Labor Law Digests 2

Q. The factory workers of Sime Darby used to work from 7:45 a.m. to 3:45
p.m. with a 30-minute paid on call lunch break. In 1992, Sime Darby
issued a memorandum to all factory workers advising them of a change in
work schedule. The new work schedule eliminated the 30-minute paid on
call lunch break and gave the workers a one-hour unpaid lunch break.
Under the new schedule, the workers will still work for eight hours per day.
The workers filed a complaint for unfair labor practice. Did the company
commit any unfair labor practice when it revised the work schedule?
A. No, the company did not commit any unfair labor practice. The right to
fix the work schedules of the employees rests principally on their
employer. Under the old schedule, the workers could be called upon to do
jobs during their 30-minute paid lunch break. Under the new schedule, the
workers were given a one-hour lunch break without any interruption from
their employer. Thus, there is no need to compensate the workers for this
period. Since the new schedule applies to all employees in the factory
whether union members or not, it is not discriminatory. It cannot be said
that this new scheme prejudices the workers right to self-organization.
Hence, there is no unfair labor practice in this case.

Q. Should the appeal bond be posted within the ten (10) day reglementary
period for filing an appeal from the Labor Arbiters decision?
A. As a general rule, yes. When the judgment involves a monetary award,
an appeal by the employer may be perfected only upon posting of a cash or
surety bond in an amount equivalent to the monetary award in the
judgment appealed from. Compliance with the requirement of posting a
bond is both mandatory and imperative as the perfection of an appeal
within the reglementary period is jurisdictional. In a growing number of
cases, however, the Supreme Court has relaxed the stringent application of
the rule concerning the posting of the appeal bond within the ten (10) day
reglementary period as a requirement for the perfection of an appeal. The
Supreme Court has allowed the filing of a motion for reduction of bond in
lieu of the appeal bond within the reglementary period for filing an appeal.
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In such case, the appeal bond may be filed after the lapse of the
reglementary period and after the resolution of the motion to reduce the
amount of the bond . (Alcosero v. NLRC, 288 SCRA 129, March 26,
1998)

Q. Roberto was a driver of Philtranco who was assigned to the Legaspi

City-Pasay City route. He was dismissed from the service. He filed a
complaint for illegal dismissal before the NLRCs National Capital region
Arbitration Branch in Manila. Philtranco filed a Motion to Dismiss stating
that the complaint should have been lodged with the NLRCs Regional
Arbitration Branch in Legaspi City not only because Roberto was a resident
thereof but also because the latter was hired, assigned, and based in
Legaspi City. Decide.
A. The Motion to Dismiss must be denied. The question of venue pertains
to the trial and relates more to the convenience of the parties rather than
upon the substance and merits of the case. Provisions on venue are
intended to assure convenience for the plaintiff and his witnesses and to
promote the ends of justice. The New Rules of Procedure of the NLRC
cited by Philtranco speaks of the complainants workplace, evidently
showing that the rule is intended for the exclusive benefit of the worker.
This being the case, the worker may waive said benefit. Moreover, since
Roberto was assigned to Legaspi City-Pasay City route, the filing of the
complaint with the National Capital Region Arbitration Branch was proper,
Manila being considered as part of Robertos workplace. (Philtranco
Service Enterprises, Inc. v. NLRC, 288 SCRA 585, April 1, 1998)

Q. Mario was hired to work on board the passenger cruise vessel

Odyssey for 12 months as utility man. When he boarded the vessel, he
was unaware that there was an existing animosity between the Filipino
crew and the Greek crew. One day, a heated argument occurred between
Mario and a Greek deck steward, Zakkas, which resulted in a scuffle
between the two. Zakkas pushed Mario who fell hitting his head against
the steel molding of the door. Mario suffered a cut in the head. Prior to
this incident, Zakkas and the other Greek workers continuously ridiculed
Mario. The night before the incident, Zakkas threatened to pour hot coffee
on Marios head. Mario reported the abuses to the ship captain but the
latter just blamed Mario for joining the ship. Because of his fear that
further trouble may erupt between him and the Greek crew, Mario left the
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ship. When he was repatriated to the Philippines, he filed a complaint for

illegal dismissal. The labor arbiter dismissed the complaint on the ground
that Mario voluntarily signed off from the vessel. Is the ruling correct?
A. No, the ruling is erroneous. Constructive dismissal exists when there is
a quitting because continued employment is rendered impossible,
unreasonable or unlikely. In this case, Mario quit because he feared for his
life and his fear was well founded. His decision to leave the ship was not
voluntary but was impelled by a legitimate desire for self-preservation.
The ship captain, as the general agent of the ship owner, could be held
responsible for failing to make the workplace safe for Mario. This is a clear
case of constructive dismissal. (Singa Ship Managament Phils., Inc. v.
NLRC, 288 SCRA 692, April 14, 1998)

Q. PISI is a duly licensed security agency. It hired Escobin and several

other security guards to work as guards in the premises of Basilan
Plantations, Inc. in Basilan, Mindanao. Escobin and his companions were
residents of Basilan and heads of families. After working for five years as
guards in the plantation, Escobin and his group were placed under
reserved or floating status. This was due to the reduction of the security
force ordered by Basilan Plantations, Inc.. Later, the guards placed on
reserved or floating status were instructed by registered letter to report to
PISI Head Office in Metro Manila for posting to PISI clients within Metro
Manila. The guards did not reply. A second letter was sent but the guards
likewise failed to reply. PISI sent individual letters to the guards ordering
them to explain why no disciplinary action should be taken against them for
failing to comply with PISIs order. The guards did not send their answers
to PISI. PISI dismissed the guards on the ground of insubordination or
willful disobedience to lawful orders of their employer.
During the
proceedings before the Labor Arbiter, the guards justified their inability to
comply with PISIs order to report to the head office in Metro Manila,
saying: they were residents of Basilan, have families of their own in
Basilan, have never traveled beyond Visayas and Mindanao, not provided
by PISI with fare money as they cannot, on their own, finance their travel
from Basilan to Manila. Assuming the allegations of the guards were true,
was the dismissal valid?
A. No, the dismissal was not valid. Disobedience, to be a just cause for
termination, must be willful and perverse mental attitude rendering the
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employees act inconsistent with proper subordination. A willful or

intentional disobedience justifies dismissal only when the rule, order or
instruction is (1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) connected with the duties which the employee has been
engaged to discharge. The reasonableness and lawfulness of a rule
depend on the circumstances of each case. Reasonableness pertains to
the kind or character of directives and commands and to the manner in
which they are ade. In this case, the order to report to the Manila office
fails to meet this standard. It was grossly inconvenient for the guards who
were residents and heads of families in Basilan. The guards were not
provided with funds to defray their transportation and living expenses.
The dismissal in this case was too harsh a penalty for the insubordination
which was neither willful nor intentional. The guards failure to answer
PISIs show-cause letters does not negate this conclusion as PISI granted
other guards a second chance to explain, an opportunity it denied Escobin
and his group. (Escobin v. NLRC, 289 SCRA 48, April 15, 1998)

