➢ There’s no prohibition on temporary designation
TITLE II of a commissioner to a division.
National Labor Relations Commissions (NLRC)
CHAPTER I
Creation and Composition
Art. 220. NLRC
Art. 221. Headquarters, branches and provincial
extension units
NLRC
- Attached to DOLE solely for administrative
supervision
- Supervisory and adjudicatory body ​(essential
character)
- Composed of a Chairman and 23 members
- Members shall be chosen from workers,
employers, and the public sector
(tripartite composition)
- May sit en banc only for the purposes of
promulgating rules and regulations governing
the hearing and disposition of cases before any
of its divisions and regional branches and
formulation policies affecting its administration
and operations.
- May sit in 8 divisions, each composed of 3
members
- Of 8 divisions:
- 1​st​-6​th divisions NCR and other parts of
Luzon (Metro Manila)
- 7​th​ division – Visayas (Cebu)
- 8​th​ division – Mindanao (CDO)
- Divisions have exclusive appellate jurisdiction
over cases within their respective territorial
jurisdiction.
➢ DOLE’s supervision does not extend to the
power to review, reverse, revise or modify
decisions of the NLRC in the exercise of its
judicial functions.
INSTANCES NLRC SITS EN BANC or REQUIRED TO
SIT EN BANC
1. For the purposes of promulgating rules and
regulations governing the hearing and
disposition of cases before any of its divisions
and regional branches and formulation policies
affecting its administration and operations.
2. An en banc decision is required so that a case
within the jurisdiction of one division may be
heard and decided by another division.
3. The appointment of a Labor Arbiter by the
President needs a recommendation of the
Commission en banc.
1
➢ NLRC has its own set of rules of procedure.
➢ The rules of court supplements the NLRC rules.
Art. 222. Appointment and Qualifications
➢ Chairman and commissioners must be members
of the Philippine Bar
Art. 223. Salaries, Benefits, and Emoluments
NLRC COMMISSIONERS NOT JUSTICES
- Being granted a rank and pay of a judge or
justice does not make the grantee a judge or
justice
RE LETTER OF COURT OF APPEALS VICENTE S.E.
VELOSO ​(A.M. No. 12-8-07-CA, etc., June 16, 2015)
- No legislative or executive gran, fiat or
recognition of rank can make the grantee who is
not a judge or justice, a judicial officer, without
violating the constitutional principles of
separation of powers and independence of the
Judiciary
- Technically, congress creates or grants
executive ranks that are equivalent to judicial
ranks
CHAPTER II
Power and Duties
PART 1
Jurisdiction
Art. 224. Jurisdiction of Labor Arbiters and the
Commission
Labor arbiter (LA)
- Is the NLRC’s representative in a Regional
Arbitration Branch (RAB).
- Compulsory arbiter
- Adjudicate cases in behalf of the NLRC but their
decisions are appealable to the NLRC itself
- NLRC has exclusive appellate
jurisdiction over all cases decided by the
LA
- have ​ORGINAL EXCLUSIVE JURISDICTION ​to
hear and decide within ​30 calendar days ​after
submission of the case by the parties for
decision.
➢ Jurisdiction of LA covers cases involving all
workers, whether agricultural or non-agricultural.
CASES COVERED BY THE LA: (Art. 224) statutory authority to hear and decide the case
in controversy
1. ULP
Compulsory arbitration
2. Termination disputes
- process of settlement of labor disputes by a
3. A case involving any of the following plus a government agency which has the authority to
claim for reinstatement: investigate and to make an award which is
binding on all the parties.
a. Wages

b. Rates of pay
➢ NLRC appellate proceedings are not part of
c. Hours of work arbitration.
○ Compulsory arbitration is deemed
d. Other terms and conditions of terminated upon the rendering of LA’s
employment decision.
➢ Proceedings before the LA are non-litigious.
4. Damages (actual, moral, exemplary, other ○ LA may employ all reasonable means,
forms) arising from employment relationship including ocular inspection to ascertain
the facts speedily, he shall personally
5. Cases involving violation of security of conduct the conferences or hearings
tenure (Art. 279), including questions involving and take full control of the proceedings.
the legality of strikes and lockouts ➢ LA jurisdiction on the 6 enumerated cases are
not absolutely exclusive
6. All other claims arising from employment ○ Any or all of the cases can, by
relationship agreement of the parties, be presented
to and decided with finality by a
Except: voluntary arbitrator (VA) or panel of
voluntary arbitrators.
a. employees compensation, ○ VA has original exclusive jurisdiction
over disputes including CBA
b. social security, implementation or personnel policy
enforcement (Art. 273)
○ VA or panel for disputes including ULP
c. medicare and maternity benefits.
and bargaining deadlocks (Art. 275)
ADDITIONAL CASES COVERED BY THE LA:
LABOR ARBITER’S JURISDICTION, IN GENERAL
1. money claims arising out of employment
➢ Generally covers cases that are
relationship by virtue of any law or contract,
involving Filipino workers for overseas employment-related
➢ However, even if there is employment
deployment, including claims for damages, as
relationship, a case may not prosper when the
well as employment termination of OFWs
employer enjoys immunity from Philippine
jurisdiction
2. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
VENUE
parties pursuant to RA 6727, as reflected in Art.
124
➢ File before RAB having jurisdiction over the
workplace of the complainant or petitioner
3. Enforcement of compromise agreements
○ Workplace shall be understood as the
when there is non-compliance by any of the
parties pursuant to Article 233 of the Labor place or locality where the employee is
regularly assigned at the time the cause
Code, as amended.
of action arose.
○ Workplace includes the place where the
4. Other cases as maybe provided by the law.
employee is supposed to report back
after a temporary detail, assignment or
Arbitration
travel.
○ For field, ambulant or itinerant
- the reference to a dispute to an impartial third employees, workplace is where they are
person, chosen by the parties or appointed by
regularly assigned or where they are
2
 supposed to regularly receive their
salaries and wages or work instructions
from, and report the results of their
assignments to their employers.
➢ When 2 or more RAB have jurisdiction over the
workplace, the branch that FIRST ACQUIRED
jurisdiction shall exclude other
➢ When venue not objected before filing position
papers, issue is deemed waived
➢ Venue may be changed by:
○ Written agreement of the parties; or
○ Commission or LA before whom the
case is pending so orders, upon motion
by proper party
➢ At the option of the complainant, cases involving
OFW to be filed before RAB having jurisdiction
over the place where:
○ The complainant resides; or
○ Principal office of the respondent
WORKER’S OPTION
DAYAG ET AL VS CANIZARES (G.R. No. 124193,
March 6, 1998)
- The question of venue essentially pertains to the
trial and relates more to the convenience of the
parties rather than the substance and merits of
the case.
- Permissive rules underlying provisions on venue
are intended to assure convenience for the
plaintiff and his witnesses and to promote the
ends of justice
- Rationale: the worker, being
economically-disadvantages
party-whether as complainant/petitioner
or as respondent, as the case may be-
the nearest governmental machinery to
settle the dispute must be placed at his
immediate disposal
SUPLICIO LINES, INC. VS NLRC (254 SCRA 506)
- The workplace of a complainant who works in a
vessel is determined as to where the employee
is regularly assigned when the cause of action
arose. The route of the vessel is material in the
determination of venue.
PHILTRANCO SERVICE ENTERPRISES, INC VS
NLRC (G.R. No. 124100, April 1, 1998)​-
- The workplace of a driver can be determined as
to where the employee is regularly assigned.
The route of the bus is material in the
determination of venue.
LABOR ARBITER’S JURISDICTION: ULP CASES
GR: Cases regarding ULP are within the original
jurisdiction of a LA
EXPN: ​the parties agree to VA (Art. 275)
NATIONAL UNION BANK OF EMPLOYEES VS.
JUDGE ALFREDO LAZARO ET AL (G.R. NO. 56431,
January 19, 1988)
- Civil aspect of a ULP charge is under the
jurisdiction of the LA (Art. 258)
- Civil controversies are not exclusive domain of
courts.
CBA AMOUNTING TO ULP
➢ Only ​gross violations of a collective bargaining
agreement are considered ULP, hence, within
the jurisdiction of a LA.
LABOR ARBITER’S JURISDICTION: TERMINATION
DISPUTES
Q. Is the dismissal of an employee an enforcement of
personnel policy and, therefore, should be brought to a
VA instead of arbiter?
A. No, not necessarily.
​SAN MIGUEL CORP. VS NLRC
- Company personnel policies are guiding
principles stated in broad, long-range terms that
express philosophy or beliefs of an
organization’s top authority regarding personnel
matters. They deal with matters affecting
efficiency and well-being of employees and
include, among others, the procedure in the
administration of wages, benefits, promotions,
transfer and other personnel movements where
are usually not spelled out in the collective
agreement
- The usual source of grievances, however, is
the rules and regulations governing
disciplinary actions.
Q. Does a LA have jurisdiction over an illegal dismissal
complaint filed by a church minister? (YES) Is the
principle of separation of church and state applicable?
(NO)
AUSTRIA vs. NLRC
- It does not matter that the employer is a
religious sect and that it was organized not for
profit because the Labor Code applies to all
establishments whether for profit or not.
3
 - Under the principle of separation of church and
state, the state is prohibited from interfering in
purely ecclesiastical affairs, and the Church
likewise is barred from meddling in purely
secular matter.
- The exercise by the employer-church of its
management prerogatives and therefore
does not concern any ecclesiastical matter.
TERMINATION OF CORPORATE OFFICER;
JURISDICTION OVER INTRA-CORPORATE
DISPUTES TRANSFERRED FROM SEC TO RTC
➢ The dismissal of a corporate officer by a
corporate board is a corporate dispute that
should be brought to the regular courts.
DY, ET AL VS NLRC
- Generally, the relationship of a person to a
corporation, whether as officer or as agent or
employee, is not determined by the nature of the
services performed, but by the incidents of the
relationship they actually exist.
- Intra-corporate controversies belong the regular
courts. It revolves around the election of
directors, officers or managers of the bank, the
relation between and among stockholders, and
between them and the corporation.
FORTUNE CEMENT CORP. VS NLRC
- A corporate officer’s dismissal is always a
corporate act, or an extra-corporate controversy
and the nature is not altered by the reason or
wisdom with which the Board of Directors may
have in taking such action.
- Election, appointment or removal of an
executive vice-president is a prerogative vested
upon the corporate board.
EFFECT OF CLAIM FOR BACKWAGES BENEFITS,
OR DAMAGES
GR: ​Jurisdiction with RTC if connected with
intra-corporate matters.
LOZON VS. NLRC AND PAL
- Position of PAL’s EVP-CEO is an elective
corporate office. Where its occupant is not
reelected by the Board of Directors, the officer’s
complaint should be lodged with the SEC (now
regular courts) not the NLRC, even if the
complainant/petitioner has claims for
backwages, employment benefits, and
damages.
ANDAYA VS. ABADIA
- Intra-corporate matters, such as those affecting
the corporation, its directors, trustees, officers
and shareholders, the issue of consequential
damages may just as well be solved and
adjudicated by SEC (now the regular courts)
BETTER POLICY IN DETERMINING SEC (now regular
courts) JURISDICTION
MAINLAND VS. MOVILLA
- In order that the SEC can take cognizance of a
case, the controversy must pertain to any of the
following relationships:
a) between the corporation, partnership or
association and the public;
b) between the corporation, partnership or
association and its stockholders, partners,
members or officers;
c) between the corporation, partnership or
association and the State as far as its franchise,
permit or license to operate is concerned; and
d) among the stockholders, partners or
associates themselves.
- The fact that the parties involved in the
controversy are all stockholders or that the
parties involved are the stockholders and the
corporation does not necessarily place the
dispute within the ambit of the jurisdiction of
SEC (now regular courts)
- The better policy to be followed in
determining jurisdiction over a case should
be to consider concurrent factors such as
the status or relationship of the parties or the
nature of the question that is the subject of
their controversy.
- In the absence of any one of these factors, the
SEC (now regular courts) will not have
jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the
corporation and its stockholders would involve
such corporate matters as only the SEC (now
regular courts) can resolve in the exercise of its
adjudicatory or quasi-judicial powers.
- In the case at bench, the claim for unpaid wages
and separation pay filed by the complainant
against petitioner corporation ​involves a labor
dispute​. It does not involve an intra-corporate
matter, even when it is between a stockholder
and a corporation. ​It relates to an
employer-employee relationship which is
distinct from the corporate relationship of
one with the other​.
4
SEC (now regular courts) JURISDICTION
REAFFIRMED
TABANG VS NLRC
- Jurisprudence defines: a corporate officer is the
president, secretary, or treasurer of the
corporation or any other officer whose office is
created by the board of directors as authorized
or required by the corporate charter or by-laws.
- It has been held that an "office'' is created by the
charter of the corporation and the officer is
elected by the directors or stockholders. On the
other hand, an "employee" usually occupies no
office and generally is employed not by action of
the directors or stockholders but by the
managing officer of the corporation who also
determines the compensation to be paid to such
employee.
- An intra-corporate controversy is one which
arises between a stockholder and the
corporation. There is no distinction, qualification,
nor any exemption whatsoever. The provision is
broad and covers all kinds of controversies
between stockholders and corporations.
MAINLAND VS TABANG COMPARISON
MAINLAND TABANG
Complainant Stockholder-em Stockholder-cor
ployee porate officer
Claim Claims for unpaid wages and 13​th
month pay
Jurisdiction NLRC SEC (now RTC)
TABANG RULING IS NOT CONTROLLING
​MATLING VS COROS
- SC calls the Tabang ruling as not controlling
because it is “too sweeping and does not accord
with reason, justice and fair play.
- In order to determine whether a dispute
constitutes an intra-corporate controversy or not,
the Court considers two elements instead,
namely:
(a) the status or relationship of the parties; and
(b) the nature of the question that is the subject
of their controversy.
- This was our thrust in Viray v. Court of Appeals:
The establishment of any of the
relationships mentioned above will not
necessarily always confer jurisdiction
over the dispute on the SEC to the
exclusion of regular courts. The
statement made in one case that the
rule admits of no exceptions or
distinctions is not that absolute. The
better policy in determining which body
has jurisdiction over a case would be to
consider not only the status or
relationship of the parties but also the
nature of the question that is the subject
of their controversy.
- The criteria for distinguishing between
corporate officers who may be ousted from
office at will, on one hand, and ordinary
corporate employees who may only be
terminated for just cause, on the other hand,
do not depend on the nature of the services
performed, but on the manner of creation of
the office. In the respondent’s case, he was
supposedly at once an employee, a stockholder,
and a Director of Matling. The circumstances
surrounding his appointment to office must be
fully considered to determine whether the
dismissal constituted an intra-corporate
controversy or a labor termination dispute. We
must also consider whether his status as
Director and stockholder had any relation at all
to his appointment and subsequent dismissal as
Vice President for Finance and Administration.
WHEN BANK OFFICER MAY BE A REGULAR
EMPLOYEE
PRUDENTIAL BANK VS REYES
- Complainant worked with the bank through the
ranks for 28 years
- Considering the length of service and nature of
work, the complainant is found to be an
employee; hence he enjoys security of tenure
and her complaint falls within NLRC’s
jurisdiction.
BARBA vs. LICEO DE CAGAYAN UNIVERSITY
- College dean is not a corporate officer, the post
not being a creation of the university’s by-laws
5
INTEGRATION/SUMMARY: CORPORATE OFFICER NOTE: A kasambahay’s claim, regardless of amount,
falls within the jurisdiction of the DOLE regional
Corporate officer director, NOT THE NLRC.

- Derives it character either from the Corporation
Code or the corporation’s by-aws.
➢ The dismissal issue is deemed an
intro-corporate dispute and falls within the
jurisdiction of trial court if the complainant if a
“corporate officer”.
○ He is a corporate officer if these
circumstances occur:
1. His position is a creation of the
corporate charter or by-laws
2. His position is elective
3. His election is by the act of
directors or stockholders
NOTE: ​BETTER POLICY IS ADHERED BY THE
COURT
The factors to consider whether the case should go to
NLRC or the regular courts:
1. Status or relationship of the parties
2. The nature of the subject of controversy
ONLY MONEY CLAIMS NOT ARISING FROM CBA
CAN BE FILED BEFORE NLRC
Q. May a money claim arising from the implementation
of the CBA be filed with the labor arbiter?
A. No, proceed to VA or panel of VA.
DOUBLE INDEMNITY
➢ RA. No. 8188 makes the employer liable to pay
an amount equivalent to double the unpaid
benefits owing to an employee by virtue of a
wage order that increases or adjusts the wage
rates.
➢ Enforcement of double indemnity falls within the
authority of LA.
MONEY CLAIMS MUST HAVE ARISED FROM
EMPLOYMENT
Q. If an employee is claiming a prize under an incentive
program in his company, where should he file his claim?

3. Nature of the complainant’s work A. Pepsi-Cola – LA not regular court

4. Length of service San Miguel – Regular court not LA

5. Manner of creation of the office PEPSI COLA VS MARTINEZ

NLRC JURISDICTION OVER PRIVATIZED - The claim for said prize unquestionably arose
GOVERNMENT CORPORATION from an employment relationship and therefore
falls within the coverage of Art. 224 of the Labor
➢ The labor code provision on breach of trust Code which speaks of all the claims arising from
applies as ground of employees dismissal even employment relations, unless expressly
if the breach of trust happened when the excluded by this Code.
employer company was still a - Indeed, Tumala would not have qualitfied for the
government-owned corporation. content, much less won the prize, if he was not
➢ The privatization did not extinguish the corporate an employee of the company at the time of the
personality although it caused the termination of holding of the contest. Besides, the cause
the employment relationship. advanced by petitioners to justify their refusal to
deliver the prize—the alleged fraudulent
LABOR ARBITER’S JURISDICTION: MONEY CLAIMS manipulations committed by Tumala in
connection with his duties as salesman of the
➢ A money claim arising from employment company—involves an inquiry into his actuations
relations, excepting SSS/ECC/Medicare claims, as an employee.
is within jurisdiction of the labor arbiter:
1. If the claim, regardless of amount is SAN MIGUEL vs. NLRC
accompanied with a claim for
reinstatement ​aka TERMINATION - Money claims of workers which now fall within
DISPUTE ​or the original and exclusive jurisdiction of Labor
2. If the claim, whether accompanied with Arbiters are those money claims which have
a claim for reinstatement, exceeds some reasonable causal connection with the
P5,000 per claimant employer-employee relationship.
- Where the claim to the principal relief sought is
to be resolved not by reference to the Labor

