alcohol Corporation vs. Dec. the length of service of each employee is the determining factor.’” LIFO rule. 1966).’ The nature of work of each assistant superintendent as well as experience were taken into account by management. the petitioners contended that the LIFO rule was violated by management in the case of two (2) employees. respectively. It is ordained that in cases of retrenchment resulting in termination of employment in line of work.

[should be Article XIII]. and the discipline. R. Hobson’s choice means no choice at all. the union proposed the use of the "last-in-first-out" method in case of lay-off. duties and welfare’ (Art. either by law or agreement. The union relied on social justice and equity to support its proposition. covers: work assignment. as amended). March 10. *291 SCRA 219 (1998)+. All that the employees were offered was a choice on the means or . National Labor Relations Commission. be retrenched or dismissed. be retrenched with benefits or be dismissed without receiving any benefit at all.” The Supreme Court ruled as follows: “We agree with the voluntary arbitrator that as an exercise of management prerogative. an English stable-owner in the 17th century. work supervision. Labor Code. [G. does not automatically entitle the union to dictate as to how an employer should choose the employees to be affected by a retrenchment program. Jr. Except as provided for.” On the other hand. transfer of employees. April 12. or limited by special laws. 156658. As we ruled in the case of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. supervision of workers. the University asserted its management prerogative and countered that “*w+hile it is recognized that this right of employees and workers to ‘participate in policy and decision-making processes affecting their rights and benefits as may be provided by law’ has been enshrined in the Constitution (Article III. They either had to voluntarily retire. The employer still retains the prerogative to determine the reasonable basis for selecting such employees. among others. The union further insists that its proposal is “…in keeping with the avowed State policy ‘(q) To ensure the participation of workers in decision and policy-making processes affecting their rights. More bluntly stated. and submitted that the University’s prerogative to select and/or choose the employees it will hire is limited. 2000]. especially where the exercise of this prerogative might result in the loss of employment. according to his own discretion and judgment. time. No.’” (emphasis supplied) Hobson’s choice. of offering only the horse nearest the stable door.109002. where the employees. 2004]. were made to understand that they had no choice but to leave the company. an employer is free to regulate. par. they were forced to swallow the bitter pill of dismissal but afforded a chance to sweeten their separation from employment. This principle was applied in the 2004 case of Asufrin. termination due to retrenchment and transfer of employees. 211. 2). said participation. It refers to the practice of Tobias Hobson. Section 3. San Miguel Corporation. a choice between accepting what is offered or having nothing at all. even if given the option to retire. however. dismissal and recall of workers. ‘*a] valid exercise of management prerogative is one which. all aspects of employment. vs. the University has the right to adopt valid and equitable grounds as basis for terminating or transferring employees. working methods.

and financial hardship for certain workers. be a certain degree of urgency for the retrenchment which is. age. the losses expected should be substantial and not merely de minimis in extent. Secondly. they were never asked if they wanted to work for petitioner-company.e. in other words. whether they are temporary. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. (2) that the employer serves a written notice both to the employees and to the Department of Labor and Employment at least one (1) month prior to the intended date of retrenchment. and (5) that the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. What are the requisites for the ground of retrenchment? Under Article 283.. serious. as such imminence can be perceived objectively and in good faith by the employer. physical fitness. such as status (i. casual. are reasonably imminent as perceived objectively and in good faith by the employer. chanrobles virtual law library 78. . The general standards in terms of which the act of an employer in retrenching or reducing the number of its employees must be appraised are as follows: Firstly. a drastic recourse with serious consequences for the livelihood of the employees retrenched or otherwise laid off. efficiency. In short. Standards to be observed in retrenchment. whichever is higher. after all. if already incurred. There should. the bona-fide nature of the retrenchment would appear to be seriously in question. regular or managerial employees). (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure. the substantial loss apprehended must be reasonably imminent. if only expected.method of terminating their services but never as to the status of their employment. actual and real or. the following are the requisites for a valid retrenchment which must be proved by clear and convincing evidence: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. seniority. are not merely de minimis but substantial. (3) that the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month's pay for every year of service.

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

necessary. 12. April 8. 152039. etc. chanrobles virtual law library In a 2005 case. The Supreme Court. Inc. R. the Supreme Court noted that it did not try other measures. 148532. NLRC. i. Thus. R. vs.e.year. In short. where the only less drastic measure that the company undertook was the rotation work scheme: the three-daywork per employee per week schedule. petitioners and their co-supervisors will not get demerits points for sanctions of reprimands and warnings of separation. Abelgas. 2005). trimming of marketing and advertising costs. The fact that the company did not resort to other such measures seriously belies its claim that retrenchment was done in good faith to avoid losses. No. inadequate or insufficient.” Article 283 uses the phrase “retrenchment to prevent losses. [G. chanrobles virtual law library Meaning of the phrase “retrenchment to prevent losses. Otherwise. such as cost reduction. improvement of manufacturing efficiency. (Polymart Paper Industries.e. the MOA cannot prevail over the CBA. reduction of both management and rank-and-file bonuses and salaries. No. the use of the MOA instead of the CBA becomes a substantive defect. April 14. G. trimming of marketing and advertising costs. it was held that the employer is required to take other measures prior or parallel to retrenchment to forestall losses. . An employer who. chanrobles virtual law library In the 2004 case of Emco Plywood Corporation vs. and so on. This is not true under the supervisors’ MOA. has interpreted the law to mean that the employer need not keep all his employees until after his losses shall have materialized. lays off substantial number of workers while continuing to dispense fat executive bonuses and perquisites or so-called “golden parachutes”.have been tried and found wanting.. after less drastic means . Aug. To impart operational meaning to the constitutional policy of providing “full protection” to labor. this phrase means that retrenchment must be undertaken by the employer before losses are actually sustained. Cost reduction measures should first be taken prior to retrenchment. No. Under Article XVIII of the CBA. Retrenchment is only a measure of last resort when other less drastic means have been tried and found to be wanting. 118973. reduction of the bonuses and salaries of both management and rank-and-file. R. the law could be . 1998). cut other costs than labor costs. Marine Corporation vs. the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. The Honorable Second Division NLRC. if the CBA governs instead of the MOA. Since the supervisors’ union did not ratify the MOA. F. however.g. (F.” In its ordinary connotation. can scarcely claim to be retrenching in good faith to avoid losses. 2004]. going on reduced time. G. The inconsistency between the supervisors’ MOA and the CBA is a substantive defect because what the CBA removes from petitioners’ record the supervisors’ MOA treats as a factor in evaluating petitioners’ demerits points. improving manufacturing efficiencies. adjustment of the work routine to avoid the scheduled power failure.. for instance. lesser investment on raw materials. chanrobles virtual law library Cost reduction measures prior to retrenchment. petitioners may not fall under those to be retrenched.