Q. Drivers/salesmen and truck helpers of a softdrinks merchandiser filed a

case for illegal dismissal, underpayment of wages, and other claims. The
Labor Arbiter decided, among others, that the employer had not complied
with the minimum wage requirements. In arriving at this conclusion, the
Labor Arbiter refused to include the commissions paid to the workers in
determining compliance with the minimum wage requirement. As part of
their compensation, the workers received commissions per case of
softdrinks sold. Is the Labor Arbiters ruling correct?
A. No, the ruling is erroneous. The definition of the term wage in the
Labor Code explicitly includes commissions. While commissions are
incentives or forms of encouragement to inspire workers to put a little more
industry on their jobs, still these commissions are direct remunerations for
services rendered. There is no law mandating that commissions be paid
only after the minimum wage has been paid to the worker. The
establishment of a minimum wage only sets a floor below which an
employees remuneration cannot fall, not that commissions are excluded
from wages in determining compliance with the minimum wage law. (Iran
v. NLRC, 289 SCRA 433, April 22, 1998)

Q. In a complaint for illegal dismissal and unfair labor practices, judgment was
rendered in favor of Buda Labor Union. The Labor Arbiter ordered the company,
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Buda Enterprises to reinstate the individual complainants and to pay them full
backwages. The decision became final and executory and a writ of execution was
issued. Parcels of land allegedly belonging to Buda Enterprises, but later found to
be registered under the names of Co Tuan, S. Ang, J. Lim, and E Gotamco, were
levied upon. Upon learning of such levy, Co Tuan and his three other relatives
filed an Urgent Motion to Quash the Writ of Execution claiming that they hold
valid and lawful title to the said properties by virtue of the Extra-judicial
Settlement and Sale of the Estate of the Deceased Edilberto Soriano executed by
the heirs. None of the heirs, except Lourdes Soriano, the proprietress and manager
of Buda Enterprises, were parties in the labor case. The motion was granted. The
workers appealed and asked the Commission to order the Labor Arbiter to implead
the movants, praying that the sale between the movants and Buda Enterprises be
declared void. Is the NLRC competent to determine the legality of the sale?
A. No. The power of the NLRC to execute its judgment extends only to properties
unquestionably belonging to the judgment debtor. If the property under levy
does not belong to the judgment debtor in the NLRC case, it could not be levied
upon by the sheriff for the satisfaction of the judgment therein. Even upon a mere
prima facie showing of ownership by the third-party claimant, if the third party
claim does not involve nor grows out of a labor dispute, a separate action for
injunctive relief against such levy may be maintained in court. If there is
suspicion that the sale of properties was not in good faith, i.e. was made in fraud of
creditors, the NLRC is incompetent to make a determination . The task is judicial
and the proceedings must be adversary. (Co Tuan v. NLRC, 289 SCRA 415,
April 22, 1998)

Q. The Regional Wage Board for Region X issued Wage Order No. RX01. Three corporations filed applications for exemption as distressed
establishments under Guidelines No. 3 issued by the Regional Wage
Board. Under the Regional Wage Boards guideline, a corporation is a
distressed establishment if it is engaged in an industry that is distressed
due to conditions beyond its control. This criterion is different from the
criterion laid down in the guidelines promulgated by the National Wages
and Productivity Commission. Should the applications be granted
pursuant to the Regional Wage Boards guidelines?
A. No, the applications should be denied. The law grants the NWPC, not
the Regional Wage Board, the power to prescribe the rules and guidelines
for the determination of minimum wage and productivity measures. While
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the Regional Wage Board has the power to issue wage orders, such wage
orders are subject to the guidelines prescribed by the NWPC. Since the
Regional Wage Boards Guideline No. 3 was not approved by the NWPC
and is contrary to NWPCs guidelines, the said guideline issued by the
Regional Wage Board is inoperative and cannot be used by the latter in
deciding on the applications for exemption. (Nasipit Lumber Company,
Inc. v. NWPC, 289 SCRA 667, April 27, 1998)

Q. Virginia was an employee of Judy Philippines, Inc.. Because of her

erroneous assortment and packaging of 2,680 dozens of infant wear, the
company dismissed her from employment on the ground of gross
negligence. Virginia committed the infraction for the first time. Is the
dismissal valid?
A. No, the dismissal is invalid. Gross negligence implies a want or
absence of or failure to exercise slight care or diligence, or the entire
absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them. Article 282 (b) of the Labor Code
requires that such neglect must not only be gross, it should be gross and
habitual neglect. The penalty of dismissal is quite severe here since the
worker committed the infraction for the first time. (Judy Philippines, Inc.
v. NLRC, 289 SCRA 755, April 29, 1998)

Q. In an illegal dismissal case filed by security guards of Scout Security Agency,

the labor arbiter held Rosewood, Inc., the principal, jointly and severally liable
with the security agency for wage differential, backwages, and separation pay.
The labor arbiter stated that Rosewood was liable as the guards indirect employer
under Arts. 106, 107, and 109 of the Labor Code. Rosewood appealed claiming
that it had no participation in the illegal dismissal of the guards. Assuming
Rosewoods claim is true, should the labor arbiters ruling be reversed?
A. Yes, the labor arbiters ruling should be reversed. Under the Labor
Code, an employer is solidarily liable for legal wages due security guards
for the period of time they were assigned to it by its contracted security
agency. However, in the absence of proof that the employer itself
committed the acts constitutive of illegal dismissal or conspired with the
security agency in the performance of such acts, the employer shall not be
liable for backwages and/or separation pay arising as a consequence of
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such unlawful termination.

SCRA 408, May 21, 1998)

(Rosewood Processing, Inc. v. NLRC, 290

Q. In an illegal dismissal case, the Labor Arbiter upheld the validity of a

retrenchment program implemented by a mining company. As basis for
the ruling, the Labor Arbiter took judicial notice of the economic difficulties
suffered by the mining sector. Is the ruling correct?
A. No, the ruling is erroneous. Jurisprudence prescribes the minimum
standards necessary to prove the validity of a retrenchment: (a) the losses
expected must be substantial and not merely de minimis in extent; (b) the
substantial losses apprehended must be reasonably imminent; (c) the
retrenchment must be reasonably necessary and likely to effectively
prevent the expected losses; and (d) the alleged losses, if already incurred,
and the expected imminent losses sought to be forestalled must be proved
by sufficient and convincing evidence. In this case, the retrenchment
cannot be considered valid on the basis of the judicial notice taken by the
Labor Arbiter. (Anino v. NLRC, 290 SCRA 489, May 21, 1998)

Q. Included in a complaint for illegal dismissal is a claim for night shift

differentials. The employer did not deny that the complainant rendered
night shift work. The labor arbiter dismissed the claim for night shift
differentials because the complainant allegedly failed to substantiate his
claim for night shift differentials. Is the ruling correct?
A. No, the ruling is erroneous. The fact that the complainant neglected to
substantiate his claim for night shift differentials is not prejudicial to his
cause. The burden of proving payment rests on the employer. The
workers claim of non-payment of this benefit is a negative allegation which
need not be supported by evidence. The worker cannot adequately prove
the fact of non-payment of the night shift differentials since the pertinent
employee files, payrolls, records, and other similar documents are not in his
possession but in the custody and absolute control of petitioner. By
choosing not to fully and completely disclose information to prove that it
had paid all the nights shift differentials due the worker, the employer failed
to discharge the burden of proof. (National Semiconductor Distribution,
Ltd. V. NLRC, 291 SCRA 348, June 26, 1998)

