LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
VI. STRIKES, LOCKOUTS AND CONCERTED
ACTIONS
A. CONCERTED ACTIONS
CASES
Republic Savings Bank vs. CIR, 21 SCRA 226
Ilaw at Buklod ng Manggagawa vs. San Miguel Corporation, 198
SCRA 586
The controversy at bar had its origin in the "wage distortions"
affecting the employees of respondent San Miguel Corporation
allegedly caused by Republic Act No. 6727, otherwise known as the
Wage Rationalization Act. Upon the effectivity of the Act on June 5,
1989, the union known as "Ilaw at Buklod Ng Manggagawa (IBM)"
— said to represent 4,500 employees of San Miguel Corporation,
more or less, "working at the various plants, offices, and warehouses
located at the National Capital Region" - presented to the company a
"demand" for correction of the significant distortion in the workers'
wages. But the Union claims that "demand was ignored. IBM filed a
notice of strike. The company moved to declare the strike illegal.
Held: The more common of these concerted activities as far as
employees are concerned are: strikes — the temporary stoppage of
work as a result of an industrial or labor dispute; picketing — the
marching to and fro at the employer's premises, usually accompanied
by the display of placards and other signs making known the facts
involved in a labor dispute; and boycotts — the concerted refusal to
patronize an employer's goods or services and to persuade others to a
like refusal. On the other hand, the counterpart activity that
management may licitly undertake is the lockout — the temporary
refusal to furnish work on account of a labor dispute. In this
connection, the same Article 263 provides that the "right of
legitimate labor organizations to strike and picket and of employer to
lockout, consistent with the national interest, shall continue to be
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recognized and respected." The legality of these activities is usually
dependent on the legality of the purposes sought to be attained and
the means employed therefor.
It goes without saying that these joint or coordinated activities may
be forbidden or restricted by law or contract. In the particular
instance of "distortions of the wage structure within an
establishment" resulting from "the application of any prescribed
wage increase by virtue of a law or wage order," Section 3 of
Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby
implicitly excluding strikes or lockouts or other concerted activities
as modes of settlement of the issue.
The legislative intent that solution of the problem of wage distortions
shall be sought by voluntary negotiation or arbitration, and not by
strikes, lockouts, or other concerted activities of the employees or
management, is made clear in the rules implementing RA 6727
issued by the Secretary of Labor and Employment pursuant to the
authority granted by Section 13 of the Act. Section 16, Chapter I of
these implementing rules, after reiterating the policy that wage
distortions be first settled voluntarily by the parties and eventually by
compulsory arbitration, declares that, "Any issue involving wage
distortion shall not be a ground for a strike/lockout.”
B. STRIKES
LABOR CODE
Art. 212. Definitions.
(o) “Strike” means any temporary stoppage of work by the
concerted action of employees as a result of an industrial or
labor dispute.
(p) “Lockout” means the temporary refusal of an employer to
furnish work as a result of an industrial or labor dispute.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
(q) “Internal union dispute” includes all disputes or grievances
arising from any violation of or disagreement over any
provision of the constitution and by-laws of a union, including
any violation of the rights and conditions of union membership
provided for in this Code.
(r) “Strike breaker” means any person who obstructs, impedes, or
interferes with by force, violence, coercion, threats or
intimidation any peaceful picketing by employees during any
labor controversy affecting wages, hours or conditions of work
or in the exercise of the right of self-organization or collective
bargaining.
(s) “Strike area” means the establishment, warehouses, depots,
plants or offices, including the sites or premises used as run-
away shops, of the employer struck against, as well as the
immediate vicinity actually used by picketing strikers in
moving to and fro before all points of entrance to and exit
from said establishment. (As amended by RA 6715)
Art. 263. Strikes, picketing and lockouts. —
(a) It is the policy of the State to encourage free trade unionism
and free collective bargaining.
(b) Workers shall have the right to engage in concerted activities
for purposes of collective bargaining or for their mutual
benefit and protection. The right of legitimate labor
organizations to strike and picket and of employers to lockout,
consistent with the national interest, shall continue to be
recognized and respected. However, no labor union may strike
and no employer may declare a lockout on grounds involving
inter-union and intra-union disputes.
(c) In cases of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the Department at
least thirty (30) days before the intended date thereof. In cases
of unfair labor practice, the period of notice shall be fifteen
(15) days and in the absence of a duly certified or recognized
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bargaining agent, the notice of strike may be filed by any
legitimate labor organization in behalf of its members.
However, in case of dismissal from employment of union
officers duly elected in accordance with the union constitution
and by-laws, which may constitute union busting where the
existence of the union is threatened, the 15-day cooling-off
period shall not apply and the union may take action
immediately.
(d) The notice must be in accordance with such implementing
rules and regulations as the Secretary of Labor and
Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the
Department to exert all efforts at mediation and conciliation to
effect a voluntary settlement. Should the dispute remain
unsettled until the lapse of the requisite number of days from
the mandatory filing of the notice, the labor union may strike
or the employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority
of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda
called for that purpose. A decision to declare a lockout must
be approved by majority of the board of directors of the
corporation or association or of the partners in a partnership,
obtained by secret ballot in a meeting called for that purpose.
The decision shall be valid for the duration of the dispute
based on substantially the same grounds considered when the
strike or lockout vote was taken. The Department may, at its
own initiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case, the
union or the employer shall furnish the Department the results
of the voting at least seven days before the intended strike or
lockout, subject to the cooling-off period herein provided.
(g) When, in his opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable
to the national interest, the Secretary of Labor and
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Employment may assume jurisdiction over the dispute and
decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall
have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out
employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law enforcement
agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.
In line with the national concern for and the highest
respect accorded to the right of patients to life and health,
strikes and lockouts in hospitals, clinics and similar medical
institutions shall, to every extent possible, be avoided, and all
serious efforts, not only by labor and management but
government as well, be exhausted to substantially minimize, if
not prevent, their adverse effects on such life and health,
through the exercise, however legitimate, by labor of its right
to strike and by management to lockout. In labor disputes
adversely affecting the continued operation of such hospitals,
clinics or medical institutions, it shall be the duty of the
striking union or locking-out employer to provide and
maintain an effective skeletal workforce of medical and other
health personnel, whose movement and services shall be
unhampered and unrestricted, as are necessary to insure the
proper and adequate protection of the life and health of its
patients, most especially emergency cases, for the duration of
the strike or lockout. In such cases, therefore, the Secretary of
Labor and Employment may immediately assume, within
twenty four (24) hours from knowledge of the occurrence of
such a strike or lockout, jurisdiction over the same or certify it
to the Commission for compulsory arbitration. For this
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purpose, the contending parties are strictly enjoined to comply
with such orders, prohibitions and/or injunctions as are issued
by the Secretary of Labor and Employment or the
Commission, under pain of immediate disciplinary action,
including dismissal or loss of employment status or payment
by the locking-out employer of backwages, damages and other
affirmative relief, even criminal prosecution against either or
both of them.
The foregoing notwithstanding, the President of the
Philippines shall not be precluded from determining the
industries that, in his opinion, are indispensable to the national
interest, and from intervening at any time and assuming
jurisdiction over any labor dispute in such industries in order
to settle or terminate the same.
(h) Before or at any stage of the compulsory arbitration process,
the parties may opt to submit their dispute to voluntary
arbitration.
(i) The Secretary of Labor and Employment, the Commission or
the voluntary arbitrator or panel of voluntary arbitrators shall
decide or resolve the dispute within thirty (30) calendar days
from the date of the assumption of jurisdiction or the
certification or submission of the dispute, as the case may be.
The decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary arbitrator or
panel of voluntary arbitrators shall be final and executory ten
(10) calendar days after receipt thereof by the parties. (As
amended by RA 6715)
Art. 264. Prohibited activities. —
(a) No labor organization or employer shall declare a strike or
lockout without first having bargained collectively in
accordance with Title VII of this Book or without first having
filed the notice required in the preceding Article or without the
necessary strike or lockout vote first having been obtained and
reported to the Department.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
No strike or lockout shall be declared after assumption of jurisdiction
by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same
grounds for the strike or lockout.
Any worker whose employment has been terminated as a
consequence of an unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who
knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his
employment right: Provided, That mere participation of a
worker in a lawful strike shall not constitute sufficient ground
for termination of his employment, even if a replacement had
been hired by the employer during such lawful strike.
(b) No person shall obstruct, impede or interfere with by force,
violence, coercion, threats or intimidation any peaceful
picketing by employees during any labor controversy or in the
exercise of the right of self-organization or collective
bargaining or shall aid or abet such obstruction or interference.
(c) No employer shall use or employ any strike-breaker nor shall
any person be employed as a strike-breaker.
(d) No public official or employee, including officers and
personnel of the New Armed Forces of the Philippines or the
Integrated National Police, or armed persons, shall bring in,
introduce or escort in any manner, any individual who seeks to
replace strikers in entering or leaving the premises of a strike
area, or work in place of the strikers. The police force shall
keep out of the picket lines unless actual violence or other
criminal acts occur therein: Provided, That nothing herein
shall be interpreted to prevent any public officers from taking
any measure necessary to maintain peace and order, protect
life and property, and/or enforce the law and legal order.
(e) No person engaged in picketing shall commit any act of
violence, coercion or intimidation or obstruct the free ingress
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to or egress from the employer’s premises for lawful purposes,
or obstruct public thoroughfares.
Art. 265. Improved offer balloting. — In an effort to settle a strike,
the Department of Labor and Employment shall conduct a
referendum by secret balloting on the improved offer of the
employer on or before the 30th day of the strike. When at least a
majority of the union members vote to accept the improved offer, the
striking workers shall immediately return to work and the employer
shall thereupon readmit them upon the signing of the agreement.
In case of a lockout, the Department of Labor and
Employment shall also conduct a referendum by secret balloting on
the reduced offer of the union on or before the 30th day of the
lockout. When at least a majority of the board of directors or trustees
or the partners holding the controlling interest in the case of a
partnership vote to accept the reduced offer, the workers shall
immediately return to work and the employer shall thereupon
readmit them upon the signing of the agreement. (As amended by
RA 6715)
Art. 266. Requirement for arrest and detention. — Except on
grounds of national security and public peace, no union members or
union organizers may be arrested or detained for union activities
without previous consultations with the Secretary of Labor and
Employment.
OMNIBUS RULES, AS AMENDED BY DO 40-03
RULE XXII
CONCILIATION, STRIKES AND LOCKOUTS
Section 1. Conciliation of labor-management disputes. - The
board may, upon request of either of both parties or upon its own
initiative, provide conciliation-mediation services to labor disputes
other than notices of strikes or lockouts. Conciliation cases which are
not subjects of notices of strike or lockout shall be docketed as
preventive mediation cases.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Section 2. Privileged communication. - Information and
statements given in confidence at conciliation proceedings shall be
treated as privileged communications. Conciliators and similar
officials shall not testify in any court or body regarding any matter
taken up at conciliation proceedings conducted by them.
Section 3. Issuance of subpoena. - The Board shall have the
power to require the appearance of any parties at conciliation
meetings.
Section 4. Compromise Agreements. - Any compromise
settlement, including those involving labor standard laws, voluntarily
agreed upon by the parties with the assistance of the Board and its
regional branches 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. Upon motion of any interested party, the Labor Arbiter in
the region where the agreement was reached may issue a writ of
execution requiring a sheriff of the Commission or the courts to
enforce the terms of the agreement.