6
 Code or other labor relations statute or a
collective bargaining agreement but by the
general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not
to the Labor Arbiter and the National Labor
Relations Commission.
MONEY CLAIMS OF COOP EMPLOYEES
PERPETUAL HELP CREDIT COOP VS FABURADA
ET AL
- There is no evidence that the complaining
workers are members of the cooperative, and
even if they are, the dispute is about payment of
wages, overtime pay, rest day and termination of
employment.
JURISDICTION OVER CLAIMS FOR DAMAGES
SUARIO VS. BPI
- Money claims of workers which the labor arbiter
has original and exclusive jurisdiction are
comprehensive enough to include claims for
moral damages of a dismissed employee
against his employer.
SPLITTING OF ACTIONS NOT ALLOWED
➢ An employee who has been illegally dismissed
so as to cause him moral damages has a cause
of action for reinstatement, back wages and
damages. When he institutes proceedings
before the Labor Arbiter, he should make a
claim for all said reliefs.
PRIMERO VS IAC
- The judgment of the LC granting separation pay
operated as a bar to his subsequent action for
the recovery of damages before the CFI under
the doctrine of res judicata.
EMPLOYER’S CLAIM FOR DAMAGES
BANEZ vs. HON. VALDEVILLA
- An employer’s claim for damages against an
employee may be filed as counterclaim in the
illegal dismissal case filed by the employee.
Such claim for damages, arising from
employment relationship, is outside the
jurisdiction of the regular court.
LABOR ARBITER’S JURISDICTION: STRIKES AND
LOCKOUTS
➢ Questions relating to strikes or lockouts or any
form of work stoppage including incidents
thereof under Art. 264 fall within the labor
arbiter’s jurisdiction.
Limitations to LA’s jurisdiction:
1. Power to issue injunction
2. Industry indispensable to national interest
3. Filed by a 3​rd​ party affected
4. Crime
- iif a crime is committed, whether in relation to a
strike or not, the prosecution of the crime has to
be done not before a labor arbiter but a regular
court, because in such a case the laws to be
administered are primarily the penal laws of the
land.
LABOR ARBITER’S JURISDICTION: OFW’S MONEY
CLAIMS OR DISMISSAL
➢ Section 10 of RA 8042, approved on June 7,
1995, known as the Migrant Workers and
Overseas Filipinos Act of 1995, ​transfers from
the POEA to Labor Arbiters the original and
exclusive jurisdiction to hear and decide
claims arising out of an employer-employee
relationship or by virtue of any law or contract
involving Filipino workers for overseas
deployment, including claims for actual, moral,
exemplary and other forms of damages.
PHILIPPINE NATIONAL BANK VS CABANSAG
- Pass or permit does not imply a waiver of the
worker’s national laws on labor the pass being a
mere compliance with the country’s immigration
regulations.
- Based on [Article 217, Labor Code and Section
10, R.A. No. 8042], labor arbiters, clearly have
original and exclusive jurisdiction over claims
arising from employer-employee relations,
including terminations disputes involving all
workers, among them whom are Overseas
Filipino Workers (OFW).
7
PRETERMINATION UNDER RA NO. 8042
SERRANO VS GALLANT
- An OFW is entitled to his salaries for the
unexpired portion of his employment contract,
plus full reimbursement of this placement fee
with interest of 12% per annum.
SAMEER OVERSEAS PLACEMENT AGENCY VS
CABILES
- Limiting wages that should be recovered by an
illegally dismissed overseas worker to three
months is both violation of due process and the
equal protection clauses of the Constitution.
CONTRACTED BUT NOT DEPLOYED; PERFECTED
CONTRACT
➢ NLRC has jurisdiction over money claims
involving Filipino workers for overseas
deployment.
➢ RA 8042 allows claims for money or damages
sustained during the period of deployment or
before departure for abroad.
Q. If the employment contract has been signed but
employment relationship did not commence because the
seafarer was not actually deployed, can he complain of
unpaid salary?
A. Yes.
SANTIAGO VS CF SHARP
- The perfection of the contract, which in this case
coincided with the date of execution thereof,
occurred when petitioner and responded agreed
on the object and the cause, as well as the rest
of the terms and conditions therein.
- Even before the stater of any employment
relationship, contemporaneous with the
perfection of the employment contract was the
birth of certain rights and obligations, the breach
of which may give rise to a cause of action
against the erring party.
EMPLOYER-EMPLOYEE RELATIONS CASES:
MONEY CLAIMS; EMPLOYER’S NATIONALITY
IMMATERIAL
➢ The statute and regulations do not limit the
coverage to non-Filipino employers.
➢ Filipino working overseas share the same risk
and burdens with their employers be Filipino or
foreigner.
JOINT LIABILITY
➢ The liability of the principal/employer and the
recruitment placement agency for any and all
claims shall be joint and several (solidary).
➢ Such liabilities shall continue during the entire
period or duration of the employment contract
and shall not be affected by any substitution,
amendment or modification made locally or in
foreign country of the said contract
WHEN CORPORATE OFFICERS ARE LIABLE
➢ Liability of corporate officers and directors is not
automatic.
➢ There must be a finding that they were remiss in
directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal
activities.
LABOR ARBITER’S JURISDICTION: WAGE
DISTORTION
➢ A salary distortion case, referred to in the Article
124, is resolved either through the CBA
mechanism or, in unorganized establishments,
through the NCMB.
➢ IF the NCMB fails to resolve the dispute in ten
days of conciliation conferences, it shall be final
to the appropriate branch of the NLRC
LABOR ARBITER’S JURISDICTION: DISPUTES
OVER COMPROMISE SETTLEMENTS
➢ Because labor law policy encourages voluntary
resolution of disputes, compromise settlements
are ordinarily final and binding upon the parties.
But a compromise settlement may itself become
the subject of dispute.
➢ If there is noncompliance with the compromise
agreement or if there is prima facie evidence
that the settlement was obtained through fraud,
misrepresentation, or coercion, then, according
to Article 227, the NLRC through the labor
8
 arbiter may assume jurisdiction over such
dispute.
SUBMISSION TO JURISDICTION
MARQUEZ VS SEC. OF LABOR
- The question whether the court has jurisdiction
either over the subject matter of the action or
over the parties is barred from such conduct not
because the judgement or order od the court is
valid and conclusive as an adjudication byt for
the reason that such a practice cannot be
tolerated – obviously for reasons of public policy.
SOCO VS MERCANTILE
- The active participation of the party against
whom the action was brought coupled with his
failure to object to the jurisdiction of the Court or
quasi-judicial body where the action is pending,
is tantamount to an invocation of that
jurisdiction, and a willingness to abide by the
resolution of the case will bar said party from
later on impugning the court or body’s
jurisdiction
- The Supreme Court frowns upon the
undesirable practice of a party submitting his
case for decision and then accepting the
judgment only if favourable, and attacking it for
lack of jurisdiction when adverse.
DIFFERENT RULING ON JURISDICTION:
LA NAVAL DRUG VS CA
- It is the law that determines the jurisdiction of an
adjudicating body and not the initiative or
acquiescence of the disputants.
IMMUNITY OF FOREIGN GOVERNMENTS
➢ In international law, ​"immunity" is commonly
understood as an exemption of the state and
its organs from the judicial jurisdiction of
another state. ​This is anchored on the principle
of the sovereign equality of states under which
one state cannot assert jurisdiction over another
in violation of the maxim par in parem non habet
imperium (an equal has no power over an equal)
➢ As it stands now, the application of the doctrine
of immunity from suit has been restricted to
sovereign or governmental activities (jure
imperii).
➢ The mantle of state immunity cannot be
extended to commercial, private and proprietary
acts (jure gestionis).
Immunity of the UN and its Specialized Agencies
➢ Our courts can only assume jurisdiction over
private respondent if it expressly waived its
immunity
EXECUTING MONEY CLAIMS AGAINST THE
GOVERNMENT
➢ Even when a government agency enters into a
business contract with a private entity, it is not
the Labor Code but C.A. No. 327 that applies in
pursuing a money claim (against the
Government) arising from such contract.
DA vs NLRC ET AL
- Not all contracts entered into by the government
operate as a waiver of its non-suability;
distinction must still be made between one
which is executed in the exercise of its
sovereign function and another which is done in
its proprietary capacity.
LOCAL WATER DISTRICT
HAGONOY WATER DISTRICT VS NLRC
- Local water districts are quasi public
corporations whose employees belong to the
civil service, hence, the dismissal of those
employees shall be governed by the civil service
law, rules and regulations
Exception: Where NLRC Jurisdiction is Invoked
OCHEDA VS CA
- It is not fair for a party who has voluntarily
invoked the jurisdiction of a tribunal in a
particular manner to secure an affirmative relief
therefrom, to afterwards repudiate and deny the
very same jurisdiction to escape a penalty.
CHAPTER II
POWER AND DUTIES
ART. 225. POWERS OF THE COMMISSION
ART 226. OCULAR INSPECTION
9
1. POWERS OF COMMISSION
1.1 Rule-Making Power
The Commission has the power to promulgate
rules and regulations:
a) Governing the hearing and disposition of cases
before it and its regional branches
b) Pertaining to its internal functions; and
c) Those that may be necessary to carry out
purposes of this Code
➢ It is an elementary rule in the administrative law
that administrative regulations and policies
enacted by administrative bodies, such as the
Revised ruled of the NLRC, to interpret the law
which they are entrusted to enforce, have the
force of law, and are entitled to great respect.
1.2 Power to Issue Compulsory Processes
The Commission has the power to:
a) Administer oaths
b) Summon parties; and
c) Issue subpoenas ad testificandum and duces
tecum
1.3 Power to Investigate and Hear Disputes
Within Its Jurisdiction
The Commission has the power to:
a) Conduct investigations for the determination of a
question, matter or controversy within its
jurisdiction; and
b) Proceed to hear and determine the disputes in
the manner laid down under paragraph (c) of
Article 225.
1.4 Contempt Power
➢ The Commission has the power to hold any
person in direct or indirect under Rule IX of
NLRC 2011 Rules of Procedure.
➢ Contempt is defined as disobedience to the
Court by setting up an opposition to its
authority, ​justice and dignity. ​It signifies not
only a wilful disregard or disobedience of the
court’s orders but such conduct tends to bring
the authority of the court and the administration
of law into disrepute or in some manner to
impede the due administration of justice.
➢ It is proper for a labor arbiter to cite guilty of
indirect contempt an employer who refuses to
reinstate an illegally dismissed employee.
1.5 Power to Conduct Ocular Inspection
➢ The chairman, any commissioner, labor arbiter
or the duty authorized representatives may, at
anytime during working hours:
a) Conduct an ocular inspection on nay
establishment, building, ship or vessel, place or
premises, including any work, material,
implement, machinery or any object therein; and
b) Ask any employee, laborer or any person, as the
case may be, for any information or data
concerning any matter or question relative to the
object of investigation
1.6 Adjudicatory Power: Original
➢ Each of the NLRC divisions has the original
jurisdiction over petitions for injunction or
temporary restraining order under Article 226
➢ It has original jurisdiction to hear and decide
“national interest” cases certified to it by the
Secretary of Labor under Article 278.
1.7 Adjudicatory Power: Appellate
➢ The NLRC (i.e., a division) has exclusive
appellate jurisdiction over all cases decided by
labor arbiters and the DOLE regional director or
hearing officers under Article 129.
➢ The NLRC has no appellate jurisdiction over
decision rendered by:
(1) a voluntary arbitrator, or
(2) the secretary of labor, or
(3) the bureau of labor relations director
on cases appealed from the DOLE
regional offices.
➢ The decisions of these officers are appealable
rather to the Court of Appeals
2. POWER TO ISSUE INJUNCTION OF
TEMPORARY RESTRAINING ORDER
➢ The NLRC has injunction power or, simply, the
power to command that an act be done or not
done. It may enjoin any actual or threatened
commission of any or all prohibited or unlawful
10
 acts, or require the performance of a particular
act in any labor dispute which, if not restrained
or performed forthwith, may cause grave or
irreparable damage to any aprty or render
ineffectual any decision in favour of such party.
An injunction, in short, may either be mandatory
or prohibitory -- it may require, forbid, or stop the
doing of an act.
➢ But it must first be stressed that injunctions or
restraining orders are frowned upon as a matter
of labor relations policy.
➢ Where the trial court [now NLRC] did not follow
and observe the procedure outlined and
provided for in Section 9 (d) of R.A. No.875
[counterpart of present Article 225(e)] in issuing
the preliminary writ of prohibitory injunction, the
said writ is illegal and void, although the court
had jurisdiction to issue it.
2.1 Injunction by Labor Arbiter
Q. May a labor arbiter issue an injunction or restraining
order?
A. Only the NLRC, through its divisions, may issue writs
of preliminary injunctions and temporary restraining
orders. The role of the labor arbiters, with regard to
issuance of writes of preliminary injunctions, is limited to
reception of evidence as may be delegated by the
NLRC.
2.2 Conditions for Issuance Ex Parte of a Temporary
Restraining Order
A temporary restraining order (valid for only 20
days) may be issued ex parte under the
following conditions:
a) The complainant “shall also allege that, unless a
temporary restraining order shall be issued
without notice, a substantial and irreparable
injury to complainant’s property will be
unavoidable”;
b) There is “ testimony under oath, sufficient, if
sustained, to justify the Commission in issuing a
temporary injunction upon hearing after notice “;
c) The “complainant shall first file an undertaking
with adequate security in an amount to be fixed
by the Commission sufficient to recompense
those enjoined for any loss, expense or damage
causes by the improvident or erroneous
issuance such as order or injunction, including
all reasonable costs, together with a reasonable
attorney’s fee, and expense of defense against
the order or against the granting of any
injunctive relief sought in the same proceeding
and subsequently denied by the Commission”;
and
d) The “temporary restraining order shall be
effective for no longer that twenty (20) days
➢ To be sure, the issuance of an ex parte
temporary restraining order in a labor dispute is
not per se prohibited. Its issuance, however,
should be characterized by care and caution for
the law requires that it be clearly justified by
considerations of extreme necessity, i.e.,when
that commission of unlawful acts is causing
substantial and irreparable injury to company
properties and the company is, for the moment,
bereft of an adequate remedy at law.
2.3. Cash Bond
➢ No temporary restraining order or writ or
preliminary injunction shall be issued except
on the condition that petitioner shall first file
an undertaking to answer for the damages
and post a cash bond in the amount
determined by the Commission.
➢ The purpose of the bond is to recompense those
enjoined for any loss , expense or damage
caused by improvident or erroneous issuance of
such order or injunction, including all reasonable
costs, together with a reasonable attorney’s fee,
and expense of defense against the order or
against the granting of any injunctive relief
sought in the same proceeding and
subsequently denied by the Commission.
➢ In one case, it was held that company’s demand
for payment of the [employees’] amortizations on
their car loans, or, in the alternative, the return of
the cars to the company, is not a labor, but a
civil dispute.
2.4 Reception of Evidence
➢ The reception of evidence “ for the application of
writ of injunction may be delegated by the
commission to any of its Labor Arbiters who
shall conduct such hearings in such places as
he may determine to be accessible to the parties
and their witnesses and shall submit thereafter
his recommendation to the commission.”
11
2.5 Twenty- day Life of TRO
➢ A temporary retraining order (TRO), if issued at
all in a petition for injunction, is valid for 20 days
and become void ipso facto at the end of that
period.
➢ The TRO takes effect upon its issuance and not
upon receipt of the partes.
➢ TRO, Saturday, Sunday, and holidays are not
excluded.
2.5a Illustrative case : Issuance of TRO
ILAW AT BUKLOD NG MANGGAGAWA VS. NLRC
AND SAN MIGUEL CORPORATION
- A petition for injunction and TRO may be filed
with the NLRC where the complaint filed with he
LA against slowdown by petitioner’s employees
had not yielded adequate relief.
2.6 Injunction from NLRC Not the Proper Remedy
Against Employee’s Dismissal
PHILIPPINE AIRLINES, INC. VS. NLRC, ET AL
- The power of NLRC to issue an injunctive write
originates from any labor dispute upon
application by a party thereof, which application,
if not granted may cause grave or irreparable
damage to any party or render ineffectual any
decision in favor of such party
- it is an essential requirement that there must first
be a labor dispute between the contending
parties before the labor arbiter. In the present
case, there is no labor dispute between the
petitioner and private respondents as there has
yet been no complaint for illegal dismissal filed
with the labor arbiter by the private respondents
against the petitioner
- Petition for injunction not the way to halt an
employee’s dismissal
PART 3
Procedure
Art. 227 Technical Rules not Binding and Prior
Resort to Amicable Settlement
1. PROCEEDINGS BEFORE LABOR ARBITER OR
THE COMMISSION; TECHNICAL RULES NOT
APPLICABLE
Ø Administrative and quasi-judicial bodies, like the
National Labor Relations Commission, are not bound by
the technical rules of procedure in the adjudication of
cases.
Ø Simplification of procedure, without regard to
technicalities of law or procedure and without sacrificing
the fundamental requisites of due process, is mandated
to insure a speedy administration of social justice.
1.1. Substantial Evidence; Cardinal Rights in
Quasi-Judicial Proceedings
Ø It is true that administrative and quasi-judicial bodies
like the NLRC are not bound by the technical rules of
procedure in the adjudication of cases. However, ​this
procedural rule should not be construed as a license
to disregard certain fundamental evidentiary rules​.
Ø While the rules of evidence prevailing in the courts of
law or equity are not controlling in proceedings before
the NLRC, the evidence presented before it must at least
have a modicum of admissibility for it to be given some
probative value.
Ø Not only must there be some evidence to support a
finding or conclusion, but evidence must be
"substantial."
Ø ​"Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to
support a conclusion.
ANG TIBAY VS CIR
- There are cardinal primary rights which
must be respected even in proceedings of
this character:
1. right to a hearing;
2. tribunal must consider the
evidence presented;
3. decision must be supported by
something (evidence);
12
 4. supporting evidence must be
substantial;
5. Decision must be rendered on
the evidence presented or at least
contained in the record and disclosed to
the parties affected;
6. the body or CIR or any of its
judges must act on his own independent
considerations of the law and facts, and
not simply accept the views of the
subordinate in arriving at a decision; and
7. decide in such manner that
parties can know the various issues
involved and the reason for the decision.
1.2 Nature of Proceedings
- non-litigious in nature
1​.3. Prohibited Pleadings and Motions
NLRC 2011, RULE V SECTION 5. PROHIBITED
PLEADINGS AND MOTIONS:
The following pleadings and motions shall not be
allowed and acted upon nor elevated to the Commission:
(a) Motion to dismiss the complaint except on the ground
of lack of jurisdiction over the subject matter, improper
venue, res judicata, prescription and forum shopping;
(b) Motion for a bill of particulars;
(c) Motion for new trial;
(d) Petition for relief from judgment;
(e) Motion to declare respondent in default;
(f) Motion for reconsideration of any decision or any
order of the Labor Arbiter;
(g) Motion to Quash and/or Motion to Lift Garnishment if
a Petition
had been filed under Rule XII;
(h) Appeal from any interlocutory order of the Labor
Arbiter, such as but not limited to, an order:
(1) denying a motion to dismiss;
(2) denying a motion to inhibit;
(3) denying a motion for issuance of writ of
execution; or
(4) denying a motion to quash writ of execution;
(i) Appeal from the issuance of a certificate of finality of
decision by the Labor Arbiter;
(j) Appeal from orders issued by the Labor Arbiter in the
course of execution proceedings; and
(k) Such other pleadings, motions and petitions of similar
nature intended to circumvent above provisions.
1.4 Mandatory Conciliation and Mediation
Conference (NLRC 2011, Rule V Section 8)
(a) The mandatory conciliation and mediation
conference shall be called for the purpose of:
(1) amicably settling the case upon a fair compromise;
(2) determining the real parties in interest;
(3) determining the necessity of amending the complaint
and including all causes of action;
(4) defining and simplifying the issues in the case;
(5) entering into admissions or stipulations of facts; and
(6) threshing out all other preliminary matters.
The Labor Arbiter shall personally preside over and take
full control of the proceedings and may be assisted by
the Labor Arbitration Associate in the conduct thereof.
Provided that, in areas where there is no Labor Arbiter
assigned, conciliation and mediation may be conducted
by a Labor Arbitration Associate, any other NLRC
personnel with sufficient training and knowledge on
conciliation and mediation, authorized by the Chairman
or a duly authorized personnel of the Department of
Labor and Employment (DOLE) pursuant to any
Memorandum of Agreement executed for this purpose.
(b) Conciliation and mediation efforts shall be exerted by
the Labor Arbiters or the said authorized personnel all
throughout the mandatory conferences. Any
agreement entered into by the parties whether in partial
or full settlement of the dispute shall be reduced into
writing and signed by the parties and their counsel or the
parties’ authorized representatives, if any.
(c) In any case, the compromise agreement shall be
approved by the Labor Arbiter, if after explaining to the
13
parties, particularly to the complainants, the terms,
conditions and consequences thereof, he/she is satisfied
that they understand the agreement, that the same was
entered into freely and voluntarily by them, and that it is
not contrary to law, morals, and public policy.
(d) A compromise agreement duly entered into in
accordance with this Section shall be final and binding
upon the parties and shall have the force and effect of a
judgment rendered by the Labor Arbiter.
(e) The mandatory conciliation and mediation
conference shall, except for justifiable grounds, be
terminated within thirty (30) calendar days from the date
of the first conference.
(f) No motion for postponement shall be entertained
except on meritorious grounds and when filed at least
three (3) days before the scheduled hearing.
​1.5 Effect of Failure of Conciliation and Mediation
Ø If the parties fail to agree on an amicable settlement,
either in whole or in part, during the mandatory
conciliation and mediation conference, the Labor Arbiter
or the said duly authorized personnel shall proceed to
the other purposes of the said conference as
enumerated in Section 8(a) of NLRC 2011 Rules of
Procedure
​1.6​ ​Non-appearance of Parties
Ø The non-appearance of the complainant or petitioner
during the two (2) settings for mandatory
conciliation and mediation conference scheduled in the
summons, despite due notice thereof, shall be a ground
for the dismissal of the case without prejudice.
Ø In case of non-appearance by the respondent during
the first scheduled conference, the second conference
shall proceed as scheduled in the summons. If the
respondent still fails to appear at the second conference
despite being duly served with summons, the Labor
Arbiter shall immediately terminate the mandatory
conciliation and mediation conference. The Labor Arbiter
shall thereafter allow the complainant or petitioner to file
his verified position paper and submit evidence in
support of his causes of action, and thereupon render
his decision on the basis of the evidence on record.
Ø It is true that a compromise agreement once
approved by the court has the effect of res judicata
between the parties and should not be disturbed except
for vices of consent and forgery. However, settled is the
rule that the NLRC may disregard technical rules of
procedure in order to give life to the constitutional
mandate affording protection to labor and to conform to
the need of protecting the working class whose inferiority
against the employer has always been earmarked by
disadvantage.
2. Binding Effect of Compromise Agreement
Ø Generally, a judgement on a compromise agreement
puts an end to a litigation and is immediately executory.
Ø The ROC requires special authority before an
attorney can compromise the litigation of his clients.
Ø The authority to compromise cannot lightly be
presumed and should be established by evidence.
GENERAL RUBBER VS DRILON
- The waiver of money claims, which in
this case were accrued money claims, by
workers and employees must be regarded
as a personal right, that is, a right that must
be personally exercised.
- For a waiver thereof to be legally
effective, the individual consent or
ratification of the workers or employees
involved must be shown. Neither the officers
nor the majority of the union had any
authority to waive the accrued rights
pertaining to the dissenting minority
members.
​2.1 Quitclaim and Waivers
​OLACAO VS NLRC
- Indeed, jurisprudence exists to the effect
that a deed of release or quitclaim cannot
bar an employee from demanding benefits
to which he is legally entitled (​Fuentes vs.
NLRC, G.R. No. 76835, November 24,
1988); that quitclaims and/or complete
releases executed by the employees do not
stop them from pursuing theri claim arising
from the unfair labor practice of the
employer ​(Garcia vs. NLRC, G.R. No.
67825, September 4, 1987, 153 SCRA 639);
and that employees who received their
received their dismissal and that the
acceptance of those benefits would not
amount to estoppel ​(Mercury Drug Co, Inc.
vs. Court of Industrial Relations, G.R. No.
23357, April 30, 1974, 56 SCRA 694); De
14
 Leon vs. NLRC, G.R. No. 52056, October
30, 1980, 100 SCRA 691).
- A telling difference from the cited
cases, however, is the ​fact that the issue
of the validity of the releases, executed
by petitioners under oath, was squarely
raised and resolved in Labor Arbiter
Reyes' Decision in the "Unpaid Wages
Case,​" which found categorically that:
The document relieved absolutely and
forever released and discharged the
Eastcoast Development Enterprises,
Inc., its sucessors and assigns, of any
and all calims and liabilities whatsoever
insofar as their pastt salaries,
termination pay, overtime pay and other
privileges accorded them by law"
2.1a Final and Executory Judgment Cannot be
Modified or Negotiated
Ø The judgment may no longer be modified in any
respect, even if the modification is meant to correct what
is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the
highest court of the land.
3. MOTION TO DISMISS
WHEN TO FILE A MOTION TO DISMISS
Ø ​2011 NLRC RULE V, Section 6:
Before the date set for the mandatory conciliation
and mediation conference​, the respondent may file a
motion to dismiss on grounds provided under Section 5,
paragraph hereof. Such motion shall be acted upon by
the Labor Arbiter before the issuance of an order
requiring the submission of position paper. ​An order
denying the motion to dismiss, or suspending its
resolution until the final determination of the case, is
not appealable.
3.1 Moto Proprio Dismissal of Complaint Based on
Prescription
Ø When plaintiff’s own allegations in the complaint show
clearly that the action has prescribed, the court may
moto proprio dismiss the case on the ground of
prescription
3.2 Res judicata as Reason to Dismiss Complaint
DELFIN ET AL VS INCIONG
- For a prior judgment to constitute a bar to a
subsequent case, the following requisites must
concur:
a) it must be a final judgment or order;
(b) the court rendering the same must have
jurisdiction over the subject matter and over
the parties;
(c) it must be a judgment or order on the
merits, and
(d) there must be between the two cases
identity of parties, subject matter and cause
of action (Ibabao vs. IAC, No. 74848, May
20, 1987,150 SCRA 76).
- There is no question that th​e first three (3) requisites
are present in this case.
First, the decision in the first complaint had
already become final and executory. The motion
for reconsideration filed by the union in that case
was denied by the CIR and no petition
questioning the denial was brought to this court.
The fact of its finality was admitted by the
petitioners in their second complaint.
Second, the Court of Industrial Relations (CIR)
which rendered the decision had jurisdiction
over the subject matter and over the parties.
Third, the judgment rendered therein was a
judgment on the merits of the case after the
parties presented their evidence, oral and
documentary.
Going now to the fourth requisite, private
respondents NLRC and then Deputy Minister
Inciong did not commit any grave abuse of
discretion amounting to lack of jurisdiction when
they ruled that there is, between the first and the
second complaints, identity of causes of action,
subject matter and parties.
- ​There is an identity of cause of action in the two
cases, ​that is, the unfair labor practices committed by
Atlantic against its employees during its existence. The
obligations of Atlantic arising from the acts of unfair labor
practices committed against its employees during the
former’s existence were already settled in the first case.
It is clear that whatever cause of action individual
15
petitioners had against Atlantic for violations of the CBA
constituting an unfair labor practice act had already been
heard in the first case.
- Union should not be allowed to split causes of action -
We have already held that when a labor union accuses
an employer of acts of unfair labor practice allegedly
committed during a given period of time, the charges
should include all acts of unfair labor practice committed
against any and all members of the union during that
period. The union should not, upon dismissal of the
charges first preferred, be allowed to split its cause of
action and harass the employer with subsequent
charges based upon acts committed during the same
period of time
3.3 No Dismissal of Complaint Despite Death of
Proprietor
CAMARA SHOES VS KAPISANAN
- The present case was not extinguished
because of the death of the proprietor.
- The case at bar sought reinstatement
of individual respondents to their work. It
was not a money claim, not to say it involved
purely employer-employee relationship,
which fell under the exclusive authority of
labor officials to hear and resolve.
- While it combined a claim for
backwages and the like, the entitlement of
individual respondents thereto solely
depended on their right to be reinstated.
3.4 Revival or Refiling of Dismissed Case
- A dismissed case is not necessarily
dead
- A party may file a motion to revive or
re-open a case dismissed without
prejudice, within 10 calendar days from
receipt of notice of the order, otherwise,
his only remedy shall be to refile the case
4. SUBMISSION OF POSITION PAPERS AND REPLY
4.1 Determination of Necessity of Hearing or
Clarificatory Conference
Ø Immediately after the submission by the parties of
their position paper or reply, as the case may be, the
Labor Arbiter shall, motu proprio, determine whether
there is a need for a hearing or clarificatory conference.
Ø At this stage, he/she may, at his/her discretion and for
the purpose of making such determination, ask
clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of
relevant documentary evidence, if any, from any party or
witness.
4.2 Submission of the Case for Decision
Ø Upon the submission by the parties of their position
papers or replies, or the lapse of the period to submit the
same, the case shall be deemed submitted for decision
unless the Labor Arbiter calls for a hearing or
clarificatory conference in accordance with Section 12
and 14(a) of this Rule, in which case, notice of hearing
or clarificatory conference shall be immediately sent to
the parties.
Ø ​Upon termination of the said hearing or
conference, the case is deemed submitted for
decision.
4.3 Position Papers as Basis for Decision
Ø In the determination of whether or not the quantum of
proof was satisfied by a party contending for a particular
proposition, the procedure by with issues are resolved
based only on position papers, affidavits or documentary
evidence, if agreed upon by the parties, may be availed
of by the arbiter.
Ø If the employer filed no position paper despite
adequate notice and in no way justified the employees
dismissal, the labor arbiter is justified in deciding the
case based on the position papers on record.
4.4 Lack of verification, not fatal
Ø Can be corrected by requiring an oath
5. DUE PROCESS: OPPORTUNITY TO BE HEARD
Ø The simple meaning of procedural due process is that
a party to a case must be given sufficient opportunity to
be heard. Its very essence is to allow all parties
opportunity to present evidence.
Ø A formal or trial-type hearing is not at all times and in
all instances essential to due process, the requirements
of which are satisfied where parties are afforded fair and
reasonable opportunity to explain their side of the
controversy at hand.
16

5.1 Inhibition
Ø A Labor Arbiter may voluntarily inhibit himself/herself
from the resolution of a case and shall so state ​in
writing the legal justifications therefor.
Ø Upon motion of a party, either on the ​ground of
relationship within the fourth civil degree of
consanguinity or affinity with the adverse party or
counsel, or on ​question of partiality or other
justifiable grounds, the Labor Arbiter may inhibit
himself/herself from further hearing and deciding the
case.
Ø Such motion shall be resolved within five (​5) days
from the filing thereof. An order denying or granting a
motion for inhibition is inappealable.
6. DUE PROCESS INCLUDES IMPARTIALITY OF THE
APPEAL BODY
Q. May the NLRC Commissioner review on appeal his
own decision as a labor arbiter?
A. No (1997 PAL case)
ANG TIBAY VS CIR
- It is self-evident from the ruling case
law that the officer who reviews a case on
appeal should not be the same person
whose decision is the subject of review.
Thus, we have ruled that "the reviewing
officer must perforce be other than the
officer whose decision is under review.
7. SUSPENSION OF PROCEEDINGS
RUBBERWORLD VS NLRC
- Presidential Decree 902-A, as
amended, provides that "upon the
appointment of a management committee,
rehabilitation receiver board or body
pursuant to this Decree, all actions for
claims against corporations, partnerships, or
associations under management or
receivership pending, before any court,
tribunal, board or body shall be suspended
accordingly."
- ​Such suspension is intended to give
enough breathing space for the
management committee or rehabilitation
receiver to make the business viable
again, without having to divert attention
and resources to litigations in various
fora.
- Among, the actions suspended are
those for money claims before labor
tribunals, like the National Labor Relation
Commission (NLRC) and the Labor arbiters.
8. RESOLUTION OF DOUBT IN LAW OR EVIDENCE
NICARIO VS NLRC
- It is a well-settled doctrine, that if
doubts exist between the evidence
presented by the employer and the
employee, the scales of justice must be
tilted in favor of the latter. It is a
time-honored rule that in controversies
between a laborer and his master, doubts
reasonably arising from the evidence, or in
the interpretation of agreements and writing
should be resolved in the former's favor.
- The policy is to extend the doctrine to a
greater number of employees who can avail
of the benefits under the law, which is in
consonance with the avowed policy of the
State to give maximum aid and protection of
labor.
- This rule should be applied in the case
at bar, especially since the evidence
presented by private respondent company is
not convincing. Accordingly, we uphold the
finding that petitioner rendered overtime
work, entitling her to overtime pay.
9. DECISION OF LABOR ARBITER
Ø The Labor Arbiter shall render his/her decision within
thirty (30) calendar days, without extension​, after the
submission of the case by the parties for decision, even
in the absence of stenographic notes: Provided,
however, ​that cases involving overseas Filipino
workers shall be decided within ninety (90) calendar
days after the filing of the complaint.
ART. 228 APPEARANCES AND FEES
1. Appearance of Non-Lawyers
Ø A non-lawyer may appear in any of the proceedings
before the Labor Arbiter or Commission only under the
following conditions:
(1) he/she represents himself/herself as party to
the case;
17
(2) he/she represents a legitimate labor
organization, as defined under Article 212 (now
219) and 242 (now 251) of the Labor Code, as
amended, which is a party to the case: Provided
that, he/she presents to the Commission or
Labor Arbiter during the mandatory conference
or initial hearing:
(i) a certification from the Bureau of
Labor Relations (BLR) or Regional
Office of the Department of Labor and
Employment (DOLE) attesting that the
organization he/she represents is duly
registered and listed in the roster of
legitimate labor organizations;
(ii) a verified certification issued by the
secretary and attested to by the
president of the said organization stating
that he/she is authorized to represent
the said organization in the said case;
and
(iii) a copy of the resolution of the board
of directors of thesaid organization
granting him such authority;
(3) he/she represents a member or members of
a legitimate labor organization that is existing
within the employer’s establishment, who are
parties to the case: Provided that,
he/she presents:
(i) a verified certification attesting that
he/she is authorized by such member or
members to represent them in the case;
and
(ii) a verified certification issued by the
secretary and attested to by the
president of the said organization stating
that the person or persons he/she is
representing are members of their
organization which is existing in the
employer’s establishment; and,
(4) he/she is a duly-accredited member of any
legal aid office recognized by the Department of
Justice or Integrated Bar of the Philippines:
Provided that, he/she
(i) presents proof of his/her accreditation; and
(ii) represents a party to the case;
(5) A corporation or establishment which is a
party to the case may be represented by the
owner or its president or any other authorized
person provided that, he/she presents:
(i) a verified certification attesting that
he/she is authorized to represent said
corporation or establishment; and
(ii) a copy of the resolution of the board
of directors of said corporation, or other
similar resolution or instrument issued
by said establishment, granting him/her
such authority.
2. CHANGE OF LAWYER
Ø The counsel who acted as such until a labor case
reached its final conclusion should be considered as the
union’s counsel in the execution of the decision
ABAN VS ENAGE
- No substitution of attorneys will be
allowed unless the following requisites
concur:
1. there must be filed a written
application for substitution;
2. there must be filed the written
consent of the client to the substitution;
3. there must be filed the written
consent of the attorney to be
substituted, if such consent can be
obtained;
4. in case such written consent
cannot be procured, there must be filed
with the application for substitution,
proof of the service of notice of such
motion in the manner required by the
rules, on the attorney to be substituted.
3. ATTORNEY’S FEES
Ø Art. 228 of the Labor Code prohibits payment of
attorney’s fees only when it is effected through forced
contributions from the workers from their own funds as
distinguished from the union funds.
18
Ø The purpose of the provision is to prevent imposition
on the workers of the duty to individually contribute their
respective shares in the fee to be paid the attorney for
his services on behalf of the union in its negotiations with
the management. The obligation to pay the attorney's
fees belongs to the union and cannot be shunted to the
workers as their direct responsibility.