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Q. After the Labor Arbiter dismissed a complaint for illegal dismissal, the
worker appealed. The employer was not furnished a copy of the
memorandum of appeal. Thus, the employer was not aware of the appeal
and did not participate in the appeal interposed by the worker. Without
the employers participation, the NLRC reversed the Labor Arbiters
decision and ruled in favor of the appellant worker. Is the decision valid?
A. No, the NLRCs decision is null and void. It is a cardinal rule in law that a
decision or judgment is fatally defective if rendered in violation of a partylitigants right to due process. The fault lies with the NLRC and not with the
appellant worker. While the New Rules of Procedure of the NLRC require proof
of service of the appeal on the other party, non-compliance therewith will present
no obstacle to the perfection of the appeal nor does it amount to a jurisdictional
defect to the NLRCs taking cognizance thereof. While the law excuses the
appellant from notifying the other party of the appeal, no reason can be given by
the NLRC that would exempt it from informing the latter of the appeal and giving
it an opportunity to be heard. The case should be set for further proceedings to
afford the employer the opportunity to be heard. (Philippine National
Construction Corporation v. NLRC, 292 SCRA 266, July 10, 1998)

Q. In their answer to a case for illegal dismissal, the employer filed position
papers supported by affidavits. Subsequently, the Labor Arbiter ordered the
company to pay wage differentials and other benefits. They appealed to the NLRC
by filing a supplemental memorandum to correct and amplify inadequate
allegations and certain omissions. In this appeal, the seek to introduce new
evidence to prove that there was no employee-employer relationship. Should the
NLRC admit new evidence?
A. No. Hearings had already been scheduled, yet the employer chose
merely to submit position papers. As such, the company had every
opportunity to submit before the labor arbiter the evidence which they
sought to adduce before the NLRC. (Santos v. NLRC; July 23, 1998)

Q. Petitioner was employed as Accounting Manager entrusted with the

evaluation and assessment of contacts. A contractor complained that
petitioner was asking two thousand pesos for every contract the contractor
gets from the company. Petitioner admitted having accepted money on
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four different occasions. The company terminated petitioner on this ground.

Was she validly dismissed?
A. Yes, the companys reliance on petitioners assessment of contracts was
based primarily on trust and confidence. Her acceptance of money, even if
voluntary on the contractors part, casts doubt on her integrity. Having
occupied a managerial position, petitioner maybe dismissed on the ground
of loss of trust and confidence. Even if she was a first-time offender, a
company may resort to acts of self-defense against a managerial employee
who has breached their trust and confidence. Furthermore, each of the
four occasions is treated as a separate offense; hence, militating her plea
of first infraction. (Villanueva v. NLRC; July 27, 1998)

Q. Petitioners were dismissed from service after they were asked by the
company to go through drug-tests, as the company received information
that they were smoking something (shabu) inside the work premises.
Petitioners and the company submitted their respective position papers on
the incident. The Labor Arbiter found the dismissal based on the position
papers as valid which the NLRC affirmed. Can a full-blown trial be
dispensed with by the labor arbiter?
A. Yes. Rules of evidence in courts shall not be controlling in any case
brought before the commission (Art. 221, LC). The Labor Code allows the
labor arbiter and NLRC to decide the case based on position papers and
other documents. The holding of a trial is discretionary on the labor arbiter
and cannot be demanded as a matter of right by the parties. (Suarez v.
NLRC; July 31, 1998)

Q. A supervisory employee labor organization was issued a charter certificate by

a national federation to which the companys rank and file union was also
affiliated` with. It filed a petition for certification election, opposed by the
company because the union was allegedly composed of both supervisory and rank
and file employees since both unions are affiliated with the same federation.
Should the petition for certification elections be granted?
A. Yes. The affiliation of two local unions in a company with the same
national federation is not a negation of their independence (as unions)
since in relation to the employer, the local unions are considered as
principals while the federation is deemed as their agent. The locals are
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separate from each other and their affiliation with the same federation
would not make them members of the same labor union. A supervisory
organization is prohibited from joining the same federation as that of the
rank and file organization only if two conditions are present: 1. The R & F
employees are directly under the authority of supervisory employees and 2.
The national federation is actively involved in union activities in the
company. (DLSU Medical Center v. Laguesma; August 12, 1998)

Q. Private respondents were employed by PAL with a salary of P1,860.

They got a salary increase of P400/mo. for a total monthly compensation of
P2,260 under the CBA. Subsequently, RA 6640 was passed raising the
minimum wage of worker. Their salaries were adjusted again by adding
P304 pursuant to the RA thus their total gross pay amounted to P2,565.
After four months, they were promoted and their basic pay of P1,860 was
raised to P2,300/mo. plus the CBA wage increase of P400/mo. thereby
making their gross pay to P2,700/mo.. The employees were not satisfied
with their gross pay, invoking the P304 wage increase under RA 6640. PAL
however refused claiming that the increase of P440 which is the difference
between their new basic salary and their old basic salary (P2,300-1,860)
was sufficient compliance with the RA. Thus respondents instituted an
action against PAL for violations of RA 6640. Is the salary increase of the
employees sufficient compliance with RA 6640? Should the CBA increase
be credited to the wage increase under the RA?
A. No. Sec. 7 of the RA prohibits the diminution of existing benefits and
allowances by workers. Consequently, it was improper and not allowed by
law for petitioner to apply or consider as compliance, with the mandated
wage hike of its workers, the salary increases corresponding to their
promotion in rank. Unlike the Wage Order Nos. 5 and 6 in the Apex ruling,
there is no creditability provision in RA 6640. It was not the intention of
Congress to credit salary increases by reason of CBA wage adjustments
or promotions in rank for the mandated wage increase. (PAL v. NLRC;
Sept. 3,1998)

Q. Complaints for illegal dismissal were filed against respondent. Summons and
notices of hearings were sent to the respondent which were received by its
bookkeeper. Thereafter, the labor arbiter rendered a judgment by default after
finding that the respondent tried merely evaded all the summons and notices by
refusing to claim its mails. Respondent contends that the he was not validly served
P a g e 10 | 31

with summons since the bookkeeper cannot be considered an agent under the Rules
of Court and thus the labor arbiter never acquired jurisdiction over respondent. Did
the labor arbiter acquire jurisdiction over respondent?
A. Yes. Procedural rules are liberally construed and applied in quasi-judicial
proceedings. Substantial compliance in this case is considered adequate.
The bookkeeper can be considered an agent because his job is integrated
with the corporation. (Pabon v. NLRC, Sept. 24,1998)

Q. Can a company, dissatisfied with the decision of the Labor Arbiter, file a
Motion to Amend the Order of the Labor Arbiter more than a month after the date
of issuance of the Order?
A. No. To allow the amendment of the order will result in the circumvention
of Sec. 17 of the Rules of Procedure of the NLRC which provide that No
Motion for Reconsideration of any order or decision of the Labor Arbiter
shall be allowed. To permit this would only allow the petitioner to violate
the statutory 10-day period requirement for appeal. (Schering Employees
Labor Union v. NLRC, Sept. 25,1998)

Q. Respondent was first hired by SMC (engaged in the manufacture of

glass) for a period of 4 months to repair and upgrade its furnace. 10 days
after his first contract ended, he was again hired to drain another furnace
for 3 months. Is he a project employee?
A. Yes. There are two kinds of project employees: 1.Those employed in a
project usually necessary or desirable in the usual trade or business
(UNOD in UTOB) of the employer but is separate and distinct from the
other undertaking of the company; or 2.Those not UNOD in UTOB but is
also distinct and separate from the other undertaking of the company. But
both jobs begin and end at determined or determinable time. In the case at
bar, the employee falls under the second category. The process of
manufacturing glass requires a furnace which is to be repaired only after
being used continuously for varying period of 5-10 years. Therefore, the
job of the respondent is a project not UNOD in UTOB. (SMC v. NLRC,
October 7,1998)