Section 5. Grounds for strike or lockout. - A strike or lockout may
be declared in cases of bargaining deadlocks and unfair labor
practices. Violations of collective bargaining agreements, except
flagrant and/or malicious refusal to comply with its economic
provisions, shall not be considered unfair labor practice and shall not
be strikeable. No strike or lockout may be declared on grounds
involving inter-union and intra-union disputes without first having filed
a notice of strike or lockout or without the necessary strike or lockout
vote having been obtained and reported to the Board. Neither will a
strike be declared after assumption of jurisdiction by the Secretary or
after certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases involving the
same grounds for the strike or lockout.
Section 6. Who may declare a strike or lockout. - Any certified or
duly recognized bargaining representative may declare a strike in
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cases of bargaining deadlocks and unfair labor practices. The
employer may declare a lockout in the same cases. In the absence
of a certified or duly recognized bargaining representative, any
legitimate labor organization in the establishment may declare a
strike but only on grounds of unfair labor practices.
Section 7. Notice of strike or lockout. - In bargaining deadlocks, a
notice of strike or lockout shall be filed with the regional branch of the
Board at least thirty (30) days before the intended date thereof, a
copy of said notice having been served on the other party
concerned. In cases of unfair labor practice, the period of notice shall
be fifteen (15) days. However, in case of unfair labor practice
involving the dismissal from employment of any union officer duly
elected in accordance with the union constitution and by-laws which
may constitute union-busting where the existence of the union is
threatened, the fifteen-day cooling-off period shall not apply and the
union may take action immediately after the strike vote is conducted
and the results thereof submitted to the appropriate regional branch
of the Board.
Section 8. Contents of notice. - The notice shall state, among
others, the names and addresses of the employer and the union
involved, the nature of the industry to which the employer belongs,
the number of union members and of the workers in the bargaining
unit, and such other relevant data as may facilitate the settlement of
the dispute, such as a brief statement or enumeration of all pending
labor disputes involving the same parties.
In cases of bargaining deadlocks, the notice shall, as far as
practicable, further state the unresolved issues in the bargaining
negotiations and be accompanied by the written proposals of the
union, the counter-proposals of the employer and the proof of a
request for conference to settle the differences. In cases of unfair
labor practices, the notice shall, as far as practicable, state the acts
complained of and the efforts taken to resolve the dispute amicably.
In case a notice does not conform with the requirements of this and
the foregoing section/s, the regional branch of the Board shall inform
the concerned party of such fact.
Section 9. Action on Notice. - Upon receipt of the notice, the
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
regional branch of the Board shall exert all efforts at mediation and
conciliation to enable the parties to settle the dispute amicably. The
regional branch of the Board may, upon agreement of the parties,
treat a notice as a preventive mediation case. It shall also encourage
the parties to submit the dispute to voluntary arbitration.
During the proceedings, the parties shall not do any act which may
disrupt or impede the early settlement of the dispute. They are
obliged, as part of their duty to bargain collectively in good faith and
to participate fully and promptly in the conciliation meetings called by
the regional branch of the Board.
A notice, upon agreement of the parties, may be referred to
alternative modes of dispute resolution, including voluntary
arbitration.
Section 10. Strike or lockout vote. - A decision to declare a strike
must be approved by a majority of the total union membership in the
bargaining unit concerned obtained by secret ballot in meetings or
referenda called for the purpose. A decision to declare a lockout
must be approved by a majority of the Board of Directors of the
employer, corporation or association or the partners in a partnership
obtained by a secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or upon
request of any affected party, supervise the conduct of the secret
balloting. In every case, the union or the employer shall furnish the
regional branch of the Board and the notice of meetings referred to in
the preceding paragraph at least twenty-four (24) hours before such
meetings as well as the results of the voting at least seven (7) days
before the intended strike or lockout, subject to the cooling-off period
provided in this Rule.
Section 11. Declaration of strike or lockout. - Should the dispute
remain unsettled after the lapse of the requisite number of days from
the filing of the notice of strike or lockout and of the results of the
election required in the preceding section, the labor union may strike
or the employer may lock out its workers. The regional branch of the
Board shall continue mediating and conciliating.
Section 12. Improved offer balloting. - In case of a strike, the
regional branch of the Board shall, at its own initiative or upon the
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request of any affected party, conduct a referendum by secret
balloting on the improved offer of the employer on or before the 30th
day of strike. When at least a majority of the union members vote to
accept the improved offer, the striking workers shall immediately
return to work and the employer shall thereupon re-admit them upon
the signing of the agreement.
In case of a lockout, the regional branch of the Board shall also
conduct a referendum by secret balloting on the reduced offer of the
union on or before the 30th day of the lockout. When at least a
majority of the board of directors or trustees or the partners holding
the controlling interest in the case of partnership vote to accept the
reduced offer, the workers shall immediately return to work and the
employer shall thereupon readmit them upon the signing of the
agreement.
Section 13. Peaceful picketing. - Workers shall have the right to
peaceful picketing. No person engaged in picketing shall commit any
act of violence, coercion or intimidation or obstruct the free ingress to
or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.
No person shall obstruct, impede or interfere with, by force, violence,
coercion, threats or intimidation, any peaceful picketing by workers
during any labor controversy or in the exercise of the right to self-
organization or collective bargaining or shall aid or abet such
obstruction or interference. No employer shall use or employ any
person to commit such acts nor shall any person be employed for
such purpose.
Section 14. Injunctions. - No court or entity shall enjoin any
picketing, strike or lockout, except as provided in Articles 218 and
263 of the Labor Code.
The Commission shall have the power to issue temporary restraining
orders in such cases but only after due notice and hearing and in
accordance with its rules. The reception of evidence for the
application of a writ of injunction may be delegated by the
Commission to any Labor Arbiter who shall submit his
recommendations to the Commission for its consideration and
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Ateneo Law 2003, 2nd Semester Page 7 of 149
Atty. Marlon Manuel

resolution. and offices in Mandaue and Cebu City respectively by ALU. It is

Any ex parte restraining order issued by the Commission, or its
chairman or Vice-Chairman where the Commission is not in session
and as prescribed by its rules, shall be valid for a period not
exceeding twenty (20) days.
Section 15. Criminal prosecution. - The regular courts shall have
jurisdiction over any criminal action under Article 272 of the Labor
Code.
CONCEPT AND SCOPE
CASES
Enrique vs. Zamora, 146 SCRA 393
true that respondents averred that said products were purchased by
Cebu Home before the strike was declared against SUGECO and that
some of said products were obtained from SUGECO in other parts of
the country; but, even if true, these circumstances did not place the
picketing of the Cebu Home beyond the pale of the aforesaid Section
9 of Republic Act No. 875 because, as distributor of SUGECO
products, Cebu Home was engaged in the same trade as SUGECO.
Neither does the claim that some SUGECO products marketed by
Cebu Home had come, not from the Mandaue plant, but from other
parts of the Philippines, detract from the applicability of said
provisions, considering that ALU had struck against SUGECO and
had announced, as early as March 1, 1966 — or 3 days before it
struck — its intent to picket "any place where your business may be
found" and that SUGECO in Cebu is a sister company of SUGECO
elsewhere in the Philippines.

Held: Picketing may be carried on not only against the manufacturer

ALU vs. Borromeo, 26 SCRA 86
In the case at bar, the ALU introduced evidence to the effect that
SUGECO products had been brought to Cebu Home and were being
distributed in the latter, as a means to circumvent, defeat or minimize
the adverse effects of the picketing conducted in the SUGECO plant
but also against a non-union product sold by one in unity of interest
with the manufacturer who is in the same business for profit
(Goldfinger v. Feintuch, 11 N.E. 2d 920). A union may picket a retail
store selling goods made in non-union factory between which and
the union there is an industrial dispute, provided there is a unity of
interest between the retailer and the manufacturer (31 Am. Jur. 752).
As ruled by the Supreme Court of Pennsylvania: "Where corporate
employer had separate plants in Missouri and Pennsylvania, and
labor dispute existed at Missouri plant, but not at the Pennsylvania
plant, peaceful picketing at Pennsylvania plant by members of union
representing employees at Missouri plant was not an unfair labor
practice as defined by Labor Management Relations Act" (American
Brake Shoe Co. v. District Lodge 9 of International Association of
Machinists, 94 A. 2d 884).
LiwaywayPublications vs. Permanent Concrete Workers Union,
100 SCRA 161
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
While a labor dispute between defendant-appellant union and
Permanent Concrete Products, Inc. was pending before the Court of
Industrial Relations, the Court of First Instance of Manila issued in
an action for damages filed by the plaintiff-appellee Liwayway
Publications, Inc. a writ of preliminary injunction against appellant
union which picketed and prevented entrance to the gate leading to
the bodega of appellee and threatened its officers and employees
despite the fact that the appellee is not in anyway related to the
striking union but a mere sublessee of said bodega in the compound
of Permanent Concrete Products, Inc. against whom the strike was
staged.
Held: The right to picket as a means of communicating the facts of
a labor dispute is a phase of the freedom of speech guaranteed by the
constitution. If peacefully carried out, it cannot be curtailed even in
the absence of employer- employee relationship. The right is,
however, not an absolute one. While peaceful picketing is entitled to
protection as an exercise of free speech, we believe that courts are
not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor
dispute, including those with related interest, and to insulate
establishments or persons with no industrial connection or having
interest totally foreign to the context of the dispute. Thus, the fight
may he regulated at the instance of third parties or `innocent
bystanders' if it appears that the inevitable result of its exercise is to
create an impression that a labor dispute with which they have no
connection or interest exists between them and the picketing union or
constitute an invasion of their rights.
Interphil Laboratories Employees Union-FFW vs. Interphil, 372
SCRA 658
Page 8 of 149
REQUISITES OF A VALID STRIKE
CASES
NFSW vs. Ovejera, 114 SCRA 354
Petitioner, the bargaining respondent Central Azucarera de la Carlota
(CAC) employees entered into collective bargaining agreement with
it wherein the parties agreed to maintain the present practice on the
grant of Christmas bonus, milling bonus and amelioration bonus
equivalent to 1 1/2 month's salary. On November 30, 1981, petitioner
and respondent CAC entered into a compromise agreement two days
after the petition struck to compel payment of the 13th month pay
agreeing to abide by the final decision of the Supreme Court in any
case involving the 13th month pay if it clearly held that the employer
is liable to pay the same separate and distinct from the bonuses
already given. Meanwhile, G.R. No. 51254, Petition for Certiorari
and Prohibition filed by Marcopper Mining Corporation which
sought to annul the decision of the Labor Deputy Minister granting
the 13th month pay to its employees in addition to mid-year ands
Christmas bonuses under a CBA was dismissed on June 11, 1981 on
the vote of seven (7) Justices and the motion for its reconsideration
was denied by a vote of five Justices. Thereafter, petitioner struck
after six days notice with the Ministry of Labor and Employment
(MOLE). One day after the commencement of the strike, petitioner
filed a strike vote report with MOLE . The strike was declared illegal
by respondent Ovejera for violation of the 15 day cooling-off period
and the 7 day strike ban required by B.P. 130. Without appealing to
the NLRC, the present petition was filed questioning the declaration
of illegality of the strike and the denial of the 13th month pay.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Held:
The provisions of Article 264 (c, e, f) and Article 265 of the Labor
Code hardly leave any room for doubt that the cooling-off period in
Article 264(c) were meant to be and should be deemed, mandatory.