3.1 Negotiation Fee

Ø The 10% negotiation fee which covers attorney’s

fees, agency fee, and the like is based on the amount of
backwages receivable under the CBA which is beyond
what the law grants

3.2 For services rendered by Union Officers

Ø Article 222 (b) prohibits attorney's fees, negotiations

fees and similar charges arising out of the conclusion of
a collective bargaining agreement from being imposed
on any individual union member.

Ø The collection of the special assessment partly for the

payment for services rendered by union officers,
consultants and others may not be in the category of
"attorney's fees or negotiations fees." But there is no
question that it is an exaction which falls within the
category of a "similar charge," and, therefore, within the
coverage of the prohibition in the aforementioned article.

3.3 Attorney’s fee collectible only from Union Funds

19
CHAPTER III – APPEAL
PROVISION: ART. 229-APPEAL
● Decisions, awards, or orders (D,A, or O) of the Labor
Arbiter (LA) are final and executory unless appealed
to the NLRC by any or both parties
● PERIOD TO APPEAL TO NLRC​: within 10 calendar
days from receipt of such D,A, or O
● Only GROUNDS FOR APPEAL
(a) If there is prima facie evidence of abuse of
discretion on the part of the Labor Arbiter;
(b) If the D, A, or O was secured through fraud
or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are
raised which would cause grave or irreparable
damage or injury to the appellant.
● In case of a judgment involving a monetary award,
an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by
a reputable bonding company duly accredited by the
NLRC in the amount equivalent to the monetary
award in the judgment appealed from.
● Aspect of the decision of the LA reinstating a
dismissed or separated employee - shall
immediately be executory, even pending appeal.
o The employee shall either be admitted back
to work under the same terms and
conditions prevailing prior to his dismissal or
separation or, at the option of the employer,
merely reinstated in the payroll.
o The posting of a bond by the employer shall
not stay the execution for reinstatement
provided herein.
● To discourage frivolous or dilatory appeals, NLRC or
LA shall impose reasonable penalty, including fines
or censures, upon the erring parties.
● FURNISH REQUIREMENT​: In all cases, the
appellant shall furnish a ​copy of the memorandum of
appeal to the other party. The appellee shall file an
answer not later than 10 calendar days from receipt
thereof.
● PERIOD TO DECIDE CASES​: NLRC shall decide
within 20 calendar days from receipt of the answer of
the appellee.
● FINAL AND EXECUTORY DECISION OF NLRC​:
after 10 calendar days from receipt of the decision
by the parties.
● Any law enforcement agency may be deputized by
the Secretary of Labor and Employment or the
NLRC in the enforcement of D, A, or O.
COMMENTS AND CASES
MEMORY AID: PERIODS TO REMEMBER
REGARDING APPEAL TO NLRC
● Vir-jen case – Calendar days means that
Saturdays, Sundays and Legal Holidays are
included in counting the 10-day period
o Within 10 calendar days from receipt of the
Decision of LA – period to appeal to NLRC
o Not later than 10 calendar days from receipt
of appellee of a copy of the memorandum of
appeal- the appellee shall file an ANSWER
o Within 20 calendar days from receipt of
appellee’s answer: NLRC must decide the
case
o After 10 calendar days from receipt of the
decision by the parties – decision becomes
final and executory
1. FINAL DECISION CANNOT BE AMENDED
● Asuncion vs NLRC – perfection of an appeal within
the reglementary period is not only mandatory but
also jurisdictional and failure to do so renders the
questioned decision final and executory thus
depriving the appellate court of jurisdiction to alter
the final judgment, much less to entertain appeal.
● Aboitiz Shipping Employee Association vs Trajano –
except for clerical errors or the making of nunc pro
tunc entries w/c cause no prejudice to any party or
where the judgment is void, after the judgment has
become final and executory, the same can neither
be amended nor altered even if the purpose is to
correct a perceived conclusion of fact or law.
o Nunc pro tunc - when the court wants the
order or judgment to be effective as of a
date in the past rather than on the date the
judgment or order is entered into the court
record
● A decision that has become final and executory
cannot be amended as to indicate in the writ of
execution that the liability as “solidary” when it is not
stated in the decision.
FAILURE TO GIVE COPY OF APPEAL TO ADVERSE
PARTY WITHIN 10 DAYS – not fatal if the appellee was
not prejudiced by the delay in the service of the copy of
the appeal
o Not a jurisdictional defect & does not justify
dismissal of appeal
o Rules of technicality must yield to the broader
interest of substantial justice
NO MOTION OR REQUEST FOR EXTENSION OF THE
PERIOD WITHIN WHICH TO PERFECT AN APPEAL
SHALL BE ALLOWED
PERIODS GENERALLY MANDATORY
o To ensure orderly and speedy discharge of
judicial business
o Only strong consideration of equity will allow an
exception to the procedural rule in the interest of
substantial justice
2. WHERE TO FILE APPEAL? – Regional Arbitration
Branch (RAB) or Regional Office (RO) where the case
was heard and decided.
20
3. GROUNDS OF APPEAL – mention above in the
provision
4. REQUISITES FOR PERFECTION OF APPEAL
1. The appeal shall be filed within 10 calendar
days from receipt of the decision of the LA
2. The appeal must be verified by the appellant
himself
3. The appeal must be in the form of a
memorandum of appeal which states:
o Grounds relied upon and
arguments
o Relief prayed for
o Statement of the date when the
appealed decision is received
4. The appeal shall be in 3 legibly typewritten or
printed copies
5. The appeal shall be accompanied by:
i. proof of payment of appeal fee and
legal research fee
ii. posting of a cash or surety bond
iii. proof of service
● Mere notice of appeal without compliance w/ other
requisites shall not stop the running of the period of
perfecting appeal
● Failure of appellee to timely file answer after being
furnished with the copy of appeal – construed as a
waiver to file an answer
● NLRC shall limit itself to review and decide only the
specific issues that were elevated on appeal
5. PAYMENT OF APPEAL FEES
● Acda vs Minister of Labor – payment of appeal fee is
by no means a mere technicality but is an essential
requirement in the perfection of appeal
● However appeal may be given due course where the
fee has been paid belatedly in the broader interest of
justice and in attaining the objective of deciding
cases on the merits
6. APPEAL BOND
● Where the decision subject of appeal involves
MONETARY AWARD- an appeal by the employer
may be perfected only upon posting if a bond which
is either in the form of:
o Cash deposit
o Surety bond issued by a reputable bonding
company duly accredited by the NLRC
- Equivalent in amount to the monetary award
● Upon verification that bond is irregular or not
genuine – immediate dismissal of the appeal
REDUCTION OF BOND – no motion to reduce bond
shall be entertained except on meritorious grounds and
only upon the posting of a bond in a reasonable amount
in relation to the monetary award
“McBurnie Guidelines” on APPEAL BOND
REDUCTION (McBurnie vs Gauzon)
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following
conditions:
(1) there is meritorious ground
(2) a bond in a reasonable amount is posted
(b) a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to 10% of the
monetary award subject of the appeal, exclusive of
damages and attorney’s fees
(c ) compliance with the foregoing conditions shall
suffice to suspend the running of the 10-day
reglementary period to perfect an appeal from the labor
arbiter’s decision to the NLRC
(d) the NLRC retains its authority and duty to resolve the
motion to reduce bond and determine the final amount of
bond that shall be posted by the appellant
(e ) In the event that the NLRC denies the motion to
reduce bond or requires a bond that exceeds the amount
of the provisional bond, the appellant shall be given a
fresh period of 10 days from notice of the NLRC order
within which to perfect the appeal by posting the
required appeal bond
● Ex: 20% or 25% of the basis amount may be
reasonable – no hard and fast rule in determining
the reasonableness of the additional bond
NO BOND. NO APPEAL PERFECTED
● Borja Estate vs Sps R. Ballad – Posting of bond is
mandatory and jurisdictional
- As there was no appeal bond filed together with
the Appeal Memorandum within the 10-day
period for the perfection of appeal. It follows that
no appeal from the decision of the Labor Arbiter
had been perfected.
SC RELAXING THE 10-DAY PERIOD​- where failure to
comply with the requirement for perfection of appeal was
justified or where there was substantial compliance with
the rules
● Ex:
o Presence of justifying circumstance
o Equitable grounds
o Reliance on the footnote of the notice of the
decision to appeal “within 10 working days”
instead of calendar days
THERE IS NO DISTINCTION BETWEEN “FILING” and
“PERFECTION”
AMOUNT OF APPEAL BOND EXCLUDES DAMAGES
● Discretionaries – damages and atty’s fees which are
excluded from the computation of the award to
determine amt of appeal bond
● Mandatories – amounts fixed in the decision to w/c
employee is entitled upon application of the law on
wages (backwages, holiday pay, overtime pay,
separation pay, 13​th​-month pay)
IS PROPERTY BOND ACCEPTABLE? ​– Yes
21
● Fernandez vs NLRC – although posting of a bond is
jurisdictional, the requirement should be given a
liberal interpretation
- SC is confident that the real property bond
posted by the petitioners sufficiently protects the
interests of private respondents should they
finally prevail
o Real property – 100M; judgment award
only a little more than 17M
BOND ACCEPTED CONDITIONALLY – failure to fulfill
conditions on time is tantamount to a failure to post the
bond required; appeal may be dismissed
7. EFFECT OF APPEAL OF ARBITER’s DECISION
EXECUTION OR REINSTATEMENT PENDING
APPEAL
● When employer refuses to reinstate the dismissed
employee – the LA shall immediately issue writ of
execution even pending appeal, directing the
employer
o Immediately reinstate either physically or in
the payroll and
o Pay the accrued salaries as a consequence
of such reinstatement at the rate specified in
the decision
● Disobedience to the writ of execution served by the
sheriff – may be cited for contempt
EFFECT OF PERFECTION OF APPEAL ON
EXECUTION – stay the execution of the decision of the
LA on appeal except for reinstatement pending appeal
8. NO APPEAL FROM AN INTERLOCUTORY ORDER
SHALL BE ENTERTAINED
UNVERIFIED LETTER NOT PROPER APPEAL
● Garcia vs NLRC – after receiving a copy of the
decision, private respondent thru its president wrote
the Labor Arbiter, a letter expressing dismay over
the judgment
o Respondent NLRC acted w/ grave abuse of
discretion and in excess of jurisdiction in
treating the letter as an appeal from the
judgment of the Labor Arbiter
o The lack of a cash or surety bond in a
judgment involving a monetary award is fatal
to the appeal
9. PROCEEDING BEFORE THE COMMISSION
Commission En Banc
o Promulgates rules and regulations
governing the hearing and disposition of
cases before its divisions and Regional
Arbitration Branches
o Formulation of policies affecting its
administration and operations
o May allow transfer of cases from one
division to another on temporary or
emergency basis
Divisions
o NLRC exercises its adjudicatory powers,
functions and duties thru its 8 Divisions
o Consist of: 1 member fr public sector –
presiding commissioner and one member
each fr the workers and employers sectors
o Presence of 2 Commissioners of a Division
constitutes a Quorum
▪ Necessary for the
pronouncement of judgment or
resolution
● NLRC MAY RECEIVE EVIDENCE ON APPEAL –
technical rules of evidence are not binding in labor
cases
10. FORM OF DECISION, RESOLUTION AND ORDER
● In setting aside Labor Arbiter’s findings, NLRC
should state an acceptable cause thereof (Reasoned
Reversal)
11. EXTENDED MEANING OF APPEAL; NLRC MAY
ISSUE WRIT OF CERTIORARI – abuse of discretion is
within the ambit of certiorari
● EXTRAORDINARY REMEDIES – Petition to annul
or modify an order or resolution of a labor arbiter
o GROUNDS:
Abuse of discretion
Serious errors in finding of facts
Fraud
12. FINALITY OF NLRC DECISION – after 10 calendar
days fr receipt of the decision by counsel or authorized
representatives or parties
● ENTRY OF JUDGMENT – upon expiration of the 10
calendar day-period above
o If no proof of service to parties – Executive
Clerk or Deputy Clerk shall consider the
decision as final and executory after 60
calendar days fr date of mailing
13. STRIKE CASES certified by DOLE Secretary
before the NLRC​ (See Art 278-g)
14. APPEAL FR the NLRC – St. Martin Funeral
Homes vs NLRC
1. way to review NLRC decisions is through the
special civil action of certiorari under Rule 65
2. jurisdiction belong initially to CA (in line with
the doctrine of hierarchy of courts) then SC
● 60 DAYS to File Petition for Certiorari
o Petitions for certiorari must be filed strictly
within 60 days from notice of judgment or fr
the order denying MR
o The rule may be relaxed and extension of
the 60-dayperiod may be allowed subject to
the Court’s discretion
▪ Necessity for the party invoking
liberality to advance a reasonable
explanation for the failure
● ONE DAY LATE​ – plea denied by SC
22
● Finality of the NLRC’s decision – not a bar to the
filing of petition for certiorari under R65
● WHAT IS TO BE CERTIFIED in Appeals under
R45 and petition for certiorari under R65 –
certified true copy of NLRC Division
● GROUNDS FOR CERTIORARI – grave abuse of
discretion
o Errors of jurisdiction including the
commission of grave abuse of discretion
amounting to lack or excess of jurisdiction
● NOT A SLAVE TO TECHNICAL RULES –
Employee’s failure to furnish the adverse party
personally a copy of the petition was entertained and
granted by SC
o Higher interest of justice and equity demand
that the petitioner should not be denied his
day in court and made him to suffer for his
counsel’s indiscretion. The employee’s fault
was to repose his faith and trust in his
previous counsel.
17. APPEAL FR OSEC TO CA
● RULINGS ISSUED BY THE OSEC (Office of the
Secretary of DOLE) may be appealed to CA , not the
SC, pursuant to the ruling in St Martin’s case
● REMEDY OF AN AGGRIEVED PARTY IN
RULINGS OF OSEC –
(1) timely file MR (precondition for any
subsequent remedy) then
(2) seasonably file a special civil action for
certiorari R65
o Petition for certiorari must be preceded
by exhaustion of administrative
remedies
● Appeal fr OSEC to the Office of the President –
optional
o Non-availment does not serve as an
impediment to judicial intervention
● WHEN MR DISPENSABLE
Fe Alindao vs Joson
REQUIREMENT OF MR may be dispensed in the
ff instances:
1. when questions raised is one on purely of law
2. where public interest is involved
3. in cases of urgency
4. where special circumstances warrant
immediate or more direct action
o To dispense w/ MR there must be a concrete,
compelling, and valid reason
EXCEPTIONS TO THE RULE ON EXHAUSTION OF
ADMINISTRATIVE REMEDIES
1. w/r the questions in dispute is purely a legal
one
2. w/r the controverted act is patently illegal or
performed w/out or in excess jurisdiction
o Rules Implementing Book V of LC
“Decision of the Sec shall become final and
executory after 10 days fr receipt of the parties.
No MR of the decision shall be entertained.
● MR is an inherent requisite of a petition for certiorari
● No second MR allowed
● Sadol vs PKI – Party who failed to appeal fr
decision of the LA to the NLRC can still participate in
a separate appeal timely filed by the adverse party
by an MR of the decision of the NLRC on appeal
o Having the lost of appeal, can PKI file an
MR on the decision rendered by NLRC
(which petition of appeal was filed by
employee)? – YES, rules of technicality
must yield to the broader interest of justice
▪ Giving due course to MR may
be able to evaluate the
conflicting versions of facts
presented by the parties in the
case
18. CERTIFICATE OF FORUM SHOPPING – failure to
comply shall be caused for dismissal w/out prejudice
unless otherwise provided
● FALSE CERTIFICATION / NONCOMPLIANCE W/
ANY OF THE UNDERTAKING – Indirect contempt
of court w/out prejudice
● WILLFULL AND DELIBERATE FORUM SHOPPING
– ground for summary dismissal w/ prejudice + direct
contempt + cause for administrative sanction
● FORUM SHOPPING – filing of civil case for
damages and an illegal dismissal complaint
(contradictory)
● CERTIFICATION OF NON-FORUM SHOPPING
MUST BE MADE BY PETITIONER​ – not the counsel
19. FROM CA TO SC: ONLY QUESTION OF LAW
(RULE 45)
● Remedy to appeal judgment, final order, resolution
of CA to SC – petition for review on certiorari under
Rule 45
o Can only raise questions of law
o PERIOD FOR FILING: w/in 15 days fr
notice of judgment or of denial of MR
o Special civil action of certiorari under Rule
65 cannot be used as a substitute for an
appeal under Rule 45
PROVISION: ARTICLE 230 – EXECUTION OF
DECISIONS, ORDERS OR AWARDS
a. The following may, motu proprio or on motion of
any interested party, issue a writ of execution on
a judgment within 5 years from the date it
becomes final and executory:
▪ The Secretary of Labor and
Employment
▪ DOLE Regional Director
▪ NLRC
▪ Labor Arbiter
▪ Med-Arbiter
▪ Voluntary Arbitrator
● requiring a sheriff or a duly deputized officer to
execute or enforce final decisions, orders or
awards of the Secretary of Labor and
Employment or regional director, the
Commission, the Labor Arbiter or med-arbiter, or
voluntary arbitrators.
23
 ● In any case, it shall be the duty of the
responsible officer to separately furnish
immediately the counsels of record and the
parties with copies of said decisions, orders or
awards – BOTH PARTY AND COUNSEL MUST
BE DULY SERVED THEIR SEPARATE
COPIES
● Failure to comply with the duty prescribed herein
shall subject such responsible officer to
appropriate administrative sanctions.
b. The Secretary of Labor and Employment, and
the Chairman of the Commission may designate
special sheriffs and take any measure under
existing laws to ensure compliance with their
decisions, orders or awards and those of the
Labor Arbiters and voluntary arbitrators,
including the imposition of administrative fines
which shall not be less than P500.00 nor more
than P10,000.00.
NOTES & COMMENTS
1. APPEAL ON THE EXECUTION OF DECISION
● GR: once a judgement becomes final and executory,
it can no longer be disturbed, altered or modified
● EXCEPTION: Supervening events
o Correctness of the execution of the decision
may be appealed to and reviewed by the
NLRC
● Abbott vs NLRC – what is sought to be reviewed is
not the decision itself but the manner of its execution
o Recomputation of the awards is justification
enough for the respondent NLRC to issue
the challenged TRO
2. INJUNCTION, GENERAL RULE: RTC cannot issue
injunction against NLRC
● The power of the Court or the NLRC to execute its
judgment extends only to properties unquestionably
belong to the judgment debtor
● REMEDIES OF THIRD PARTY CLAIMANTS
1. file a 3​rd party claim with the sheriff of the
Labor Arbiter
2. If the 3​rd party claim is denied, the 3​rd party
may appeal denial to NLRC
o Even if a 3​rd party claim was denied, a 3​rd
party may still file a proper action with a
competent court to recover ownership of the
property illegally seized by the sheriff
o The filing of a 3​rd party claim with Labor Arbiter
and the NLRC did not preclude the petitioner
from filing a subsequent action for recovery of
property and damages with the RTC – forum
shopping
● RTC INJUNCTION AGAINST LABOR ARBITER
OR NLRC​ – when allowed
o When a 3​rd party or a stranger to the action,
asserts a claim over the property levied
upon, the claimant may vindicate his claim
by an independent action in the proper civil
court which may stop the execution of the
judgment on property not belonging to the
judgment debtor
o A person other than the judgment debtor
who claims ownership or right over the
levied properties is not precluded, however,
from taking other legal remedies
o A separate civil action for recovery of
ownership of the property would not
constitute interference with the powers or
processes of the Labor Arbiter and the
NLRC which rendered the judgment to
enforce and execute upon the levied
properties
● THIRD PARTY CLAIM – filed within 5 days from the
last day of posting publication of the notice of
execution sale; otherwise the claim shall be forever
barred
● Simulated Sale, Void Ab Initio
o Civil Code: alienations by onerous title are
presumed to be fraudulent when done by
persons against whom some judgment has
been rendered or some writ of attachment
issued in any instance
o Disputed contract was not merely
rescissible; it was simulated or fictitious thus
void ab initio
PROVISION: ART. 231 – CONTEMPT POWERS OF
THE SECRETARY OF LABOR
In the exercise of his powers under this Code, the
Secretary of Labor may hold any person in direct or
indirect contempt and impose the appropriate penalties
therefor.
TITLE III – BUREAU OF LABOR RELATIONS
PROVISION: Art 232 – BLR
● The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the
Department of Labor, shall have original and
exclusive authority to act, at their own initiative or
upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting
labor-management relations in all workplaces,
whether agricultural or non-agricultural, except those
arising from the implementation or interpretation of
collective bargaining agreements which shall be the
subject of grievance procedure and/or voluntary
arbitration.
● The Bureau shall have fifteen (15) working days to
act on labor cases before it, subject to extension by
agreement of the parties.
NOTES & COMMENTS
1. BLR JURISDICTION & FXN
a.) union matters – Inter-union and Intra-Union
Disputes
b.) collective bargaining registry
c.) labor education
24
 d.) set policies, standards and procedures on
the registration & supervision of legitimate labor
union activities including denial, cancellation and
revocation of labor union permits
e.) set policies, standards and procedures
relating to collective bargaining agreements
f.) examination of financial records of accounts
of labor organizations
g.) provide proper orientation to workers
● National Conciliation and Mediation Board (NCMB)​ –
mediation, conciliation and arbitration fxns
● NLRC​ – countries only labor court
o Settles labor-management disputes
2. INTER-UNION AND INTRA-UNION DISPUTE
● INTER-UNION DISPUTE​ – any conflict between
and among legitimate labor unions involving
representation questions for purpose of
collecting bargaining or to any other conflict or
dispute between legitimate labor unions
● INTRA-UNION DISPUTE​ – any conflict between
and among union members including :
o grievances arising from any violation of
the rights and conditions of membership
o violation of or disagreement over any
provision of the union’s constitution and
by-laws or
o disputes arising from chartering or
affiliation of union
- WHO MAY FILE​: A complaint involving
intra/inter-union dispute may be filed by a LLO
or its members
▪ CONDITION FOR FILING if
issue involves the entire
membership - the complaint
shall be supported by at least
30% of the membership
● OTHER RELATED LABOR RELATIONS
DISPUTES – any conflict between a labor union
and the employer or any individual or entity that
is not a labor org or worker’s association
o Cancellation of registration of labor org
o Interpleader
- WHO MAY FILE​: a party-in-interest who is not
necessarily a union or union member
● WHERE TO FILE​?
o DOLE Regional Office where the labor
organization is registered - independent
union, a chartered local or a worker’s
association
o BLR itself – federation or any industry/
national union
3. EXTENT OF BLR AUTHORITY
● Certification election is the fairest and most
effective way of determining which labor
organization can truly represent the working
force
4. KATARUNGANG PAMBARANGAY – not applicable
to Labor Dispute
PROVISION: Art. 233 – COMPROMISE AGREEMENT
● Any compromise settlement, including those
involving labor standard laws, voluntarily agreed
upon by the parties with the assistance of the
Bureau or the regional office of the Department
of Labor, shall be final and binding upon the
parties.
● The National Labor Relations Commission or
any court, shall not assume jurisdiction over
issues involved therein except in case of
non-compliance thereof or if there is prima facie
evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.
NOTES & COMMENTS
COMPROMISE AGREEMENT​ – contract whereby
the parties make reciprocal concessions in order to
resolve their differences and thus avoid or put an
end to litigation
1. COMPROMISE AGREEMENT – Constitution
commands the State to promote the preferential use of
voluntary modes in settling disputes since maintenance
of industrial peace is a joint responsibilities of workers
and employers
● BASIC REQUIREMENT – assistance of the
BLR or the regional office of the DOLE in the
execution of a compromise agreement
o No valid compromise agreement without
it
● NLRC or other courts have no jurisdiction over
issues on compromise agreement except:
a.) in case of noncompliance
b.) there is prima facie evidence that the
settlement was obtained through fraud,
misrepresentation or coercion
● Legitimate waivers – represent a voluntary and
reasonable settlement of a worker’s claim, law
between parties
● ANNUL TRANSACTION - NOT ALL
QUITCLAIMS ARE INVALID OR AGAINST
PUBLIC POLICY,​ except:
1. Where there is a clear proof that the
waiver was wangled from an
unsuspecting or gullible person
2. where the terms of settlement are
unconscionable on their faces
2. FORMAL REQUIREMENTS OF COMPROMISE
AGREEMENT
(1) reduced in writing
(2) signed in the presence of the Regional
Director or his duly authorized representative
- Special Power of Attorney (SPA) is
required before agent/counsel may be
authorized
25
3. VALIDITY OF COMPROMISE AND QUITCLAIM
● Veloso and Liguaton vs DOLE​ – valid quitclaim
o Petitioners claim that they were forced to
sign their respective releases in favor of
employer by reason of dire need
o Quitclaims in this case were signed while
the MR was pending in the DOLE & with the
knowledge and approval of the DOLE
o Dire necessity is not a ground for annulling
the release since it has not been shown that
the employees had been forced to execute
them. Not proven that the considerations for
the quitclaim were unconscionably law and
the petitioners were tricked into accepting
them
o Where it is shown that the person making
the waiver did so voluntarily with full
understanding of what he was doing, the
consideration for quitclaim is credible and
reasonable, the transaction must be
recognized as a valid and binding
undertaking
4. COMPROMISE SHOULD BE DULY AUTHORIZED
● Jag and Haggar Jeans vs NLRC, Lakas
Manggagawa sa Jag – Whether the compromise
agreement entered into by the petitioner and the
Union (w/c constitutes the majority) is binding upon
the other complainants (who constitute minority)? –
NO
o The waiver of reinstatement like waivers of
money claims must be regarded as a
personal right which must be exercised
personally by the workers themselves.
o For a waiver to be legally effective-
individual consent or ratification of the
employees involved must be shown
o Neither officers nor the majority of the union
had any authority to waive the accrued
rights pertaining to the dissenting minority
members
o When it comes to individual benefits
accruing to members from favorable
judgment, the members themselves become
the real parties in interest and it is for them,
rather than for the union to accept or reject
individually the fruits of litigation
5. RULINGS ON COMPROMISE AGREEMENT
● Labor vs NLRC and Gold City​ – Quitclaim not valid
o Amounts received were unreasonably lower
than what they were entitled to
o Compromise settlements were not executed
with the assistance of BLR or the Regional
office of the DOLE (Art 227)
o Filing of vouchers with RO of DOLE to show
payments of the compromise settlement is
not considered as the requisite assistance in
the execution of compromise agreement
● QUITCLAIMS MAY BE GIVEN EFFECT IF THE FF
REQUISITES ARE PROVED​:
(1) the employee executes the deed of quitclaim
voluntarily
(2) there is no fraud or deceit on the part of any
of the parties
(3) consideration of the quitclaim is credible and
reasonable
(4) contract is not contrary to law, public order,
public policy, morals, good customs or
prejudicial to 3​rd​ person
● Even when a compromise agreement is approved by
a labor arbiter, the judgment cannot have the effect
of res judicata upon persons who are not parties to
the compromise agreement
6. WHEN TO EFFECT COMPROMISE? – at any stage
of the proceedings even when there is already a final
executory judgment
● Magbanua vs Uy – a compromise agreement
covering a case which is either pending trial or on
appeal or with final judgment, is allowed and valid
assuming that the elements of a valid contract are
present
o Compromise agreement may be entered
into after final judgment – allowed by law
o ELEMENTS OF A VALID COMPROMISE (law on
contracts)
(1) consent of the parties to the compromise
(2) an object certain that is the subject matter of
the compromise
(3) cause of the obligation w/c is established
● ABSENCE OF COUNSEL REMEDIED
o Labor arbiter’s absence when the waivers
were executed was remedied upon
compliance with appropriate procedure
▪ Arbiter made searching questions
during pre execution conference to
ascertain voluntariness and freedom
in executing the waiver
o Even w/out assistance of labor officials,
compromise agreements remain valid and
considered desirable means of settling
disputes
7. OPTIONS WHEN COMPROMISE AGREEMENT IS
VIOLATED
(1) enforce the compromise agreement by a writ
of execution
(2) regard it as rescinded and so insist upon his
original demand
● Complainant employees were within their right when
they insisted, after the company’s noncompliance,
that they be reinstated to their jobs, as they had
originally demanded
PROVISION – Art. 234 – MANDATORY
CONCILIATION AND ENDORSEMENT OF CASES
a) Except as provided in Title VII-A, Book V of this Code,
as amended, or as may be excepted by the Secretary of
Labor and Employment, all issues arising from labor and
26
employment shall be subject to mandatory
conciliation-mediation.
● The labor arbiter or the appropriate DOLE agency or
office that has jurisdiction over the dispute shall
entertain only endorsed or referred cases by the duly
authorized officer.
(b) Any or both parties involved in the dispute may:
o pre-terminate the conciliation-mediation proceedings
and request referral or endorsement to the
appropriate DOLE agency or office which has
jurisdiction over the dispute, or
o if both parties so agree, refer the unresolved issues
to voluntary arbitration
NOTES & COMMENTS
● A simple request for assistance authorizes a SEnA
Desk Officer (SEADO) to conduct and end w/in 30
days a – conciliation-mediation conference
- Mandatory method
o Purpose: aims to solve conflict before it
ripens to a full blown trial
o IF SUCCESSFUL – conference preserves
the peace
o IF IT FAILS – conflict may be referred to the
DOLE Office or Agency that has jurisdiction
over the dispute
PROVISIONS:
Art. 229. Issuance of subpoenas​.​ The Bureau (either
at the request of any interested party or at its own
initiative) shall have the power to require:
o the appearance of any person or
o the production of any paper, document or matter
relevant to a labor dispute under its jurisdiction
Art. 230. Appointment of bureau personnel.​ The
Secretary of Labor and Employment may appoint, in
addition to the present personnel of the Bureau and the
Industrial Relations Divisions, such number of examiners
and other assistants as may be necessary to carry out
the purpose of the Code
Art. 231. Registry of unions and file of collective
bargaining agreements.​
● The Bureau shall:
o keep a registry of legitimate labor
organizations
o maintain a file of all collective bargaining
agreements and other related agreements
and records of settlement of labor disputes
and copies of orders and decisions of
voluntary arbitrators.
● The file shall be open and accessible to interested
parties under conditions prescribed by the Secretary
of Labor and Employment,
o provided that no specific information
submitted in confidence shall be disclosed
unless :
▪ authorized by the Secretary, or
▪ when it is at issue in any judicial
litigation, or
▪ when public interest or national
security so requires.
● Within 30 days from the execution of a Collective
Bargaining Agreement, the parties shall submit:
o copies of the same directly to the Bureau or
the Regional Offices of the Department of
Labor and Employment for registration,
o accompanied with verified proofs of its
posting in two conspicuous places in the
place of work and ratification by the majority
of all the workers in the bargaining unit.
● The Bureau or Regional Offices shall act upon the
application for registration of such Collective
Bargaining Agreement within 5 calendar days from
receipt thereof.
● The Regional Offices shall furnish the Bureau with a
copy of the Collective Bargaining Agreement within 5
days from its submission.
● The Bureau or Regional Office shall assess the
employer for every Collective Bargaining Agreement
a registration fee of not less than one thousand
pesos (P1,000.00) or in any other amount as may be
deemed appropriate and necessary by the Secretary
of Labor and Employment for the effective and
efficient administration of the Voluntary Arbitration
Program.
● Any amount collected under this provision shall
accrue to the Special Voluntary Arbitration Fund.
● The Bureau shall also maintain a file and shall
undertake or assist in the publication of all final
decisions, orders and awards of the Secretary of
Labor and Employment, Regional Directors and the
Commission.
NOTES & COMMENTS
REGISTRY OF UNIONS AND CBAs
● Within 30 days from execution, parties shall submit
copies of their CBA to the BLR or the Regional
Office of the DOLE for ​REGISTRATION
o Registration of CBA not a requisite for
validity – once duly entered into and signed
by the parties - CBA becomes effective as
between parties regardless of BLR’s
certification
o Why registration of the CBA needed?
Instigate the contract bar rule
PROVISION: ​Art. 232 - Prohibition on certification
election
The Bureau shall not entertain any petition for
certification election or any other action which may
27
disturb the administration of duly registered existing
collective bargaining agreements affecting the parties
except under Articles 253, 253-A and 256 of this Code.