Q. Petitioner was employed as an assistant credit and collection manager. From

the start, he was informed that those not eligible for membership in the bargaining
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unit are not entitled to CBA benefits, but to benefits at least equivalent or higher
than that provided in the CBA. Subsequently, petitioner was diagnosed with
pulmonary disease, prompting him to apply for optional retirement as provided by
the CBA. He wished to retire on July 16,1992 but was asked by the company to
change it to April 30,1992. The employee, due to urgent need, agreed, for which
he received P100,000 as advances on his retirement pay. Could the employee avail
of the optional retirement benefit in the CBA? Could the employer vary the
effective date of retirement?
A. Yes, although managerial employees are not covered by the CBA, the
employer voluntarily agreed to grant them benefits at least equivalent or
higher than that provided in the CBA. Thus, this agreement is the
applicable retirement contract under the Labor Code. Moreover, the
employer may vary the effective date of retirement as petitioner assented to
the change, in consideration for an advance of his retirement pay. So long
as the agreement is voluntary and reasonable, it is valid. (Martinez v.
NLRC, October 12, 1998)

Q. Respondent employee was a truck driver who was dismissed because

he allegedly drove while drunk after he chase an office personnel with a
knife. The incident resulted to the damage of the ten-wheeler truck he
drove. The employee only reported the incident on March 1993, though it
happened on December 1992. Prior to the accident, he was already
caught stealing diesel fuel from the company. As a result of these actions,
he was dismissed for serious misconduct. Was the dismissal valid? Can
the company rely on past offenses to justify the dismissal?
A. No, the reliance by petitioner corporation on his past offenses to justify
his dismissal is unavailing. The correct rule has always been that such
previous offenses may be used as valid justification for dismissal from work
only if the infractions are related to the subsequent offense upon which
basis the termination is decreed. The vehicular accident causing damage to
the truck is not a just cause for dismissal. The penalty of dismissal is
grossly disproportionate to the offense of driving through reckless
imprudence resulting in damage to property. He was likewise deprived of
due process as he was not afforded ample opportunity to be heard. If after
the thirty-day period the employee does not give his explanation of what
happened, he must again be sent a notice of dismissal stating the particular
acts constituting the ground for dismissal and an inquiry why he did not
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give his explanation. (La Carlota Planters Association v. NLRC, October

27, 1998)

Q. PAL entered into a service agreement with STELLAR Corp., a corporation in

the business of job contracting janitorial services. After the agreement expired,
PAL called for a bidding but in the meantime allowed STELLAR to maintain the
janitorial contract. Subsequently, PAL sent a letter to STELLAR informing them
that the contract would no longer be renewed. STELLAR, terminated their
services, so respondent employees filed a case for illegal dismissal against PAL
and STELLAR. The NLRC affirmed the decision of the labor arbiter finding the
dismissal illegal. Was there an employee-employer relationship existing between
PAL and respondents? And were they illegally dismissed?
A. No, there is no employee-employer relationship between PAL and the
respondents. PAL is not engaged in labor-only contracting evidenced by
the service agreement that it would be STELLAR who will employ the
janitors. PAL was engaged in permissible job contracting and the
employees were employees of STELLAR not PAL. However, the
employees were illegally dismissed by STELLAR. They were regular
employees not project employees. A project employee must be employed
in a project distinct, separate and identifiable from the main business of the
employer and its duration must be determined or determinable. While the
service agreement may have had a specific term, STELLAR disregarded it
and repeatedly renewed the agreement and continued hiring the
respondents for thirteen years. (PAL. V. NLRC, Nov. 9, 1998)

Q. Several security guards of Sentinel Security, assigned to PHILAM were

found to have been illegally dismissed. Can PHILAM be made liable for the
payment of backwages and separation pay of the illegally dismissed
employees?
A. Yes. Although an indirect employer should not be made liable without a
finding that it had committed or conspired in the illegal dismissal
(Rosewood ruling), in the case at bar the exoneration of PHILAM was not
included in the DISPOSITIVE PORTION of the Courts decision despite the
fact that it was clearly stated in the body of the decision that they were
exonerated. The decision did not completely exonerate PHILAM which, as
an indirect employer is solidarily liable with Sentinel for the complainants
unpaid service incentive leave pursuant to Art. 106, 107 and 109 of the
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Labor Code. Should the contractor fail to pay the wages of its employees
in accordance with law, the indirect employer is jointly and severally liable
with the contractor, but such responsibility should be understood to be
limited to the extent of work performed under the contract, in the same
manner and extent that he is liable to the employees directly employed by
him. (Sentinel Security v. NLRC, Nov. 16,1998)

Q. Producers Bank was placed by the Central Bank under a conservator to

protect its assets. When the retired employees sought the implementation of the
CBA regarding their retirement plan and uniform allowance, the conservator
objected, resulting in an impasse between the bank and the union. Should the CBA
provisions be implemented, despite the banks status?
A. Yes. The conservator cannot rescind a valid and existing contract and
the CBA is the law between the contracting parties. Although the
employees are already retired, retirement does not affect their employment
status when it involves all rights and benefits due them. The retirement
scheme was part of their employment package and the benefits under the
scheme constituted a continuing consideration for services rendered and
effective inducement to remain in the company. The employees were not
pleading for the companys generosity but were demanding their rights
under the CBA. (Producers Bank v. NLRC, Nov. 16,1998)

Q. After negotiations failed to produce any agreement, the exclusive

bargaining agent of Coca-Cola decided to file a notice of strike.
Conciliation hearings were conducted but were unavailing. The union
conducted a strike vote on April 14, which shoed that the members were in
favor of conducting a strike. On April 20, the union staged the strike. The
company filed a petition to declare the strike illegal as it was staged without
observing the mandatory seven-day strike ban and that it was staged in
bad faith. The company then fired alleged union officers by virtue of the
illegal strike. Was the strike legal? Was the termination of the employees
(allegedly, union officers) valid?
A. The strike was illegal for failure to observe the mandatory requirements
of Articles 264 and 265 of the Labor Code. The failure of the union to
observe the 7-day strike ban made the strike illegal. While the strike vote
was conducted around 7:30 am to 8:45 am and the strike held on April 20
was around 8:30 am, the Civil Code states that in computing a period, the
P a g e 14 | 31

first day shall be excluded and the last day included; hence the failure to
observe 7 days. However, the dismissal of the strikers was not valid. The
employees were mere union members and not officers who should not be
dismissed unless they knowingly participate in illegal acts during a strike.
Although these employees signed the CBA, nowhere in these documents
can it be found that the cited employees signed it as union officers. Their
active participation in the negotiations did not render them union officers.
(CCBPI Postmix Workers Union v. NLRC, Nov. 27,1998)

Q. A case for illegal dismissal was filed against Orlando Farms Growers
Association, an informal association of landowners engaged in the production of
export quality bananas. Can an unregistered association be considered an employer
independently of the respective members it represents?
A. Yes, being an unregistered association and having been formed solely to
serve as an affective medium for dealing collectively with another company
is not an element of an employee-employer relationship. The Labor Code
does not require an employer to register before he may come within the
purview of the said law. (Orlando Farms Growers Association v. NLRC,
Nov. 25,1998)