When the law says "the labor union may strike" should the dispute
"remain unsettled until the lapse of the requisite number of days
(cooling-off) period from the mandatory filing of the notice," the
unmistakable implication is that the union may not strike before the
lapse of the cooling-off period. Similarly, the mandatory character of
the 7 day strike ban after the report on the strike vote is manifest in
the provisions that "in every case," the union shall furnish the MOLE
with the results of the voting "at least seven (7) days before the
intended strike, subject to the (prescribed) cooling-off period and the
7 day strike ban must both complied with, although a labor union
may take a strike vote and report within the statutory cooling-off
period.
PURPOSE OF STRIKE NOTICE AND COOLING- OFF PERIOD.
— In requiring a strike notice and a cooling-off period, the avowed
intent of the law is to provide an opportunity for mediation and
conciliation. It thus directs the MOLE " to exert all efforts at
mediation and reconciliation to effect a voluntary settlement" during
the cooling-off period.
STRIKE VOTE REPORT, PURPOSE. — The submission of the
report gives assurance that a strike vote has been taken and that, if
the report concerning it is false, the majority of the members can take
appropriate remedy before it is too late.
In this case, the NFSW declared the strike (6) days after filing of
strike notice. i.e., before the lapse of mandatory cooling-off period. It
is also file with the MOLE before launching the strike a report on the
strike vote, when it should have filed such report "at least 7 days
before the intended strike." Under the circumstances , the strike
stated by petitioner is not in conformity with the law.
Page 9 of 149
Lapanday Workers Union vs. NLRC, 248 SCRA 95
The Union filed a notice of strike with the National Conciliation and
Mediation Board(NCMB), accusing the Co. of ULP (coercion of
employees, intimidation of union officers and union- busting).
During the pendency of a conciliation conference called by the
NCMB, a director of the Union was gunned down by a man later
identified to be an alleged member of the new security forces of the
Co. For failing to report for work and complying with the quota
system adopted by management, the Co. filed charges against the
Union for illegal strike, ULP and damages. A strike was conducted
among the members of the Union. The result of the strike was then
submitted to the NCMB. 2 days later, the Union struck.
Held:
1. Some of the limitations on the exercise of the right of strike
are provided for in paragraphs (c) and (f) of Article 263 of the
LC. They provide for the procedural steps to be followed
before staging a strike— filing of notice of strike, taking of
strike vote, and reporting of the strike to DOLE. The 7 day
waiting period is intended to give DOLE an opportunity to
verify whether the projected strike really carries the
imprimatur of the majority of the union members. Strike is
usually the last weapon of labor to compel capital to concede
to its bargaining demands or to defend itself against ULPs of
management. In addition, a majority vote assures the Union it
will go to war against management with the strength derived
from unity and hence, with better chance to succeed.
2. In the case at bar, we rule that the strike conducted by the
union is plainly illegal as it was held within the 7- day waiting
period provided by par. f of Art. 263. The haste in holding the
strike prevented DOLE from verifying whether it carried the
approval of the majority of the union members.
3. We affirm the penalty of dismissal meted only to the leaders of
the illegal strike, esp. the Union officers who served as major
players. They cannot claim good faith to exculpate themselves
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having admitted knowledge of the law on strike, including its
procedure. Members who were merely instigated to
participate are entitled to reinstatement but not to backwages
as they should not be compensated for services skipped during
the illegal strike.
First City Interlink Transportation Co., Inc. vs. Roldan- Confesor,
272 SCRA 124
Nagkakaisang Manggagawa ng Fil Transit- NFL went on strike twice
after several failed conciliation conferences with Fil Transit(business
name of First City Interlink). The company claims that the strikes
held were illegal since a) no strike vote had been obtained before the
strike was called and b) assuming there was, the result of strike vote
was not reported to the DOLE. Thus, Co. refused to comply with the
return-to-work order. DOLE granted backwages.
Held:
1. Pursuant to Art. 263(c)(f), the requisites for a valid strike are
as follows: (1) a notice of strike filed with the Department of
Labor at least 30 days before the intended date thereof or 15
days in case of unfair labor practice; (2) strike vote approved
by a majority of the total union membership in the bargaining
unit concerned, obtained by secret ballot in a meeting called
for that purpose; (3) notice given to the Dept. of the results of
the voting at least 7 days before the intended strike. These
requirements are mandatory.
In none of the numerous pleadings filed by the Union
has it been shown that a strike vote had been taken before
declaring a strike. As between the Co. and the Union, the
latter is in a better position to present proof of such fact. The
Union’s failure to do so raises the strong probability that there
was no strike vote taken. The statement that there was in the
Secretary’s order is contrary to evidence in the record.
2. Even assuming that there was a vote taken, the SC agrees that
the Union nevertheless failed to observe the required seven-
day strike ban from the date the strike vote should have been
Page 10 of 149
reported to the DOLE up to the time the Union staged the
strike.
The importance of the strike vote and reporting of the
results to the DOLE cannot be gainsaid as it is the Union itself
that the law seeks to protect by ensuring that the majority of its
members voted in favor of the strike. Consequently, good
faith cannot be invoked by the Union in this case.
3. The strike declared by the Union was attended by pervasive
and widespread violence. The acts of violence committed
were not mere isolated incidents which could normally occur
during any strike. Nevertheless, we are constrained to uphold
the Secretary’s ruling that responsibility for these illegal acts
must be on an individual and not collective basis. Therefore,
although the strike was illegal, only the union officers and
criminal acts against the employer are deemed to have lost
their employment status. Union members who were merely
instigated to participate in the illegal strike should be treated
differently.
Tiu vs, NLRC, August 18, 1997
This is a petition for certiorari under Rule 65 of the Rules of Court to
annul and set aside the resolution of the National Labor Relations
Commission (NLRC) dated 28 November 1994 in NCR Case No.
00-08-0453-91 which affirmed the decision of labor arbiter Edgardo
Madriaga dated 18 February 1994 holding the strike held by GMA
Channel 7 Employees Union (GMAEU) on 2 August 1991 as illegal
and declaring the fourteen (14) GMAEU union officers who
knowingly participated in the illegal strike to have lost their
employment status. The records show that of the fourteen (14)
GMAEU officers involved in the strike, ten (10) officers did not
appeal the labor arbiter's decision and opted to avail of the optional
retirement benefits under the collective bargaining agreement with
private respondent Republic Broadcasting System Inc. (RBS). The
remaining four (4) union officers, namely: Mario Tiu, Nani
Hayuhay, Bong Cerezo and Virgilio Santoyo, appealed to the NLRC.
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Held: The notice of strike filed by the union before the NCMB on 12
July 1991 contained general allegations that RBS management
committed unfair labor practices by its gross violation of the
economic provisions in their collective bargaining agreement and by
alleged acts of coercion, union interference and discrimination which
amounted to union busting. It is the union, therefore, who had the
burden of proof to present substantial evidence to support these
allegations.
Significantly, the union had two (2) conciliatory meetings arranged
by the NCMB at which it could have substantiated these additional
allegations. However, the fact that it had submitted the results of the
strike vote even ahead of the conciliatory meetings, and continuously
refused to substantiate its allegations in its notice of strike thereafter,
lends credence to the NLRC's observation that these charges were
indiscriminately hurled against RBS to give a semblance of validity
to its notice of strike.
Under Rule XIII Sec. 4 Book V of the Implementing Rules of the
Labor Code. —
". . . In cases of unfair labor practices, the notice of strike shall as far
as practicable, state the acts complained of and the efforts to resolve
the dispute amicably."
Upon the other hand, Rule III Sec. 6 provides that
"xxx xxx xxx
During the (conciliation) proceeding, the parties shall not do any act
which may disrupt or impede the early settlement of the dispute.
They are obliged, as part of their duty to bargain collectively in good
faith, to participate fully and promptly in the conciliation meetings
called by the regional branch of the board . . ." (emphasis supplied)
Petitioners plead that their contemporaneous acts, reckoned from
their 26 June 1991 letter to RBS up to the actual strike held on 2
August 1991, were justified based on its honest belief that RBS was
committing unfair labor practices. Stated otherwise, "the
presumption of legality (of the strike) prevails even if the allegations
of unfair labor practices are subsequently found out to be untrue."
(citing Master Iron Labor Union v. NLRC, 219 SCRA 47)
Page 11 of 149
However, in the case at bar the facts and the evidence did not
establish even at least a rational basis why the union would wield a
strike based on alleged unfair labor practices it did not even bother to
substantiate during the conciliation proceedings. It is not enough that
the union believed that the employer committed acts of unfair labor
practice when the circumstances clearly negate even a prima facie
showing to warrant such a belief. The evidence show that the union
anchored its position on alleged unfair labor practices in order to
evade not only the grievance machinery but also the no strike clause
in their collective bargaining agreement with RBS. RBS did not issue
its implementing guidelines dated 24 June 1991 concerning the
availment of leaves and rendering of overtime services in an
arbitrary manner. The union was promptly informed that RBS'
decision was based on its management prerogative to regulate all
aspects of employment, subject of course to well-defined limitations
imposed by law or by contract. Even assuming arguendo that in the
issuance of said guidelines RBS may have violated some provisions
in the collective bargaining agreement, there was no palpable
showing that the same was a flagrant and/or malicious refusal to
comply with its economic provisions.
National Union of Workers in Hotels, Restaurants & Allied
Industries vs. NLRC, 287 SCRA 192
Due to unheeded demands, a faction of the Union proclaimed itself
as the Interim Union Junta. This Junta requested from the Hotel the
conduct of a special election of officers which was disallowed. A
notice of strike was filed by the Junta before the NCMB alleging
ULP against the Co. The NCMB dismissed said notice on the
ground that the imputed ULP acts were mere conflicts between two
sets of union officers or intra- union disputes, and, being categorized
as “non- strikeable acts,” they fall under DOLE jurisdiction.
Held:
1. Generally, a strike based on a non- strikeable ground is an
illegal strike. Corollarily, a strike grounded on ULP is illegal if no
such acts actually exist. As an exception, even if no ULP acts are
committed by the ER, if the EEs believe in good faith that ULP acts
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exist soa s to constitute a valid ground to strike, the strike held
pursuant to such belief may be legal, although subsequently, such
allegations of ULP were found to be groundless.
Mere claim of good faith would not justify the holding
of a strike under the exception. In addition, the circumstances
must have warranted such belief. Moreover, failure of the
Junta to comply with the prohibition to strike by dismissal of
their notice is reflective of bad faith.
2. As such, their discharge by the ER was lawful especially in
this case where such “wildcat” strike was an attempt to
undermine the Union’s position as the exclusive bargaining
representative, and was therefore, an unprotected activity.
Philippines Inter- Fashion, Inc. vs. NLRC, 117 SCRA 659
After being informed by the Co. of the an intended retrenchment,
about 200 EEs went to DOLE during their breaktime. On their 2nd
visit, the SOLE issued to them an RWO. Upon their return to Co.
premises, they were made to stay in the canteen only on the pretext
that the machines needed repair. Nonetheless, they were paid their
wages for the days they weren’t allowed to work. Co. applied for
clearance to terminate EEs who participated in the alleged walk out
Held:
1. There was no clear and unequivocal waiver by the ER of its
right to pursue the case for illegal strike against the 114 EEs
who weren’t reinstated. It actually pursued its application for
their dismissal. However, in view of the undisputed findings
of illegal strike and illegal lockoout, both parties are in pari
delicto and such situation warrants the restoration of the status
quo ante (i.e., before the illegal strike and lockout) through
reinstatement of the 114 EEs.