NLRC. 2005). [G. (Danzas Intercontinental. NLRC. chanrobles virtual law library Best evidence of losses in a government-controlled corporation . R. A. a company possesses sufficient property to cover all its debts but “foresees the impossibility of meeting them when they respectively fall due” and “there is imminent danger of dissipation. 110740. . Unless duly audited by independent auditors. March 25. (Asian Alcohol Corporation vs. wastage or destruction of assets of other properties or paralyzation of business operations. These financial documents duly audited by COA constitute the normal and reliable method of proof of the profit and loss performance of a government-controlled corporation.” That the SEC appointed an interim receiver for the EYCO Group of Companies on its petition in light of “factors beyond the control and anticipation of the management” rendering it unable to meet its obligation as they fall due. August 9. June 27.audited financial statements. R. the financial statements submitted as evidence to prove losses were duly audited by the Commission on Audit (COA). the Labor Arbiter and the NLRC rejected them. F. R. chanrobles virtual law library In the 2001 case of NDC-Guthrie Plantations. No. vs. No. Inc. . The Supreme Court ruled that in the context of the submitted financial statements prepared by COA itemizing and explaining the losses suffered by petitioner companies. chanrobles virtual law library Rehabilitation receivership presupposes existence of losses. And yet. R.” shows that Clarion. involving the retrenchment of workers in government-controlled corporations. and thus resulting to “complications and problems . G. G. No. NLRC. inter alia. 2001]. 8799) presupposes a finding that. Inc. 154368. April 15. loss. it was held that the appointment of a receiver or management committee by the SEC (now RTC under the Securities Regulation Code. The Supreme Court has consistently ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company.vulnerable to attack as undue taking of property for the benefit of another. vs. supra). Second Division NLRC. was suffering business reverses justifying.financial statements audited by COA. chanrobles virtual law library Best evidence of losses . . together with the other member-companies of the EYCO Group of Companies. Daguman.. (F. The Hon. vs. 2005]. among other things. the financial statements can be assailed as self-serving documents. In the 2005 case of Clarion Printing House. No. R. to arise that would impair and affect *its+ operations . Inc. 131108. . . No. the Court is unable to understand the rationale behind the NLRC’s challenged judgment. Marine Corporation vs. [G. 148372. the retrenchment of its employees. 305 SCRA 416). 1999.

The Supreme Court ruled: “Petitioners’ failure to adduce financial statements duly audited by independent external auditor casts doubt on their claim of losses for financial statements are easy prey to manipulation and concoction. The financial statements show that in 1994 and 1995.918. it was declared that pursuant to the policy that technical rules of procedure are not strictly applied in labor cases.89.96. chanrobles virtual law library Audited financial statements belatedly filed in the CA. R. No. effect.072. However. NLRC. June 27. Philippine Postal Savings Bank. R.Evidence of losses in a retrenchment case may be presented for the first time on appeal with the NLRC. No.79 and P155. 155278. Marine Corporation vs. [320 Phil. 2003]. 2005].609. 152039.316. It was only before the Court of Appeals that the financial statements for the years 1996 and 1997 as audited by an independent external auditor were introduced. No.” Evidence of losses may be allowed to be presented for the first time on appeal with NLRC but not with CA. Philippine Postal Savings Bank. delay in the submission of evidence should be clearly explained and should adequately prove the employer’s allegation of the cause for termination. 2005). A careful examination of financial statements may be resorted to especially if on their face relevant facts appear to have been ignored that will warrant a contrary conclusion. To prove their claim. petitioners adduced before the Labor Arbiter the 1994 and 1995 Financial Statements. Said Financial Statements. Inc.339. R. 155278. September 16. [G. 2003 (supra)].. In contrast. petitioners seek to justify the retrenchment on the ground of serious business losses brought about by the Asian economic crisis. be allowed to present. petitioner corporation earned an income of only P77. They were not presented before the Labor Arbiter and the NLRC although they were executed on 30 March 1998. however. and P21. [G. This Court has ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. the 1996 and 1997 Financial Statements showed losses of P18. even on appeal. however. R. were prepared only by petitioners’ accountant and approved by the manager. NLRC. September 16. on cogent grounds. In the 2005 case of F. several months prior to the filing of the complaint for illegal dismissal on 12 January 1999. respectively..005. is not a hard and fast rule as the norm does not compel this Court to accept the contents of the said documents blindly and without thinking. Even this. the Supreme Court allowed the presentation of documentary . delay in the submission of evidence should be clearly explained and should adequately prove the employer’s allegation of the cause for termination. No. F. 313 (1995)] as in Tanjuan vs. The Honorable Second Division NLRC. Inc. Inc. In Cañete vs. evidence of business losses to justify the retrenchment of workers. April 8. G.08. [G. employers may. However. In the 2003 case of Tanjuan vs. vs. (See also Clarion Printing House. respectively. They were not audited by an independent external auditor. 148372.

evidence for the first time on appeal with the NLRC. March 10. In Atlantic Gulf and Pacific Company of Manila. No. 313 (1995)+ where the Court upheld the NLRC’s consideration of documents submitted to it by the respondent therein for the first time on appeal. it should have retrenched the private respondent-employees as soon as the business losses became evident. In Taggat Industries. The same cannot be said of the private respondent in this case. Distinguishing the Cañete from the F. NLRC. [G. effect. aimed at removing union officers who had declared a strike. Inc. it was contended that the “redundancy program” was actually a union-busting scheme of management. No. 1999]. it has been shown that such action was made only as company projects became available and that it was done in pursuance of the company’s policy of giving preference to its former workers in the rehiring of project employees. 1991. F. The holding is clearly not apropos since the documents were presented to the NLRC. vs. the same is belied by the fact that the private respondentemployees remained employed by petitioner company until October 15. chanrobles virtual law library Re-hiring of retrenched employees. R. 1987. *320 Phil. the decision to close or cease operations should be made in good faith. the purpose should not be to circumvent the provisions of Title I of Book Six of the Labor Code. vs. per its financial statements for the period 1986 to December 31. Inc. But in F. May 28. This contention. Indeed. 1999]. The rehiring or re-employment does not negate the imminence of losses. more than four (4) years since the company declared losses in 1987. That was why this Court in Cañete ratiocinated that the petitioner therein had the opportunity to rebut the truth of the additional documents. Marine cases. [AG & P]. however. NLRC. . unlike in this case where the new financial statements were submitted for the first time before the Court of Appeals. cannot stand in the fact of evidence of substantial losses suffered by the company. 2. the Supreme Court did not allow the presentation of evidence of losses for the first time before the Court of Appeals. if there was any truth that the company was reeling from business reverses. chanrobles virtual law library 79. [G. the Supreme Court ruled in the latter case: chanrobles virtual law library “Petitioners cite Cañete vs. which prompted private respondents to retrench. while sufficient evidence of the company’s business losses was submitted by the petitioner company. 120971. What are the requisites for the ground of closure or cessation of business operations? The requisites for the valid invocation of this statutory ground are as follows: 1.” Retrenchment effected long after business losses. Marine [supra]. R. Moreover. F. while it is true that the company re-hired or re-employed some of the dismissed workers. NLRC. 127516.