Q. Respondent employee was recruited for employment with Gulf Catering

Company in Saudi as a waitress. When she was deployed to Saudi, she was made
to wash dishes, cooking pots and utensils, janitorial work and other unrelated jobs
in 12-hour shifts without overtime pay. Due to the strenuous work, she was
confined in a housing facility during which, she was not paid her salaries. She
worked again after getting well but was not paid her compensation. Subsequently,
she was hospitalized and went through surgical operations, again without
compensation. She was then dismissed on the ground of illness without any
separation pay or salary payment for the periods she was not allowed to work. She
filed a complaint before POEA against petitioner for underpaid salaries and
damages. Was she illegally dismissed? Is the employee entitled to the payment of
underpaid salaries?
A. She was illegally dismissed because the manner by which she was
terminated was in violation of the Labor Code since her illness was not
prohibited by law nor was it prejudicial to her health as well as that of her
co-employees (Art. 284). Her illness was not even contagious (Carpal
Tunnel Syndrome). As for the time she was hospitalized and she was not
P a g e 15 | 31

given any compensation, the no work-no pay rule does not apply since
that period was due to her illness which was clearly work-related. (Triple
Eight Integrated Services v. NLRC, Dec. 3, 1998)

Q. Does Section 4, Rule V of the NLRC New Rules of Procedure require

the Labor Arbiter to propound clarificatory questions to the parties in order
to determine whether a formal hearing is necessary?
A. There is no legal justification for a mandatory interpretation. A reading of
Sec 4 Rule V of the New Rules of Procedure of the NLRC readily shows that
clarificatory questions may be propounded to the parties at the discretion of
the LA. Aside from employing the word may which denotes discretion
negating a mandatory or obligatory effect, the provision expressly states that
it is discretionary on the part of the LA. (RDS Trucking vs NLRC, 294 SCRA
NLRC)

Q. Melchor, a taxi driver under the boundary system, met a vehicular accident.
After filing a report to the office of respondents, he was allegedly advised to stop
working and have a rest. He thus filed a complaint for illegal dismissal. The
company maintains that Melchor was not illegally dismissed, there being in the
first place no employer-employee relationship between them. Is there an employeremployee relationship under the boundary system?
A. The employer-employee relationship was deemed to exist. (Martinez v.
NLRC)
The relationship of taxi owners and taxi drivers is the same as that between
jeepney owners and jeepney drivers under the boundary system. The
taxi operator exercises control over the driver. In Martinez v NLRC this
court already ruled that the relationship of taxi owners and taxi drivers is
the same as that between jeepney owners and jeepney drivers under the
boundary system. In both cases the employer-employee relationship was
deemed to exist, viz: The relationship between jeepney owners/operators
on one hand and jeepney drivers on the other under the boundary system
is that of employer-employee and not of lessor-lessee.xxx Thus, private
respondent were employees xxx because they had been engaged to
perform activities which were usually necessary or desirable in the usual
P a g e 16 | 31

trade or business of the employer. (Paguio Transport Corporation v

NLRC, 294 SCRA 65)

Q. Moneral Andal applied with G & M Phils. Inc. for an overseas employment as
a domestic helper in Riyadh KSA. She was hired for a term of 2 years (19911993) at a monthly basic salary of $200.00. However, she was repatriated on 11
Jan 1992. Upon her repatriation she filed a complaint before the POEA for illegal
dismissal, non-payment and underpayment of salaries. Impleaded as co-respondent
in the complaint was Empire Insurance (petitioner), in its capacity as the surety of
G & M. Is Empire solidarily liable for the payment of the employees monetary
claims?
A. Yes. Petitioner is solidarily liable with its principal. When Empire entered
into suretyship agreement with G & M Phils Inc it bound itself to answer for
the debt or default of the latter. Where the surety bound itself solidarily with
the principal obligor, the former is so dependent on the principal debtor such
that the surety is considered in law as being the same party as the debtor in
relation to whatever is adjudged touching the obligation of the latter, and the
liabilities are interwoven as to be inseparable. The purpose of the required
bond is to insure that the rights of the overseas are violated by their employer
recourse would still be available to them against the local companies that
recruited them for the foreign principal. (Empire Insurance Company v
NLRC, 294 SCRA 263)

Q. Private respondent is Samuel L. Bangloy was a production supervisor

and radio commentator of the DZJC-AM radio station in Laoag City, owned
by MBC. Bangloy subsequently applied for a leave of absence in order to
run for Board Member in Ilocos Norte. The company later on informed him
that, as a matter of company policy, any employee who files a certificate of
candidacy for any elective national or local office would be considered
resigned from the company. Bangloy nonetheless ran, but lost. Neither
was he permitted to return to work. Is MBCs policy that any employee who
is running for elective public position shall be considered to have voluntarily
terminated his employment relations valid?

P a g e 17 | 31

A. The policy is justified. Working for the government and the company at the
same time is clearly disadvantageous and prejudicial to the rights and interest not
only of the company but the public as well. In the event that the employee loses in
the election, the impartiality and cold neutrality of an employee as broadcast
personality is suspect, thus readily eroding and adversely affecting the confidence
and trust of the listening public to employers station. As such, the dismissal is
justified. An employee may be dismissed for willful disobedience of the lawful
orders of his employer in connection with his work. (Manila Broadcasting
Company v NLRC, 294 SCRA 486)

Q. What are the requirements for a valid closure due to retrenchment?

A. The following requirements must be met to justify retrenchment. First,
the loss should be substantial and not merely de minimis. Second, the loss
must be reasonably imminent, perceived objectively and in good faith by
the employer. In other words, there should be a certain degree of urgency
for the retrenchment. Third, the retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses. Fourth, the
employer should have taken other measures prior or parallel to
retrenchment to forestall losses, so retrenchment may only be undertaken
as a last resort. Finally, the alleged losses if already realized, and the
expected imminent losses to be forestalled must be proven by sufficient
evidence. (Stainless Steel Corporation v. NLRC, 11 March 1998)

Q. Victoria Abril was employed by PFCCI in different capacities from

1982-1988, until she went on maternity leave. Upon her return in 1989, she
discovered that another person had been appointed to her former position.
Nevertheless, she accepted another position as evidenced by a contract
which stipulated that her employment would be probationary for a period of
6 months. After the period elapsed, she continued to work until she and her
employer entered into another employment contract for a period of 1 year,
after which her employment was terminated. Abril filed a case for illegal
dismissal. PFCCI claims that her appointment had been fixed for a specific
project, and should therefore be considered as causal or contractual
employment under Article 280 of the Labor Code. Was Abril's termination
valid? Is she a regular employee?

P a g e 18 | 31

A. Article 281 of the Labor Code allows the employer to secure the services
of an employee on a probationary basis allowing the employer to
terminate the latter for just cause or upon failure to qualify in accordance
with reasonable standards set forth by the employer at the time of his
employment. A probationary employee is one who is on trial by an
employer during which the employer determines whether or not he is
qualified for permanent employment. Probationary employees,
notwithstanding their limited tenure, are also entitled to security of tenure.
Thus, except for just cause as provided by law, or under the employment
contract a probationary employee cannot be terminated.
Under Article 280 of the Labor Code, there are 3 kinds of
employees: regular, project and casual employees. With respect to
contractual employees, stipulations in employment contracts providing for
term employment are valid when the period was agreed upon knowingly
and voluntarily by the parties without force, duress or improper pressure
being brought to bear upon the employee, and absent any other
circumstances vitiating his consent, or where is satisfactorily appears that
the employer and employee dealt with each other in more or less equal
terms.
The present employment contract entered into initially provides
that the period of employment is for a fixed period. However, the
succeeding provisions contradicted the same when it provided that
respondent would be under probationary status. Given the ambiguity in the
contract, and following the pronouncement in Villanueva v. NLRC (10 Sept.
1998), where a contract of employment, being a contract of adhesion, is
ambiguous, any ambiguity therein should be construed strictly against the
party who prepared it. Furthermore, all labor contracts should be construed
in favor of the laborer, pursuant to Article 1702 of the Civil Code. Thus,
notwithstanding the designation made by PFCCI, having completed the
probationary period and allowed to work thereafter, Abril became a regular
employee who may be dismissed only for just or authorized causes under
the Labor Code. Hence, the dismissal, premised on the expiration of the
contract, is illegal. (Phil. Federation of Credit Cooperatives v. NLRC, 300
SCRA 72, 11 December 1998)