2. On the basis of the general rule that strikers aren’t entitled to
backwages, the award of backwages to the 114 EEs is deleted.
The principle of “no work, no pay” applies.
Page 12 of 149
INJUNCTION
LABOR CODE
Art. 254. Injunction prohibited. — No temporary or
permanent injunction or restraining order in any case
involving or growing out of labor disputes shall be issued by
any court or other entity, except as otherwise provided in
Articles 218 and 264 of this Code. (As amended by BP Blg.
227)
CASES
Samahang Manggagawa ng Liberty Commercial vs. Pimentel, 156
SCRA 138
The respondent court, in its questioned order, sustained the position
of the plaintiff (private respondent herein) and denied petitioners'
motion to dismiss and issued a writ of preliminary injunction, on the
theory that jurisdiction is determined by the allegations in the
complaint; that the facts, as established by the evidence, showed that
no employer-employee relationship existed between the plaintiff and
the defendants who were either dismissed or resigned employees of
the plaintiff; and that the petition for direct certification filed by
petitioners was already dismissed by the Labor Arbiter. Said the
respondent court:
"At this point in time, considering the admissions of the defendants
that they are not connected with the plaintiff's establishments as
employees, and that their allegations as to their having been
terminated, resigned or abandoned their work constitute unfair labor
practices, such allegations must be proven first before the proper
forum, but the fact remains at this time that there exists no labor
dispute between the parties and they are not employees anymore
when they staged picketing at the plaintiff's establishment on May 3,
4, 24 and 25, 1987 up to the present.
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A notice of strike does not necessarily mean that there is a labor
dispute, for a notice of strike can be filed by any labor organization,
or by anyone at all.
Even if there is a complaint for unfair labor practice filed by the
defendants, or some of them, it does not prove a labor relationship.
MSF Tire and Rubber, Inc. vs. CA, August 5, 1999
SOLE assumed jurisdiction over Union and Co. dispute. Pending
resolution, the Co. entered into a Memorandunm of Agreement with
Siam Tyre Public Co. where the equipment and plant of Philtread
(the Co.) were to be sold to MSF, Inc. and its land to Sucat Land
Corp. MSF asked the Union to desist from picketing and upon the
latter’s refusal, filed a complaint for injunction with the RTC. Union
moved to dismiss on the ground that MSF, being a mere alter ego of
Philtread, was not an “innocent bystander” and therfore not entitled
to injunction.
Held:
1. The right to picket is not absolute. The courts are authorized
to confine or localize the sphere of the demonstration to the
parties to the labor dispute, including those with related
interest, and to insulate establishments or persons with no
industrial connection or having interest totally foreign to the
context of the dispute. The right may be regulated at the
instance of 3Ps or “innocent bystanders” when the exercise of
the right would constitute an invasion of their rights.
2. Said innocent bystander must, however, satisfy the court that it
is entirely different from, without any connection whatsoever
to, either party to the dispute. In the transaction bet/ Philtread
and Siam, Philtrad remains 20% owner of MSF and 60%
owner of Sucat Land. MSF not an innocent bystander. (Court
refused to apply doctrine of piercing saying that it is the
innocent bystander rule which is applicable.)
Deltaventures Resources, Inc. v. Cabato, 327 SCRA 521
Page 13 of 149
LA found that respondents were illegally dismissed, ordering Green
Mountain Farm, Roberto Ongpin and Almus Alabe to pay the former
various amounts. SC denied appeal. Respondents moved for issuance
of writ of execution, which LA granted. The Sheriff levied on real
property owned by Ongpin and scheduled its public auction. A
month before the auction, Deltaventures filed a third-party claim
asserting ownership over the property. LA suspended auction. Later,
Deltaventures filed with RTC a complaint for injunction and
damages, with a prayer for the issuance of a TRO against the Sheriff.
RTC Judge issued TRO. Eventually, RTC ruled that it cannot enjoin
the execution of a decision of the NLRC, with which it is of equal
rank.
Issue: Whether RTC may take cognizance of petitioner’s complaint
and consequently provide the injunctive relief sought
Held: NO. Petitioner filed the third-party claim before the court a
quo by reason of a writ of execution issued by the NLRC-CAR
Sheriff against a property to which it claims ownership. Ostensibly
the complaint before the trial court was for the recovery of
possession and injunction, but in essence it was an action challenging
the legality or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the LA and the Deputy
Sheriff implementing the writ. The complaint was in effect a motion
to quash the writ of execution of a decision rendered on a case
properly within the jurisdiction of the LA, to wit: Illegal Dismissal
and Unfair Labor Practice. Considering the factual setting, it is then
logical to conclude that the subject matter of the third party claim is
but an incident of the labor case, a matter beyond the jurisdiction of
RTCs. Precedents abound confirming the rule that said courts have
no jurisdiction to act on labor cases or various incidents arising
therefrom, including the execution of decisions, awards or orders.
Jurisdiction to try and adjudicate such cases pertains exclusively to
the proper labor official concerned under the DOLE. To hold
otherwise is to sanction split jurisdiction which is obnoxious to the
orderly administration of justice. Petitioner failed to realize that by
filing its third-party claim with the deputy sheriff, it submitted itself
to the jurisdiction of the NLRC acting through the LA. It failed to
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perceive the fact that what it is really controverting is the decision of
the LA and not the act of the deputy sheriff in executing said order
issued as a consequence of said decision rendered.
ASSUMPTION OF JURISDICTION; RETURN-TO-WORK ORDER
Philtread Workers Union vs. Confesor, 269 SCRA 393
PTWU filed a notice of strike on grounds of ULP. The Co. filed a
notice of lockout and a petition to declare the work slowdowns
staged by the Union illegal. After a failure in conciliation, the
company declared a company- wide lockout which resulted in the
dismissal of 80 Union members, which in turn brought about a notice
of strike being filed by the Union in self- defense. In exercise of his
power under Art. 263 (g), the Sec. of Labor certified the case for
compulsory arbitration to the NLRC enjoining the strike and issued a
return-to work order which is being questioned by the Union.
Held: Art. 263 (g) does not violate the rights of workers to strike.
It was a valid exercise of police power of the State and is pursuant to
the Secretary’s work of maintaining industrial peace. The rights
granted by the Constitution are not absolute. They are still subject to
the limitation of not being exercised arbitrarily.
The Labor Code vests upon the Secretary discretion as to
which industries are indispensable to national interest. The co.
supplies 22% of the tire products in the country and employs about
700 people. Any work disruption thereat will certainly prejudice the
employment and livelihood of their workers and their dependents,
which will aggravate the already worsening unemployment situation
in the country and discourage foreign and domestic investors from
further investing in the country. Thus, upon such determination of
the Secretary, he will assume jurisdiction over the dispute of said
industry. The intervention of the Secretary was necessary to settle
the labor dispute. No GAD on his part.
PSBA-Manila vs. Noriel, 164 SCRA 402
A complaint for ULP and declaration of illegality of strike was filed
by PSBA against the union. The DOLE Sec. assumed jurisdiction
and enjoined the parties to maintain status quo (for the EEs to return
Page 14 of 149
to work and for the Co. to accept all returning employees under the
same terms prior to the strike.). During the pendency of these cases,
some students filed a complaint before the RTC to enjoin the
company and the union from continuing with their picket which the
RTC dismissed.
Held:
1. The facts and the law fully support the acting secretary’s
assumption of jurisdiction. It may be added that due to
PSBA’s intransigent refusal to attend the conciliation
conferences called after the union struck, assumption of
jurisdiction by the secretary and the issuance of a return-to-
work order had become the only way of breaking the
deadlock.
2. The regional trial court was without jurisdiction over the
subject matter of the case filed by the students. That the
regular courts have no jurisdiction over labor disputes and to
issue injunctions against strikes is well-settled.
St. Scholastica’s College vs. Torres, 210 SCRA 565
Workers and teachers at the St. Scholastica’s College formed for the
first time, a labor union. They filed a petition for CE to which the
school objected. The teacher struck. Upon petition of the school,
the DOLE Sec. assumed jurisdiction and ordered the teachers to
return to work twice. For refusing to comply with such orders, the
school dismissed the teachers.
Held: The dismissal of the teachers was valid. The assumption of
jurisdiction by the secretary over labor disputes involving academic
institutions was already upheld in PSBA vs. Noriel.
Art. 263 (g) provides that if a strike has already taken place
at the time of assumption, all striking employees shall immediately
return to work. This means a return to work order is immediately
effective and executory notwithstanding the filing of a MfR. Under
Art. 264, all workers who knowingly participate in an illegal strike
are deemed to have lost their employment status. Not only union
officers but union members can be dismissed when they knowingly
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participate in an illegal strike. It is presumed that when a striking
worker insists on the strike when told by the Sec. to return to work,
they have forfeited their right to be readmitted.
Sarmiento vs. Tuico, 162 SCRA 676
Asian Transmission Corporation dismissed Catalino Sarmiento who
was the Vice President of Bisig ng Asian Transmission Labor Union.
The company dismissed him for allegedly carrying a deadly weapon
within company premises. The union filed a notice of strike
claiming ULP. SOLE assumed jurisdiction and certified the case to
NLRC. NLRC issued a return-to work order. All this happened
while criminal complaints were pending against the workers for
staging an illegal strike.
Held: There can be no question that the SOLE acted correctly in
certifying the labor dispute to the NLRC. The return-to-work order
issued by the NLRC was equally valid as a statutory part and parcel
of the certification order issued by the SOLE. It was merely an
implementation of the law and a reiteration of the SOLE’s directive.
The law itself provides that such assumption or certification shall
have the effect of automatically enjoining the impending strike. If
one has already taken place at the time of assumption or certification,
all striking or locked out employees shall immediately return to work
and the employer shall immediately readmit them.
The legality of the order is also not affected by the pendency
of the determination of the legality of the strike. It is, therefore, not
correct to say that the return-to-work order may be enforced only if
the strike is illegal, for the purpose precisely is to maintain the status
quo while the determination is being made.
Held: The co. can no longer contest the legality of the strike held
by the union before the agreement as it was even the one which
sought compulsory arbitration to resolve the issue. By acceding to
the peaceful settlement brokered by the NLRC, the co. waived the
issue of the illegality of the strike which was already resolved. The
very nature of compulsory arbitration, that of a compromise
agreement, makes the settlement binding on the parties. It could no
longer be reviewed by the Labor Arbiter, much less by the NLRC as
the Code provides that decisions in compulsory arbitration
proceedings shall be final and executory 10 calendar days after
receipt by the parties.
As regards the illegal lockout alleged, the co. was culpable.
Since there was no defiance of the SOLE’s RWO and there being no
cause to decree the Ees’ dismissal, reinstatement can be the only
outcome (but was infeasible here so sep. pay na lang).
Consolidated Labor Associaton of the Philippines vs. Marsman &
Co., Inc., 11 SCRA 589

Reformist Union of R.B. Liner vs. NLRC, 266 SCRA 713

The Union struck. The SOLE assumed jurisdiction and certified the
case to NLRC. Case was dismissed after the two parties reached an
agreement that included the holding of CE. The winner of the CE Cromwell Commercial Employees and Laborer’s Union-PTUC vs.
made CBA proposals but the co. refused to bargain so the Union CIR, 12 SCRA 124
filed a ULP case again while the co. countered with a case seeking to
declare the strike illegal. Strike declared illegal and Ees deemed to
have lost employment for participating.