NLRC.[NOTE: If the ground is serious business losses or financial reverses. In Industrial Timber Corporation vs. court cannot order employer to continue its business. there is no other option available to the employer except to close or cease operations. (J. vs.” Principle of closure under Article 283 applies in cases of both complete and partial cessation of business operation. if such is the cause invoked. NLRC. in fact. It would. be stretching the intent and spirit of the law if we were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. 395. Employer may close its business whether it is suffering from business losses or not. provides for the payment of separation pay to employees terminated because of closure of business not due to losses. separation pay under the law (when not due to serious business losses) or company policy or Collective Bargaining Agreement or similar contract. 4. 148340. thus implying that termination of employees other than closure of business due to losses may be valid. indeed. General Services vs.]. 125887. the Supreme Court held more emphatically that: chanrobles virtual law library “In any case. Said provision. If not due to serious business losses. [339 Phil. Although Article 283 uses the phrase “closure or cessation of operation of an establishment or undertaking. this requisite becomes relevant. R. Jan.T. 405 (1997)]. and 5. must be paid to the affected employees.” the Supreme Court ruled in Coca-Cola Bottlers [Phils. No.] 3. 26. A careful examination of Article 283 indicates that closure or cessation of business operation as a valid and authorized ground of terminating employment is not limited to those resulting from business losses or reverses. NLRC. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. [G. 2004). G. as long as he pays his employees their termination pay in the amount corresponding to their length of service. whether or not the closure or cessation of operations is due to serious business losses or financial reverses. the notice requirement under Article 283 should be complied with. when appropriate. R. No. . there should be clear proof thereof since no separation pay to the employees is required to be paid under the law. Inc.A.

Batangas is neither a closure nor retrenchment. It ruled that even though the transfer was due to a reason beyond its control.” (Citing Coca-Cola Bottlers [Phils. NLRC. chanrobles virtual law library It is worth noting in this regard that the employer’s prerogative to close or abolish a department or section of his establishment for economic reasons such as to minimize expenses and reduce capitalization is as much recognized as management’s prerogative to close the entire establishment and cease operations due to adverse economic conditions. Inc. No. it held that since the closure was due to serious losses duly proven by clear evidence. departments or sections. Cheniver Deco Print Technics Corporation vs. In Dangan vs. 2000]. [G. branches. the Supreme Court had occasion to reiterate management’s prerogative to close or abolish a department or section of the employer’s establishment for economic reasons. In a 2000 case. hence. G. *G. not necessarily the entire business operations. that since the greater right to close the entire establishment and cease operations due to adverse economic conditions is granted an employer. the Supreme Court ruled as valid the closure of outlets or branches. chanrobles virtual law library Burden of proof in case closure is due to losses. whether it be a complete or partial cessation or closure of business operation. thus: chanrobles virtual law library “Broadly speaking. .March 11. Relocation of business amounts to cessation of operations. 153021. R. 194 SCRA 592. 599 [1991]). petitioner has to accord its employees some relief in the form of severance pay. R. 2004+. In the 2004 case of Cama vs. the employees affected were not entitled to separation pay. April 15. 2005). NLRC. (Danzas Intercontinental. February 17. Joni’s Food Services. separation pay should not be awarded to the private respondents. chanrobles virtual law library Closure of outlets. in our view. said the Supreme Court.] Inc. Inc.. amounts to cessation of petitioner’s business operations in Makati. 1998]. petitioner contends that the transfer of its business from its site in Makati to Sto. The Supreme Court considered this contention without merit. that said statutory provision applies to closure or cessation of an establishment or undertaking. We reasoned out. Moreover. Daguman. the closure of a part thereof to minimize expenses and reduce capitalization should similarly be recognized. No. there appears no complete dissolution of petitioner’s business undertaking but the relocation of petitioner’s plant to Batangas. vs. NLRC. 154368. It must be stressed that the phrase ‘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 company’s business. *127 SCRA 706+. R. March 10. No. 122876. Tomas. vs.

In the 2005 case of Me-Shurn Corporation vs. . Daguman. if the business losses that justify the closure of the establishment are duly proved. No. R. The employer must prove that the cessation of or withdrawal from business operations was bona-fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. the High Tribunal held that as the employerpetitioners have the burden of proving the existence of an authorized cause. March 2. No. NLRC. 156292. of course.those that justify the closing of its business and show the losses in its operations . 2004). That they failed to do so and only presented these documents to the Court of Appeals on certiorari is lamentable considering that the admission of evidence is outside the sphere of the appellate court’s certiorari jurisdiction. they should have presented the company’s audited financial statements before the Labor Arbiter or. Inc. General Services vs. the employer closing his business is obligated to pay his employees their separation pay. No.FSM.A. Otherwise. R. 148340. under justifiable circumstances. 154368. Matters regarding the financial condition of a company . good faith. Audited financial statements necessary in closure due to losses. 127718. the right of affected employees to separation pay is lost for obvious reasons. Jan. R. if any. although the more overriding consideration is. G. Article 283 does not contemplate a situation where the closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees as in the case of closure of the employer’s business because a large portion of its estate was acquired by the Department of Agrarian Reform pursuant to the Comprehensive Agrarian Reform Program under Republic Act No. [G. the petitioners are not entitled to separation pay.It is well settled that the burden of proving that the closure is bona-fide falls upon the employer. R. 2000]: “(S)ince the closure was due to the act of the government to benefit the petitioners as members of the Patalon Estate Agrarian Reform Association by making them agrarian lot beneficiaries of said estate. who are in the position to evaluate evidence. 2005] and Danzas Intercontinental [supra]. 6657. 26. The blame. for the termination of petitioners’ employment can even be laid upon the petitioner-employees themselves inasmuch as they formed themselves into a cooperative. (J. Closure due to CARP. Parenthetically. [G.are questions of fact that must be proven below. The condition of business losses is normally shown by financial documents duly audited by independent auditors. According to the 2005 case of Danzas Intercontinental. [G. NLRC. The Supreme Court thus said in National Federation of Labor vs. vs. the same evidence is generally required when the termination of employees is by reason of closure of the establishment or a division thereof for economic reasons. Me-Shurn Workers Union . even on appeal with the NLRC. April 15.T. chanrobles virtual law library Evidence of losses in a closure case should not be presented for the first time on appeal with the Court of Appeals or Supreme Court. The termination of their employment was not caused by the private respondents. January 11. No. 2005].