Q. X was dismissed by her employer, FTH. Upon her dismissal, FTH

withheld 15 days worth of her salary, and applied it to a Xs personal loan to
the companys general manager. Both the labor arbiter and the NLRC
P a g e 19 | 31

approved the deduction of the amount of the personal loan from Xs salary.
Is this action of the labor arbiter correct?
A. Article 217 of the Labor Code limits the jurisdiction of labor arbiters to:
(a) unfair labor practice cases;
(b) termination disputes
(c) if accompanied by a claim for reinstatement, cases involving wages,
rates of pay, hours of work, and other terms and conditions of employment
(d) claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations
(e) cases arising from violations of Article 264 of the Labor Code, including
questions on the legality of strikes and lockouts
(f) all other claims from employer-employee relations, including those of
persons in domestic/household service involving an amount not exceeding
P5,000 regardless of whether accompanied by a claim for reinstatement
(except for claims of Employees Compensation, SSS, Medicare and
maternity benefits)
As the personal loan did not arise from the employer-employee
relationship, said loan is not within the ambit of the Labor Arbiter's
jurisdiction. Moreover, following Article 217 of the Labor Code, if a claim
does not fall within the exclusive original jurisdiction of the labor arbiter, the
NLRC cannot have appellate jurisdiction therein. Thus, the garnishment of
Espino's salary was disregarded. (Food Traders House v. NLRC, 300
SCRA 360, 21 December 1998)

Q. In a case for illegal dismissal, the Labor Arbiter found the dismissal of
X unjustified, and ordered the employer to reinstate X with full backwages.
On appeal by the company, the NLRC reversed the labor arbiters decision,
in effect finding the termination legal. However, the NLRC ordered the
employer to pay Xs wages from 25 January 1991 (date of filing the appeal
with the NLRC) up to 23 September 1993 (promulgation of the NLRC
decision), pursuant to Article 223 of the Labor Code. Under Article 223 of
the Labor Code, the employer found to have illegally dismissed an
employee is required to reinstate the employee either actually or through
payroll at the employer's option. Does this requirement need execution of
enforcement? Or was the LA's decision immediately self-executory?
A. While the interpretation of Article 223 has been divergent, the Court in
the 1997 Pioneer Case laid down the doctrine that henceforth an award or
P a g e 20 | 31

order for reinstatement is self-executory, and does not require a writ of

execution, much less a motion for its issuance. Article 224 only applies to
final and executory decisions which are not within the coverage of Article
223. Thus, the employer was bound to either re-admit X or include him in
the payroll, and inform X of its choice in order to enable him to act
accordingly. Failing to exercise these options, the company must pay his
salary, which automatically accrued from notice of the LA's order until its
reversal by the NLRC. International Container Terminal Services, Inc. v.
NLRC 300 SCRA 335 (21 December 1998)

Q. Eduardo Felipe, employee of Hyundai Engineering and Construction

Co., through its local agent Omanfil, perished in an accident. Hyundai
deposited 14,400 Malaysian Ringgit as Felipe's death benefits in the
Melacca labor office. This was done pursuant to Section 8 of Malaysia's
labor law, which provides that death benefits in a lump sum equal to 45
months earnings ($27,902.02) or MR 14,400 shall be awarded, whichever
is less. Felipe's widow alleged that the amount should be US$27,902.02,
and that the deposit made by Hyundai to the Melacca labor office did not
constitute payment. What amount is the Felipe family entitled to?
A. The Felipe's are entitled to MR 14,400, in compliance with the provisions
of Malaysia's labor law. A manning agency cannot be faulted for following
applicable foreign law. As a result, Omanfil has discharged its monetary
obligation to Mrs. Felipe. (Omanfil International Manpower Devt. Corp v.
NLRC, 300 SCRA 454 ,22 December 1998)

Q. X was one of the 2 employees of Gandara Mill Supply. In February

1995, X did not report to work for 2 weeks, and when he returned, he was
informed that someone had been hired to replace him. However he was
advised that he was to be readmitted in June of 1996. Was there an illegal
dismissal?
A. Admittedly, it is unclear whether respondent was actually dismissed.
However, there is no indication that he was to be reinstated. In effect, the
offer to re-admit Germano was merely a gesture used to mitigate the
impact of his extended suspension. This is contrary to the explicit
provisions of the Labor Code, which provide that no preventive suspension
should last more than 30 days. As the supposed suspension was expected
P a g e 21 | 31

to last for more than the period allowed by law, the suspension constitutes
an illegal dismissal.
Even assuming that X's absence caused difficulty to the company,
his dismissal was unwarranted. Given the constitutional mandate of
protection to labor, the rigid rules of procedure may sometimes be
dispensed with to give room for compassion. In calling for the protection of
labor, the Constitution does not condone wrongdoing by the employee, it
nevertheless urges a moderation of the sanctions to be applied, in the light
of the many disadvantages of laborers. (Gandara Mill Supply v. NLRC,
300 SCRA 702, 29 December 1998)

Q. The offices and factory of Master Shirt Co. were burned, so the
company had to cease operations. Management and the union held a
conference with the NCMB, where they agreed that the company would try
to resume operations ASAP, but if this did not occur within 6 months, the
workers would be paid their corresponding separation benefits. After 6
months, the company failed to resume operations, but the company
refused to grant separation pay, for it had not recovered on their claim for
damages against their insurance company. The union and its members
filed a complaint for illegal dismissal, separation pay and damages against
Manila Shirt Co. Are the employees entitled to separation pay?
A. Separation pay is paid to an employee whose services are validly
terminated as a result of retrenchment, suspension, closure of business or
disease. IT does not necessarily follow that if there is no illegal dismissal,
no award of separation pay may be made. The basis for the award in this
case is the agreement entered into between the company and the
employees. The agreement is the law between the parties and must be
enforced. The claim for damages is unavailing, in the absence of malice or
bad faith. (Master Shirt Co. v. NLRC, 300 SCRA 649, 29 December 1998)
Thank you to Cris, Yumi, Andrew and Sten.