1. ​THE CONTRACT BAR RULE – while a valid and

registered CBA is subsisting, BLR is not allowed to hold
an election contesting the majority status of the
incumbent union
● existence of CBA ​bars the holding of the inter-union
electoral contest
o WHEN allowed? Only during freedom
period – the last 60 days of the fifth year of a
CBA

28
 BOOK SIX: POST-EMPLOYMENT
TITLE I: TERMINATION OF EMPLOYMENT
PART 1. Introduction: Employee’s Security of Tenure
ART. 293. Coverage. ​– The provision of this Title shall
apply to all establishments or undertakings, whether for
profit or not.
ART. 294. Security of Tenure. ​– In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed
from the time his compensation was withheld from him
up to the time of his actual reinstatement.
1. CONSTITUTIONAL GUARANTY OF TENURE
When a person has no property, his job may possibly be
his only possession or means of livelihood. Therefore,
he should be protected against any arbitrary deprivation
of his job.
2. ARTICLE 294, MISLEADING
· Article 294 entitles ​all workers ​to the right to
security of tenure.
· Probationary and contractual employees are
still entitled to the enjoyment of security of tenure but
only to a limited extent – ​i.e., t​ hey remained secure
in their employment during the period of time their
respective contracts of employment remained in
effect.
· PH LAWS does NOT accept the employer’s
momentary mood, personality preference, or
autocratic proclivity as enough reason to dismiss a
worker, whether a manager or nonmanager.
3. TENURE OF MANAGERIAL PERSONNEL
· ​Managerial employees may be dismissed
merely on the ground of loss of confidence and trust
as such rank requires the employer’s full trust and
confidence however, such ground cannot be left
entirely to the employer.
· ​Ordinary rank-and-file employees requires a
high proof of involvement if such dismissal is
grounded on loss of confidence. Mere
uncorroborated assertions and accusations by the
employer will not suffice.
3.1. Even Managerial Employees are Entitled to
Security of Tenure
Cruz v. Medina
A dean of a college is a position at the managerial level.
Managerial personnel and other employees occupying
positions of trust and confidence are entitled to security
of tenure, fair standards of employment, and the
protection of labor laws.
4. CONTRAST: EMPLOYMENT-AT-WILL (EAW)
Employment-at-will refers to employees working with no
assurance about their condition or term of employment
which can be altered or terminated by the employer at
any time, for good reason, no reason, or even immoral
reason. These employees have no rights to due process
or to appeal employment decisions, and the employer
does not have any obligation.
Gen. Rule:​ EAW does not apply in the Philippines
Exception:​ Overseas Filipino Worker in a foreign
land where EAW is legal.
​ WO ASPECTS OF “DUE PROCESS”:
T
1. Existence of Lawful Cause; and
2. Observance of Proper Procedure
ART. 295. Regular and Casual Employment. – The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of employer,
except 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 or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph. Provided, That,
any employee who has rendered at least one year of
service, whether such service is continuous or broken,
shall be considered a regular employee with respect to
the activity in which he is employed and his employment
shall continue while such activity exists.
​1. ESSENTIALITY OF EMPLOYMENT
RELATIONSHIP
1.1​ A​ rticle 295 ​Presupposes​ Employment
Relationship
29
· ​Four-fold Test of Employment Relationship
1. Selection and Engagement of the
Employee
2. Payment of Wages
3. Power of Dismissal; and
4. Employer’s Power to Control the
Employee’s Conduct ​[Control Test]
· ​Kinds of Employment Arrangement
1. Regular Employment
2. Project Employment
3. Seasonal Employment; and
4. Casual Employment
1.2​ ​Examples of Non-employment
Commission Agent
Singer Sewing Machine Co. v. Drilon
· The nature of the relationship between a
company and its collecting agents depends on the
circumstances of each particular relationship. Not all
collecting agents are employees and neither are all
collecting agents independent contractors: The
collectors could fall under either category depending
on the facts of each case.
​PH Global Communications, Inc. v. De Vera
· Any agreement may province that one party
shall render services for and in behalf of another, ​no
matter how necessary ​for the latter’s business,
even without being hired as an employee​. This
set-up is
· Any agreement may province that one party
shall render services for and in behalf of another, ​no
matter how necessary ​for the latter’s business,
even without being hired as an employee​. This
set-up is precisely true in the case of an independent
contractorship as well as in an agency agreement.
· ​Article 295 is NOT the yardstick for
determining the existence of an employee
relationship. It merely distinguishes between two
kinds of employees – regular and casual.
A Non-employee Even after Eleven Years
Where there is no employment relationship, the
non-employee remains as such despite passage of time.
Passage of time or length of service is not one of the
elements of the four-fold test.
​Atok Big Wedge Co. v. Gison
One who agreed to help, on retainer basis, in the
prosecution of illegal occupants within the mining area of
the mining company and in liaison work with several
government tasks, remained a non-employee even after
11 years. The absence of the element of control did not
convert the retainer relationship to one of employment.
2. REGULAR EMPLOYMENT
· The ​primary standard to determine regular
employment is the reasonable connection between
the particular activity performed by the employee in
relation to the usual business or trade of the
employer.
· The ​test is whether the former is ​usually
necessary or desirable in the usual business or trade
of the employer.
​2.1 Examples of Regular Employment by Nature of
Work
De Leon v. NLRC
· What determines whether a certain employment
is regular or casual is not the will and word of the
employer, to which the worker often accedes, much less
the procedure of hiring the employee or the manner of
paying his salary. It is the ​nature of the activities
performed in relation to the particular business or trade
considering all circumstances, and in some cases the
length of time of its performance and its continued
existence.
​2.1a Workers Supplied by Labor-only Contractor
May be Declared Regular Employees of Contractee
Ecal, et al. v. NLRC
· A finding that Mr. Ecal is a “labor-only”
contractor is equivalent to a finding that an
employment relationship exists between the
company and Ecal including the latter’s “contract
workers,” herein petitioners, the relationship being
provided by the law itself.
· Since petitioners perform tasks which are
usually necessary or desirable in the main business
of Hi-Line, they should be deemed regular
employees of the latter and, as such, are entitled to
all the benefits and rights appurtenant to regular
employment.
2.1b “Contractual Project” Employee Becoming
Regular
Magante v. NLRC and Constress Philippines Inc.
· Petitioner has established that since the very
inception of his employment in 1980, he was never
deployed from project to project of private
respondent but had been regularly assigned to
perform carpentry work. This goes to show two
things: (1) petitioner was assigned to perform tasks
which are usually necessary or desirable in the usual
business or trade of private respondent; and (2) said
assignments did not end on a project basis, although
the contrary was made to appear by private
30
 respondent through the signing of separate
employment contracts allegedly for different projects.
· Although petitioner had only rendered almost
two years of service, nevertheless this should not
detract from his status of being a regular employee
because as correctly stated by the Labor Arbiter, the
determining factor of the status of
complainant-petitioner or any worker is the ​nature of
the work performed by the latter and the ​place where
he performed his assignment​.
2.1c “Day-to-Day Contractual” Employee Becoming
Regular
Baguio Country Club Corporation v. NLRC
· The records reveal that the employee was
repeatedly re-hired to perform tasks ranging from
dishwashing to gardening, aside from performing
maintenance work. ​Such repeated hiring and the
continuing need for his service are sufficient
evidence of the necessity and indispensability of his
service to the petitioner’s business or trade.
· Furthermore, he performed the said tasks
which ​lasted for more than one year​, until early
January 1981 when he was terminated. Certainly, by
this fact alone he is entitled by law to be considered
a regular employee.
​NOTE: ​The nature of the work performed must be
viewed from a perspective of the business or trade in its
entirely and not on a confined scope.
​2.1d Temporary Employee Becoming Regular
Beta Electric Corporation v. NLRC
· Under the Labor Code, “an employment may
only be said to be “temporary” where it has been
fixed for a specific undertaking” the completion or
termination which has been determined at the time
of the engagement of the employee or where the
work or services to be performed is seasonal in
nature and the employment is for the duration of the
season.
· In this case, respondent’s work, that of
“typist-clerk,” is far from being specific or seasonal,
but rather, one according to the code: “Where the
employee has been engaged to perform activities
which are usually necessary or desirable in the usual
business.” And under the Code where one performs
such activities, he is a regular employee, the
provisions of written agreement to the contrary
notwithstanding.
2.1e No Legal Room for Perpetual Employment
Sorreda v. Cambring Electronics Corporation
· A contract of perpetual employment deprives
management of its prerogative to decide whom to
hire, fire and promote, and renders inutile the basic
precepts of labor relations. While management may
validly waive it prerogatives, such waiver should not
be contrary to law, public order, public policy, morals
or good customs.
· An absolute and unqualified employment for
life in the mold of petitioner’s concept of perpetual
employment is contrary to public policy and good
customs as it unjustly forbids the employer from
terminating the services of an employee despite the
existence of a just or valid cause. It likewise compels
the employer to retain an employee despite the
attainment of the statutory retirement age, even if
the employee has become a “non-performing asset”
or, worse, a liability to the employer.
​2.2 Casual Employee; Regular Employee by Year(s)
of Service
The other type of regular employee is the casual
employee who, after one year of service, becomes
regular. But he is “regular” only for that work activity for
which he was hired. His employment may be on-and-off,
but every time the particular work activity occurs, he is
the one to be rehired. In this sense he is a ​“REGULAR
CASUAL.” ​A casual may become regular even if he is
not issued a “regular” appointment.
​2.2a Casual Employee within Less Than One Year of
Service does not become Regular
Capule, et al. v. NLRC
· The usual business or trade of private
respondent is the manufacture of cultured milk. The
cutting of the cogon grass in the premises of its
factory is hardly necessary or desirable in the usual
business of the private respondents. Indeed, it is
alien thereto.
· Thus, petitioners are casual employees who
cannot be considered regular employees under the
aforestated provision of the Labor Code.
Nevertheless, they may be considered regular
employees if they have rendered services for at least
one year. When, as in this case, they were
dismissed from their employment before the
expiration of the one-year period they cannot lawfully
claim that their dismissal was illegal.
2.2b Salary of Casual Employee Converted to
Regular Should not be Reduced
Casual employees who have been converted to regular
should be entitled to be treated as such in every aspect.
In addition to enjoying the fringe benefits, they should
also be allowed to retain the same rate they were
enjoying at the time of their conversion to regular
employees. Otherwise, they would be effectively
demoted in rank and compensation.
2.3 May Regular Jobs be Contracted Out?
Serrano v. Isetann
31
 · Efficiency and economical operations are
therefore recognized as valid, lawful reasons for
contracting out jobs, even those being done by
direct-hire regular employees. But, always, the legal
bars must not be transgressed so as to protect the
workers, namely: (1) the contractor must be a
legitimate one and not a labor-only contractor, and
(2) the contracting out is not one of the
arrangements prohibited under Section 6 of D.O. No.
18-02 [replaced by D.O. No. 18-A] nor does it
amount to U.L.P.
2.4 Outsourcing of Union Members’ Jobs: Is this
Allowed?
· ​YES, ​it is legal for an employer, in the
absence of a prohibition in the CBA, to outsource
jobs being held by union members. The outsourcing
does not violate the union security clause in the
CBA. Nor does it interfere with the employee’s right
to self-organization. Not one of the employees has
been dismissed form the service despite the
outsourcing.
​ .5 Contracting Out Almost All Regular Jobs
2
Wack Wack Golf & Country Club v. NLRC, et al.
· The employees availed themselves of the
special separation package offered by petitioner,
Wack Wack, and such was thought of and ​agreed by
the two parties,​ Wack Wack and the Union, after a
series of discussion and negotiations to aver any
labor unrest due to closure of Wack Wack.
· BSMI is an independent contractor, engaged
in the management of projects, business operations,
functions, jobs and other kinds of business ventures,
and has sufficient capital and resources to undertake
its principal business. It had provided management
service to various industrial and commercial
business establishments. As legitimate job
contractor, there can be no doubt as to the existence
of an employment relationship between contractor
and the workers.
2.6 Does Contracting Our Require Union’s
Conformity?
NO, c​ ontracting out is not unlimited; rather it is a
prerogative that management enjoys subject to
well-defined legal limitations.
3. PROJECT EMPLOYMENT: MEANING AND SCOPE
1.​ ​Project Employment (for a definite period)
2.​ ​Seasonal Employment (for an indefinite period)
· They are also entitled to security of tenure at
least for the duration of the project or of the season.
· The difference, therefore, is not the nature of
work but in the duration of existence.
· A ​project employee is one whose
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 or where the work or service to be
performed is ​seasonal in nature and the employment
is for the ​duration of the season​.
3.1 Two Types of Project Activities
1) A project could refer to a particular job or
undertaking that is within the regular or usual business
of the employer company, but which is distinct and
separate, and identifiable as such, from the other
undertakings of the company.
2) The term “project” could also refer to a particular
job or undertaking that is not within the regular business
of the corporation. Such a job or undertaking must also
be identifiably separate and distinct from the ordinary or
regular business operations of the employer.
· A ​common basic requisite is that the
designation of named employees as “project
employees” and their assignment to a specific
project are effected and implemented in good faith,
and not merely as means of evading otherwise
applicable requirements of labor laws.
​PROJECT EMPLOYEES v. REGULAR EMPLOYEES
· The services of project employees are
conterminous with the project and may be
terminated upon the end or completion for that
project for which they were hired. Regular
employees, in contrast, are legally entitled to remain
in the service of their employer until their services
are terminated by one or another of the recognized
modes of termination of service under the Labor
Code.
3.2 Principal Test
Whether or not the “project employees” were assigned to
carry out a “specific project or undertaking,” the ​duration
(and scope) of which were specified at the time the
employees were engaged for that project.
· ​It is not enough that an employee is hired
for a specific project or phase of work. There
must also be a determination of or a clear
agreement on the completion or termination of
the project at the time the employee is engaged
if the objective of Art. 295 is to be achieved.
· The simple fact that the employment as a
project employee has gone beyond one year, does
not detract from, or legally dissolve, their status as
project employees.
32
3.3 Project Employees in the Construction Industry
Fernandez v. NLRC and D.M Consunji
· ​Two types of employees in the
construction industry:
1. Project Employees – those employed in
connection with a particular construction project.
2. Non-project employees – those employed by a
construction company without reference to a particular
project
3.4 Indicators of Project Employment ​[Sec. 2.2 of
D.O. No. 19]
a) The duration of the specific/identified undertaking
for which the work is engaged is reasonably
determinable;
b) Such duration, as well as the specific
work/service to be performed, is defined in an
employment agreement and is made clear to the
employee at the time of hiring;
c) The work/service performed by the employee is
connected with the particular project/undertaking for
which he is engaged;
d) The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer;
e) ​The termination of his employment in the
particular project/undertaking is reported to the
Department of Labor and Employment (DOLE) Regional
Office having jurisdiction over the workplace w​ ithin 30
days following the date of his separation​ for work, using
the prescribed form on employee’s
terminations/dismissals/suspensions;
f) An undertaking in the employment contract by the
employer to pay completion bonus to the project
employee as practiced by most construction companies.
Samson v. NLRC
Failure to submit reports of termination would convince
the Court that the alleged project employees are truly
regular employees.
3.5 Work Pool
An employee in the work pool is not necessarily a
regular employee; he may also be a project employee.
Project employees may or may not be members of a
work pool (that is, the employer may or may not have
formed a work pool at all).
​3.5a Illustrative Case: Project Employee
Cartanegas v. Romago Electric Company
Since its work depends on availability of such contracts
or projects, necessarily the duration of the employment
of its workforce is not permanent but coterminous with
the projects to which they are assigned and from whose
payrolls they are paid. It would be extremely
burdensome for their employer who, like them, depends
on the availability of projects, if it would have to carry
them as permanent employees and pay them wages
even if there are no projects for them to work on.
​3.5b Project Employees Not Entitled to Separation
Pay; Exception
General Rule:​ Project employees are not entitled to
termination pay if they are terminated by reason of
completion of project or any phase thereof, regardless of
the number of projects they have been employed by the
particular construction company. There is no need to
have prior notice of termination nor obtain a clearance
from the Secretary of Labor in connection with such
termination. What is required is a report to the neared
Public Employment Office for statistical purposes.
[Salazar. v. NLRC and Carlos Construction, Co, Inc.]
Exception​: If the contracts of the project worker has
expired but the project itself was still on-going and so
continued to require the workers’ services for its
completion. And there is no showing that services was
unsatisfactory to justify the termination. ​[De Ocampo, et
al. v. NLRC]
​3.6 Non-Project Employees; Three Types
1. Probationary Employees
2. Regular Employees
3. Casual Employees
​3.6a “Completion of Project” Not Valid Reason to
Separate a Project Employee Who has Become
Regular
· When such employee is separated, he is
entitled to reinstatement with backwages, without
loss of seniority rights and other benefits that may
have accrued as he has attained regular status.
3.6b Computing the Backwages of Project
Employee Who has Become Regular; “No Work, No
Pay” Rule Applicable
· In computing petitioner’s backwages, the
amounts corresponding to what could have been
earned during the periods from the date petitioenrs
33
 were dismissed until their reinstatement when
petitioners’ respective Shooting Units were not
undertaking any movie projects, should be deducted.
· Petitioners are entitled to receive full
backwages from the date of their dismissal up to the
time of their reinstatement, without deducting
whatever earnings derived elsewhere during the
period of illegal dismissal, subject, however, to the
above observations.
4. SEASONAL EMPLOYMENT; “REGULAR
SEASONAL” AFTER ONE SEASON
· Seasonal employees are considered regular
employees.
· Regular seasonal employees are those called
to work from time to time, season after season. They
are not, strictly speaking, separated from the service
but are merely considered as on leave of absence
without pay until they are reemployed. Their
employment relationship is never severed but only
suspended.
4.1 Employment Relationship Exists Between Milling
Company and Its Workers Even During Off Season
There is merely a temporary cessation of the
manufacturing process due to passing shortage of raw
material that by itself along is not sufficient, in the
absence of other justified reasons, to sever the
employment or labor relationship between the parties,
since the shortage is not permanent.
​4.2 Season “​Pakiao”​ Employees
Zamudio v. NLRC
· ​Pakiao workers are considered employees as
long as the employer exercises control over the
means by which such workers are to perform their
work regardless of the seasonal nature of
petitioner’s work.
· Seasonal workers whose work is not merely
for the duration of the season, but who are rehired
every working season are considered regular
employees.
· The circumstance that they do not appear on
the payroll does not destroy the employment
relationship as the omission in the payroll was not
within their control. They have no hand in the
preparation of the payroll.
4.3 The ​Mercado​ Ruling: Project Employees Do Not
Become Regular Although Service Exceeds One
Year
Mercado Sr. v. NLRC
The concept of regular and casual employees was
designed to put an end to casual employment in regular
jobs, which has been abused by many employers to
prevent so-called casuals from enjoying the benefits of
regular employees or to prevent casuals from joining
unions. This only applies to employees who are deemed
“casuals” but not to the “project” employees nor the
regular employees treated in paragraph one of Art. 295.
4.4 “Regular Contractuals” Entitled to Benefits of
Regular Employees
Cinderella Marketing Corp. v. NLRC
It is undeniable that private respondent have rendered at
least one year of service to petitioner as sales clerks, an
activity which is ​necessary or desirable in the usual
business or trade of the employer. T ​ herefore, they are
regular employees under the CBA who are entitled to the
benefits granted to all other regular employees of
petitioner under the CBA.
​4.5 Casual Employment
Casual employment is where an employee is engaged to
perform a job, work or service which merely incidental to
the business of the employer, and such job, work or
service is for a definite period made known to the
employee at the time of engagement; provided, that any
employee who has rendered at least one year of service,
whether such service is continuous or not, 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.
5. FIXED-PERIOD EMPLOYMENT, WHEN VALID
· Under the Civil Code (1306), and as a
general proposition, fixed-term employment
contracts are not limited, as they are under present
Labor Code, to those (1) by nature seasonal or (2)
for specific projects with predetermined dates of
completion; they also include (3) those to which the
parties by free choice have a specific date of
termination.
· Thus, not all fixed-period employment is
“project or seasonal.”
​5.1 Brent Doctrine Summarized
· An employment contract with a fixed period is
not prohibited, provided it is entered into by the
parties without any force, duress or improper
pressure being brought to bear upon either party,
particularly the employee, and absent any other
circumstance vitiating consent.
· Such employment for a defined period is
allowed even where the duties of the employee
34
 consist of activities usually necessary or desirable in
the usual business of the employer.
· There is nothing essentially contradictory
between a definite period of employment and the
nature of the employee’s duties.
5.2 Pretermination of Fixed-Period Employment
· A fixed-period employee is not regular
(permanent) because his job, as anticipated and
agreed, will exist only for a specified period of time.
· However, he is deemed regular in two
senses:
1. The nature of his work is necessary or
desirable in the principal business of the
employer; and
2. He enjoys security of tenure during the
limited time of his employment.
Liability of Employer
· If he is removed before the end of the agreed
period without a valid cause, the employer commits
illegal dismissal​.
· In fact, the employer commits a ​breach of
contract which the employee is entitled to payment
of his salaries corresponding to the unexpired
portion of his contract.
​5.3 A Fixed-Term Employer is Not an Independent
Contractor
· Employees under fixed term contracts cannot
be independent contractors because in fixed-term
contracts, an employment relationship exists.
· The test in this kind of contract is not the
necessity and desirability of the employee’s
activities, “but the day certain agreed upon by the
parties for the commencement and termination of
the employment relationship.”
​5.4 Illegal “Fixed Period Employment”; ​Brent ​Ruling
Clarified
Cielo v. Hon. NLRC
Where from the circumstances it is apparent that periods
have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down or
disregarded as contrary to public policy, morals, etc.
​5.4a Effect of Retention of Employee Beyond the
Period of Employment
Viernes v. NLRC
· While it is true that petitioners were initially
Employed on fixed term basis as their employment
contracts were only for October 8 to 31, 1990, after
October 31, 1990, they were allowed to continue
working in the same capacity as meter readers
without benefit of a new contract or agreement or
without the term of their employment being fixed
anew. ​After October 31, 1990, the employment of
​ he
petitioners is no longer on a fixed term basis. T
complexion of the employment relationship of
petitioners and private respondent is thereby totally
changed. petitioners have attained the status of
regular employees.
5.4b “ENDO” (End of Contract) Contractualization;
When “Five-Month Contractuals” Considered
Regular Employees; the ​Purefoods ​Precedent
Purefoods Corp. v. NLRC
· This scheme of the petitioner was apparently
designed to prevent the private respondents and the
other “casual” employees from attaining the status of
a regular employee. It was a clear ​circumvention of
the employees’ right to security of tenure and to
other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13​th​-month
pay. Indeed, petitioner succeeded in defeating the
application of labor laws. Also, it saved itself from
the trouble or burden of establishing a just costs for
terminating employees by the simple expedient of
refusing to renew the employment contracts. Thus,
the five-month period in the contract should be struct
down or disregarded as contrary to public policy or
morals.
5.4c Effect of Renewals of Fixed-Period
Employment in Regular Jobs
· Where the direct-hired employee is doing
necessary or desirable job, the three-month fixed
term of the employment, ​renewed several times
exceeding one year, establishes her being a ​regular
employee​.
· However, employees have ​not attained
regular status and they are not illegally terminated if
they worked under fixed term employment contracts
none of which was extended beyond the initial
five-month period, even if they are doing jobs
necessary or desirable to the employer’s business.
5.4d Overseas Seafarers are Contractuals
Millares and Lagda v. NLRC
· An overseas seafarer is not a regular
employee and is not entitled to separation pay. His
employment is governed by the POEA Standard
Employment Contract of Filipino Seamen.
· Their employment is contractually fixed for a
certain period of time, falling under the exception of
Art. 295 whose employment has been fixed for a
specific project or undertaking the completion or
termination of which has been determined at the
time of engagement of the employee or where the
work or services to be performed is seasonal in
nature and the employment is for the duration of the
season.
· Moreover, it is an accepted maritime industry
practice that employment of seafarers is for a fixed
35
 period only. Constrained by the nature of their
employment which is quite peculiar and unique in
itself, it is for the mutual interest of both the seafarer
and the employer why the employment status must
be contractual only or for a certain period of time.
​Gu-Miro v. Adorable
A radio officer on board a vessel cannot be considered
as a regular employee although the work he performs is
necessary and desirable in the business of the company.
5.4e Domestic Seafarers Not Contractuals
Seamen employed in domestic shipping are entitled to
security of tenure, can become permanent employees
and can be terminated only for just or authorized causes.
They are covered by the Labor Code.
ART. 296. Probationary Employment. – ​ Probationary
employment shall not exceed six (6) months from the
date the employee started working, unless it is covered
by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been
engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards
made known by the employer to the employee at the
time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a
regular employee.
​ . PROBATIONARY EMPLOYMENT: REASON AND
1
PURPOSE
· A ​probationary employee is one who is under
observation by an employer to determine whether he
is qualified for permanent employment.
· “​Probationary​” implies the purpose of the term
or period, but not its length.
· ​Probationary employment is a “trial period.​”
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.
​2. CONDITIONS AND STANDARDS OF PROBATION
· Probationary employment must have been
expressly agreed upon​. Without such explicit
agreement, the employment is ​considered regular​.
· The agreement must be genuine.
· ​Probationary employees, not withstanding
their limited tenure, are also entitled to security
of tenure. Thus, except for just or authorized
cause as provided by law, or under the
employment contract, a probationary employee
cannot be terminated.
​Manila Hotel Corporation v. NLRC
· By terminating his employment and/or
abolishing his position with but only one day
remaining in his probationary appointment, petitioner
deprived Cruz of qualifying as regular employee with
its concomitant rights and privileges. Cruz was also
deprived of his only means of livelihood upon a
vague and empty assertion of “retrenchment.”
· If an employee hired allegedly on
probationary basis was not informed of the
standards that should qualify her as a regular
employee, the employee is deemed to have been
hired from day one as a regular employee.
​ .M. Oreta & Co. Inc. v. NLRC
A
Probation is the time and the opportunity the employer
utilizes to size up not just the knowledge skills, and
abilities but also the character traits of the prospective
permanent employee.
​ anadian Opportunities Unlimited v. B. Dalangin, Jr.
C
The fact that Dalangin was separated from the service
after only about four weeks does not necessarily mean
that his separation form the service is without basis. Due
to Dalangin’s refusal to attend the seminar and his
exhibition of negative habits, it can be seen that
Dalangin’s actuations, behavior and deportment during a
four-week period is enough for the company to realize d
that Dalangin would be a liability rather than an asset to
its operations.
​2.1 Rights of Probationary Employee
Aside from the just or authorized causes of termination,
the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance
with reasonable standards made known by the employer
at the time of the engagement.
2.2 Limitations to Termination of Probation
1. It must be exercised in accordance with the
specific requirements of the contract;
2. If a particular time is prescribed, the termination
must be within such time and if formal notice is required,
then that form must be used;
3. The employer’s dissatisfaction must be real and
in good faith, not feigned so as to circumvent the
contract or the law;
4. There must be no unlawful discrimination in the
dismissal.
The standards of performance should be explained and
accepted and the performance should be appraised
36
against those standards unless the job is
self-descriptive, like maid, cook, driver or messenger.
​Regular Status After Probationary Period
· A probationary employee engaged to work
beyond the probationary period of six months, or for
any length of time set forth by the employer, shall be
considered a regular employee.
2.3 Non-observance of employer’s Own Termination
Procedure: Termination “Procedurally Infirm”
Abbott Laboratories v. Alcaraz
The employer complied with the requirements to
terminate a probationary employee. However, it failed to
abid by its own procedure of termination. Since such
procedure was not followed, the dismissal was therefore
“​procedurally infirm​.” Thus, employer is liable for
nominal damages.
​3. DURATION AND TERMINATION OF PROBATION
3.1 Period of Probation Not Necessarily Six Months
General Rule​: 6 months of probationary period
Exception:​ When the parties to an employment contract
agree otherwise, such as when the same is established
by​ ​company policy or when the same is required by the
nature of work to be performed by the employee.
[Busier v. Hon. Vicente Leogardo, Jr. and General
Telephone Directory]
​3.2 No Successive Probations
An employee who is allowed to work after a probationary
period shall be considered a regular employee. The
Court perceives such excessive hirings and firings as 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 our country today.
​3.3 Probation in Sister Company
There is no basis for subjecting an employee to a new
probationary or temporary employment where he had
already become a regular employee when absorbed by
a sister company.
​3.4 Last Day of Probation
When the probationary period of an employee is, for
example, “six months,” when is its last day?
· The Supreme Court has so far used two
different computation methods in three cases. Under
the ​first method​, a probation, of say, six months,
ends on the same day it started six months before.
This was followed in the ​CALS Poultry and Alcira
cases.​ Under the ​second method it ends 189 days
from the starting date and was adopted in the latest
case of ​Mitsubishi Motors i​ n conformity with Article
13 of the Civil Code providing that a “month” is
understood to consist of 30 days; hence, the formula
for 6 months probation is:
30 days * 6 months = 180 days
​3.5 Extension of Probation
Mariwasa Manufacturing v. Hon. V. Leogardo, Jr.
May the employer and the employee validly agree to
extend the probationary period beyond six months?
· ​YES, ​by voluntarily agreeing to an extension
of the probationary period, Dequila in effect waved
any benefit attaching to the completion of said period
if he still failed to make the grade during the period
of extension. Nothing in the law prohibits such a
waiver. No public policy protecting the employee and
the security of his tenure is served by prescribing
voluntary agreements which, by reasonably
extending the period of probation, actually improve
and further a probationary employee’s prospects of
demonstrating his fitness for regular employment.
​3.6 Probation Not the Same as Fixed-Term
Employment
· ​Fixed-term employment terminates when the
agreed period ends and there is no need to prove
the employee’s unsatisfactory performance.
· On the other hand, ​probationary employment
ends at a certain time, usually on the sixth month. It
required to be justified by a valid cause grounded on
the employee’s failure to pass the agreed standards
of performance or conduct. There has to be
performance standards that were made known to the
employee at the time of hiring and which the
employee failed to meet. Without showing the failure
to meet the standards or the existence of just or
authorized cause, the termination is unlawful and
invalid.
​3.7 Probation of Teachers
UST v. NLRC
· ​Legal Requisites for Acquisition by a
Teacher of Permanent Employment, or Security
of Tenure:
(a) The teacher is a full-time teacher;
(b) The teacher must have rendered 3
consecutive years of service; and
37
 (c) Such service must have been
satisfactory.
· ​Full-time teacher is one whose total working
day is devoted to the school, has no other regular
remunerative employment, and is paid on a regular
monthly basis regardless of the number of teaching
hours; and that in college the normal teaching load
of a full-time instructor shall be eighteen hours a
month.
· Part-time member of the faculty CANNOT
acquire permanent employment under the Manual of
Regulations in relation to the Labor Code.
· Nonetheless, the services of an employee
who has been engaged on a probationary basis may
be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with
reasonable standards made known to the employee
at the time of his engagement.