No. is apropos. respondent NLRC correctly ruled that the termination of employer-employee relationship as a result of the implementation of the Comprehensive Agrarian Reform Law does not make out a case for illegal dismissal or termination due to authorized cause under Article 283 of the Labor Code as to warrant the payment of separation pay. the Supreme Court had occasion to re-affirm the ruling in the above 2000 case of National Federation of Labor [supra]. 2004] discusses in clear . General Services vs. [G. 148340. The 2004 case of J. We quote with approval the following disquisitions of public respondent which We have found to be substantiated by the evidence. January 26. NLRC. [G.’ (Emphasis supplied) “The ruling in the parallel case of National Federation of Labor vs. as in this case.” chanrobles virtual law library In 2005. Sarphil Corporation. R. If the landowners ceased their operation.T. 2005+. primarily because dismissal presupposes a unilateral act by the employer in terminating the employment of its workers. the Supreme Court said: “Anent the legality of the Labor Arbiter’s award of separation pay in favor of petitioners. Patalon Coconut Estate. when it was placed under CARP. Thus. in the case of Manaban vs. R. 150915. The resulting closure of the business establishment. A. April 11. Rather. private respondents’ landed estate pursuant to R. distinguished. Such would be tantamount to dealing a DOUBLE WHAMMY against the landowner who was forced to relinquish or part with the ownership of his land by an act of the State. occurred through no fault of the private respondents. It would be the height of injustice and inequity if the workers who benefited from the takeover of the lands and becoming new owners in the process would still be allowed to exact payment from their former employer-landowner in the form of separation pay benefit. it was something forced upon them by an act of law or the State.PEARA. 6657. by an act of the Law or State to benefit petitioners by making them agrarian lot beneficiaries. xxx. ultimately to take over. NLRC. it was not because they wanted to. There.A.” chanrobles virtual law library Retrenchment and closure of business. as agrarian lot beneficiaries. No. The closure of business operations contemplated under Article 283 refers to a voluntary act or decision on the part of the employer. viz: ‘x x x The resulting severance of employment relation between the parties does not make out a case of illegal dismissal nor of termination due to cessation of business operation or undertaking under Article 283 of the Labor Code warranting payment of separation pay. not one forced upon it. the Supreme Court categorically held that former employees who became beneficiaries of the Comprehensive Agrarian Reform Program are not entitled to separation pay because the closure of the business of their employer is compelled by law and not by the decision of its management. Quoting the Court of Appeals’ decision affirming the ruling of the NLRC. The resulting severance of employment relationship between the parties came about INVOLUNTARILY.

The notice requirement is a substitute for the prior-clearance requirement in case of termination of employment. G. NLRC. 2. the ground cited by petitioner in terminating its employees working in its Food and Beverage Department (F & B Department) was retrenchment. No. While an employer may have a valid ground for implementing a retrenchment program. Sept. vs.terms the distinction between retrenchment and closure of business. 266 SCRA 24. R. No. R. Rationale for the notice requirement. 2005). Inc. however. NLRC. This requirement is mandatory. it cited jurisprudence relating to retrenchment to support its resolution and conclusion. April 15. 116593. usually due to financial losses. is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment. chanrobles virtual law library The foregoing distinction was reiterated in the 2005 case of Alabang Country Club. In this case. The reason is that when petitioner decided to cease operating its F & B Department and open the same to a concessionaire. 157611. Closure of business as an authorized cause for termination of employment aims to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. NLRC. found closure as the most appropriate ground. It is sometimes also referred to as down-sizing. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. they are actually two separate and independent authorized causes for termination of employment. on one hand. While the two are often used interchangeably and are interrelated. while the Court of Appeals defined the issue to be the validity of dismissal due to alleged closure of business. R. August 9. Termination of an employment may be predicated on one without need of resorting to the other. Cabinet Bill No. On the other hand. G. Pulp and Paper. It terminated the employment of all personnel assigned at the department. 1997). mandatory. vs. Jan. it is not excused from complying with the required written notice served both to the employee concerned and the DOLE at least one month prior to the intended date of retrenchment. 147002. chanrobles virtual law library Closure of business. 1997. 24. (Explanatory Note. 80. retrenchment is reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. Inc. NLRC. it did not reduce the number of personnel assigned thereat. 45 which was later enacted into law as Batas . In this case. (PT & T vs. The Supreme Court. Notices required under Article 283. Article 283 requires that separate 30-day prior notices should be sent to the affected employees and to the Department of Labor and Employment. [G. 32. 2005]. No. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. (Fuentes vs.

Notice to DOLE. defective or illegal. Based on prevailing jurisprudence. 2005+. The written notice should be served on the employees themselves. Consequently. the Supreme Court held that while the employer’s failure to comply with the one-month notice requirement prior to retrenchment does not render the termination illegal. [G. 2004]. R. 147002. The notice to the Department of Labor and Employment (DOLE) is necessary to enable it to ascertain the verity and truth of the cause of termination. the employer should be held liable in the amount of P20. No. Abelgas. TPI Philippine Cement Corporation. April 15. it. the supervisors and the department heads instructing them to retrench some of the workers based on certain guidelines is not the required notice contemplated by law. April 14. the Supreme Court ruled that dismissal for authorized cause but without complying with the notice requirement does not make the dismissal illegal or ineffectual. renders the same defective. 2005 Absence of notice does not render the dismissal ineffectual. R.Pambansa Bilang 130). However. NLRC. The dismissal remains valid and legal but the employer is made to pay an indemnity in the form of nominal damages for non-compliance with the procedural requirements of due process. however.00 as nominal damages for non-compliance with the procedural requirements of due process. In another 2005 case. No. February 11. Notice to the employee. it should not invalidate the dismissal.000. this notice requirement gives employees some time to prepare for the eventual loss of their jobs and their corresponding income.00. No. R. 2005]. The notice to the employee is required to enable him to contest the factual bases of the management decision or good faith of the termination before the DOLE. April 15. entitling the dismissed employee to payment of indemnity in the form of nominal damages. 1. 149090. 147002. Notice should be served to employees themselves. [G. NLRC. A notice sent to the foremen. NLRC. 148532. R. Philippine Telegraph & Telephone Corporation vs. [G. it was ruled that a notice served on the employee to be retrenched and to the DOLE three (3) days short of the 30 days required by law is procedurally defective. the section heads. G. (PT & T vs.000. In addition. R. 2004). rationale. Failure to observe 30-day prior notice rule. G. (Emco Plywood Corporation vs. while this infirmity cannot be cured. the amount of indemnity is pegged at P30. 2. In Agabon. not on their . 158693 November 17. vs. effect per Agabon case. In the 2005 case of Cajucom VII vs. No. No. rationale.