1997 CASES

Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the

complainant and ordered his reinstatement. The employer appealed. Refusing to
P a g e 22 | 31

reinstate the worker pending appeal, the employer claims that the order of
reinstatement needs a writ of execution. The employer further maintains that even
if a writ of execution was issued, a timely appeal coupled by the posting of
appropriate supersedeas bond effectively forestalled and stayed the execution of
the Labor Arbiters reinstatement order. Is the employers contention correct?
A. No, the employers contention is erroneous. The law as now worded
employs the phrase shall immediately be executory without qualification
emphasizing the need for prompt compliance. The term shall denotes an
imperative obligation and is inconsistent with the idea of discretion. The
Labor Arbiters order of reinstatement does not need a writ of execution. It
is self-executory. The posting of a bond by the employer shall not stay the
execution for reinstatement.
After receipt of the decision ordering
reinstatement, the employer has the right to chose whether to re-admit the
employee to work under the same terms and conditions prevailing prior to
his dismissal or to reinstate the employee in the payroll. In either instance,
the employer has to inform the employee of his choice. (Pioneer
Texturizing Corp. v. NLRC, 280 SCRA 806, October 16, 1997)

Q. When can R.A. No. 7641 (Retirement Pay Law), which took effect on January
7, 1993, be given retroactive effect?
A. R.A. 7641 may be given retroactive effect where (1) the claimant for
retirement benefits was still the employee of the employer at the time the
statute took effect; and (2) the claimant was in compliance with the
requirements for eligibility under the statute for such retirement benefits.
Thus, the law can apply to labor contracts still existing at the time the
statute took effect and its benefits can be reckoned not only from the date
of the laws enactment but retroactively to the time said employment
contracts have started. (Cabcaban v. NLRC, 277 SCRA 671, August 18,
1997)

Q. An insurance agent was required to solicit business exclusively for AFP

Mutual Benefit Association, Inc. pursuant to an Insurance Commission
regulation. He was also bound by company policies, memo/circulars, rules and
regulations issued by the company relating to payment of the agents
accountabilities, availment by the agent of cash advances, incentives and awards,
and other matters concerning the selling of insurance, in accordance with the rules
P a g e 23 | 31

promulgated by the Insurance Commission. Given this set of facts, can the
insurance agent be considered an employee of the company?
A. No, the facts are not sufficient to support the conclusion that there exists
an employer-employee relationship between the agent and the company.
The significant factor in determining the relationship of the parties is the
presence or absence of supervisory authority to control the method and the
details of performance of the service being rendered, and the degree to
which the principal may intervene to exercise such control. Not every form
of control, however, may be accorded the effect of establishing an
employer-employee relationship. There is a difference between rules that
merely serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict
the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the
second, which address both the result and the means used to achieve it.
In this case, the rules that the agent should follow merely aim to promote
the result desired, primarily to conform to the requirements of the Insurance
Commission. (AFP Mutual Benefit Association v. NLRC, 267 SCRA 47,
January 28, 1997)

Q. An employer appealed from the Labor Arbiters decision. Instead of posting

cash or surety bond, the employer posted a Real Estate Bond consisting of land and
various improvements. Is such property bond allowed?
A. While Article 223 of the Labor Code provides that an appeal by the
employer may be perfected only upon the posting of cash or surety bond,
this provision should be given a liberal interpretation. This policy stresses
the importance of deciding cases on the basis of their substantive merit and
not on strict technical rules. When the real property bond sufficiently
protects the interests of the workers should they finally prevail, the appeal
should be allowed. (UERM-Memorial Medical Center v. NLRC, 269 SCRA
70, March 3, 1997)

Q. CFTI, a close family corporation owned by the Naguiat family, stopped its taxi
business within Clark Air Base because of the phase-out of U.S. military presence
at the said installation. In an illegal dismissal complaint filed by CFTIs
dismissed employees, the Labor Arbiter ruled that Sergio Naguiat, CFTIs
P a g e 24 | 31

president who had actively engaged in the management and operation of the
corporation, was solidarily liable with CFTI for the separation pay due the
employees. Is the Labor Arbiters ruling correct?
A. Yes, the ruling is correct. Sergio Naguiat can be held solidarily liable
with the corporation. First, as the president of CFTI who actively managed
the business, Naguiat falls within the meaning of an employer as
contemplated by the Labor Code, who may be held jointly and severally
liable for the obligations of the corporation to its dismissed employees.
Second, Section 100 of the Corporation Code states that stockholders
actively engaged in the management or operation of the business of a
close corporation shall be personally liable for corporate torts unless the
corporation has obtained reasonably adequate liability insurance. Tort is a
breach of a legal duty. Since the Labor Code mandates the payment of
separation pay to employees in case of closure or cessation of operations
not due to business losses, failure to comply with this law-imposed duty
can be considered a corporate tort. Hence, pursuant to the Corporation
Code, Naguiat should be held solidarily liable for this corporate tort. In this
case, the rule that a corporate officer cannot be held solidarily liable with a
corporation in the absence of evidence that he acted in bad faith is not
applicable. (Naguiat v. NLRC, 269 SCRA 564, March 13, 1997)
***In another case, the Court held:
The fictional veil of a corporation can be pierced by the very same
law which created it when the notion of the legal entity is used as a means
to perpetrate fraud, an illegal act, as a vehicle for the evasion of an existing
obligation, and to confuse legitimate issues. Under the Labor Code, for
instance, when a corporation violates a provision declared to be penal in
nature, the penalty shall be imposed upon the guilty officer or officers of the
corporation.
To justify solidary liability, there must be an allegation or showing that
the officers of the corporation deliberately or maliciously designed to evade
the financial obligation of the corporation to its employees, or a showing
that the officers indiscriminately stopped its business to perpetrate an
illegal act, as a vehicle for the evasion of existing obligations, in
circumvention of statutes, and to confuse legitimate issues. (Reahs
Corporation v. NLRC, 271 SCRA 247, April 15, 1997)
P a g e 25 | 31

Q. Purificacion was a founding member, a member of the Board of Trustees, and

the corporate secretary of pamana Golden Care Medical Center Foundation, a nonstock corporation engaged in extending medical and surgical services. In 1990,
the Board of Trustees issued a memorandum appointing Purificacion as Medical
Director and Hospital Administrator of the foundations medical center. A medical
director and aa hospital administrator are considered as corporate officers under the
foundations by-laws. When the Board of Trustees relieved Purificacion of her
position as Medical Director and Hospital Administrator, she filed a complaint for
illegal dismissal and non-payment of wages before the Labor Arbiter. Does the
Labor Arbiter have jurisdiction over the case?
A. No, the Labor Arbiter has no jurisdiction over the case. The Securities
and Exchange Commission has jurisdiction. The charges filed by
Purificacion partake of the nature of an intra-corporate controversy. 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 such employee. In this case,
Purificacion was appointed by the Board of Trustees to offices stated in the
by-laws. She is deemed an officer of the corpporation. An officers
dismissal is always a corporate act, or an intra-corporate controversy, and
the nature is not altered by the reason or wisdom which the Board of
Directors may have in taking such action. The question of remuneration of
an officer is likewise not a simple labor problem but a matter that comes
within the area of corporate affairs and management and is a corporate
controversy. (Tabang v. NLRC, 266 SCRA 462, January 21, 1997)

Q. Reformist Union, a labor union staged a strike against R.B. Liner in 1989.
R.B. Liner petitioned the Secretary of Labor to assume jurisdiction over the dispute
or certify it to the NLRC. The Secretary certified the case to the NLRC for
compulsory arbitration. The certified case was dismissed after the union and the
company reached an agreement providing, among others, for the holding of a
certification election. Later, when the union filed a complaint for unfair labor
practice against the company, i.e. illegal lockout that allegedly took place after the
strike and the election, R.B. Liner countered with another case that sought to
declare the 1989 strike illegal. Can the company still contest the legality of the
1989 strike?
P a g e 26 | 31

A. No, the company can no longer contest the legality of the strike. The
company itself sought compulsory arbitration in order to resolve that very
issue. The dispute or strike was settled when the company and the union
entered into an agreement. By acceding to the peaceful settlement
brokered by the NLRC, the company waived the issue of the illegality of the
strike. The very nature of compulsory arbitration makes the settlement
binding upon the company. Compulsory arbitration has been defined both
as the process of settlement of labor disputes by a government agency
which has the authority to investigate and to make an award which is
binding on all the parties, and as a mode of arbitration where the parties
are compelled to accept the resolution of their dispute through arbitration
by a third party. Clearly, the legality of the strike can no longer be
reviewed. (Reformist Union of R.B. Liner, Inc. v. NLRC, 266 SCRA 713,
January 27, 1997)