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CONSEQUENCES OF STRIKE
Shell Oil Workers Union vs. Shell Co., 42 SCRA 224
Bacus vs. Ople, 132 SCRA 690
Gold City Integrated Port Services, Inc. vs. NLRC, 254 SCRA 627
First City Interlink Transportation Co., Inc. vs. Roldan- Confesor,
272 SCRA 124
Nagkakaisang Manggagawa ng Fil Transit- NFL went on strike twice
after several failed conciliation conferences with Fil Transit(business
name of First City Interlink). The company claims that the strikes
held were illegal since a) no strike vote had been obtained before the
strike was called and b) assuming there was, the result of strike vote
was not reported to the DOLE. Thus, Co. refused to comply with the
return-to-work order. DOLE granted backwages.
Held:
1. Pursuant to Art. 263(c)(f), the requisites for a valid strike are
as follows: (1) a notice of strike filed with the Department of
Labor at least 30 days before the intended date thereof or 15
days in case of unfair labor practice; (2) strike vote approved
by a majority of the total union membership in the bargaining
unit concerned, obtained by secret ballot in a meeting called
for that purpose; (3) notice given to the Dept. of the results of
the voting at least 7 days before the intended strike. These
requirements are mandatory.
In none of the numerous pleadings filed by the Union
has it been shown that a strike vote had been taken before
declaring a strike. As between the Co. and the Union, the
latter is in a better position to present proof of such fact. The
Union’s failure to do so raises the strong probability that there
was no strike vote taken. The statement that there was in the
Secretary’s order is contrary to evidence in the record.
2. Even assuming that there was a vote taken, the SC agrees that
the Union nevertheless failed to observe the required seven-
day strike ban from the date the strike vote should have been
reported to the DOLE up to the time the Union staged the
strike.
The importance of the strike vote and reporting of the
results to the DOLE cannot be gainsaid as it is the Union itself
that the law seeks to protect by ensuring that the majority of its
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members voted in favor of the strike. Consequently, good
faith cannot be invoked by the Union in this case.
3. The strike declared by the Union was attended by pervasive
and widespread violence. The acts of violence committed
were not mere isolated incidents which could normally occur
during any strike. Nevertheless, we are constrained to uphold
the Secretary’s ruling that responsibility for these illegal acts
must be on an individual and not collective basis. Therefore,
although the strike was illegal, only the union officers and
criminal acts against the employer are deemed to have lost
their employment status. Union members who were merely
instigated to participate in the illegal strike should be treated
differently.
Sarmiento vs. Tuico, 162 SCRA 676
Asian Transmission Corporation dismissed Catalino Sarmiento who
was the Vice President of Bisig ng Asian Transmission Labor Union.
The company dismissed him for allegedly carrying a deadly weapon
within company premises. The union filed a notice of strike
claiming ULP. SOLE assumed jurisdiction and certified the case to
NLRC. NLRC issued a return-to work order. All this happened
while criminal complaints were pending against the workers for
staging an illegal strike.
Held: There can be no question that the SOLE acted correctly in
certifying the labor dispute to the NLRC. The return-to-work order
issued by the NLRC was equally valid as a statutory part and parcel
of the certification order issued by the SOLE. It was merely an
implementation of the law and a reiteration of the SOLE’s directive.
The law itself provides that such assumption or certification shall
have the effect of automatically enjoining the impending strike. If
one has already taken place at the time of assumption or certification,
all striking or locked out employees shall immediately return to work
and the employer shall immediately readmit them.
The legality of the order is also not affected by the pendency
of the determination of the legality of the strike. It is, therefore, not
correct to say that the return-to-work order may be enforced only if
Page 17 of 149
the strike is illegal, for the purpose precisely is to maintain the status
quo while the determination is being made.
Telefunken Semiconductors Employees’ Union- FFW vs. SOLE,
283 SCRA 145
After striking Ees refused to comply with an RWO of the SOLE,
violence erupted in their picket lines. Complaints for threats,
defamation, illegal detention and physical injuries against the strikers
for stoning the service bus ferrying non- striking Ees. The Ees were
eventually terminated. The Union now questions the exclusion of
union officers, shop stewards and those with pending crim cases in
the SOLE order for the ER to accept striking EEs.
Held: We cannot see how the SOLE arrived at his decision of
excluding Union officers, et al. It may be true that the workers
struck after the SOLE assumed jurisdiction over the case and that
they may have failed to immediately return to work even after
issuance of the RWO, making their strike illegal (for an RWO is
immediately effective). But the liability of each of the union officers
and the workers, if any, has yet to be determined. This is evident as
the DOLE has yet to hear and receive evidence on the matter. Thus,
excluding the specified workers w/o first determining whether they
knowingly committed illegal acts would be tantamount to dismissal
without due process of law = GAD.
As to the issue of the enforcement of the Writ of Execution
for the implementation of the RWO, no legal impediment existed to
such as the said issue was not raised to the SC and has thus become
final.
Telefunken Semiconductors Ees’ Union- FFW vs. CA, GR
1430313-14, December 18, 2000
SOLE issued an Assumption Order after te Union filed a notice of
strike. Union still struck. SOLE then issued an RWO along with
directive on the Co. to reinstate all striking workers “except union
officers, shop stewards, and those with pending criminal charges”
while the resolution on the legality of the strike was pending. SOLE
subsequently declared the strike illegal on the basis of position
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papers and evidence submitted by the Co. only since theUnin refused
to adduce evidence on the ground of insufficiency of the
prosecution’s evidence.
Held: The office of a pet. for review on certio (R45) requires only
questions of law. The factual findings of quasi- judicial agencies,
like DOLE, when supported by substantial evidence are entitled to
great respect in view of their expertise. The need to determine the
individual liabilities of the striking workers, the union officers and
members alike, was correctly dispensed with by the Sec. of Labor
after ha gave sufficient opportunity to the striking workers to cease
and desist from continung with ther picket.
It is clear from Art. 263 (g) that the moment the SOLE
assumes jurisdiction over a labor dispute in an industry indispensabe
to national interest, such assumption shall have the effect of
automatically enjoining the intended or impending strike. It was not
even necessary for the SOLE to issue another order directing them to
return to work. The mere issuance of an assumption order
automatically arries with it an RWO, even if the directive to return to
work is not expressly stated in the assumption order. Regularity of
the service having been established, the strike is deemed illgal for
having been staged in knowing defiance of the assumption and retur-
to work orders.
union, and not the other contending group, as the bargaining
representative despite teh striking union’s doubtful majority
status to merit voluntary recognition and lack of formal
certification as the exclusive rep.
2. The strike was illegal. The right to strike is never meant to
oppress or destroy the ER. The law provides limits such as the
prohibited activities under Art. 264, particularly (e):
commission of acts of violence, coercion, intimidation, etc.
Even if a strike is valid because its objective is lawful, it may
still be declared invalid where the means employed are illegal.
3. It follows, therefore, that dismissal of the union officers of the
striking union was justified and valid as a consequence of the
illegality of the strike staged by them in accordance with Art.
264 (a):knowing participation in an illegal strike.
4. No illegal lockout. It was the EEs who voluntarily stopped
working because of their strike.
PNOC Dockyard and Engineering Corporation vs. NLRC, 291
SCRA 219

Association of Independent Unions in the Phils. vs. NLRC, 305

SCRA 219
Casual EEs were excluded from membership with the bargaining
rep. A strike was staged by a union formed by casual employees
seeking regularization during which they perpetrated illegal acts like
coercing non- striking ees to not report for work. Union filed cases
for ULP and illegal lockout. The Co. sought injunction and
declaration of illegal strike. Strike held illegal and union officers to
have lost employment status.
UST vs. NLRC, 190 SCRA 758
Held:
1. The strike staged was in the nature of a union-recognition-
strike which is calculated to compel the ER to recognize one’s
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Jacinto vs. CA, GR 124540, November 14, 1997
Public teachers staged a “mass action’ for the purpose of pressuring
gov’t. to grant their demands. DECS Sec. Cariño issued an RWO.
Upon their refusal, Cariño issued formal charges & preventive
suspension orders against them for gross misconduct, found guilty by
the CSC. He found them guilty and ordered their dismissal. CA said
the mass action was for all intents and purposes a strike which civil
service employees, like these public teachers, did not have a right to.
Held:
1. There are allowable standards to freedom of speech such as the
overriding considerations of national security and preservation
of democratic institutions. As regards to the right to strike, the
Constitution itself qualifies its exercise with the proviso “in
accordance with law”, which is a manifestation of the State’s
right to regulate its use or even deny certain sectors such right.
EO180 enjoins under pain of administrative sanctions, all
gov’t officers and EEs from staging strikes, demonstrations,
mass leaves, walkouts, and other forms of mass action that
will result in temporary work stoppage or disruption of public
service. Jurisprudence is also clear in holding that workers in
the public sector do not enjoy the right to strike.
2. Strike means any temporary stoppage of work by the
concerted action of EEs as a result of an industrial or labor
dispute. In this case, the teachers were not penalized for the
exercise of their right to assemble peacefully and to petition
the gov’t. for redress but of conduct prejudicial to the best
interest of the service for having absented themselves without
prior authority from their schools which led to deprivation of
students of education. Had they availed themselves of their
free time—not the DECS, the CSC nor the SC—could have
held them liable for the valid exercise of their constitutionally
guaranteed rights.
3. No backwages for suspension was justified. Decision of the
Sec. confirming dismissal of an EE under his jurisdiction is
Page 19 of 149
executory even pending appeal thereof. It was the Sec’s final
judgment which were carried out.
Acosta vs. CA, GR 132088, June 28, 2000
Public school teachers didn’t report for work and instead staged mass
actions at Liwasang Bonifacio. For refusal to comply with DECS
SEC. Cariño’s RWO, they were charged with gross neglect of duty,
etc. The Sec. Found them guilty after an investigation and ordered
their dismissal from the service.
Held:
1. Jacinto vs. CA, Mla. Public School Teachers’ Assoc vs.
Laguio constitute stare decisis from which the Court finds no
reason to deviate.
2. Since dismissal orders remain valid and effective until
modified or set aside, the intervening period during which an
EE is not permitted to work cannot be argued as amounting to
unjustified suspension. Preventive suspension not a penalty.
Moreover, after full ventilation of their case before the Merit
Systems Protection Board (MSPB), the CSC and the CA, they
cannot no w allege denial of due process to justify claim for
backwages. Appeal is curative of supposed denial.
LECTURE
Strikes
What is a strike? Any temporary stoppage of work through
concerted action of the workers because of a labor dispute. To be
considered a strike, the stoppage of work must be the result of a
labor dispute. Assuming you have a stoppage of work, the proximate
or remote cause of such must be due to a labor dispute, and the
stoppage must be through concerted effort of the workers.
There are three elements:
1. Stoppage of work
2. Concerted action of the employees
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3. A labor dispute
Without the concurrence of the three elements, there is no
strike.
For example:
1. Stoppage of work because the machinery shut down due to a
technical problem
2. Stoppage of work because of a labor dispute and because of
a commotion in the negotiations room, the workers out of
their own initiative stopped work, with not concerted efforts
The basis of the right to strike is the Constitution and the
Labor Code. However, remember that:
1. This pertains only to the private sector employees.
2. There can never be a strike if there is no legitimate union in
the company
3. The right to strike should be exercised only after the exercise
of the right to self-organization
Thus, one can strike even before filing a petition for
certification election. One can strike the moment one becomes a
legitimate labor organization.