nor would they have signed the corresponding releases and quitclaims. Santos vs. vs. not a substitute for written notice requirement. Here. Abelgas. chanrobles virtual law library In a subsequent 2001 case.. 120009. Such notice is defective if it stated that the company would terminate the services of 104 of its workers but had actually dismissed 250. most of the private respondents even filled up application forms to be considered for the redundancy program and thus acknowledged the existence that their services were redundant. Well-settled is the rule that notice to the Department of Labor and Employment need not be complied with if the termination of employment under Article 283 was made voluntarily by the employees pursuant to a valid personnel reduction program. Notice to DOLE need not be complied with in case of voluntary personnel reduction program. Inc. Inc. there is no need to rule on this contention. Petitioners assail the voluntariness of their consent by stating that had they known of PEPSI’s bad faith. Having established private respondent’s good faith in undertaking the assailed redundancy program. 2001].). chanrobles virtual law library Notice to DOLE should state correct number of workers to be terminated. vs. chanrobles virtual law library In another 2001 case. Petitioner accurately invoked the case of International Hardware [supra]. [G. 2001]. NLRC.supervisors. [176 SCRA 256 (1989)]. they would not have agreed to their termination. does not render the voluntary redundancy program void. closure or cessation of operation or to prevent financial losses to the business of the employer. Inc. was cited. NLRC. R. No.. the required previous notice to the Department of Labor and Employment is not necessary as the employee thereby acknowledged the existence of a valid cause for termination of his employment. CA. . September 13. the lack of notice to the DOLE. The law requires that the notice to the employee who will be terminated for authorized causes and notice to the Department of Labor and Employment (DOLE) must be served at least one (1) month before the intended date of effectivity thereof. Advance payment of one month salary. Pepsi-Cola Products Phils. July 5. 141947. (Emco Plywood Corporation vs. it was ruled that if an employee consented to the retrenchment or voluntarily applied for retrenchment with the employer due to the installation of labor-saving devices. redundancy. In International Hardware. the same ruling in International Hardware [supra] that the mandated one (1) month notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker himself. [G. supra). The notice required to be sent to the DOLE should state clearly the correct number of workers to be terminated based on the grounds cited in Article 283. R. (Ibid. according to the Supreme Court in Dole Philippines. No..

unimpeded time to look for a new job during the one (1) month period he is no longer required to work by his employer.May the employer validly pay in advance. a job is more than the salary that it carries. the purpose of such previous notice is to give the employee some time to prepare for the eventual loss of his job as well as the DOLE the opportunity to ascertain the verity of the alleged authorized cause of termination. NLRC. the salary of the employee equivalent to said one (1) month period but without requiring him to report for work within said period? This question may be answered in the affirmative considering that the law does not preclude such procedure and the same is more beneficial to the employee who will then have enough. [G. it must be stressed that the service of separate notices to the employees affected and to the Department of Labor and Employment at least thirty (30) days from the effectivity of the termination for authorized cause should still be duly complied with. where the Supreme Court. No. Such purpose would not be served by the simple expedient of paying thirty (30) days salary in lieu of notice of an employee’s impending dismissal. It is not for the employer to make substitutions for a right that a worker is legally entitled to. One-month notice requirement. Payment of thirty (30) days salary cannot compensate for the psychological effect or the stigma of immediately finding one’s self laid off from work. In other words. upon the service of notice to the employee and to the DOLE. continues the High Court. 2000]. R. No. It cannot be a fully effective substitute for the thirty (30) days written notice required by law especially when. there is no need to qualify the term. chanrobles virtual law library This is the conclusion of the Supreme Court in the 2005 case of Philippine Telegraph & Telephone Corporation vs. 117040. Such advance payment cannot be treated as a replacement or substitute for the notices required under the law. in its Resolution on the Motion for Reconsideration. This is so because Article 283 itself does not speak of temporary or permanent retrenchment. the fact is that no notice was given to the Department of Labor and Employment (DOLE). the advance payment of the salary for one month does not dispense with the requirement of the 1-month prior notice. However. Indeed. as in this case. [G. Besides. R. NLRC. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish. The case in point is the 2000 en banc case of Serrano vs. It must be stressed that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. as by then the loss of employment would have been a fait accompli. The employer paying the advance salaries should still comply with said notice requirement one month prior to the intended effectivity of the termination. May 4. April 15. which involves the temporary retrenchment of . had the occasion to reiterate the rule that nothing in Article 283 of the Labor Code gives the employer the option to substitute the required prior written notice with payment of thirty (30) days salary. applies to both permanent and temporary-lay off. 147002. 2005]. we must not distinguish). hence.

to require the company to hold a hearing at which private respondent would have had a right to be present. 248 SCRA 532]. in this manner: “Article 283 speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. allege any malfeasance or nonfeasance on the part of the employee. Separation pay under Article 283. The said memorandum was received by Castillo on August 24. to respondents Bayao and Castillo informing the latter that they were included in the TSRP to be implemented effective September 1. . Thus.R. In such case. there are no allegations which the employee should refute and defend himself from. 1999. The particular issue involved in the said decision was the duration of the period of temporary lay-off. Jr. emphasized the mandatory nature of the said notice. 1998 was dated August 21.. Further. the vice-president of the COG. the memorandum of Del Rosario. 1998. 115394. 1995. Hearing in termination of employment for authorized causes need not be conducted by the employer. and they quote Sebuguero vs. No.some employees dubbed as Temporary Staff Reduction Program (TSRP) lasting for not more than five and a half (5½) months. The rationale behind this rule is that where the ground for the dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. 82. as the retrenchment involved was merely temporary and not permanent. The respondents had barely two weeks’ notice of the intended retrenchment program. on the business and financial circumstances compelling retrenchment and resulting in redundancy. At the same time. 81. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. The petitioners insist that the one-month notice requirement does not apply in this situation. Hearing is not required in termination for authorized causes under Article 283 (and Article 284). in the case at bar. NLRC. They aver that this has been recognized by the Supreme Court. the one-month notice rule was not complied with. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. to commence from September 1. and not the compliance with the one-month notice requirement. On the contrary. 1998. the petitioners never showed that any notice of the retrenchment was sent to the DOLE. 1998 to February 15. there is no need for an investigation or hearing to be conducted by the employer who does not. Clearly then. September 27. Davide. to begin with. speaking through Chief Justice Hilario G. the Supreme Court. [G.” chanrobles virtual law library The petitioners’ adherence to the above pronouncement of the Court is misplaced. 1998 and Bayao on August 26. Nowhere can it be found in Sebuguero that the one-month notice may be dispensed with.