Q. From 1953 until 1991, Honorio worked as maintenance man,

carpenter, plumber, electrician and mason at the Tanjangco apartments and
residential buildings. In short, he took charge of the maintenance and
repair of the buildings. He reported for work from 7:00 a.m. to 4:00 p.m..
He earned P180 a day (latest salary). When Honorio filed a complaint for
illegal dismissal, Tanjangco claimed that Honorio was an independent
contractor. Tanjangco further claimed that even assuming that Honorio
can be considered an employee, he was merely a project employee whose
services were hired only with respect to a specific job and only while the
same exists.
(a)
On the basis of this set of facts, can Honorio be considered an
independent contractor?
A. No, Honorio was not an independent contractor but an employee of
Tanjangco. He was not compensated in terms of profits for his labor
orservices like an independent contractor. Rather, he was paid on a daily
wage basis. It is absurd to expect that with such humble resources,
Honorio woulld have substantial capital or investment in the form of tools,
equipment, and machineries with which to conduct the business of
supplying Tanjangco with manpower and services for maintaining the
apartments and buildings. The most important requisite of control that
determines the existence of an employer-employee relationship is
present. The power of control refers merely to the existence of the power
P a g e 27 | 31

and not to the actual exercise thereof. Naturally, Honorios work as

maintenance man had to be performed within the premises of Tanjangco.
It is not far-fetched to expect that Honorio had to observe the instructions
and specifications given by Tanjangco as to how his work had to be
performed. Tanjangco could easily exercise control on Honorio.
(b)

What kind of an employee is Honorio?

A. Honorio is a regular employee. There are two kinds of regular
employees: (1) those who are engaged to perform activities which are
usually necessary or desirable in the usual trade or business of the
employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are
employed. Whichever standard is applied, Honorio qualifies as a regular
employee. Honorio cannot be considered a project employee. If he was
employed as a project employee, Tanjangco should have submitted a
report of termination to the nearest public employment office everytime his
employment is terminated due to completion of each project, as required by
Policy Instruction No. 20. There should have been filed as many reports
of termination as there were projects actually finished. (Aurora Land
Projects Corp. v. NLRC, 266 SCRA 48, January 2, 1997)

Q. Antonio was hired by Orient Express as crane operator subject to a 3month probationary period. After only one month and five days, he was
dismissed. When he filed a complaint for illegal dismissal, Orient Express
claimed that he was terminated for poor job performance. Orient Express
did not inform Antonio about the standards of work required of him by which
his competency would be adjudged. When he was dismissed, Orient
Express did not point out the reasonable standards of work by which he
was evaluated and how he failed to live up to such standards. Is the
dismissal valid?
A. No, the dismissal is not valid. The services of an employee hired on a
probationary basis may be terminated 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. Antonios
dismissal cannot be sustained on this ground because Orient Express
failed to specify the reasonable standards by which Antonios alleged poor
performance was evaluated, much less to prove that such standards were
P a g e 28 | 31

made known to him at the time of his recruitment. (Orient Express

Placement Philippines v. NLRC, 273 SCRA 256, June 11, 1997)

Q. Capili was an instructor of a private educational institution. In 1993,

the school informed Capili that he would be eligible for retirement when he
would reach the age of 60 years. Capili answered that he was not opting to
retire but would continue to serve until he reaches the age of 65. When the
school reiterated its position that it could retire him, Capili filed a complaint
questioning his forced retirement. Later, after receiving the Labor Arbiters
decision but before filing his appeal, Capili received partial payment of his
retirement pay. During the pendency of his apppeal with the NLRC, he
received full payment of his retirement benefiits.
(a) Can an employee be compelled to retire at the age of sixty years?
A. No, an employee cannot be compelled to retire at the age of sixty years
in the absence of a provision on retirement in the CBA or if the employer
has no retirement plan. Under the Labor Code, as amended by R..A. NO.
7641, the option of the employer to retire an employee at age 60 no longer
exists. Under the present rule, the option to retire upon reaching the age
of 60 years or more but not beyond 65 is the exclusive prerogative of the
employee if there is no provision on retirement in the CBA or any
agreement or if the employer has no retirement plan.
(b) Will the subsequent acceptance of retirement benefits estop an employee
from pursuing his complaint questioning the validity of his forced
retirement?
A. Yes, the acceptance of retirement benefits will estop the employee from
pursuing his case. By accepting the retirement benefits, the employee is
deemed to have opted to retire under the present rule stated above.
(Capili v. NLRC, 273 SCRA 576, June 17, 1997)

Q. Can an employee unilaterally withdraw his/her resignation?

A. No, an employee cannot unilaterally withdraw his/her resignation.
Resignation, once accepted, may not be withdrawn without the consent of
the employer. If the employer consents to the withdrawal, the employee
retains the job. If the employer does not, the employee cannot claim illegal
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dismissal. To say that an employee who has resigned is illegally

dismissed is to encroach upon the right of the employers to hire persons
who will be of service to them. An employment contract is consensual and
voluntary. If the resignation is accepted by the employer, its consequent
effect is severance of the contract of employment. A resigned employee
who desires to take his job back has to reapply therefor and cannot
demand an appointment. (Philippines Today, Inc. v. NLRC, 267 SCRA
202, January 30, 1997)

Q. Can the employer dismiss an employee who is afflicted with pulmonary

tuberculosis?
A. Yes, but only if there is a prior certification from a competent public
authority that the disease afflicting the employee sought to be dismissed is
of such nature or at such stage that it cannot be cured within six (6) months
even with proper medical treatment. The fact that an employee is suffering
from a disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to that of his co-employees does not ipso
facto make the employee a candidate for dismissal. (Tan v. NLRC, 271
SCRA 216, April 14, 1997)

Q. In the proceedings before the Labor Arbiter, only the unregistered trade
name of the employercorporation, Hacienda Lanutan, and its
administrator-manager were impleaded and subsequently held liable for
illegal dismissal. On appeal, the NLRC motu proprio included the
corporate name of the employer as jointly and severally liable for the
workers claims. There is no dispute that Hacienda Lanutan which was
owned solely by the employer-corporation was impleaded and heard. It
was represented by its corporate officer in the proceedings before the
Labor Arbiter. Is the NLRCs action justified?
A. Yes, the action is justified. In quasi-judicial proceedings, procedural
rules governing service of summons are not strictly construed. Substantial
compliance thereof is sufficient. In labor cases, punctillious adherence to
stringent technical rules may be relaxed in the interest of the worker; it
should not defeat the complete and equitable resolution of the rights and
obligations of the parties. Furthermore, the NLRC is given the power to
correct, amend, or waive any error, defect or irregularity whether in the
substance or in the form of the proceedings before it. The non-inclusion of
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the corporate name of the employer was a mere procedural error which did
not at all affect the jurisdiction of the labor tribunals. (Pison-Arceo
Agricultural and Development Corp. v. NLRC, 279 SCRA 312,
September 18, 1997)

The State is bound under the Constitution to afford full protection to labor
and when conflicting interests of labor and capital are to be weighed
on the scales of social justice
the heavier influence of the latter should be counterbalanced
with the sympathy and compassion
the law accords the less privileged worker.
This is only fair
if the worker is to be given the opportunity and the right
to assert and defend his/her cause
not as a subordinate
but as part of management with which he/she can negotiate on even
plane.
Thus labor is not a mere employee of capital but its active and equal
partner.
(Fuentes v. NLRC, 266 SCRA 24, January 2, 1997)

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