Grounds for Strike
1. Bargaining deadlock – obviously only the LLO bargaining
agent may file for notice for strike under this ground
2. ULP – any LLO can initiate in the absence of a bargaining
agreement
3. Union busting – the officers of the union are terminated in
bad faith
4. No ULP – when the union believed in good faith that there is
ULP despite a finding to the contrary later on
Requisites for a strike
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1. CBA (collective bargaining agreement) deadlock or ULP
(unfair labor practice) – these are the ONLY grounds for a
valid strike
2. Notice of strike filed with the NCMB Regional Office and
the employer 30 or 15 (if ULP) days before the intended date
thereof
3. Efforts of the NCMB at conciliation and mediation through
the conciliator
4. File notice with the NCMB regarding the strike vote to be
conducted 24 hours after notice
5. Report of the strike vote
The strike vote is done in order to determine whether to
proceed with the strike, under the grounds raised in the notice of
strike. The earliest it can be filed is simultaneous with the notice of
strike. If the first strike vote fails, can a second strike vote be
conducted again? There is no prohibition under the law to allow this.
*A common mistake is to think the Med-Arbiter has something to do
with strikes. No. His only function is to act upon and decide petitions
for certification election and nothing else.
Who can file a notice of strike?
 If bargaining deadlock is the cause, the bargaining agent
 If ULP, both bargaining agent and, to Sir’s mind =) other LLO’s
as well. Art. 263 (c) is not a clear prohibition that any LLO can
file a notice only in cases where there is no bargaining agent.
Besides, in reality, the minority union is usually the victim of
ULP!
The importance of notice of strike is that, aside from the fact
that it should be filed, it also initiates the conciliation process, and
the day of strike is reckoned from the day the notice of strike is filed.
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*Union busting as a ground to strike may be so, when the existence
of the union is threatened:
 In such a case, there is a dismissal of a DULY ELECTED officer
of a union
 In this situation, the cooling off period does not apply
After the cooling-off period, the earliest time a strike may be
conducted is right after such cooling-off period. Noticeably, the law
does not give an expiry date for a notice of strike. It does not state a
maximum period between filing the notice and conducting the strike.
The law also does not give any period within which to
submit the report of the strike vote. However, the law states the
strike may be held only seven days after the report of the strike vote
is filed. Now the NCMB manual states that the 7-day period must be
counted after the 30/15 day ban. But that’s wrong because that’s not
in the law.
There are two views regarding cases of union busting:
View 1 – the 15 day period is dispensed with, but the 7-day ban must
still be followed, or
View 2 – this is an emergency situation where the 7 day period
should not be made to apply as well. The reason why the 15-day
period is dispensed with in union busting is because of the exigency
of the situation, and if the 7day period is to be made to apply, it only
defeats the purpose of removing the 15-day period.
Illegality of Strikes
When is a strike illegal? When it is attended with any of the
following:
1. Procedural requirements are not complied with
2. Non-strikeable grounds
3. Use of violence – such will be considered illegal only if it is
pervasive and widespread. Isolated acts will not affect the
legality of the strike.
Page 21 of 149
4. Use of strikebreaker – e.g. use of police force to stop the
strike
Also, the strike cannot be conducted with the use of
violence, force or intimidation or blockage of the ingress/egress of
the premises and public thoroughfares
Effect of illegal strike
1. Union officer – will be terminated if he knowingly participated
in an illegal strike
2. Union member – must knowingly participated in the commission
of the illegal acts for him to be terminated
If prohibited or unlawful acts are committed by the strikers,
can injunction issue? YES, but only against the prohibited activities,
not against the strike.
A strike without valid ground is not tantamount to an illegal
strike, if the workers believed in good faith that there was valid
ground to strike. But this belief must be based on actual
circumstances justifying the belief.
INNOCENT BYSTANDER DOCTRINE
Persons affected by the strike or picket, who are not parties to
the dispute, and whose interests are completely foreign, may file
before the regular courts for a civil case of injunction. The acts
complained of are prohibited acts that may be committed either
by the LLO or the employer.
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Assumption of Jurisdiction
*Secretary of Labor or president may assume jurisdiction which are
indispensable to the national interest (may be motu propio or upon
request)
Assumption Order – the Secretary of Labor intervenes and decides
the case/issue, not even to conciliate/mediate
Certification Order – Secretary certifies the NLRC to arbitrate
 It depends on the Secretary of Labor whether the case should be
a case for issuance of an AO or CO, but usually if there is a
bargaining deadlock, an AO is issued. If it is a ULP= CO.
When the Secretary assumes jurisdiction, the employee must
return to work and the employer is required to accept them back, and
follow the status quo ante the strike. No order is needed, it
automatically operates.
The general rule is that in no case can there be a wholesale
dismissal of all strikers if there is an illegal strike. The exception is
when there is an assumption/certification order but the employees
refuse to obey such order despite notice. The employees’ refusal to
return, despite having been duly notified of the Secretary’s
assumption of jurisdiction, is a ground for termination.
However, not all the employees who defied the assumption
order or participated in an illegal strike may be terminated at once.
Each employee must be judged on their individual culpability (due
process pa rin!!!).
During the strike, no work=no pay except if the employee
returned voluntarily and the employer refused to get them back. The
employer can hire replacements while the strike is ongoing. After the
strike, the temporary employees can be terminated for redundancy.
Page 22 of 149
VII. POST-EMPLOYMENT
A. CLASSES OF EMPLOYEES
LABOR CODE
Art. 278. Coverage. – The provisions of this Title shall
apply to all establishments or undertakings, whether for
profit or not.
Art. 280. Regular and casual employment. — The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements 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 the 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 service 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.
Art. 281. Probationary employment. —
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Probationary employment
- shall not exceed six 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
a) in accordance with reasonable standards
b) 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.
OMNIBUS RULES, BOOK VI
SECTION 5.
(a) Regular employment. The provisions of written agreements to
the contrary notwithstanding and regardless of the oral agreements
of the parties, employment shall be deemed regular for purposes of
Book VI of the Labor code where the employees has been engaged
to perform activities which are usually necessary or desirable in the
usual business or trade of the 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 job, work or service
to be performed is seasonal in nature and the employment is for the
duration of the season.
(b) Casual employment. There is casual employment where an
employee is engaged to perform a job, work or service which is
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
Page 23 of 149
activity in which he is employed and his employment shall continue
while such activity exists.
Notwithstanding the foregoing distinctions every employee shall be
entitled to the rights and privileges and shall be subject to the duties
and obligations, as may be granted by law to regular employees
during the period of their actual employment.
SECTION 6. Probationary employment. — There is probationary
employment where the employee upon his engagement, is made to
undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable
standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:
(a) where the work for which the employee has been engaged is
learned or apprenticeable in accordance with the standards
prescribed by the Department of Labor and Employment, the period
of probationary employment shall be limited to authorized learnership
or apprenticeship, period which is applicable.
(b) Where the work is either learnable nor apprenticeable, the
period of probationary employment shall not exceed six months
reckoned from the date the employee actually started working.
(c) The services of any employee who has been engaged on
probationary basis may be terminated only for a just or authorized
cause, when he fails to qualify as a regular employee in accordance
with reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall
make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement. Where
no standards are made known to the employee at that time, he shall
be deemed a regular employee.
REGULAR EMPLOYEES
De Leon V. NLRC, 176 SCRA 615
De Leon was employed by La Tondena as a painter and on the
agreement that he is considered a casual employee. He was made to
clean and oil machines and other odd jobs when he had no painting
job. After more than a year of service, he requested to be included in
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the payroll of regular workers. La Tondena responded by dismissing
him.
The Labor Arbiter found that de Leon was illegally
dismissed and, in light of the facts, is considered a regular employee.
NLRC reversed. Petition for review with the Supreme Court.
Held: Petition granted, employer must reinstate De Leon as a regular
maintenance man.
Contrary agreements notwithstanding, an employment is
deemed regular when the activities performed by the employee are
usually necessary or desirable in the usual business or trade of the
employer. Not considered regular are the so-called “project
employment” the completion or termination of which is more or less
determinable at the time of employment, such as those employed in
connection with a particular construction project, and seasonal
employment which by its nature is only desirable for a limited period
of time. However, any employee who has rendered at least one year
of service, whether continuous or intermittent, is deemed regular
with respect to the activity he performed and while such activity
actually exists.
The primary standard, therefore, of determining a 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.
The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been
performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists.
What determines whether a certain employment is regular or
casual is not the will and word of the employer, to which the
Page 24 of 149
desperate 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.
Aurora Land vs. NLRC, 266 SCRA 48
Honorio Dagui was hired by Dona Aurora Suntay Tanjangco in
1953 to take charge of the maintenance and repair of the Tanjangco
apartments and residential buildings. He was to perform carpentry,
plumbing, electrical and masonry work. Upon the death of Dona
Aurora Tanjangco in 1982, her daughter, petitioner Teresita
Tanjangco Quazon, took over the administration of all the Tanjangco
properties. On June 8, 1991, his services was terminated. He filed a
complaint for illegal dismissal with the Labor Arbiter.
Petitioners insist that Dagui had never been their employee.
Since the establishment of Aurora Plaza, Dagui served therein only
as a job contractor. Dagui had control and supervision of whoever
he would take to perform a contracted job. On occasion, Dagui was
hired only as a “tubero” or plumber as the need arises in order to
unclog sewerage pipes. Every time his services were needed, he was
paid accordingly. It was understood that his job was limited to the
specific undertaking of unclogging the pipes. In effect, petitioners
would like the Court to believe that Dagui was an independent
contractor, particularly a job contractor, and not an employee of
Aurora Plaza.
Held: An employer-employee relationship exists. Section 8,
RuleVIII, Book III of the Implementing Rules and Regulations of the
Labor Code provide the essential requisites before one is considered
a job contractor. Honorio Dagui earns a measly sum of P180.00 a
day (latest salary). Ostensibly, and by no stretch of the imagination
can Dagui qualify as a job contractor.
Whenever the existence of an employment relationship is in
dispute, four elements constitute the reliable yardstick:
 the selection and engagement of the employee (hiring);
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 the payment of wages (wages);
 the power of dismissal (firing); and
 the employer’s power to control the employee’s conduct
(control).
It is the so-called “control test”, whether the employer
controls or has reserved the right to control the employee not only as
to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished, which constitute
the most important index of the existence of the employer-employee
relationship. An employer-employee relationship exists where the
person for whom the services are performed reserves the right to
control not only the end to be achieved but also the means to be used
in reaching such end.
Labor Congress of the Phils. v NLRC, 290 SCRA 509
LCP is the exclusive bargaining representative of the employees of
Empire Food Products. A MOA was entered into by the employees
and the company. Later, the employees, represented by LCP, filed a
complaint for ULP, union busting, violation of the MOA and for
underpayment of wages.
The labor arbiter and the NLRC held that there was no
underpayment of wages nor were they entitled to other benefits
because the employees were “pakiao” workers and paid on the basis
of their output subject to the limitation that the payment conformed
with the minimum wage rate to an 8-hour workday. Being pakiao
workers, they are not entitled to any other benefits to which regular
workers are entitled to receive.
Issue: Whether the employees are piece rate workers which make
them not entitled to other benefits being given to regular employees.