​3.8 Reversion from Full-time to Part-time Teacher to

Avoid “Regularization”

Bongar v NLRC

The principal cause of petitioner’s dismissal is the

alleged expiration of his teaching contract. However,
records show that he had rendered service for nearly
four years. To allow such would be unscrupulous as it
inflexibly confine the recruitment or employment of its
teachers to part-time basis, or to revert an originally
full-time status to mere part-time basis to prevent in any
way the incumbent teacher for becoming regular, subtly
circumventing the Labor Code provisions on
probationary employment.

3.9 Is It Proper to Reinstate a Probationary

Employee?
· ​YES​, reinstatement applies even to a
probationary employee unjustly dismissed. However,
when relations between the parties are so strained,
separation pay in lieu of reinstatement should
instead be awarded.
· If the dismissal is illegal, the employee is
likewise entitled to backwages. But the backwages
cannot cover the whole time the case was pending.
It should cover only the period from the date the
employee was dismissed up to the last day of the
agreed probation period.

38
PART 3. MANAGEMENT RIGHTS AND JUST CAUSES
OF TERMINATION
Article 297.​ ​Termination by employer.​ 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;
b) Gross and habitual neglect by the employee
of his duties;
c) Fraud or willful breach by the employee of
the trust reposed in him by his employer or duly
authorized representative;
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; and
e) Other causes analogous to the foregoing.
I.​ ​MANAGEMENT RIGHTS
RIGHT TO MANAGE PEOPLE, IN GENERAL
Employer is free to regulate according to his own
discretion and judgment, all aspects of employment
including hiring, work assignments, working methods,
time, place and manner of work, tools to be used,
processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, layoff of workers and the discipline,
dismissal and recall of workers.
Every business enterprise endeavors to increase its
profits.
So long as a company’s prerogatives are exercised in
good faith for the advancement of the employer’s
interest and not for the purpose of defeating or
circumventing the rights of the employees under special
laws or under valid agreements, the Supreme Court will
uphold them.
Servitude – when the employer compels the employee to
work against latter’s will
Oppression – when an employee can compel the
employer to give him work against the employer’s will
RIGHT TO DISCIPLINE​ - Employer has the right
- Employer can impose
reasonable penalties.
Including dismissal, on
erring employees pursuant
to company rule and
regulations
RIGHT TO DEMOTE
Petrophil Corp. v. NLRC – ​Court ruled that it is
management's prerogative to transfer, demote,
discipline and even to dismiss an employee to
protect its business, provided it is not tainted with
unfair labor practice.​ Here, Encarnacion was not
dismissed but was only demoted and transferred to
Caltex Phil., Inc. because of his failure to observe
diligence in his work, and also because of his indolence,
habitual tardiness, and absences. But following his
demotion and transfer Encarnacion refused to report for
work anymore.
Demotion Considered as Demotion
Ledesma v. NLRC – a company guard was reassigned
as laborer and his pay was changed from monthly to
daily basis because the Company believed that he was
more pro-worker than pro-management, SC ruled that
demotion is illegal constructive dismissal.
RIGHT TO DISMISS – is not absolute
Employers can dismiss or lay off an employee for just
and authorized causes enumerated under Art.297 and
298.
Right of the employer to freely discharge his employees
is subject to regulation by the State in the exercise of its
police. Reason is the preservation of the lives of the
citizens is a basic duty of the State, more vital than the
preservation of corporate profits.
II.​ ​JUST CAUSES OF DISMISSAL
1. ​CAUSES OF DISMISSAL IN GENERAL
Right of the company to dismiss its employee is a
measure of self-protection so as to protect the company
from acts inimical to its interest.
Law in protecting the rights of the laborer authorizes
neither oppression nor self-destruction of the employer.
39
Hence, an employer cannot be legally compelled to
continue with the employment of a person who
admittedly was guilty of misfeasance towards his
employer and whose continuance in the service of the
latter is patently inimical to his interest.
2. ​JUST CAUSE: SERIOUS MISCONDUCT
Misconduct – transgression of some established and
definite rule of action, a forbidden act, a dereliction of
duty, willful in character and implies wrongful intent and
not mere error in judgment
- To be within the
meaning of the Act,
misconduct must be of such
a grave and aggravated
character and not merely
trivial or unimportant
For misconduct or improper behavior to be just
cause of dismissal:
1.) Must be serious
2.) Must relate to the performance of the
employee’s duties; and
3.) Must show that the employee has become
unfit to continue working for the employer
★ A series of irregularities when put together may
constitute serious misconduct (case: Samahan
ng Manggagawa sa Hyatt-NUHWRAIN v. Phil.
Rabbit, p.819-821)
★ Employers may dismiss an employer if the
former has reasonable grounds to believe, or to
entertain the moral conviction, that the latter is
responsible for the misconduct and the nature of
his participation therein renders him absolutely
unworthy of the trust and confidence demanded
by his position.
Examples of misconduct
★ Pressure and influence exerted by petitioner on
his colleague to change grade of a student,
petitioner’s nephew
★ Employee who utters obscene, insulting or
offensive words against superior
★ Immorality alone does not justify a discharge
unless such conduct is prejudicial; or in some
way detrimental to the employer’s interests. Test
is not morality in the abstract, but whether,
taking the nature of the employment into
account, the immoral acts complained of were
such as to render the servant incapable of
performing the service properly or were
calculated to injure the employer’s business
★ Sleeping in post, gross insubordination,
dereliction of duty and challenging superior
officers to a fight are grave offenses considering
the function of a security guard which is to
protect company property from pilferage and
loss. Court ruled dismissal was proper
★ An employee who sells the product of a
competitor
Sexual Harassment
Villarama v. NLRC – Court ruled that, sexual harassment
is reprehensible enough but more so when inflicted by
those with moral ascendancy over their victims. Hence, it
is a valid cause for separation from service.
Cause found inadequate
★ Where the fisticuffs are plainly a private
matter between 2 employees which had
no apparent deleterious effect on the
substantial interest of the company –
dismissal is not commensurate with the
employee’s alleged misconduct
★ Shipmaster’s statement in his report that
he considered an employee to be
hot-tempered and he was apprehensive
said employee might get into trouble –
not a ground for dismissal
★ Borrowing money is neither dishonest,
nor immoral nor illegal, much less
criminal – not a ground for dismissal.
Court further ruled that the nurse must
have been compelled to borrow money
from patients because of economic
difficulties which circumstance should
evoke sympathy from this Court, the
very constitutional organ mandated by
the fundamental law to implement social
justice guarantee.
Teacher in Love with Student: The Heart has
reasons which reason does not know
Chua-Qua v. Clave
Ruling: Teacher falling in love with student, not immoral -
School failed to show that teacher took advantage of her
position to her student. Hence dismissal was illegal. In
40
termination cases, the burden of proving just and valid
cause for dismissing an employee rests on the employer
and his failure to do so would result in a finding that the
dismissal is unjustified.
Reinstatement in this case is also not possible because
it is apparent that the relationship between the school
and teacher has been inevitably and severely strained. It
would neither be to the interest of the parties nor would
any prudent purpose be served ordering reinstatement.
​Secular not religious, Immorality
Leus v. St. Scholastic’s College
Issue: Does premarital relations justify an employee's
dismissal on grounds of serious misconduct or
immorality?
Ruling: No. Court ruled that “when the law refers to
morality, it necessarily pertains to public and secular
morality and not religious morality.” And for a conduct to
be considered as disgraceful and immoral, it must be
detrimental to those conditions upon which depend the
existence and progress of human society and not
because the conduct is prescribed by beliefs of one
religion or the other. Court also ruled that “ There is no
law which penalizes an unmarried mother by reason of
her sexual conduct or prescribes consensual sexual
activity between 2 unmarried persons” and “ Such
conduct is denounced by public and secular morality. It
may be an unusual arrangement, but it certainly is not
disgraceful or immoral within the contemplation of the
law.”
Extra-marital relationship as immoral
Both teachers are married – SC rules that affair is
immoral
Court said: “ A teacher, both in his personal and official
conduct, must display exemplary behavior… When a
teacher engages in an extra-marital relationship,
especially when the parties are both married, such
behavior amounts to immorality, justifying his dismissal
from employment.”
Immoral conduct – conduct which is so willful, flagrant,
or shameless as to show indifference to the opinion of
good and respectable members of the community.
Must not only be Immoral but grossly immoral
That is, it must be so corrupt as to constitute a criminal
act or so unprincipled as to be reprehensible to a high
degree or committed under such scandalous or revolting
circumstances as to shock the common sense of
decency.
3. ​JUST CAUSE: WILLFUL DISOBEDIENCE
Employer’s prerogative to prescribe reasonable rules
and regulations necessary or proper for the conduct of
its business, to provide certain disciplinary measures to
implement said rules and to assure that the same be
complied with.
In order that the willful disobedience by the employee
may constitute a just cause for terminating his
employment, orders, regulations or instruction of the
employer or representative must be:
1.) Reasonable and lawful
2.) Sufficiently known to the employee
3.) In connection with the duties which the
employee has been engaged to discharge
Where order or rule is not reasonable – a refusal to obey
does not constitute a just cause for the employee’s
discharge
Reasonable order or rule will depend on the
circumstances of each case.
Reasonableness – has reference not only to the kind
and character of directions and commands but also to
the manner in which they are made.
Requisites of Willful Disobedience
1. There must be disobedience or insubordination;
2. The disobedience or insubordination must be willful or
intentional characterized by a wrongful and perverse
attitude;
3. The order violated must be reasonable, lawful and
made known to the employee [Mirant Philippines Corp v.
Sario, GR No. 197598 (2012)]; and
4. The order must pertain to the duties which he has
been engaged to discharge. [Sec. 5.2(b), D.O. No.
147-15]
Disobedient Dean validly Dismissed
41
Dean was holding a managerial position. Her
disobedience to the order of the school led to the erosion
of the trust and confidence the school reposed on her.
Her teaching load of 6 units was only a privilege the
school can withdraw, especially so because she was to
be given a monthly honorarium equal to her teaching
load. Her explanation that she desired to be in constant
contact with her student did not justify her disobedience.
Employer’s Policy Enforceable Despite Union’s
Objection
It would be a dangerous doctrine to allow employees to
refuse to comply with rules and regulations, policies and
procedures laid down by employer by the simple
expedient of formally challenging their reasonableness
or the motives which inspired them or by filing a notice of
strike with the Labor Secretary to give employees the
power to suspend compliance with company rules and
policies by requesting that they be first subject to
collective bargaining.
Insubordination by a Manager
A managerial employee is clothed with discretion to
determine what was in the best interest of the company,
such managerial discretion is not without limits. Its
parameters were contained the moment the discretion
was exercised, and then opposed by the immediate
superior/officer for being against the policies and welfare
of the company. Hence, any action in pursuit of the
discretion thus opposed had ceased to be discretionary
and could be considered as willful disobedience.
Disobeying a Suspension Order –​ validly dismissed
Violating a Company Policy: Being the Spouse of a
Co-employee
May an employee be dismissed for being married to a
co-employee, a marriage which company policy
prohibits?
No. Policy does not facially violate Art. 136 of the Labor
Code, but it creates a disproportionate effect and under
the disparate impact theory, the only way it could pass
judicial scrutiny is a showing that it is reasonable despite
the discriminatory, albeit disproportionate, effect. The
failure of employer to prove a legitimate business
concern in imposing the questioned policy cannot
prejudice the employee’s right to be free from arbitrary
discrimination based upon stereotypes of married
persons working together in one company. Court further
ruled that “The absence of a statute expressly prohibiting
marital discrimination in our jurisdiction cannot benefit
the company. The protection given to labor in our
jurisdiction is vast and extensive that we cannot
prudently draw inferences from the legislature’s silence
that married persons are not protected under our
Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of the company
to present undisputed proof of a reasonable business
necessity, the policy is invalid.”
Knowledge of Company Policy
For an employer to justify punishment for disobedience
of company policy, it is essential that the employee
knows such policy.
In a private firm, lack of information is a defense that
stands if not successfully refuted by the employer.
Does defense of lack of information excuse reckless
driving?
No. Court said that job requirements of the bus driver
are “so fundamental and so universal” that any bus
driver is expected to satisfy them. Hence, the defense of
the bus driver that he was not informed of the company
policy in regards to the duties and responsibilities of a
driver, such as “to obey traffic rules and regulation,”
cannot stand in court.
Midstream Changing of Company Policy
Is an employee bound by a policy initiated after he was
hired?
Yes. Employers may change company policy even after
employees have been hired. Such amended policy
becomes an implied contract between the employer and
the employees if the latter continues to work while such
amended policy is in effect. The implied contract binds
both the employer and the employees.
Employee considered resigned, not dismissed
A company policy of a broadcasting company declaring
that once an employee files a certificate of candidacy for
any elective office is deemed resigned is valid. Due
process requirement is not violated. The company is not
duty-bound to ask him to explain why he did not tender
his resignation before he ran for public office as
mandated by company policy.
Order to Transfer
42
General Rule: Management has the right to transfer or
reassign employee
Exception: When the transfer is with malice and
disguised as an attempt to remove or punish the
employee sought to be transferred.
Transfer must not be used as a subterfuge by the
employer to rid himself of undesirable workers
Example of Valid Transfer Order
a. Business need – when the employee has
given his consent to the transfer when he
accedes to the employer’s policy of hiring sales
staff who are willing to be assigned anywhere in
the Philippines which is demanded by the
employer's business.
- By nature of
employment as a drug
salesman or medical
representative
b. Transfer During Investigation –executive
assistant/ office manager position is sensitive; it
demands the employer’s utmost trust and
confidence. The moment confidence was
breached the employer has the right to reassign
her. The purpose of the reassignment is no
different from that of preventive suspension
which management can validly impose as a
disciplinary measure for the protection of the
company’s property pending investigation of any
alleged ,malfeasance or misfeasance committed
by the employee. Transfer may cause
inconvenience to employees but unless there is
a showing that transfer was with bad faith said
transfer is valid.
Invalid Transfer Order, Justified Disobedience
Examples:
a. Unreasonable Instruction – grossly
inconvenient, were not provided with funds by
employer to defray expenses on transportation
and living expenses, were not told of their
assignments, payment to defray expenses were
given to employees not parties in the case.
Hence, Court found that this case was effected
with mala fides, as it was intended to punish
petitioners for their refusal to heed employer’s
unreasonable directive.
b. ULP Act of Employer
c. Discriminatory Transfer
d. Transfer with Pay reduction
Inconvenient Transfer
❖ Inconvenience to the employee does
not necessarily invalidate a transfer
order but inconvenience caused by
unreasonableness of the transfer order
makes the order itself invalid, and
disobedience thereof is not a reason to
dismiss the worker.
❖ In other words, although mere
inconvenience does not justify
disobedience to a transfer order, the
transfer order itself becomes flawed and
unenforceable if it fails the criteria of
lawfulness and reasonableness.
When the contract of employment stipulates that an
employee can perform service at a place other than
that at which he was hired or commenced work.
➢ Must be resolved with a view to the
terms of the contract of employment,
nature of the service to be performed
and the attending circumstances which
disclose the intention of the parties
Where contract of employment requires or is understood
to require, that the employee’s services are to be
performed in a certain city or locality
➢ Employee cannot be required to work
elsewhere
When contract expressly specifies the territory within
which the services to be rendered
➢ Employees can only perform work
within the places mentioned and the
employee is not bound to do any work
outside stipulated boundary.
Test of Validity of Transfer/ Change of Position
a. Transfer is not unreasonable
b. Transfer is not inconvenient
c. Transfer is not prejudicial to employee
43
 d. Does not involve a demotion in rank or
diminution of his salaries, privileges and other
benefits
Transfer with Promotion of a Manager
A transfer becomes unenforceable if the transfer is
coupled with or is in the nature of a promotion, where the
promotion is rejected by the employee.
Transfer ​is a movement from one position to another of
equivalent rank, level or salary, without break in the
service while ​Promotion ​is the advancement from one
position to another with an increase in duties and
responsibilities as authorized by law and usually
accompanied by an increase in salary.
Disobeying Regulations on Proper Attire
May an employee be dismissed for violating the
employer’s regulations on proper attire?
Safety, business goodwill or regulatory compliance are
common reasons of company regulations requiring
employees to wear prescribed work uniform or proper
attire. Such regulations fall within the right of an
employer to issue and enforce regulations or policies
that are lawful and reasonable. Their nonobservance
can be appropriately punished.
4. ​Just Cause: Neglect of Duties
Gross Neglect – means an absence of that diligence that
an ordinarily prudent man would use in his own affairs
Neglect of Duties must not only be gross but also
habitual
It is not necessary that the employer show that he has
incurred actual loss, damage, or prejudice by reason of
the employee’s conduct. It is sufficient that the gross and
habitual neglect by the employee of his duties tends to
prejudice the employer’s interest since it would be
unreasonable to require the employer to wait until he is
materially injured before removing the cause of the
impending evil.
Gross Negligence ​connotes a want of care in the
performance of one’s duties.
Habitual Neglect ​implies repeated failure to perform
one’s duties over a period of time, depending upon the
circumstances
Fraud and Willful Neglect of Duties ​imply bad faith on
the part of the employee in failing to perform his job to
the detriment of the employer and the latter’s business.
Abandonment ​of a job is a form of neglect of duty
Elements of Abandonment
1) Failure to report for work or absence without
valid or justifiable reason
2) A clear intention to sever the
employer-employee relationship
Second element is the more determinative factor and
being manifested by overt acts.
Mere absence is not sufficient.
Gen. Rule:​ I​ mmediate Filing of Complaint Negates
Abandonment
Exception: ​where evidence show that the illegal
dismissal complaint was intended to gain leverage for
the employee to induce the employer to withdraw the
criminal charge filed against the employee
Tardiness and Absenteeism ​– a form of neglect of duty
In a case, Court ruled that 3 counts of tardiness cannot
be considered as gross and habitual neglect of duty. The
infrequency of his tardiness already removes the
character of habitualness. Late attendances were also
broadly spaced out, negating the complete absence of
care in the performance of duties.
Occasional lapse in punctuality and attendance is not
enough to be dismissed. Perfection cannot after all be
demanded.
Unauthorized Absences of a Union Officer – ​a valid
dismissal
Is attitude problem a just cause to dismiss an
employee?
Yes. When personal differences between employees
and management affect the work environment, the
peace of the company is affected. Thus an employee’s
attitude problem is a valid ground for his termination. It is
a situation analogous to loss of trust and confidence that
must be duly proved by the employer. Similarly
compliance of the twin requirement of notice and hearing
must also be proven by the employer.
44
 5. ​Just Cause: Dishonesty, Loss of
Confidence
To constitute a just cause for termination, Fraud must be
committed against the employer or representative and in
connection with the employee’s work.
Thus, fraud committed by an employee against 3​rd
persons not in connection with his work and which does
not in anyway involve his employer is not a ground for
dismissal.
Dishonesty is the disposition to lie, cheat, deceive, or
defraud; untrustworthiness; lack of integrity; lack of
honesty, probity or integrity in principle; lack of fairness
and straightforwardness; disposition to defraud, deceive
or betray.
Example of Dishonesty: Falsification of time cards
Theft of company property, Theft of scrap material ​–
a valid reason for his dismissal
Theft of Co-employee’s Property​ – valid reason for
dismissal. Analogous to serious misconduct
Loss of Confidence Guidelines
1) Loss of confidence should not be simulated;
2) It should not be used as a subterfuge for
causes which are improper, illegal, or unjustified
3) It may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary
4) It must be genuine, not a mere afterthought
to justify earlier action taken in bad faith; and
5) The employee involved holds a position of
trust and confidence
Is pecuniary gain a necessary element of termination on
account of loss of trust?
No. Court held that misappropriation of company funds,
although the shortages had been fully restored, is a valid
ground to terminate the services of an employee of the
company for loss of trust and confidence.
HR Director’s Lack of working knowledge of Labor
Law ​– a valid reason of dismissal
Failure to reach Quota – not a valid ground for dismissal.
Low sales performance could be attributed to several
factors which are beyond respondent’s control. To be a
valid ground for an employee’s dismissal, loss of trust
and confidence must be based on a willful breach. A
breach is willful if it is done intentionally, knowingly and
purposely without justifiable excuse.
Loss Confidence because of Poor Performance
Poor Performance is equivalent to inefficiency and
incompetence in the performance of official duties.
Under Art. 297 of the Labor Code an “unsatisfactory”
rating can be a just cause for dismissal only if it amounts
to gross and habitual neglect of duties.
In the Asia Pacific case, Court ruled that dismissal was
illegal because employer failed to show the performance
standard needed by the employee to comply with. Job
description, terms and conditions of employment were
never reduced into writing. There was no showing that
the decline in sales was due to willful breach of duties.
Proof Required
Sufficient if employer has reasonable ground to believe
or to entertain the moral conviction that the employee
concerned is responsible for the misconduct and that the
nature of his participation therein rendered him unworthy
of the trust and confidence demanded by his position
6. ​Just Cause: Commission of a Crime or
Offense
❖ Another cause for termination is
employee’s commission of a crime or
offense against person of his employer
or against any immediate member of
employer’s family
Immediate members of the family – referred to are
limited to spouse, ascendants, descendants, or
legitimate, natural or adopted brothers or sisters of the
employer or his relative by affinity in the same degrees
and those by consanguinity within the 4​th​ civil degree.
Conviction or Prosecution not required
ü Fact that a criminal complaint against the
employee has been dropped by the city fiscal is
not binding and conclusive upon labor tribunal
45
Analogous Cases