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

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

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

(Martinez vs. 117495. May 29. • Liability of buyer or transferee of business in good faith . Rule 86 of the Rules of Court. the employee is suffering from a disease. not indicative of bad faith. 84. 272 SCRA 793). • Generous termination pay package indicates good faith. No. R. claims for unpaid benefits should be filed in the intestate proceedings involving the estate of the deceased in accordance with Section 5. NLRC. Thus. 85.Liable to the employees. prejudicial to the health of his co-employees. et al.83. What is the legal consequence of merger? In merger.. or b. • Transfer of business due to death . prohibited by law. transfer or spin-off of business? • Change of ownership of business. • Appointment of same directors and employees. chanrobles virtual law library • Sale or transfer of business in bad faith .Not obligated to absorb employees except when this is specifically stipulated. The obligation of the new company involves not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former employers as well. 2. What are the legal principles that may be invoked in cases of sale. not an authorized cause to terminate employment. G. the employees of the merged companies or entities are deemed absorbed by the new company.obligations of deceased not enforceable against the transferee. or c. What are the requisites for the ground of disease? The following requisites must be complied with before termination of employment due to disease may be justified: 1. 1997. his continued employment is either: a. . prejudicial to his health. • New owner is not assignee of CBA in sale in good faith.

notice of termination based on this ground should be served to the employee. February 27. it having been issued not by a “competent public health authority. 2000). A medical certificate issued by a company’s own physician is not an acceptable certificate for purposes of terminating an employment based on Article 284. G. R.” •Medical certificate issued by company doctor is not sufficient. G. Deputy Minister of Labor. the Supreme Court has consistently ruled against the validity of the employee’s dismissal. that the requirement for a medical certificate under Article 284 cannot be dispensed with. the competent physician in this case would be a cardiologist. vs. 153 SCRA 38 [1987]). If the employee has cardiac symptoms. 58639. R. 142293. otherwise. NLRC. an employee who is sick of tuberculosis should consult a government-employed pulmonologist who is competent to make an opinion thereon. •Company physician is not a “competent public health authority. (Cebu Royal Plant *San Miguel Corporation+ vs. 4. R. For instance. No. it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the protection of labor. •Burden of proof rests on the employer. whichever is greater. 12. there is a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within a period of six (6) months even with proper medical treatment. 614 1998]. chanrobles virtual law library Medical certificate.3. In the 2003 case of Sy vs.” the person referred to in the law. chanrobles virtual law library . 2003]. In the absence of the required certification by a competent public health authority. 116384. Hon. No. NLRC. [G. the High Court reiterated its earlier ruling in Triple Eight Integrated Services. Medical certificate issued by company doctor. not acceptable. a fraction of at least six (6) months being considered as one (1) whole year. [299 SCRA 608. an indispensable requisite. Feb. “Competent public health authority” refers to a government doctor whose medical specialization pertains to the disease being suffered by the employee. CA.separation pay shall be paid to him in the amount equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service. 1987. 7. Aug. (Cruz vs. Inc. No. and 6.

No. aside from their respective letterheads. August 2. NLRC. chanrobles virtual law library Medical certificate as evidence of illness. 141702-03. the termination of the employee due to PTB sickness was declared not justified in the absence of medical certificate issued by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. [G. It is sufficient that the physician and the dentist who examined the employee. Book VI of the Rules to Implement the Labor Code before private respondent-doctors were dismissed. 2004) Medical certificate issued by Labor Attache and Ministry of Public Health of Kuwait. Rule I. Here. the nature and the duration of the procedures performed by the dentist on him. a requirement under Section 8. petitioner did not present any certification whatsoever. 143949. 2001]. Book VI. the employee was dismissed based only on the recommendation of its company doctors who concluded that she was afflicted with asthma. R. In addition. vs. the Supreme Court. of the Rules to Implement the Labor Code. when she returned to the company clinic five (5) days after her initial examination. [G. G. No. On the contrary. NLRC. had written their respective license numbers below their names and signatures. It has been said that verification of documents is not necessary in order that the said documents could be considered as substantial evidence. R. and (b) the period during which he was incapacitated to work are admissible in evidence and have probative weight even if not notarized. Common sense dictates that an ordinary worker does not need to have these medical certificates to be notarized for proper presentation to his company to prove his ailment. R. not sufficient. August 9. It did not likewise show proof that the employee’s asthma could not be cured in six (6) months even with proper medical treatment. 2001]. NLRC. Medical certificates presented by an employee to prove (a) his illness. ruled that there is nothing in the records to show that petitioner complied with Sec. [G. 8. hence. (Union Motor Corporation vs. 1995]. Dec. No. the company doctor diagnosed her condition to have vastly improved. petitioner presented a certification issued by the Philippine . In the 2001 case of ATCI Overseas Corporation vs. In General Textile. In the proceedings before the POEA. R. April 4. 159738. in declaring the termination as illegal.In the 2001 case of Cathay Pacific Airways. No. vs. CA. the dismissal of the employee based on a finding that she was suffering from asthma was declared illegal because of the absence of a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. 102969. they bear all the earmarks of regularity in their issuance and are entitled to full probative weight. Inc. involving two (2) overseas Filipino workers who were recruited by the Ministry of Public Health of Kuwait to work as dental hygienists in that country for a period of 2 years but who were terminated after working for only two months based on alleged tuberculosis and heart disease. 9. It was only when the case was appealed to the NLRC that petitioner belatedly introduced in evidence a letter from the Ministry stating that private respondents were found to be positive for tuberculosis and heart disease. Rule I. Ltd.

necessary. 2004. CA. a belated. The employer is presumed to know the law and the stipulation in its Contract of Service with the employee. Notice to employee and the DOLE regarding termination due to disease. there is no finding that the disease allegedly afflicting private respondents is of such nature or at such a stage that it cannot be cured within a period of six (6) months with proper medical treatment. Clearly. the decision to dismiss the employee was reached after a single examination only. 2001. not the employee. burden of proof is on the employer. It did not make even a token offer for the employee to take a leave of absence as what it provided in its Contract of Service. failing to observe the provision of the Labor Code which requires a certification by a competent public health authority. vs. Cebu Royal Plant vs. Book VI. it is only where there is such prior certification that the employee could be validly terminated from his job. and not the employee. of the Omnibus Rules was not complied with. 1997. No. The burden of proving the existence of such a medical certificate required under the law is upon the employer. thus making private respondents’ dismissal illegal. Rule I. No. 143949. . Employ Services and Resources. G. Aug. 271 SCRA 216 [1997]. Inc. Secondly. It devolves upon the employer the obligation to obtain a certificate from a competent public authority that the employee’s disease is at such stage or of such nature that it cannot be cured within six (6) months even with prior medical treatment. 116807. (Tan vs. 8. G. yet grossly unsuccessful attempt at compliance with Philippine laws. (ATCI Overseas Corporation vs. because the employer summarily dismissed the employee from the service based only on the recommendation of its medical officers. Sec. Rather. Employee dismissed without the medical certificate is entitled to moral and exemplary damages. chanrobles virtual law library Existence of certificate. petitioner has not proven that the same was presented to private respondents prior to their termination. NLRC. CA. April 14. The certificate should be procured by the employer. it was held that the award of moral and exemplary damages to the employee should be affirmed. 271 SCRA 216. supra).labor attache attesting to the fact that private respondents were subjected to a medical examination after their arrival in Kuwait and were found to be unfit for employment due to lung defects. R. Tan vs. in effect. First of all. Notably. produced by petitioner after an adverse judgment was rendered against it by the POEA. Clearly. G. The letter from the Ministry and the certification by the Philippine labor attache fall short of the demands of the Omnibus Rules. See also Phil. R. NLRC. 144786. It is the employer. Paramio. R. April 15. Sy vs. supra). No. who has the burden of proof to justify that the termination was supported by said certificate. 9. Deputy Minister of Labor. The employer’s medical officers recommended the employee’s dismissal even after having diagnosed her condition to have vastly improved. even assuming that the letter from the Ministry complied with the Omnibus Rules. In the same 2001 case of Cathay Pacific Airways [supra]. the letter appears to have been an afterthought.