Held: Petitioners are entitled to holiday pay, premium pay, 13th
month pay and service incentive leave. There are 3 factors which led
the court to conclude that petitioners, although piece rate workers,
were regular employees of private respondents. First, as to the
nature of petitioners’ tasks, their job of repacking snack food was
necessary or desirable in the usual business of private respondents,
Page 25 of 149
who were engaged in the manufacture and selling of such food
products; second, petitioners worked for private respondents
throughout the year, their employment not having been dependent
on a specific project or season; and third, the length of time that
petitioners worked for private respondents. Thus, while petitioners’
mode of compensation was on a “per piece basis” the status and
nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain
employees from receiving benefits such as nighttime pay, holiday
pay, service incentive leave and 13th month pay, inter alia, “field
personnel and other employees whose time and performance is
unsupervised by the employer, including those who are engaged on
task or contract basis, purely commissions basis, or those who are
paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof.” Plainly, petitioners as piece-
rate workers do not fall within this group. Not only did petitioners
labor under the control of private respondents as their employer,
likewise did petitioners toil throughout the year with the fulfillment
of their quota as supposed basis for compensation. Further, in
Section 8(b), Rule IV, Book III, piece workers are specifically
mentioned as being entitled to holiday pay.
In addition, the Revised Guidelines on the Implementation
of the 13th Month Pay Law, in view of the modifications to P.D. No.
851 by Memorandum Order No. 28, clearly exclude employer of
piece rate workers from those exempted from paying the 13th month
pay.
The Revised Guidelines as well as the Rules and
Regulations identify those workers who fall under the piece-rate
category as those who are paid a standard amount for every piece or
unit of work produced that is more or less regularly replicated,
without regard to the time spent in producing the same.
As to overtime pay, the rules, however, are different.
According to Sec 2(e), Rule I, Book III of the Implementing Rules,
workers who are paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their output rates are in
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accordance with the standards prescribed under Sec. 8, Rule VII,
Book III, of these regulations, or where such rates have been fixed
by the Secretary of Labor in accordance with the aforesaid section,
are not entitled to receive overtime pay. Private respondents did not
allege adherence to the standards set forth in Sec. 8 or with the rates
prescribed by the Secretary of Labor. As such, petitioners are
beyond the ambit of exempted persons and are therefore entitled to
overtime pay.
Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401
(case where the SC uses Art. 280 to prove ‘er-’ee relationship)
Paid wages directly to employee, wielded power of dismissal, and
members of union did not possess substantial capital which belies
claim that they were independent contractors.
Maraguinot v. NLRC, 284 SCRA 539
It is settled that contracting out of labor is allowed only in case of
job-contracting. For a contactor to be job-contactor, must have tools,
equipment, machinery, work premises, and other materials necessary
to his business, or substantial capital or investment.
As labor-only contracting is prohibited, the law considers the
person or entity engaged in the same, a mere agent or intermediary of
the direct employer.
International Pharmaceuticals, Inc. v NLRC, 287 SCRA 313
Petitioner employed Quinta as Medical Director for the
development of its herbal medicine department. Their contract had a
period of 1 year. After the contract, Quinta was allowed to continue
working until she was terminated. She filed a case for illegal
dismissal. Petitioner claims that she was only a project employee.
Moreover, it is claimed by petitioner that she was not required to
keep fixed hours of work, thus she couldn’t have been a regular
employee.
Issue: Whether Quinta became a regular employee.
Page 26 of 149
Held: Yes. The SC held that although their contracts were valid,
the fact that after its expiration petitioner decided to continue her
services, she is now entitled to security of tenure.
Moreover, the fact that the employee was not required to
report at a fixed hour or to keep fixed hours of work does not detract
from her status as a regular employee. As petitioner itself admits,
Quinta was a managerial employee and therefore not covered by the
Labor Code provisions on hours of work.
Neither does the fact that Quinta was teaching full time at
the Cebu Doctors’ College negate her regular status since this fact
does not affect the nature of her work. Whether one’s employment
is regular is not determined by the number of hours one works, but
by the nature of the work and by the length of time one has been in
that particular job.
Highway Copra Traders vs. NLRC, 293 SCRA 350
“…[A]n employment is deemed regular when the activities
performed by the employee are usually necessary or desirable in the
usual business or trade of the employer. The nature of his work as a
general utility man was definitely necessary and desirable to
petitioner’s business of trading copra and charcoal and regardless of
the length of time. The argument of the respondent was only engaged
for a specific task, the completion of which is resulted in the
cessation of his employment is untenable. By specific project or
undertaking, Article 280 of the Labor Code contemplates an activity
which is not commonly or habitually performed or such type of
work which is not done on a daily basis but only for a specific
duration of time or until completion in which case the services of an
employee are necessary and desirable in the employer’s usual
business only for the period of time it takes to complete the project.
Philippine Federation of Credit Cooperatives vs. NLRC, Dec. 11,
1998
A probationary employee who is engaged to work beyond the
probationary period of 6 months or for any length of time set forth by
the employer, shall be considered a regular employee.
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Bernardo vs. NLRC, July 12, 1999

Those who have worked beyond worked beyond 6 months and Mehitabel Furniture Co. vs NLRC, 220 SCRA 602
whose contracts have been renewed are already regularized.
The accommodation argument does not change the nature of
their employment. An employee is regular because of the nature of
work and the length of service, not because of the mode or even the
reason for hiring them. The character of employment is determined
not by stipulations in the contract but by the nature of the work
performed. Otherwise no employee can become regular by the
simple expedient of incorporating this condition in the contract of
employment. Where an employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business of the employer, such employee is deemed a regular Magcalas vs. NLRC, 269 SCRA 453
employee and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.

PROJECT EMPLOYEES

Sandoval Shipyard vs. NLRC, 136 SCRA 647

San Miguel Corporation vs. NLRC, 297 SCRA 277

An employment is deemed regular when the activities performed by
the employee are usually necessary or desirable in the usual trade or
business of the employer even if the parties enter into an agreement
stating otherwise. But considered not regular are the “project
employment” the termination of which is more or less determinable
Rada vs. NLRC, 205 SCRA 69
at the time of employment, and seasonal employment which by its
nature is only for one season of the year the employment is limited
for the duration of the season. Nevertheless, an exception to the
exception is made: any employee who has rendered at least one year
of service whether continuous or intermittent with respect to the
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activity he performed and while such activity actually exists, must be
deemed regular.
It must be noted that the respondent was employed only for
seven months. First he was employed for repair and upgrading of
furnaces, upon completion of such , he was terminated. A few days
after, two other furnaces required draining/cooling down and
emergency repair. Thus he was hired again. Upon completion of
such second undertaking, he was likewise terminated. He was not
hired for a third time and his two engagements taken together did not
total one full year. Clearly, he was hired for a specific project that
was not within the regular business of the corporation.
Villa vs. NLRC, 284 SCRA 105
By entering into such contract of project employment, an employee
is deemed to understand that his employment is coterminous with the
project. Project employment contracts are not lopsided agreements in
favor of one party. Thus, the fact that workers work under different
project employment contracts for several years cannot be made a
basis to consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have
worked. Length of service is not the controlling determinant of the
employment tenure of a project employee.
PAL vs. NLRC, 298 SCRA 430
The janitorial service agreement is not a labor-only contracting.
There is labor only contracting where the person supplying workers
to an employer does not have substantial capital or investment in the
form of tools, equipment, machinery, work premises, among others
and the workers recruited and placed by such persons are performing
activities that are directly related to the principal business of such
employer.
Stellar was not engaged in labor only contracting because it
has sufficient capital form of tools and equipment, like vacuum
cleaners, polishers, and substantial capitalization as proven by its
financial statements. STELLAR even has other clients like San
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Miguel Corporation and etc. Thus PAL is not the employer of the
janitors.
Imbuido vs. NLRC, GR 114734, 329 SCRA 357
The principal test for determining whether an employee is a project
employee or a regular employee is whether the project employee was
assigned to carry out a specific project or undertaking, the duration
and scope of which were specified at the time the employee was
engaged for that project. 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.
In the recent case of Maraguinot, Jr. v. NLRC, we held that
“[a] project employee or a member of a work pool may acquire the
status of a regular employee when the following concur: 1) There is
a continuous rehiring of project employees even after [the] cessation
of a project; and 2) The tasks performed by the alleged “project”
employee are vital, necessary and indispensable to the usual business
or trade of the emplyer.”
TERM EMPLOYEES
Brent School vs. Zamora, 181 SCRA 702
Brent School, Inc. (“BS”) employed Doroteo R. Alegre (“DA”) as
athletic director. The employment contract fixed a specific term for
its existence: 5 years (18 July 1971 to 17 July 1976). 3 subsequent
subsidiary agreements reiterated the same terms and conditions
stipulated in the original contract.
20 April 1976. DA received copy of report filed by BS with
DOLE advising of the termination of his services effective 16
July1976. The ground: “completion of contract, expiration of the
definite period of employment.” DA protested, arguing that he had
acquired regular employment status and could not be removed except
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for valid cause because his services were UNOD in UTOB and his
employment had lasted for 5 years.
DOLE Regional Director ruled in favor of DA. Secretary of
Labor sustained. Office of the President dismissed BS’ appeal and Blancaflor vs. NLRC, 218 SCRA 366
affirmed SOL decision.
Held: Since the entire purpose behind the development of legislation
culminating in the present Art. 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention
of the employee’s right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil
that the Code itself has singled out: agreements entered into precisely
to circumvent security of tenure. It should have no application to
instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress Romares vs. NLRC, 294 SCRA 411
or improper pressure being brought to bear upon the employee and There are two kinds of regular employees: those who are engaged to
absent any circumstances vitiating his consent, or where it perform activities which are UNOD in UTOB, and those casual
satisfactorily appears that the employer and employee dealt with employees who have rendered at least one year of service, whether
each other on more or less equal terms with no moral dominance continuous or broken, with respect to the activity in which they are
whatever being exercised by the former over the latter. Unless thus employed.
limited in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus becomes The scheme of rehiring him for a two to three month contract
pointless and arbitrary, unjust in its effects and apt to lead to absurd on a temporary job as a mason is a clear circumvention of the
and unintended consequences. employee’s right to security of tenure and to other benefits. Despite
the provisions of the contract of employment, as long as the activities
There was a valid fixed term employment contract. DA’s are UNOD in UTOB, such employee is already regular.
employment was terminated upon the expiration of his last contract
with BS on 16 July 1976 without necessity of any notice.
SEASONAL EMPLOYEES
Concurring and dissenting opinion (J. Sarmiento): “I cannot liken
employment contracts to ordinary civil contracts in which the Mercado vs. NLRC, 201 SCRA 332
relationship is established by stipulations agreed upon.” Petitioners are farm workers who are contending that they are regular
farm workers of Cruz and other respondents and thus, are entitled to
Millares vs. NLRC, July 29, 2002 benefits like overtime pay, holiday pay, service incentive leave,
ECOLA, 13th month pay, etc.
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They claim that they have been working for 12 hours a day
the whole year round for almost 19 years (others, for 30 years).
Respondents deny that petitioners are regular workers since
they are only hired to work for six months (during the harvesting of
sugar canes) a year and for the rest of the year, petitioners are
allowed to seek employment elsewhere.
Petitioners contend that the proviso in the second paragraph
of Art. 280 is applicable to their case, and that the Labor Arbiter
should have considered them regular by virtue of said proviso.