The determination of whether the cause for termination

is analogous will depend on the circumstances of each
case.

To be considered analogous – a cause must be due to

the voluntary and/or willful act or omission of the
employee

Obligation to Stay in Service after a Training Grant ​–

a valid contractual commitment that binds the employee.
It is a valid exercise of management prerogative

No – compete undertaking

Is it lawful to prohibit employment with a competitor?

Yes, but the employer has to present evidence to prove

that the restriction is reasonable and not greater than
necessary to protect the employer’s legitimate business
interests.

No – hire agreement: Contractee Should not “Pirate”

Contractor’s Employees

(Wisconsin court ruling. p.866)To determine

enforceability of no-hire provision employ the 5- factor
analysis that is used to evaluate covenants not to
compete. Restrictive covenant must:

1) Be necessary to protect the employer

2) Provide a reasonable time limit

3) Provide a reasonable territorial limit

4) Not be harsh or oppressive to the employee

5) Not be contrary to public policy

Enforcement of Union Security Clause

The substantive and procedural aspects of due process

in relation to tenurial security are not bargained away
even in a collective contract with the employee’s union.

Employment contracts mostly adhesion contracts

Hence, civil law rule on interpretation of contract applies.

Art. 1377 of CC provides: “ The interpretation of obscure

words or stipulations in a contract shall not favor the
party who caused the obscurity.”

46
PART 4. AUTHORIZED CAUSES OF TERMINATION 8. Commission of illegal acts in a strike

Article 298.​ ​Closure of establishment and reduction of 9. Non- feasible reinstatement

personnel.​ The employer may also terminate the
employment of any employee due to the installation of 10. Floating status or off-detail beyond 6
labor-saving devices, redundancy, retrenchment to months
prevent losses or the closing or cessation of operation of
the establishment or undertaking unless the closing is for 11. Resignation
the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the 12. Violation of contractual commitment
Ministry of Labor and Employment at least one (1) month
Separation Pay 4 senses:
before the intended date thereof. In case of termination
due to the installation of labor-saving devices or
1) As a statutory benefit
redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1)
2) As employment benefit voluntarily granted
month pay or to at least one (1) month pay for every
or required by contract
year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures 3) As alternative to reinstatement of an illegally
or cessation of operations of establishment or
dismissed employee, and;
undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent 4) As financial assistance to a legally
to one (1) month pay or at least one-half (1/2) month pay dismissed worker
for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1) Art. 298 and 299 specifically relate to and require the
whole year. payment of separation pay.

Article 299.​ ​Disease as ground for termination.​ An
employer may terminate the services of an employee
who has been found to be suffering from any disease
and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his
co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half
(1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being
considered as one (1) whole year.
Amount of pay varies as to cause.
INTRODUCTION OF LABOR – SAVING DEVICES
The right to reduce personnel should not be abused. It
should not be made a pretext for easing on account of
their union activities. But neither should it be denied
when it is shown that they are not discharging their
duties in a manner consistent with good discipline and
the efficient operation of an industrial enterprise.

OTHER AUTHORIZED CAUSES REDUNDANCY

1. Total and permanent disability of an - Exists where the

employee services of an employee are
in excess of what is
2. Valid application of a union security clause reasonably demanded by
the actual requirements of
3. Expiration of period in term employment the enterprise

4. Completion of project in project employment - Does not necessarily

refer to duplication of work
5. Failure in probation
Position is redundant where it is superfluous, and
6. Sale amounting to closure of business superfluity of a position or positions may be the outcome
of a number of factors.
7. Defiance of return-to-work order

47
Employers have no legal obligation to keep in its payroll
more employees that are necessary for the operation of
its business.
Characterization of employee’s services as no longer
necessary or sustainable, and therefore properly
terminable – an exercise of business judgment on the
part of the employer company.
Abolition of department or positions in the company –
part of management prerogatives
Creation of Position with functions related or similar
to those of the abolished positions - ​does not
necessarily invalidate the declaration of redundancy
Redundancy selection criteria
Court ruled that employers must use fair and reasonable
criteria in the selection of employees who will be
dismissed due to redundancy. Following is the criteria:
1) Less preferred status (e.g. temporary
employee)
2) Efficiency
3) Seniority
Presence of the criteria used by the employer shows
good faith on its part and is evidence that the
implementation of redundancy was painstakingly done
by the employer in order to properly justify the
termination from service.
For implementation of redundancy program to be valid,
employer must comply with the requisites:
1) Written notice served on both employees
and DOLE at least 1 month prior to the intended
date of retrenchment;
2) Payment of separation pay equivalent to at
least 1 month pay or at least 1 month pay for
every year of service, whichever is higher;
3) Good faith in abolishing the redundant
positions;
4) Fair and reasonable criteria in ascertaining
what positions are to be declared redundant and
accordingly abolished
Change in job title is not synonymous to change in
functions.
Presentation of a new table of organization and
certification by the HR Manager to the effect that the
position in question has become redundant are
inadequate evidence.
Valid abolition of position and transfer to lower
position
Whether the position is two grades lower than regional
cashier is immaterial because the employer could have
then terminated the employee when the position was
abolished. Proposed transfer was merely an
accommodation. The Court in this case used by analogy
Art.298 of Labor code which that in case of termination
by reason of labor-saving devices or redundancy, the
worker affected shall be entitled to separation pay
equivalent to at least 1 month pay or at least 1 month
pay for every year of service, whichever is higher.
Reorganization cannot be used as a convenient device
to remove personnel in order to replace them with new
ones. If this is the objective, rules and procedures on
dismissal of employees will have to be followed. And in
still another similar situation, court required the employer
to pay the employee 1 month’s pay for every year of
service.
Replacing a Regular Employee with an Independent
Contractor
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. To it
belongs the ultimate determination whether services
should be performed by its personnel or contracted
outside agencies. In the case of Serrano, the Court ruled
that we only have bare assertion of petitioner that, in
abolishing the security section, private respondent’s real
purpose was to avoid payment to the security checkers
of the wage increase provided in the CBA. Such an
assertion is not sufficient basis for concluding that the
termination of petitioner’s employment was not a bona
fide decision of management to obtain reasonable return
from its investment.
Contracting out of a Concessionaire
Court ruled that: “ Determination of the advisability of
retaining a particular office or position in a business
operation is a management prerogative. Court will not
interfere with the management’s decision unless it is
48
shown that the action is characterized by abuse of
discretion or is arbitrary or malicious
Following are evidences of good faith:
1) Engaging an independent consulting firm to
arrest losses before manpower audit and
organization development;
2) Instituting of cost-saving programs
3) Termination of probationary employees
4) Retrenchment of some managers
5) Efforts to find jobs in other firms where
employees to be retrenched may be employed.
Good Faith is Presumed
Employee has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice
Invalid Declaration of Redundancy
Redundancy is not the way to remove an unwanted
employee.
In Asufrin v. San Miguel, Court was not convinced about
the alleged redundancy, citing the following reasons:
1) Of the 14 employees who did not avail of
the retirement package only the complaint was
not deployed to other offices or outlets; her
therefore appeared to be singled out
2) Complaint was in the payroll of Sta.Fe
Brewery although actually posted at the Sum-ag
Warehouse where his post was declared
redundant; he could have been retained in Sta.
Fe;
3) Despite contrary allegation, warehousing
activities continued in Sum-ag as transit point
where dealers got their stocks
4) No criteria was adopted in determining the
employees to be laid off.
Court concluded that: “We do not treat our workers as
merchandise and their right to security of tenure cannot
be valued in precise peso and centavo terms.
In another case, the Court ruled that position is not
redundant. Private Respondent PRC had no valid and
acceptable basis to declare the position of Pollution
Control and Safety Manager redundant as the same may
not be considered as superfluous; since the positions
are required by law
Redundancy in Bad Faith: Hiring New Employees
while firing old ones
RETRENCHMENT
- Economic grounds
resorted to by an employer
to terminate employment
primarily to avoid or
minimize business losses
- Employer bears the
burden to prove his
allegation of economic or
business reverses
- Failure to prove results
to the employee’s dismissal
as invalid
Causes of retrenchment ​– lack of work or business
recession among others
Requisites of Valid Retrenchment
1) Necessary to prevent or minimize losses
and such losses are proven;
2) Written notice is given to the employees
and DOLE at least 1 month before the intended
date of retrenchment
3) Separation pay is paid
4) Employer exercises its prerogative to
retrench employees in good faith for the
advancement of its interest and not to defeat or
circumvent the employee’s right to security of
tenure ; and
5) Employers use fair and reasonable criteria
to be used in selecting who will be dismissed or
retained among employees, such as status,
efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
1​st​ requisite​- whether or not employer would imminently
suffer serious or substantial losses for economic reason
49
is essentially a question of fact the Labor Arbiter and
NLRC to determine
2​ requisite ​– That employees were already on
nd​
temporary lay -off at the time the notice should have
been given to them is not an excuse to forego the 1
month written notice because by this time, their lay-off is
to become permanent and they were definitely losing
their employment.
3​rd​ requisite​ – in a case where some of the retrenched
employees opposed the retrenchment by staging a
strike. Retrenchment was found justified and strike
declared illegal. Leaders of the strike including the
retrenched employees were declared to have lost their
employment status. Should they still be paid separation
pay because of retrenchment? Court ruled in the
affirmative. Court said that employees should still
receive separation pay, inasmuch as the retrenchment
occurred much ahead of the strike. Declaration that they
had lost their employment status produced no real
significance to them since their retrenchment preceded
the declaration of strike.
Criteria; Who to retrench
There must be a fair and reasonable criteria to be used
in selecting employees to be dismissed, on account of
retrenchment, such as:
a) Less preferred status (temporary
employees)
b) Efficiency rating
c) Seniority
Seniority Rights ​– acquired through long time
employment
An employee has no inherent right to seniority.
He has only such right as may be based on a contract, a
statute, or an administrative regulation relative thereto. It
is not a constitutional right. Hence, discharge of such
employees will not violate the Constitution.
But in selecting the employees to retrench, the employer
cannot completely disregard seniority as a factor.
In deciding what positions to retrench, a company is
allowed to consider the margins of contribution to the
income of the company as a primary retrenchment
standard.
LI – FO Rule ​(last in first out)
● More recently hired ones will be the
first to go instead of those with longer
years of service,
● Observance is not a statutory obligation
of the employer.
● Li-Fo therefore yields to the employer’s
judgment, unless CBA provision
requires otherwise.
D.O. No. 147-15 ​Section 5.4 states: In cases of
installation of labor- saving devices, redundancy and
retrenchment, :LIFO shall apply except when an
employee volunteers to be separated from employment.
D.O. No. 147-15 makes LIFO a mandatory standard.
4 Standards of Retrenchment
1. Losses expected should be substantial and
not merely de minimis in extent
2. Substantial loss apprehended must be
reasonably imminent
3. Reasonably necessary and likely to
effectively prevent the expected losses
4. Alleged losses if already realized, and the
expected imminent losses sought to be
forestalled, must be proven by sufficient and
convincing evidence.
Actual losses or profuse bleeding of the business does
not have to happen before the employer may do the
saving act. Preventive retrenchment is lawful.
Evidence to Prove losses – ​Modicum of Admissibility
Hiring of Replacements after Retrenchment
Retrenchments are allowed for all unnecessary positions
based on the employer’s own reorganization program.
However, reorganization cannot be used as a
convenient device to get rid of existing personnel in
order to replace them with new ones.
Where the employee that was hired after the company
was doing retrenchment previously worked for the
company. Court ruled that it is immaterial. The fact that
there was hiring of additional personnel right after the
complaints were retrenched is enough to destroy
50
whatever pretense the employer had with respect to
retrenchment.
Retrenchment is not an escape route to implement a
secret desire to remove an unwanted person. In fine,
retrenchment is justified by ethical, good- faith business
motive.
Retrenchment does not substitute for dismissal of an
employee.
Contracting Out after Retrenchment/Redundancy
Court upheld the termination of employees on grounds
of redundancy and subsequent hiring of an independent
contractor to promote economy and efficiency.
Preventive Retrenchment
In one case, employer presented evidence of the low
volume of sales which inevitably prompted it to
streamline its operations. It decided to cut down on
operational costs by shutting down one of its paper mills.
Yet, employer did not outrightly dismiss the workers
affected. It gave them the option to be transferred to
posts of equal rank and pay. Retrenchment was utilized
by the employer only as an available option in case the
affected employees would not want to be transferred.
This is an indication of good faith on the employer’s part
as it exhausted other possible measures before resorting
to retrenchment.
Permanent retrenchment ​contemplated in Art. 298
while ​temporary retrenchment ​is included in Art. 301.
When the 6 month period mentioned in Art.301 is over
and the employee is not recalled, he is deemed
separated and constructively dismissed
Constructive dismissal – is one inferred or construed
from the employer’s action; at first glance, it does not
look like a dismissal, but upon closer viewing of the facts
and interpretation, the action amounts anyway to
dismissal.
Sebuguero vs. NLRC: Court ruled 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 thereof. These
employees cannot forever be temporarily laid-off. To
remedy this situation or fill the hiatus, Art. 286 may be
applied but only by analogy to set a specific period that
employees may remain temporarily laid-off or in floating
status. 6 months is the period set by law that the
operation of a business or undertaking may be
suspended, thereby suspending the employment of the
employees concerned.
To determine therefore, whether the petitioners were
validly retrenched or were illegally dismissed, we must
determine whether there was compliance with the law
regarding a valid retrenchment at any time within the 6
month period that they were temporarily laid – off.
The Puzzle: Redundancy or Preventive
Retrenchment
What is the dividing line between preventive
retrenchment and redundancy?
Court has not answered that question; instead it ruled in
the Asian Alcohol case that it is a twin ground.
Reduction of Work Days; Constructive
Retrenchment
International Hardware, Inc. v. NLRC
In this case, Pedroso had not been terminated or
retrenched by the employer but due to the financial crisis
the number of working days of Pedroso was reduced to
just 2 days a week. Employer could not have been
expected to notify DOLE of the retrenchment of Pedroso
under the circumstances for there was no intention to do
so on the part of the employer. Nevertheless,
considering that Pedroso has been rotated by the
employer for over 6 months due to serious losses in the
business so that Pedroso had been effectively deprived
of a gainful occupation thereby, and considering further
that the business of the employer was ultimately closed
and sold off, Court finds and holds that the NLRC
correctly ruled that Pedroso was thereby constructively
dismissed or retrenched.
Reduction of work days, reasons for which were not
specifically explained and which was applied only to
union officers – constructive dismissal and ULP
CLOSURE OF BUSINESS
1.​ ​BECAUSE OF LOSSES
A firm which faces serious business decline and loss is
entitled to close its business in order to avoid further
economic loss and the court has no power to require
such firm to continue operating at a loss.
51
Total closure of a company’s bottling business without
prior clearance is justified upon the cancellation of its
franchise.
If closure is because of losses, the losses must be
shown.
Right to close whether losing or not
If business is not losing but the owner, for reasons of his
own, wants to get out of business, he in good faith can
lawfully do so anytime. But the employees should be
paid severance pay.
3 Requisites if cessation of business operations not due
to business reverses:
1. Service of a written notice to the employees
and to the DOLE at least 1 month before
intended thereof;
2. Cessation of or withdrawal from business
operations must be bona fide in character;
3. Payment to the employees of termination
pay amounting to at least ½ month pay for each
year of service, or one month pay, whichever is
higher.
Partial Closure ​– is allowed. Court ruled that since it
recognizes total closure of business operation due to
economic conditions, the closure of a part thereof
must similarly be recognized
Temporary Shutdown​ – is not a good reason to
terminate employees, where it is apparent that the
closure of the company’s warehouse was merely a
ploy to get rid of the employees who were then
agitating the company for benefits, reforms and
collective bargaining as a union
Should Separation Pay be Paid in case of closure
because of serious business losses​?
No, the Court said that where the closure was due to
business losses, the Labor Code does not impose any
obligation upon the employer to pay separation benefits,
for obvious reasons (North Davao v. NLRC).
Must the company pay the same generous separation
benefits that it paid its other employees before its
closure?
No. When a business enterprise completely ceases
operations, upon its death as a going concern, its vital
lifeblood - cash flow- literally dries up. Therefore the fact
that less separation benefits were granted when the
company finally met its business death cannot be
characterized as discrimination. Such action was
dictated not by a discriminatory management option but
by its complete inability to continue its business life due
to accumulated losses. Indeed, one cannot squeeze
blood out of a dry stone. Nor water of parched land.
Closure to Prevent Losses
If the alleged serious financial losses are not adequately
proven, then the situation may be viewed as closure to
prevent losses in which case the employees must be
paid separation pay.
Justification for Closure Not Credible
Other than the amount of separation pay, another
question about closure is whether it is bone fide or
merely an evasion of the obligation to deal with
employees’ union. The closure, in other words, may turn
out to be ULP in disguise.
Closure by Operation of the Agrarian Reform Law
Closure contemplated under Art. 298 is a unilateral and
voluntary act on the part of the employer to close the
business establishment. By applying the principle of
verba legis, it means that Art.298 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.
Expiration of Lease
In this case employment expires as soon as the lease
expires and the lessee turns over the hacienda to owner.
What severs employer-employee relationship is not the
worker’s dismissal but the expiration of their working
relationship with the lessee Hence, even if it is assumed
that a gap existed the expiration of their employment and
the resumption of the operation by the owner, the
workers are not entitled to any separation pay as the
case entails expiration of tenure, not dismissal.
SALE IN GOOD FAITH
Purchaser unless he agrees to do so has no legal
obligation to continue employing the employees of the
seller.
52
If the sale is tinged with bad faith, however, the law and
rulings on unfair labor practice and doctrine of successor
employer may apply.
Change of Name – is not an authorized cause of
employment termination
Resignation of Diseased Employee
Art. 299 contemplates a situation where the employer,
and not the employee, initiates the termination of
employment on the ground of the latter’s disease or
sickness

Summary Where employees resigned because he was suffering

from a disease - Art. 299 is not applicable
Gen. Rule: A corporation that purchases the assets of
another will not be liable for the debts of the selling
corporation provided former acted in good faith and paid
adequate consideration for such assets.