What are the requisites for termination of employment by employee without just cause? In case of termination without just cause. 1988). 26. Separation pay in case of lawful dismissal based on disease. Feb. Baby Bus. [G. TERMINATION OF EMPLOYMENT BY EMPLOYEE. 2004]. NLRC. Labor Code. and 2. Notice of termination in case the certification of the competent public health authority is to the effect that the sickness is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. for the purpose of having his sickness certified that it is of such nature or at such a stage that it can be cured within a period of six (6) months with proper medical treatment. service of such notice to the employer at least one (1) month in advance. Being an authorized cause. the employer must give the employee and the Department of Labor and Employment written notices thirty (30) days prior to the effectivity of his separation.Although Article 284 does not require the service of notice to the employee. Inc. more importantly. The second notice above should be given not only to the employee but also to the Department of Labor and Employment. No. in accordance with the ruling in the case of Agabon vs. written (not verbal or oral) notice of the termination (commonly known as resignation letter). as distinguished from just cause. hearing is not necessary to be conducted by the employer prior to the termination of employment of the sick employee. Notice to the sick employee to submit himself for medical examination by a competent public health authority to determine not only his fitness for work but. 158693. Minister of Labor. if only to document the procedure taken by the employer prior to terminating the employment: 1. a fraction of at least six (6) months being considered as one (1) whole year. and 2. where the Supreme Court opined that if the dismissal is based on authorized causes under Articles 283 and 284. (RESIGNATION) 86. No. however. R. 54223. (Article 284. No hearing require in case of termination due to disease. the following requisites must be complied with by the employee: 1.R. it is necessary under the following circumstances. whichever is greater. November 17. vs. G. . The separation pay of an employee terminated on the ground of disease is equivalent to at least one (1) month salary or to one-half (½) month salary for every year of service.

1997. except with the consent or agreement of the employer. irrespective of whether it was made revocable or irrevocable. NLRC. 1991. Once accepted. The assumption of a new job by an employee prior to receiving his employer’s acceptance of his resignation is clearly inconsistent with any desire to remain in employment. the employee cannot claim illegal dismissal for the employer has the right to determine who his employees will be. R. R. Inc. (Philippines Today. 153148. Jan. Withdrawal of resignation. 07. as if he were re-applying for the job. No. If the employer does not. Assumption of new job by employee prior to employer’s acceptance of resignation.Acceptance of resignation. 643174. 198 SCRA 318). 2005). G. National Federation of Labor. (Intertrod Maritime. the employee retains the job. therefore. NLRC. therefore. 81087. Once accepted. 267 SCRA 202). the acceptance of a resignation does not require the conformity of the resigning employee. may still be withdrawn anytime before its acceptance by the employer. 110637. deemed effective. No. R. 280 SCRA 116). 30. If the employee later changes his mind. (Rase vs. 1994). NLRC. chanrobles virtual law library Employment elsewhere during the pendency of case. however. 120961. G. (Custodio vs. G. Oct. chanrobles virtual law library The acceptance of the withdrawal of resignation is the employer’s sole prerogative. withdrawal thereof can no longer be made by the resigning employee. (Shie Jie Corp. His resignation is. G. effect of acceptance thereof. Once resignation is accepted. that resignation terminates the employer-employee relationship. No. The employee who resigned cannot unilaterally withdraw his resignation. the employee no longer has any right to the job. July 19. the employee no longer has any right to the job. R. Acceptance of the resignation tendered by an employee is necessary to make the resignation effective. If the employer accepts said withdrawal. It will then be up to the employer to determine whether or not his services would be continued. No. . 1990). A resignation tendered by an employee. However. NLRC. 1997. he must ask for approval of the withdrawal of his resignation from his employer. Oct. vs. G. R. Such conformity only indicates that the employee was forced to resign for which reason her “conformity” was obtained to make it appear as voluntary or legal. To say that the employee who has resigned is illegally dismissed is to encroach upon the right of the employers to hire persons who will be of service to them. (Philippine National Construction Corporation vs. No. No. 2. 112965. vs. effect. July 15. It goes without saying. effect. R. necessary. G. Ministry of Labor and Employment. June 19. Inc. vs.

and . chanrobles virtual law library Resignation and execution of quitclaim. R. chanrobles virtual law library Re-employment after acceptance of resignation. 28. 120961. supra). It has been held that an employer is free to regulate. or when it is established that there is an unwritten agreement between the employer and employee which would entitle the employee to other remuneration or benefits upon his or her resignation. effect. The law. R. was held as an unreasonable inference.In the 2005 case of Great Southern Maritime Services Corporation vs. NLRC. Inc. It should be expected that they would seek other means of income to tide them over during the time that the legality of their termination is under litigation. (Philippines Today. NLRC. all aspects of employment including hiring. 1997). G. Acuña. impels neither the oppression nor self-destruction of the employer. he is thereby estopped from filing any further money claims against the employer arising from his employment. A resigned employee who desires to take his job back has to reapply therefor. serious insult by the employer or his representative on the honor and person of the employee. commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family. They should not be faulted for seeking employment elsewhere for their economic survival. as accentuated by the concurrent fact that two of the respondents already have jobs in Singapore. (Philippine National Construction Corporation vs. 2005). To allow him to do so would be to deprive the employer of his basic right to choose whom to employ. The fact that these two have already found employment elsewhere should not be weighed against their favor. in protecting the rights of the laborer. What are the just causes for termination of employment by employee with just cause? An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: 1. and he shall have the status of a stranger who cannot unilaterally demand an appointment. Feb. 3. Once an employee resigns and executes a quitclaim in favor of the employer. according to his own discretion and judgment. Such money claims may be given due course only when the voluntariness of the execution of the quitclaim or release is put in issue. Oct. the employer’s submission that respondent-employees voluntarily resigned because of their desire to seek employment elsewhere. vs. 2. 2. He cannot arrogate unto himself the same position which he earlier decided to leave. 140189. chanrobles virtual law library 87. (G. No. inhumane and unbearable treatment accorded the employee by the employer or his representative. No.