Exception:

1. Where purchaser expressly or impliedly

agrees to assume the debts;

2. Where the transaction amounts to a

consolidation or merger of the corporations;

3. Where the purchasing corporation is merely

a continuation of the selling corporation; and

4. Where the selling corporation fraudulently

enters into the transaction to escape liability for
debts.

AILMENT OR DISEASE

ELEMENTS OF AILMENT OR DISEASE

1. Employer found to be suffering from any

disease (whether contagious or not);

2. His continued employment is prohibited by

law or prejudicial to his health or to the health of
co-employees;

3. A competent public health authority certifies

that the disease is of such nature or such stage
that it cannot be cured within a period of 6
months even with proper medical treatment;

4. Payment of separation pay equivalent to at

least 1 month salary or to ½ monthly salary for
every year of service whichever is higher, a
fraction of at least 6 months being considered as
1 whole year

A medical certificate issued by the company’s own

physician is not a certificate by “competent public health
authority.”

53
TERMINATION OF EMPLOYMENT
Part 5. Procedure to Terminate Employment
Substantially illegal dismissal​- dismissal lacking in
valid cause; employee is entitled to reinstatement,
backwages, etc.
Procedurally illegal dismissal​- dismissal lacking in
valid procedure; dismissal is “merely defective”;
dismissal stays, employee remains dismissed, but
employer is liable for nominal damages
PROCEDURAL PROCESS; AMPLE OPPORTUNITY
TO BE HEARD
2 aspects of Due Process:
1. Substantive due process​- mandates that an
employee may be dismissed based only on just
or authorized causes
2. Procedural due process​- requires further that
he may be dismissed only after he has been
given an opportunity to be heard.
- Any meaningful opportunity (verbal or
written) given to the employee to answer the
charges against him and submit evidence in
support of his defense, whether in hearing,
conference or some other fair, just and
reasonable way.
- Reasonable opportunity to explain means
at least 5 days from receipt of the notice to
explain
Note: Due process principle requires compliance
with these two aspects
✔ Right to Labor- Constitutional and statutory right
✔ Guarantee of due process applies to ALL
workers, including managerial employees
STANDARDS OF PROCEDURAL DUE PROCESS
I. For termination of employment based on ​just cause:
a. Written notice served on the employee
specifying the grounds for termination​,
and giving to the said employee
reasonable opportunity to explain his
side.
b. Hearing or conference​-employee is
given opportunity to respond to the
charge, present his evidence or rebut
the evidence against him
c. Written notice of termination served on
the employee indicating that upon due
consideration of all the circumstances,
grounds have been established to justify
his termination.
II. For termination of employment based on ​authorized
causes- w​ ritten notice to the employee and the
appropriate Regional Office of the Department at
least 30 days before the effectivity of the termination,
specifying the grounds for termination
III. If termination is brought about by the completion of
the contract or phase thereof no prior notice is
required. If termination is brought about by the
failure to meet the standards of the employer
(probationary employment)- ​written notice served to
the employee within a reasonable time from the
effective date of termination.
✔ Court ruled that the employer’s right to due process
prevails over the company rules that allow
“immediate dismissal” of the erring employee.
TWO-Notice Requirement for the “Just” and the
“Authorized” Causes
Dismissal under ​“just causes”-​ 2 notices are required
1. Notice which apprises the employee if the
particular acts or omissions which his dismissal
is sought ​(Written Charge or Notice to
Explain).
2. Subsequent notice which informs the employee
of the employer’s right decision to dismiss him
(The Notice of Decision).
✔ Failure to comply, taints dismissal with illegality
Written explanation of employee- may be in the form of a
letter, affidavit, memorandum, or position paper
Dismissal under ​“authorized causes”- 2 notices are also
required
1. Notice to the employee
2. Notice to the Dept. of Labor and Employment
✔ Preventive suspension and investigation do not
replace “two-notice” requirement of due process
✔ Consultation with Union, Insufficient Notice;
employer’s “prior consultation” with the labor union
which the employee is affiliated with is legally
insufficient. The rights of an employee whose
services are sought to be terminated to be informed
beforehand of his proposed dismissal as well as
other reasons therefor, and to be afforded adequate
opportunity to defend himself from the charges
levelled against him, are rights personal to the
employee.
✔ Ample opportunity should be prior to Employee’s
dismissal
✔ “Ample opportunity” is meant every kind of
assistance that management must accord to the
employee to enable him to prepare adequately for
his defense.
✔ Hearing​- means that a party should be given a
chance to adduce his evidence to support his side of
54
 the case and that the evidence should be taken into
account in the adjudication of the controversy.
Face-to-face investigation is not always required.
A formal hearing or conference becomes mandatory
only:
1. When requested by the employee in writing; or
2. Substantial evidentiary dispute exists; or
3. A company or a company rule or practice
requires it; or
4. When similar circumstances justify it.
Participation of Counsel
✔ Right to counsel on the part of the employee is
not mandatory and indispensable part of due
process.
✔ The right to counsel and the assistance of one
in investigations involving the termination cases
is neither indispensable nor mandatory, except
when the employee himself requests for one or
that he manifests that he wants a formal hearing
on the charges.
Due Process “not rigid or formulaic”; Valid
suspensions without Two Notices
✔ The essence of due process is simply the
opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek a
reconsideration of the action or ruling
complained of.
Procedural Due Process Not Wiped Away by Union
Security
✔ Cariño vs. NLRC: The company, upon being
formally advised in writing of the expulsion of
Cariño from the union, in turn simply issued a
termination letter to him, the termination being
made effective the very next day. Court ruled
that the company had failed to accord Cariño the
right to procedural due process. The right of an
employee to be informed of the charges against
him and reasonable opportunity to present his
side in a controversy with either the company or
his union, is not wiped away by a union security
clause or a union shop clause in a CBA.
✔ Ferrer et. ​al., vs. NLRC: A CBA provision for a
closed shop is a valid form of union security and
it is not a restriction on the right of freedom of
association guaranteed by the Constitution.
However, in the implementation of the provisions
of the CBA, both parties thereto should see to it
that no right is violated or impaired. The
employer has the obligation to observe due
process by conducting its own investigation.
In terminating the employment of an employee by
enforcing the union security clause, the employer, needs
only to determine and prove that:
1. The union security clause is applicable
2. The union is requesting for enforcement of the
union security provisions in the CBA
3. There is sufficient evidence to support the
union’s decision to expel the employee from the
union.
WHEN HEARING NOT REQUIRED
✔ No hearing is needed if the employee has
admitted his guilt.
✔ All that is needed is to inform the employee of
the findings of the management.
✔ THERE MUST BE ADMISSION OF GUILT
✔ If the employee merely narrated and explained
what he did, without admitting his guilt, then
conducting a hearing is required; otherwise,
there is failure of due process.
OTHER INSTANCES WHEN HEARING NOT
REQUIRED
1. Termination which is justified by any of the
authorized causes under Art. 298
2. Termination initiated by the employee
3. Termination of the probationary period of
employment
4. Termination resulting from bona fide
suspension of operation
5. In case of project employment termination
upon completion of the project or phase
thereof for which the employee is hired.
BURDEN OF PROOF
✔ Termination cases- burden of proof rests upon
the employer to show that the dismissal is for
just and valid cause.
✔ Termination cases(Filipino workers recruited and
deployed to overseas employment)- ​burden
devolves upon both the foreign-based employer
and the employment agency or recruitment
entity which recruited the worker.
✔ Unlawful dismissal case- employer has the
burden of proving the lawful cause sustaining
the dismissal of the employee.
Substantial Evidence- such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.
Circumstantial Evidence
If the conviction of a person in a criminal case can be
absorbed on circumstantial evidence, with more reason
55
can termination of employment be anchored likewise on
circumstantial evidence.
CONDONATION
The employer by condonation or waiver of the conduct of
his employees, preclude himself from subsequently
asserting the right to discharge them for cause.
✔ Employer is deemed to have lost or waived his
right to insist on the employee’s acts as ground
for dismissal.
✔ In case of a continuing breach of the contract of
employment, there can be no waiver or
condonation that will prevent the employer from
discharging the employee at any time.
✔ Where it appears that the employer retained the
employee in the service after having had
knowledge of the facts and paid to him the
stipulated wages or salary without objection or
protest, a conclusion that the employees
conduct was condoned, is sustainable.
DUE PROCESS IN AUTHORIZED CAUSES; TWO
NOTICES REQUIRED BUT NOT A HEARING
✔ Investigation and hearing need not be done by
the employer
✔ One-month advance notices to the affected
employee and to DOLE must be complied with
✔ Individual, Not Collective Notice
✔ Does the two-notice rule apply to
employment termination on ground of
disease under Art. 298 of the Labor Code? –
YES
✔ Voluntary arbitration is substantial compliance
with the one-month mandatory notice required
✔ When Notice Not Needed​- if an employee
consented to his retrenchment or voluntarily
applied for retrenchment, the required notice to
the DOLE is not necessary as the employee
thereby acknowledged the existence of a valid
cause for termination of his employment.
PREVENTIVE SUSPENSION
The employer may place the worker concerned under
preventive suspension if his continued employment
poses a serious and imminent threat to the life or
property of the employer or of his co-workers​.
Invalid Preventive Suspension
✔ The ​tardiness of the employee does not in any
way pose serious threat to the property of the
employer. As sales clerk, she was required to
prepare reports and submit the, before closing of
office hours in the afternoon. Herein complainant
managed to comply with such requirement
without prejudice to company’s interest.
Valid Preventive Suspension
Globe-Mackay Cable and Radio Corporation vs.
NLRC and Salazar: ​There was a report that some of
GMCR’s expensive equipment were missing. GMCR
conducted investigation on Saldivar, the manager for
technical support and on Salazar.
The suspension of Salazar was impelled by the
discovery of the missing Fedders air-conditioning unit
inside the private apartment which she shared with
Saldivar. Under such circumstances, preventive
suspension does not signify that the company has
adjudged the employee guilty of the charges she was
asked to answer and explain. Such disciplinary measure
is resorted to for the protection of the company’s
property pending investigation of any alleged
malfeasance or misfeasance committed by the
employee.
Period of Suspension
Preventive suspension, being only an intermediate
protective measure, cannot last for an indefinite period.
The implementing rules provide that no preventive
suspension shall last longer than 30 days. After that
period, the employer shall reinstate the worker in this
former position or in a substantially equivalent position.
✔ 30 days- employment in general
✔ Not longer than 15 days​- preventive
suspension for ​project and non-project
employees in the construction industry
Preventive Suspension Exceeding 30 Days;
Constructive Dismissal
✔ After the 30-day period of suspension, the
employee must be reinstated.
✔ Suspension beyond the maximum period
amounts to constructive dismissal.
✔ Constructive dismissal does not always involve
forthright dismissal or diminution in rank
compensation, benefit, and privileges. There
may be constructive dismissal if an act of clear
discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of
the employee that it could foreclose any choice
by him except to forego his continued
employment.
PROGRESSIVE DISCIPLINING; APPROPRIATE
PENALTY
✔ Penalty must be commensurate to the offense.
56
 ✔ Principle of Progressive Disciplining: light
offenses deserve light penalties and only grave
offenses deserve grave penalties.
✔ Not every case of serious misconduct, willful
disobedience, neglect of duty, or even
dishonesty will justify dismissal. Dismissal is the
supreme penalty at the workplace.
✔ Dismissal- should be imposed only as last
recourse
Value of Property
✔ In determining the appropriate penalty, the value
of the property taken is a pertinent factor.
✔ Gelmart Industries Phils., Inc. vs. NLRC:
Felix, automechanic of Gelmart, was found guilty
of theft of 16 ounces of used motor oil and was
dismissed by its employer. The Court ruled that
be it big or small commercial value, intended to
be reused or altogether disposed or wasted, the
used motor oil still remains the property of
Gelmart. To take the same out of its premises
without the corresponding gate pass is a
violation of the company rule on theft or
pilferage of company property. However, where
a penalty less punitive would suffice, whatever
missteps may be committed by labor ought not
to be visited with a consequence so severe as
dismissal. The suspension imposed upon Felix
is sufficient penalty for the misdemeanor
considering that he has no previous derogatory
record in his 15 years of service with Gelmart
and the value of the property pilfered is very
minimal.
Length of Service
✔ Higher standards are expected of management
viz. ordinary rank-and-file
✔ Length of service is taken into account in
imposing the penalty to be meted an erring
employee.
Forfeiture of Benefits, A Valid Penalty
✔ It is lawful for a company’s code of conduct to
impose the penalty of restitution or forfeiture of
benefits, apart from other penalties, to an
employee proven to have committed and
infraction that caused loss or damage to the
employer.
✔ Only unjustly dismissed employees are entitled
to retirement benefits and other privileges
including reinstatement and back wages.
Some Criteria the Supreme Court has Applied in
Evaluating Appropriateness of the Penalty
1. Penalty must be commensurate to the depravity
of the malfeasance, violation or crime being
punished.
2. Number of commission of offense.
3. Value of the property pilfered or stolen
4. The company suffered no loss
5. If, under the company’s code of conduct, the
penalty prescribed for first offense is
suspension, then dismissal is not appropriate.
6. Length of service of an employee.
Past Offenses
✔ Previous offenses may be so used as valid
justification for dismissal from work only if the
infractions are related to the subsequent offense
upon which basis the termination of employment
is decreed.
DISMISSING A RETIRED OR RESIGNED EMPLOYEE
If the employee has already resigned or retired, may he
still be dismissed?
✔ Retirement from the service during the
pendency of an administrative case does not
render the case moot and academic.
✔ Resignation or retirement does not preclude the
findings of administrative liability for which the
employee shall still be answerable.
FILING OF ILLEGAL DISMISSAL COMPLAINT;
VENUE AND TIME
✔ Regional Branch of the NLRC- refers to the
branch comprising the workplace
✔ Case should be filed within ​4 years ​from the
time the employee is dismissed.
CLEARANCE NO LONGER REQUIRED
✔ With or without a collective agreement, no
employer may shut down his establishment or
dismiss or terminate the employment of
employees with at least one year of service
during the last two years, whether such service
is continuous or broke, without prior, written
authority issued in accordance with such rules
and regulations as the Secretary may
promulgate.
57
Part 6. Consequences of Termination
· The consequences vary as to whether the
termination is legal or illegal which in turn
depends on the justification of the dismissal
4 kinds of separation pay
1. Separation pay as employer’s statutory
obligation in cases of legal termination due
to authorized causes
2. Separation pay as financial assistance,
as an act of social justice, even in case of
legal dismissal, at court’s discretion
3. Separation pay in lieu of reinstatement
(SPIR) in illegal dismissal cases where the
employee is ordered reinstated but
reinstatement is not feasible
4. Separation pay as an employment benefit
granted in a CBA or company policy
Separation pay as employer’s statutory obligation in
cases of legal termination due to authorized causes
under Articles 298 and 299
· Statutory requirement
· For terminations because of introduction of labor
saving device or of redundancy, the separation pay
is equivalent to whichever is higher of either
o a) one-month pay OR
o b) one-month pay multiplied by the
employee’s years of service, a
fraction of at least 6 months being
counted as 1 year
· for terminations caused by retrenchment or closure
or cessation of operations NOT due to serious
business losses, the separation pay is lower than
that for the preceding 2 causes precisely because
the business is caught in financial straits; the
separation pay is equivalent to whichever is higher
of either
o a) one-month pay OR
o b) one-month pay multiplied by the
employee’s years of service, a
fraction of at least 6 months being
counted as 1 year
· same formula is applicable to separation due to
disease
· if the closure or cessation of business is due to
serious business losses or financial reverses, NO
separation pay need be paid at all
· in the computation of backwages and
separation, allowances are included
· the Code provides only the required minimum
amount of separation pay for employee
separation for any of the authorized cases,
thus, employers have the right to create plans
or enter into agreements providing for a
separation pay higher than the rates in Article
298 or 299, so long as the policy or agreement
is not contrary to law, morals, good customs,
public order or public policy
Separation pay as financial assistance, as an act of
social justice, even in case of legal dismissal, at
court’s discretion (Article 297)
· this kind of separation pay is NOT a statutory
requirement
· this concept is an exception to Article 296
wherein the dismissal for a just cause is legal
and therefore, NO separation pay need be paid
to the employee
· however, if the act committed by the employee
does NOT amount to serious misconduct or
does NOT reflect on the employee’s moral
character, the Court may require the employer
to pay as a measure of social justice,
“separation pay” or “financial assistance” to the
employee
PLDT vs NLRC, GR no. 80609, August 23, 1988
· the employee, a traffic operator of PLDT was
accused by 2 complainants of having
demanded and received from them the total
amount of
Php 3,800 in consideration of her promise to
facilitate approval of their application for
telephone installation. She was found guilty and
was separated from the service. But the labor
58
 arbiter required the company to give
complainant, who had worked with the company
for 10 years, 1 month’s pay for every year of
service as financial assistance.
· Is it legal to award financial assistance to an
employee who is validly dismissed for cause?
YES. But in this case, the grant of separation
pay is unjustified since the employee was
dismissed for dishonesty.
· The rule embodied in the Labor Code is that a
person dismissed for cause as defined therein
is NOT entitled to separation pay. The cases
where separation pay was allowed constitute
the exception based upon considerations of
equity. Equity has been defined as justice
outside law, being ethical rather jural and
belonging to the sphere of morals than of law.
· When it comes to such valid but iniquitous
causes as failure to comply with work
standards, the grant of separation pay to the
dismissed employee may be both just and
compassionate, particularly if he has worked for
some time with the company.
· Separation pay shall be allowed as a measure
of social justice only in those instances where
the employee is validly dismissed for causes
other than serious misconduct or those
reflecting on his moral character.
· Where there is doubt that dishonesty was
committed, financial assistance may still be
awarded to an employee who has rendered
long years of service
· Toyota case:
If the dismissal is based on any of the just causes in
Article 297, NO financial assistance can be
granted, except perhaps under the
last-mentioned ground (analogous cases)
where the court, for the sake of social justice,
may grant financial assistance
Alcantara & Sons Inc vs CA
· The Court refused to grant financial assistance
to the employee strikers who led an illegal strike
or who committed illegal acts in the course of
the strike
· Financial assistance in exceptional
circumstances only
· The grant of financial assistance in exceptional
circumstances does NOT supersede but
restrictively retains the Toyota ruling
· NO financial assistance apart from separation
pay
o The court should refrain from adding more
than what the law requires
Separation pay in lieu of reinstatement (SPIR) in
illegal dismissal cases where the employee is
ordered reinstated but reinstatement is not feasible
· This is an ​alternative​ relief after a finding of
illegal dismissal.
· Situations do arise where reinstatement is
neither possible nor advisable such as when the
employee’s position no longer exists or the
company has closed down or severe strained
relations has set in between the parties
Separation Pay as Employment Benefit from
Employer
· this does NOT arise from legal or illegal
dismissal but from nonadversarial mode of
leaving one’s employment such as resignation.
· Depends on the terms of its grant through CBA
or voluntary company policy or established
practice
Backwages
-full backwages, inclusive of allowances, without lost of
seniority rights and other privileges or their monetary
equivalent computer from the time that his compensation
was withheld from him
· Entitlement to backwages NOT barred by
non-execution of the labor arbiter’s decision
· Backwages continue to accrue until employer
complies with the reinstatement order
· Backwages up to retirement age only
59
 · The effects of extraordinary inflation are not to
be applied without an agreement between the
parties
Agabon and Jaka case:
· Dismissal attended by a valid cause is legal
and valid but as penalty for NOT observing the
process the employer must pay indemnity
· If the dismissal is based on a ​just cause​ but
the employer failed to comply with the notice
requirement = the sanction to be imposed on
him should be ​tempered​ because the dismissal
process was, in effect, initiated by an act
imputable on the employee
· If the dismissal is based on ​authorized cause
but the employer failed to comply with the
notice requirement = the sanction should be
stiffer​ because the dismissal was initiated by
the employer’s exercise of his management
prerogative
· In this case, the removal of the employees was
because of serious business losses so the
employer does NOT have to pay separation
pay. But for not complying with the statutory
due process, the employer must pay nominal
damages.
Industrial Timber case
-factors to consider in the determination of the amount of
nominal damages:
· The authorized cause invoked, whether it was
a retrenchment or a closure or cessation of
operation of the establishment due to serious
business losses or financial reverses or
otherwise
· Number of employees to be awarded
· Capacity of the employers to satisfy the
awards, taking into account their prevailing
financial status as borne by the records
· Employer’s grant of other termination benefits
in favor of the employees
· Whether there was a bona fide attempt to
comply with the notice requirements as
opposed to giving no notice at all
· Employer’s financial, medical, moral assistant
to the sick employee
· Flexibility and leeway that the employer
allowed the sick employee in performing his
duties while attending to his medical needs
HSBC case
· Proper terms:
o Substantively illegal OR
o Procedurally illegal
Reinstatement
· The normal consequences of a finding that an
employee has been illegally dismiss (there
being NO valid cause), are that the employee
becomes entitled to reinstatement to his former
position without loss of seniority rights and the
payment of backwages
· Reinstatement is incompatible with a finding of
guilt
· Conversely, employer guilty of ULP, may be
required to reinstate the worker with full
backwages
Salary rate upon reinstatement – ​reinstatement means
restoration to a state of condition from which one has
been removed or separated; one who is reinstated
assumes the position he occupied prior to the dismissal
and is, ordinarily, entitled only to the last salary in that
position
May an employee lose the right to reinstatement?
Buenviaje case:
· The law mandates the employer to either:
o Admit the dismissed employee back to work
under the same terms and conditions
prevailing prior to his dismissal OR
o Reinstate him in the payroll to abate further
loss of income on the part of the employee
during the pendency of the appeal
· But we CANNOT stretch the language of the
law so as to give the employer the right to
60
 remove an employee who fails to immediately
comply with the reinstatement order
· It should give the employee ​reasonable or
ample time
Reinstatement without backwages
Manila Electric Co vs NLRC
· Employee was guilty of breach of trust and
violation of company rules. He, however, had
been with the company for 20 years without any
previous derogatory record, in fact, the
company had awarded him 2 commendations
for honesty.
· SC: reinstatement was proper but without
award of backwages, considering the goof faith
of the employer in dismissing him
-thus, ​while an award of backwages presupposes a
finding of illegal dismissal, NOT every case of illegal
dismissal entails an award of backwages
Other cases where there is reinstatement without
backwages:
· The employer dismissed the employee upon
the union president’s representation that the
employee violated the union security clause of
the CBA. It turned out that the union president
had already resigned, hence, not authorized to
act on behalf of the union. The court declared
the dismissal illegal and ordered the employee’s
reinstatement but did NOT grant backwages
because the employer merely relied in good
faith with the union security clause.
· The employee let a job applicant use his
company ID card to ride the bus for fee. This is
prohibited under company rules. The employer
dismissed the employee. Too harsh, said the
court of the penalty, and ordered the
reinstatement. But the employee is not faultless,
hence, the court denied backwages.
· instead of denial of backwages in toto, the
court may opt to grant limited backwages only
o the court awarded limited backwages to an
employee of a religious hospital who was
dismissed because she was impregnated
out-of-wedlock. The court ruled that her
dismissal was illegal since the standard of
morality by which an act should be gauged
should be public and secular, NOT
religious
Reinstatement NOT feasible due to adverse
circumstances
· in an order of reinstatement, the employer may
NOT be compelled to reemploye more persons
than the economic operation of his business
requires
· but the court does have the right to order that
those who were NOT reinstated be given
precedence in future hiring
· but if the employer has already hired a
replacement, the employer’s remedy is to
reinstate the employee to a substantially
equivalent position
· reinstatement will NOT be insisted upon an
employer who, while the illegal dismissal
complaint was pending, had to resort to
retrenchment due to losses adequately proven.
The employee should be paid full backwages
instead and separation pay due to retrenchment
pursuant to Article 298 of the Labor Code.
· An illegally dismissed employee who is
approaching or has approached the retirement
age shall NOT be ordered reinstated. Instead,
he shall be entitled to separation pay, full
backwages and retirement benefits.
Other instances justifying nonreinstatement
1. Injury or disability of the employee
2. Dissolution of the company
3. Merger of the companies
4. Sale of the company
5. Closure of the company
6. Insolvency of the company
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 7. Abolition of the position
8. Difficulty in enforcing the employee’s
reinstatement because the employer is in a
foreign country
Reinstatement NOT feasible due to strained relations
-where the employment relationship is so strained and
ruptured as to preclude a harmonious working
relationship should reinstatement of the employee be
decreed, the latter should be afforded the right to
separation pay
Qualification to the “Strained Relations” Principle
-Globe-Mackay case:
· It should be proved that the employee
concerned occupies a position where he enjoys
the ​trust and confidence​ of his employer and
that it is likely that if reinstated, an atmosphere
of antipathy and antagonism may be generated
as to adversely affect the efficiency and
productivity of the employee concerned
-the relationship between the employee, a roomboy, and
management was clearly on an impersonal level. The
employee did not occupy such a sensitive position as
would require complete trust and confidence, where
personal ill will would preclude his reinstatment.
“Strained Relations” is ​factual issue​, NOT a rule
-​strained relations are a factual issue which must be
raised before the labor arbiter for the proper reception of
evidence
When reinstatement NOT feasible; separation pay
instead of reinstatement (SPIR)
SPIR different from backwages
· the grant of separation pay in lieu of
reinstatement is a substitute for immediate and
continued reemployment with the employer
· the grant of separation pay does NOT redress
the injury that is intended to be relieved by the
second remedy of backwages, i.e., the loss of
earnings that would have accrued to the
dismissed employee during the period between
dismissal and reinstatement.
How much is the SPIR? – ​preponderant jurisprudence
favors 1 month pay for each year of service
SPIR of seasonal worker
· ½ of the average monthly pay during the last
season he worked x # of years he
actually rendered service, provided that he
worked for at least 6 months during a given
year
Remedy if reinstatement is thwarted
· The remedy for refusal of the employer to
reinstate the employee despite several writes of
execution is NOT the grant of additional
backwages to serve as damages but to file a
motion to cite the employer for contempt
Recomputation of monetary award
· A labor arbiter’s monetary award to an illegally
dismisses employee is subject to
re-computation after the case is decided on
appeal. Such recomputation is NOT a violation
of the rule that a final decision cannot be
modified,
· The recomputation of the consequences of the
illegal dismissal upon execution of the decision
does NOT constitute an alteration or
amendment of the final decision being
implemented. The illegal dismissal ruling
stands; only the computation of monetary
consequences of this dismissal is affected.
Payroll reinstatement​ as an option
· The ​decision of the Labor Arbiter reinstating a
dismissed employee is immediately executory
even while the case is on appeal
· The reinstatement may be
o Actual OR
o Payroll, at the employer’s option.
· This would simply mean that although NOT
admitted back to work, the employee
nevertheless be included in the payroll and
entitled to receive her salary and other benefits
as if she were in fact working
62
No obligation to reimburse
· In the Roquero case, both the CA and SC
reversed the order of reinstatement as they
upheld the employee’s dismissal. Must the
employee pay back the salary he received
during the reinstatement? NO.
Backwages pending appeal end when the CA
upholds the employee’s dismissal
· In Roquero: the Labor Arbiter’s award of
backwages remains effective even while such
decision is elevated on appeal, and the
employee’s entitlement to the backwages
continues until such decision is reversed by a
higher court
Rationale of payroll reinstatement
· This option is based on practical
considerations. The employer may insist that
the dismissal of the employee was for a just and
valid cause and the latter’s presence within its
premises is intolerable by any standard; or such
presence would be inimical to its interest or
would demoralize the co-employees. Thus,
while payroll reinstatement would in fact be
unacceptable because it sanctions the payment
of salaries to one not rendering service, it may
still be the lesser evil to the intolerable presence
in the workplace of an unwanted employee.
Rationale and constitutionality of reinstatement
during appeal
· In authorizing execution pending appeal of the
reinstatement aspect of a decision of a Labor
Arbiter reinstating a dismissed or separated
employee, the law itself has laid down a
compassionate policy which, one more, vivifies
and enhances the provisions of the 1987
Constitution on labor and the workingmen.
Exception to immediate reinstatement
· Where the dismissed employee’s
reinstatement would lead to a strained
employment relationship or to an atmosphere of
antipathy and antagonism, the exception of the
twin remedies of reinstatement and payment of
backwages can be invoked and reinstatement,
which might become anathema to industrial
peace, could be held back pending appeal.
Reinstatement pending appeal is enforceable
despite employer’s denial of employment
relationship
· The intent of the law in making a reinstatement
order immediately executory is much like a
return-to-work order, i.e., to restore the status
quo in the workplace in the meantime that the
issues raised and the proofs presented by the
contending parties have not yet been finally
resolved. It is a legal provision which is fair to
both labor and management because while
execution of the order cannot be stayed by the
posting of a bond by the employer, the workers
also cannot demand their physical
reinstatement if the employer opts to reinstate
them only in the payroll.
Reinstatement should have been order by Labor
Arbiter
Is reinstatement self-executory?
· By a Labor Arbiter = YES, self-executory
· By NLRC = NO; not self-executory
· Article 299: “the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is
concerned, shall immediately be executory,
even pending appeal” vs.
· Article 229: “the decision of the Commission
shall be final and executory after 10 calendar
days from receipt thereof by the parties”. And
this decision needs a writ of execution.
If reinstatement is NOT prayed for
· If the employee decides NOT to be reinstated,
the employer shall pay him separation pay in
lieu of reinstatement (SPIR) vs
· Failure to pray for reinstatement -> the court
still grants the relief he is entitled to under the
law
Damages
· Apart from the reliefs expressly set out in the
Labor Code flowing from illegal dismissal from
employment, NO other damages may be
63
 awarded to an illegally dismissed employee
OTHER THAN those specified in the Civil Code
o Moral damages
o Exemplary damages
o Attorney’s fees
Persons liable for wrongful dismissal
· ​GR: ​Sunio doctrine​: no personal liability on the
officer for the mere fact that he is part of the
corporation; if within the scope of his authority
and was a corporate act
· ​EXPN​:​ ​personal liability if he acted maliciously
or in bad faith; acted without or in excess of his
authority or was motivated by personal ill-will
against the employee
· EXPN: when the voluntariness of the execution
of the quitclaim or release is put in issue, or
when it is proved that there is an unwritten
agreement entitling the employee to other
remuneration or benefits, then such a money
claim of the employee may still be given due
course
· Even if voluntarily executed, agreements are
invalid if they are contrary to public policy. The
protection of labor is one of the policies laid
down by the Constitution.
· The subordinate position of the employee
vis-à-vis management renders him especially
vulnerable to its blandishments and
importuning, and even intimidations. These may
result in the employee’s improvidently if
reluctantly signing over benefits to which he is
clearly entitled.