it must be committed by the employer or his representative. 88. the insult must be serious in character. 2. it is perpetrated by the employer or his representative. a crime or offense is committed. 2. What are other analogous causes that may be invoked as a ground to terminate employment by employee? Other analogous causes that may be cited are: constructive dismissal or forced resignation. other causes analogous to any of the foregoing. What are the requisites for serious insult as a ground to terminate employment by employee? In order to be considered a just cause to warrant the valid termination of employment by the employee without notice. 89. the treatment is inhumane and unbearable in nature.4. the following requisites must concur: 1. and 3. it must injure the honor and person of the employee. and 3. What are the requisites for serious inhumane and unbearable treatment as a ground to terminate employment by employee? This ground may be invoked if the following requisites concur: 1. chanrobles virtual law library 91. 90. . What are the requisites for commission of crime as a ground to terminate employment by employee? The requisites for this ground are as follows: 1. it was committed by the employer or his representative. it was perpetrated against the person of the employee or any of the immediate members of his family. and 2.

No. January 19. The CA’s ruling was upheld thus: “*w+hen the first resignation letter was a pro forma one. In the 2005 case of Mobile Protective & Detective Agency vs. to say the least. 140189. 107320. waiver or release. vs. [G. R. 2005]. effect. instead of doing the termination himself. Voluntariness of resignation may be inferred from the language thereof.92. R. R. According to the 2000 case of A’ Prime Security Services. 2005]. Its form is of the company’s and its wordings are more of a waiver and quitclaim. Acuña. NLRC. No. unreasonable or unlikely as in the case of an offer involving a demotion in rank and a diminution in pay. A bare reading of their content would reveal that they are in the nature of a quitclaim. and the second one entirely copied by the private respondent with his own hand from the first resignation letter. voluntariness is not attendant. May 9. They also constitute evidence of forced resignation or that they were summarily dismissed without just cause. as distinguished from constructive dismissal. *G. Inc. More so when the supposed resignation was not acknowledged before a notary public. entirely drafted by the petitioner Agency for the private respondent to merely affix his signature. it was held that resignation letters which were all prepared by the employer and were substantially similarly worded and of the same tenor would reveal the true nature of these documents they are waivers or quitclaims which are not sufficient to show valid separation from work or bar the employees from assailing their termination. the High Court agreed with the NLRC and the CA that the two resignation letters at issue are dubious. [G. 93. No. the . December 17. effect. 2004]. In the 2005 case of Great Southern Maritime Services Corporation vs. What are the distinctions between constructive dismissal and forced resignation? Both forced resignation and constructive dismissal consist in the act of quitting because continued employment is rendered impossible. No. Feb. Maghuyop. 160348. Some principles on resignation.” Resignation letters similarly worded and of same tenor. In the 2005 case of Willi Hahn Enterprises. 2000+. Resignation letter written and prepared by employer.submission or tender of resignation . [G. 28. They were written in a language obviously not of respondent's and “lopsidedly worded” to free the employer from liabilities.However. in forced resignation. luring or influencing or practically forcing the employee to effectuate the termination of employment. the employee is made to do or perform an involuntary act . R. vs.meant to validate the action of management in inveigling. no weight should be given to the employee’s resignation letter which appears to have been written and submitted at the instance of the petitioner-employer. 159195. Ompad.

he voluntarily signed the resignation letter though there is no urgency in signing the same. *G.49 in a ‘spot audit’ conducted by the company. “Very truly yours. National Labor Relations Commission. 105083. and Mrs. and consequently. I was of some help to you and your family.005. He later filed an illegal dismissal case claiming that his consent to the resignation was vitiated as he signed the company’s ready made resignation letter because the latter threatened to file a estafa case against him.. In rejecting his contention. candid and direct to the point. the employee immediately filed a complaint for illegal dismissal thereby preempting an investigation by the employer on the matter. Hahn “I am respectfully submitting my resignation from Willi Hahn Enterprises effective today. July 22. Although she started as nanny to the son of petitioner Willi Hahn. 225 SCRA 526+. The Court concluded that he affixed his signature in the said letter of his own free will with full knowledge of the consequences thereof. Instead of defending himself against the adverse audit report. she has risen to being the manager and officer-in-charge of the Willi Hahn Enterprises in SM Cebu branch. We find no merit in respondent’s claim that being a mere clerk. 1998. assigned in Iligan City. if not. 1998 “Dear Mr. Lanao del Sur and Lanao Del Norte. resigned after he was found to have a shortage of P49. the Supreme Court ruled that the employer did not violate any law when it gave the employee .R. to submit her written explanation to the complaints against her.employee’s resignation letter reads: “July 22. “LILIA MAGHUYOP” In holding that the afore-quoted letter was voluntarily tendered by the employee. “In Callanta vs. a national-promoter salesman of Distilleria Limtuaco Co. the Supreme Court declared: “The letter is simple.” chanrobles virtual law library Act of employer in giving the employee the choice between resignation or investigation. No. I hope that in some way. coerced or intimidated into signing the resignation letter.. not illegal. 20 August 1993. “Thank you for your assistance during the past. the Court ruled that a salesmanpromoter could not have been confused. she did not realize the consequences of her resignation. Inc. In a case where the employer asked the employee to submit her resignation letter or.

Maghuyop. G. 1995. Feb. The general rule is that the filing of a complaint for illegal dismissal is inconsistent with resignation. [G. R. substantial evidence of the shortages and non-remittances would have been indispensable. Feb. 23. (Belaunzaran vs. 2000). No. the Supreme Court in Shie Jie Corp. the resigning employee’s unsubstantiated and self-serving claim that she was coerced into signing the resignation letter was not given any credence. 120038. 28. No. vs. R. Moreover. which act is wholly incompatible to petitioner’s assertion that he voluntarily resigned. Under the circumstances. November 24. No. the Court of Appeals’ finding that respondent had no motive to resign because the charges of dishonesty were not fully substantiated has no basis. 330]. [G. No. Dec. 17. Filing of complaint negates resignation. It is a basic rule in evidence that the burden of proof is on the part of the party who makes the allegations. 250 SCRA 325. exception. R.” In Great Southern Maritime Services Corporation vs. 122876. is not the case here considering her voluntary resignation. Acuña. R. NLRC. 153148. July 15. She failed to discharge this burden. 160348. effect. G. 2005]. 2004)]. In Willi Hahn Enterprises.the option to resign because there is nothing illegal with the practice of allowing an employee to resign instead of being separated for just cause. 17. Citing Molave Tours Corporation vs. Failure of employer to criminally prosecute employee who resigned. No. it was held that the f