Government as stockholder NOT directly liable for

NOT all waivers are against public policy; elements
corporate indebtedness
and validity of waivers and quitclaim

Exception: Piercing the Corporate Veil: Officers 1. The employee executes the deed of quitclaim
become personally liable
voluntarily

· The shield of corporate fiction should be pierced

2. There is NO fraud or deceit on the part of any
when it is deliberately and maliciously designed of the parties
to evade financial obligations to employees.
3. The consideration of the quitclaim is credible
Key elements of personal liability and reasonable

· Fraud 4. The contract is NOT contrary to law, public

order, public policy, morals or good customs or
· Bad faith
prejudicial to a 3​rd​ person with a right
recognized by law
· Malice
“Dire necessity” does NOT nullify quitclaim
Sole proprietorship: Piercing the Corporate Veil
doctrine applies

Quitclaim;​ Public policy protects labor

· After resigning and executing a quitclaim, may

an employee still file a claim against the
employer?

· GR: once an employee resigns and executes a

quitclaim in favor of the employer, he is
estopped from filing any further money claim
against the employer arising from his
employment

64
TERMINATION OF EMPLOYMENT
Part 7. Termination by Employee and Suspension of
Operation
Article 300. [285] Termination by Employee.—
a) An employee may terminate without just cause the
employee-employer relationship by serving a written
notice on the employer at least one (1) month in
advance. The employer upon whom no such notice
was served may hold the employee liable for
damages.
b) An employee may put an end to the relationship
without serving any notice on the employer for any of
the following just causes:
1. Serious insult by the employer or his
representative on the honor and person of the
employee;
2. Inhuman and unbearable treatment accorded
the employee by the employer is representative;
3. Commission of a crime or offense by the
employer or his representative against the
person of the employee or any of the immediate
members of his family; and
4. Other causes analogous to any of the foregoing.
RESIGNATION AND RESIGNATION NOTICE
Resignation- the voluntary act of an employee who
“finds himself in a situation where he believes that
personal reason cannot be sacrificed in favor of the
exigency of the service, then he has no other choice but
to dissociate himself from his employment.”
The law affords the employee the right to resign
regardless of whether the company has found an able
and competent replacement and whether the operation
of the company would be affected, provided he serves a
written notice on the employer at least one month in
advance.
✔ Discretionary on the part of the employer- rule
requiring an employee to stay or complete the
30-day period prior to the effectivity of his
resignation
WITHDRAWAL OF RESIGNATION
✔ Resignation is withdrawable even if the
employee has called it “irrevocable.” But after it
is accepted or approved by the employer, its
withdrawal needs the employer’s consent.
RESIGNATION PAY
✔ Is an employee who voluntarily resigned his job
entitled to separation pay?
✔ Travelaire & Tours Corp. vs. NLRC & N.
Medelyn
GR: an employee who voluntarily resigns from
employment is NOT entitled to separation pay.
EXCEPTION: if there is a stipulation for
payment of such in the employment contract or
CBA, or payment of the amount is sanctioned by
established employee practice or policy.
CONSTRUCTIVE DISMISSAL; FORCED
RESIGNATION
Constructive discharge- a quitting because continued
employment is rendered impossible, unreasonable or
unlikely, as, an offer involving a demotion in rank and a
diminution in pay.
✔ An employer’s act to dismissal but made to
appear as if it were not.
✔ Where the employer inveigled the employee to
resign so it would avoid paying her separation
pay, said employee is constructively dismissed,
hence, entitled to reinstatement with backwages.
Constructive Dismissal Even Without Quitting;
Preventive Suspension Beyond 30 Days Amounts to
Constructive Dismissal
Hyatt Taxi Services, Inc. vs. Catinoy:
✔ After the 30-day period of suspension, the
employee must be reinstated to its former
position because suspension beyond this
maximum period amounts to constructive
dismissal.
✔ Constructive dismissal does not always involve
forthright dismissal or diminution in rank,
compensation, benefit and privileges.
✔ There may be constructive dismissal if an act of
clear discrimination, insensibility, or disdain by
an employer become so unbearable on the part
of the employee that it could foreclose any
choice by him except to forego his continued
employment.
✔ An employee is deemed constructively
dismissed where his status is changed from
regular to casual.
NOT CONSTRUCTIVE DISMISSAL: VALID
TRANSFER
Japan Air Lines Local Employees’ Association
(JALLEA) and S.B. Quiocho vs. Calica
Quicho was transferred from her original assignment as
passenger service agent at the check-in counter of the
NAIA to senior accounting clerk in the main office by her
employer, JAL, following numerous complaints from
clients of her rudeness and unprofessional behavior.
Court ruled that Quiocho’s transfer was a remedial and
not a disciplinary measure intended to forestall further
damage to customer relations of JAL. That was indeed a
valid and justified exercise of JAL’s management
65
prerogative for self-preservation and is not a constructive
dismissal.
Not Constructive Dismissal: Voluntary Resignation
Concrete Aggregates vs. NLRC:
The company’s general manager informed Solita that the
company was creating a new secretarial staffing patter.
Solita was transferred to the special projects committee
to conduct feasibility studies on manpower exports.
When she learned of her new assignment, she handed a
letter of resignation. She was given her separation pay
and she signed a quitclaim and waiver.
Court ruled that Solita resigned voluntarily and signed
the quitclaim after receiving all the benefits for her
separation. While her boss appeared to be hostile
towards her, he did not show by his acts any desire to
fire her from employment. Solita could have been
included in the retrenchment but she was not. She was
fit for the assignment and she was not eased out, much
less forced to resign.
Not Conclusive Dismissal: Resignation to Avoid
Dismissal
✔ There is nothing illegal with the practice of
allowing an employee to resign instead of being
separated for just cause, so as not to smear his
employment record.
Constructive Dismissal: Who has the Burden of
Proof?
✔ the employee who is complaining of constructive
dismissal because he was “forced to resign” has
the burden to prove that the resignation was
involuntary.
INTENTION TO RESIGN
✔ employee may be deemed to have resigned
from his position although the employee did not
mention the word “resign” and/or “resignation”
✔ Memorandum sent by the chief investigative
reporter to the Chairman-CEO which was
responded with an acceptance of “resignation”:
“It has never occurred to me that, in my
acceptance of the invitation from no less that the
publisher himself, to join him xxx,
I was unwittingly signing my own death warrant
as well. The insults he had later on hurled at my
person, the malicious inuendoes he had spread
around, casting doubt on my personal and
professional integrity, had mercilessly torn at my
soul causing metaphysical death.”
Article 301. [286] When Employment not Deemed
Terminated.— The bona fide suspension of the
operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate
employment. In all such cases, the employer shall
reinstate the employee to his former position without loss
of seniority rights if he indicates his desire to resume his
work not later than one (1) month from the resumption of
operations of his employer or from his relief from the
military or civic duty.
SUSPENSION OF OPERATIONS; “FLOATING
STATUS”
✔ so called floating status of an employee should
last only for a legally prescribed period of time
✔ when floating status lasts for more than 6
months, he may be considered to have been
illegally dismissed from the service.
✔ Bona fide suspension of the operation of a
business for a period not exceeding 6 months
does not terminate employment and no notice of
termination need be given to the employee or to
DOLE.
✔ Placing a property manager on floating status
“until such time that another project could be
secured” does not amount to constructive
dismissal, provided the floating status has not
exceeded 6 months.
TITLE II
RETIREMENT FROM THE SERVICE
Article 302. [287] Retirement.​— Any employee may be
retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining
agreement and other agreements: Provided, however,
That an employee’s retirement benefits under any
collective bargaining and other agreements shall not be
less than those provided therein.
In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared ​the compulsory
retirement age​, who has served at least five (5) years in
the said establishment, may retire and shall be entitled
to ​retirement pay equivalent to at least one-half (½)
month salary for every year of service, a fraction of at
66
least six (6) months being considered as one whole
year.
Unless the parties provide for broader inclusions, the
term ​one-half (½) month salary shall mean ​fifteen (15)
days plus one-twelfth (1⁄12) of the 13th month pay and
the cash equivalent of not more than five (5) days of
service incentive leaves.
An underground mining employee upon reaching the
age of fifty (50) years or more, but not beyond sixty (60)
years which is hereby declared the compulsory
retirement age for underground mine workers, who has
served at least five (5) years as underground mine
worker, may retire and shall be entitled to all the
retirement benefits provided for in this Article.
Retail​, ​service and ​agricultural establishments or
operations employing not more than ten (10) employees
or workers ​are ​exempted from the coverage of this
provision.
Violation of this provision is hereby declared unlawful
and subject to the penal provisions under Article 288 of
this Code.
Nothing in this Article shall deprive any employee of
benefits to which he may be entitled under existing laws
or company policies or practices.
Coverage
✔ Retirement pay law applies to private sector
employees who have served the employer
establishment for at least five years and reached
the age 60 (optional retirement) or 65
(compulsory retirement)
✔ Covers full-time or part-time employees, regular
or non-regular
✔ Does not cover government employees and
employees of retail, service and agricultural
establishments or operations that regularly
employ not more than 10 employees.
RETIREMENT
- A withdrawal from office, public station,
business, occupation, or public duty.
- Result of a bilateral act of the parties, a
voluntary agreement between the employer and
the employee whereby the latter, after reaching
a certain age, agrees and/or consents to sever
his employment the former.
✔ Employers and employees are free to
stipulate on retirement benefits, as long as
these do not fall below the floor limits
provided by law.
Conditions for Entitlement to Retirement, Not
Continuing
✔ Retirement ends employment
✔ Employer cannot demand continuing service
from the retiree as a condition to the receipt
and enjoyment of the retirement benefit.
✔ Conditions of eligibility for retirement must
be met at the time of retirement at which
juncture the right to retirement benefits or
pension, if the employee is eligible, vests in
him.
Two Kinds of Retirement; Employee’s Option
a. Compulsory- takes place at age 65
b. Optional- primarily determined by the CBA or
other employment contract or employer’s
retirement plan.
Note: In the absence of any provision on optional
retirement in a CBA, other employment contract, or
employer’s retirement plan, an employee may optionally
retire upon reaching the age of 60 years or more, but not
beyond 65 years, provided he has served at least 5
years in the establishment concerned.
Cessation from work before retirement age is not
retirement, hence, no retirement benefit.
Employer’s Option
✔ Where the CBA itself gives the option to retire to
either the employer or the employee, such
provision is VALID, and the employer’s act of
retiring and employee who is of retriable age as
defined in the CBA is a valid exercise of the
option.
Minimum Five years’ Service
✔ Azucena believes that the five years is required
in retirements at age 60 and 65.
IS COMPULSORY RETIREMENT BELOW AGE 60
ALLOWABLE? ​YES
Pantranco North Express vs. NLRC and U. Suniga
✔ A CBA provision lowering compulsory retirement
age to less than 60 is not contrary to law
because it does not diminish the employee’s
benefits.
✔ Providing in a CBA for compulsory retirement of
employees after 25 years of service is legal and
enforceable so long as the parties agree to be
governed by such CBA.
AMOUNT OF RETIREMENT PAY
Minimum: The retirement pay is equal to half-months
pay per year of service. But “half-month’s pay” is
expanded because it means not just the salary for 15
67
days but also 1/12 of the 13​th month pay and the cash
value of 5-day service incentive leave, totaling 22.5
days. This figure is multiplied retiree’s age of
employment ; a fraction of 6 months is considered is
considered as one year.
✔ Retirement pay package may be improved upon
by voluntary company policy, or a particular
agreement with the employee, or through a CBA
✔ Retirement pay payable under Art. 302 is apart
from the retirement benefit claimable by the
qualified employee under the Social Security
law.
RETIREMENT BENEFITS ASIDE FROM SEPARATION
PAY; DISTINCTION
May an employee claim retirement benefits and
separation pay simultaneously? ​YES
✔ Separation pay arising from forced termination in
one hand and benefits given as a contractual
right due to many years of faithful service, on the
other hand, do not necessarily exclude each
other.
✔ Separation pay is required in the cases
enumerated in Articles 298 and 299 of the Labor
Code, which is retrenchment, and is computed
at least one month salary or at the rate of ½
month salary for every year of service,
whichever is higher.
✔ On the other hand, Retirement Benefits, where
not mandated b law, may be granted by
agreement of the employees and their employer
as voluntary act on the part of the employer. It is
intended to help the employee enjoy the
remaining years of his life, lessening the burden
of worrying for his financial support.
Company Policy or CBA May Make Separation Pay
and Retirement Benefit Mutually Exclusive
Salomon, et al. vs. Association of International
Shipping Lines
There is no provision in the parties’ CBA authorizing the
grant to petitioners of retirement benefits in addition to
their retrenchment pay; an that there is no indication that
they were forced by respondent to sign the Releases
and Quitclaim
Gratuity Pay Distinguished from Retirement Benefit
✔ Gratuity Pay​—paid to the beneficiary for the
past services or favor rendered purely out of the
generosity of the giver or grantor. It is not
intended to pay a worker for actual services
rendered or for actual performance. It is a
money benefit or bounty given to the worker, the
purpose of which is to reward the employees
who have rendered satisfactory service to the
company.
✔ Retirement benefits​- intended to help the
employee enjoy the remaining years of his life,
releasing him from the burden of worrying for his
financial support, and are a form of reward for
his loyalty to the employer.
UNJUSTIFIED DENIAL OF RETIREMENT BENEFIT
✔ The words “upon the discretion of the
management“ are not synonymous with absolute
or unlimited discretion. Management discretion
may not be exercised arbitrarily or capriciously
especially with regard to implementation of the
retirement plan.
Separation Disguised as Retirement
S. Villena vs. NLRC:
Villena, then 57 years old was advised through a letter,
that he was compulsorily retired from the service
effective immediately. The Court ruled that the
“compulsory retirement” of Villena was in effect a
dismissal in violation of law. He still had 3 years to serve
the company when his employment was peremptorily
terminated by his employer. Having been illegally
dismissed, he is entitled to receive full compensation for
the remaining three years of his work life.
Dismissal to Avoid Retirement Benefits
✔ if it is wrong to ostensibly retire an employee
who actually is retrenched, it is likewise, and
probably more reprehensible, to dismiss and
employee to avoid paying his retirement benefit.
✔ Company should exercise caution and care in
dealing with its employees to prevent suspicion
that its dismissal of an employee is only a
scheme to evade its responsibility of granting
retirement benefits.
EXTENSION OF SERVICE OF RETIREE
✔ Upon compulsory retirement of an employee or
official in the public or private service, his
employment is deemed terminated.
✔ The matter of extension of service of such
employee or official is addressed to the sound
discretion of the employer.
FINANCIAL ASSISTANCE FOR AN UNCOVERED
RETIREE
✔ Financial assistance based on “compassionate
justice” was granted event to an employee who
was not dismissed but who had to retire without
being covered by the company’s retirement plan.
IS IT ILLEGAL TO RETIRE UNION MEMBERS, THEN
REHIRE THEM AT LOWER PAY?
Conditioned upon 2 questions:
1. Is it a matter of survival?
68
 2. Is it a product of free agreement?
Insular hotel Employees Union -NFL vs. Waterfront
Insular Hotel Davao:
The court agrees (that art. 100) does not prohibit a union
from offering and agreeing to reduce wages and benefits
of the employees. The diminution was decided bilaterally
with the union, not unilaterally by the management.

69
 BOOK SEVEN
TRANSITORY AND FINAL PROVISIONS
Title I
Penal Provisions and Liabilities
Article 303. [288] Penalties.—​250 Except as otherwise
provided in this Code, or unless the acts complained of
hinge on a question of interpretation or implementation
of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of
this Code declared to be unlawful or penal in nature shall
be punished with a fine of not less than One Thousand
Pesos (₱1,000.00) nor more than Ten Thousand Pesos
(₱10,000.00), or imprisonment of not less than three
months nor more than three years, or both such fine and
imprisonment at the discretion of the court.
In addition to such penalty, any alien found guilty shall
be summarily deported upon completion of service of
sentence.
Any provision of law to the contrary notwithstanding, any
criminal offense punished in this Code shall be under the
concurrent jurisdiction of the ​Municipal or City Courts
and the Courts of First Instance.
✔ MTC/ RTC
Article 304. [289] Who are Liable When Committed
by Other Than Natural Person.— If the offense is
committed by a corporation, trust, firm, partnership,
association or any other entity, ​the penalty shall be
imposed ​upon the guilty officer or officers of such
corporation, trust, firm, partnership, association or
entity.
Title II
Prescription of Offenses and Claims
Article 305. [290] Offenses​.— Offenses penalized
under this Code and the rules and regulations issued
pursuant thereto shall prescribe in ​three (3) years.
All unfair labor practice arising from Book V shall be filed
with the appropriate agency ​within ​one (1) year ​from
accrual of such unfair labor practice; otherwise, they
shall be forever barred.
Article 306. [291] Money Claims.— All money claims
arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within
three (3) years ​from the time the cause of action
accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of this
Code shall be filed with the appropriate entities
established under this Code within one (1) year from the
date of effectivity, and shall be processed or determined
in accordance with the implementing rules and
regulations of the Code; otherwise, they shall be forever
barred.
Workmen’s compensation claims accruing prior to the
effectivity of this Code and during the period from
November 1, 1974 up to December 31, 1974, shall be
filed with the appropriate regional offices of the
Department of Labor not later than March 31, 1975;
otherwise, they shall forever be barred. The claims shall
be processed and adjudicated in accordance with the
law and rules at the time their causes of action accrued.
Article 307. [292] Institution of Money Claims.​—
Money claims specified in the immediately preceding
Article shall be filed ​before the appropriate entity
independently of the criminal action ​that may be
instituted in the proper courts.
Pending the final determination of the merits of money
claims filed with the appropriate entity, no civil action
arising from the same cause of action shall be filed with
any court. This provision shall not apply to employees
compensation cases which shall be processed and
determined strictly in accordance with the pertinent
provisions of this Code.
PRESCRIPTIVE PEREIOD FOR MONEY CLAIMS
✔ All money claims arising from
employer-employee relations ​accruing during
the effectivity of the Labor Code, are covered by
the ​3-year prescriptive period
✔ Covers claims for overtime pay, holiday pay,
service incentive leave, salary differentials, and
illegal deductions by an employer. It also covers
money claims arising from seafarer’s contract.
Backwages and Damages
✔ Art. 306 does not cover money claims
consequent to an illegal dismissal, such as
backwages and damages due to illegal
dismissal.
✔ These claims are governed by the Civil Code
✔ Actions upon injury to rights of the plaintiff must
be instituted within 4 years
Reckoning of the Three-Year Prescription; Accrual
of Cause of Action
✔ When does the cause of action
accrue?—determines the reckoning date of the
3 year prescriptive period.
3 elements of cause of action:
1. A right in favor of the plaintiff by whatever law it
arises or is created
70
 2. An obligation on the part of the named
defendant to respect or to not violate such right
3. An act or omission on the part of such defendant
to the plaintiff.
✔ Where it is the employer’s own action that
prevented the employees from interposing their
claims, it will be the height of injustice to deny
the employees’ claims on ground of prescription.
Rivera vs. United Laboratories:
Prescriptive period for the labor-related money claims
can be interrupted by an extra-judicial demand on the
employer
Money Claims Based on Foreign Law
✔ The application of Art. 305 is not limited to
money claims recoverable under the Labor
Code; neither is it limited to employer’s
violations of employee’s rights under the Labor
Code.
Filing after Three Years: “Promissory Estoppel”
✔ A promise by the employer, relied upon by the
employee, may justify filing of complaint beyond
three years.
✔ Promissory estoppel may arise from the making
of a promise, even though without consideration,
if it was intended that the promise should be
relied upon, as in fact it was relied upon, and if a
refusal to enforce it would virtually sanction the
perpetration of fraud or would result in other
injustice.
✔ In order to make out a claim of promissory
estoppel, party bears the burden of establishing
the following elements:
1. A promise was reasonably expected to
induce an action or forbearance
2. Such promise did, in fact, induce such action
or forbearance; and
3. The party suffered detriment as a result.
AWARD FOR MONETARY BENEFITS MAY EXCEED
THREE YEARS
Bustamante et. al. vs. NLRC et al:
Lifted the three-year restriction on the amount of
backwages and other allowances that may be awarded
an illegally dismissed employee.
MONEY CLAIMS INCLUDE INCREMENTAL
PROCEEDS ARISING FROM TUTION FEE
INCREASES
ACTION FOR REINSTATEMENT PRESCRIBES IN
FOUR YEARS
✔ The four-year prescriptive period under Art 1146
of the New Civil Code applies by way of
supplement.
When does the Period Begin?
✔ Cause of action requires, as essential elements,
not only a legal right of the plaintiff and a
correlative obligation of the defendant but also
an act or omission of the defendant in violation
of said legal right, the cause of action does not
accrue until the party obligates refuses,
expressly or impliedly, to comply with its duty.
Prescriptive Period Not Suspended by Criminal Case
✔ The filing of the criminal case against the
employee does not have the effect of
suspending or interrupting the prescriptive
period for the filing of an action for illegal
dismissal.
Effect of Filing Then Withdrawing a Complaint
✔ The filing of the illegal dismissal complaint
interrupts the running of the prescriptive period.
If such complaint however, is dismissal or
voluntarily withdrawn, the dismissal or voluntary
withdrawal is effectively erased.
LACHES
✔ The failure or neglect for an unreasonable or
unexplained length of time to do that which by
exercising due diligence, could or should have
been done earlier.
✔ Laches or sleeping on one’s right can be defeat
an action such as a complaint for illegal
dismissal.
✔ But laches cannot be taken against the
complainant if there is valid reason for the delay
in filing the action.
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