Held: They are seasonal workers.
The first paragraph of Art 280 answers the question of who
are regular employees. It states that regardless of any written or oral
agreement to the contrary, an employee is deemed regular where he
is engaged in necessary or desirable activities in the usual business or
trade of the employer, except for project employees. A project
employee has been defined to be 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.
The second paragraph demarcates as “casual” employees, all
other employees who do not fall under the definition of the preceding
paragraph. Policy Instruction No 12 discloses that 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. The
same instructions show that the proviso in the second paragraph was
not designed to stifle small scale businesses nor to oppress
agricultural land owners to further the interests of laborers, whether
agricultural or industrial. What it seeks to eliminate are abuses of
employers against their employees and not, as petitioners would have
us believe, to prevent small scale businesses from engaging in
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legitimate methods to realize profits. Hence the proviso is applicable
only to the employees who are deemed casuals but not to the project
employees nor the regular employees treated in paragraph one of Art
280.
Tacloban Sgkahan Rice Mill vs. NLRC, 183 SCRA 425
Philippine Tobacco Flue-Curing Corp. vs. NLRC, 300 SCRA 37
They are entitled to separation pay. Seasonal workers who work
from time to time and are temporarily laid off during off-season are
not separated from service in said period, but are merely considered
on leave until re-employed.
Since they are repeatedly rehired, such is sufficient evidence
of the necessity and indispensability of services, and is equated to a
regular employee. On the contrary, when an employee is rehired
every year but may work with another, one is not seasonal but a
project employee and would naturally end upon the completion of
each project.
The doctrine in Mercado vs. NLRC is inapplicable to the
case at bar because in Mercado, the seasonal employees were not in
the employer’s regular employ. They performed different phases of
agricultural work in a given year, and during such periods they could
work for others, which they did. They were free to contract with
others even if they were presently working for the employer.
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Rather, the case at bar is pretty much similar to the case of
Gaco vs. NLRC, where the Court likewise ruled that Gaco was a
regular employee, due to his repeated rehiring every season,
spanning over fifteen years.
PROBATIONARY EMPLOYEES
International Catholic Migration Commission v. NLRC, 169
SCRA 606
Petitioner engaged the services of private respondent Galang
as a probationary cultural orientation teacher for a probationary
period of 6 months. Three months thereafter, she was informed,
orally and in writing , that her services were being terminated for her
failure to meet the prescribed standards of petitioner as reflected in
the performance evaluation of her supervisors during the teacher
evaluation program she underwent along with other newly-hired
personnel.
She subsequently filed a complaint for illegal dismissal,
unfair labor practice and unpaid wages against petitioner with the
then Ministry of Labor and Employment, praying for reinstatement
with backwages, exemplary and moral damages.
The labor arbiter dismissed the complaint, but awarded
payment for the unexpired portion of the agreed period. NLRC
affirmed. Petitioner questions the award.
Held: For the petitioner.
A probationary employee, as understood under Art 281 of
the Labor Code, is one who is on trial by an employer, during which
the employer determines whether or not he is qualified for permanent
employment. A probationary employment is made to afford the
employer an opportunity to observe the fitness of a probationer while
at work, and to ascertain whether he will become a proper and
efficient employee. The word “probationary”, as used to describe
the period of employment, implies the PURPOSE of the term or
period, but not its length.
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Being in the nature of a “trial period”, the essence of a
probationary period of employment fundamentally lies in the
purpose or objective sought to be attained by both the employer and
the employee during said period. The length of time is immaterial to
determining correlative rights of both in dealing with each other
during said period. While the employer observes the fitness,
propriety and efficiency of a probationer to ascertain whether he is
qualified for permanent employment, the probationer, on the other,
seeks to prove to the employer that he has the qualifications to meet
the reasonable standards for permanent employment.
The employer has the right or is at liberty to choose who will
be hired and who will be denied employment. In that sense, it is
within the exercise of the right to select his employees that the
employer may set or fix a probationary period within which the latter
may test and observe the conduct of the former before hiring him
permanently.
Art 281 of the LC gives ample authority to the employer to
terminate a probationary employee 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. There is nothing under Art 281 of the LC that
would preclude the employer from extending a regular or permanent
appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the
expiration of the probationary period. Conversely, if the purpose
sought by the employer is neither attained nor attainable within the
said period, Art 281 does not likewise preclude the employer from
terminating the probationary employment on justifiable causes.
The dissatisfaction of the petitioner over the performance of
private respondent Galang is a legitimate exercise of its prerogative
to select whom to hire or refuse employment for the success of its
program or undertaking. More importantly, Galang failed to show
that there was unlawful discrimination in the dismissal.
Mariwasa Manufacturing vs. Leodegario, 169 SCRA 465
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Manila Hotel Corp. vs. NlRC, 141 SCRA 169
Colegio de San Agustin vs. NLRC, 201 SCRA 398
CASUAL EMPLOYEES
Capule vs. NLRC, 191 SCRA 374
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LECTURE (PART ONE)
It is important to distinguish the classes in order to apply the
proper rules in labor standards, or apply the security of tenure
provisions (illegal termination). It is also important in labor relations,
because in a certification election, the definition of a bargaining unit
depends on the classes of employee agreed upon by the parties
allowed to join.
The general rule is that all employees are regular
employees. The standard test is that there must be a reasonable
connection between the job and the employer’s business.
Regular employee:
1. Performs tasks which are UNOD in UTOB; and the word
“usually” is used because it does not mean they always have to
perform tasks which are necessary or desirable.
2. It also refers to casual employees who have rendered at least
one year of service, whether continuous or broken, with respect
to the activity they are employed.
3. Probationary or term employees are also considered regular
once they are allowed to work beyond the term or duration of the
project.
4. Project employee who has been continuously rehired
(Maraguinot case) – becomes regular for the specific job
continuously rehired for
a. The employee is continuously rehired from project to project
even with gaps of time in between
b. Task is UNOD in UTOB, or else the project ee is considered
only a casual ee
c. Rehired for the same task or nature of task.
A project employee converted to regular employee is still not
paid for the period he does not work. But the employer is
required to hire him when the next project requires he particular
job he does, or else, the employer is guilty of illegal termination.
Project employee:
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Those employed for a fixed project or specific task, the completion of
which has been determined and made known to the ee at the time of
engagement. Two kinds:
1. Tasks which are UNOD in UTOB
2. Tasks which are not UNOD in UTOB
a. The job must be distinct from the totality of the er’s business
b. The project must be definite as to its completion
c. Employment terminates with the project, regardless of the
period
A Workpool is not necessary in order to convert the project ee into
regular. But its existence may signify that the proj. ee has become
regular if there is continuous rehiring.
Fixed Term:
The job is assigned a specific date of expiration even if the job is
considered UNOD in UTOB. The important aspect is that the job is
time bound.
Brent School ruling: requirements for a valid FT employment:
a. The parties dealt on equal footing (bargaining position)
b. The contract is reasonable, not oppressive
c. The employee entered into it voluntarily
d. There is no intent to circumvent labor laws
e. Usually apply to teachers; sadly, it is used in other types of jobs
and has been subject of abuse
Seasonal Employee:
Hired for a specific period of time during the year, and may be UNOD
in UTOB
- Rehired whenever their services are required (e.g. farmworkers)
- At the arrival of the season must be rehired, or else the er is
guilty of illegal termination
- Allowed to seek work elsewhere while off-season (Mercado case
is clarified by the Phil Tobacco case).
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Probationary Employee:
Hired for 6 months to determine qualification, or capacity as a regular
employee, though an ee can become regular right away without
going through probation
- The employee is given the standards at the time of engagement
(employer must explain, not merely giving document)
- General rule is that it is limited to 6 months, except
a. When the qualifications cannot be determined during the 6
months, as part of company policy
b. When the ee is the one who asked for the extension
Casual Employee:
- One who does not fall under the definition of a regular, project,
seasonal or fixed employee
- The job is not UNOD in UTOB
- Casual converted to regular after rendering more than a
year of service with respect to that activity employed,
whether continuous or broken
- If broken but has served more than one year already, during
the intervals he does not have work due to temporary lay-
off, he can look for another job, but not during the times the
er needs him.
- Any doubts must be resolved in favor of regular employment
(PFCCI case)
Lecture (Part Two)
Types of employment
Remember that the presumption is in favor of regular
employment. It may be shown that one is not a regular employee,
but proof must be given to show this.
How to determine regular employment? The nature of the
work is UNOD in UTOB of the employer, and if a casual is employed
for more than one year, he is considered an employee.
Probationary employment:
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probe period is 6 months for the employer to determine the eligibility
of the employee. But the period may be shortened or extended.
Probe converts to regular after the period imposed has lapsed, and
the employee continues to work. It implies that the employee has
passed and is eligible for regular employment. Also, if the terms and
conditions of employment are not clearly provided by the employer,
the standards are not clear then the employee is deemed a regular
employee. This is because the employee has no knowledge of what
standards he or she must meet, and so this should not work to his or
her prejudice.
Project employment:
Project employee is one who works for a specific project or
undertaking which is separate and distinct from the main business of
the employer. E.g. the Ateneo Law School wants to computerize its
records. The employees hired to do such are project employees. But
remember the project or undertaking MAY be within the regular
business of the employer. That is, it may be necessary or desirable
to the main business. But it is considered a project because it is
distinguishable as separate from the main business.
There are three instances when the project employee is
converted into a regular employee.
1. A project employee may be converted to regular status when he
was employed for a specific project, the completion of which is
determined, but despite the termination of the project, he is still
made to work. It negates the essence of project employment. It
shows the employee’s work is needed not only in the specific
project.
2. Within the project itself, and before the completion of the project,
the employee is given tasks not related at all to the project.
Giving the employee additional work negates again the essence
of project employment. It shows again the need of his services is
not limited to the project. Even if the extra work is not UNOD in
UTOB to the main business, he is converted to a regular
employee.
3. The case of Maraguinot. Under multiple succeeding projects,
can you have gaps between each project, and the employee still
be converted to regular status? YES. But only when the project
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employee is rehired continuously, and for the same nature of
task. There is a pattern showing that UNOD in UTOB.
Remember that the one year rule in the Code applies only to
casual employment, not to project nor seasonal employees.
If a project employee is converted to a regular employee,
when can he reckon his conversion to regular employment? At the
start of the project? According to Sir, there is no clear answer to that.
Two possible options: One is to say that regular employment starts
from day one, because it can be analogous to the ground of
“psychological incapacity” under the Family Code. Theoretically it
should have existed from the very start, even if it manifests much
later. Hence, one theory is that from day one, the work done is
UNOD in UTOB, thus regular employee from day one.
The second option is after showing a series of rehiring, a
pattern, only then will conversion occur. But it is hard to determine
what exact date the regular employment will be counted – should it
be counted from the start of the third project? Or from the second
project? Etc. etc. Again, there is no clear-cut formula.
Casual Employment:
A casual employee is one whose employment is not UNOD in UTOB,
but his term of employment is not made known at the time of the
employment, unlike a project ee. A casual converts to regular ee if
after one year of service, whether continuous or broken, he still
works for the employer. The length of time is an indication that his
job is UNOD in UTOB.
Now what if this scenario happens:
hired hired again hired again
6 months vacancy 7 months vacancy
6 months
regular
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In this case, the employee becomes regular after one year,
that is, under the second undertaking. Hence he is deemed a regular
employee, and so he may demand to be rehired when there is
another available undertaking, even though the intervals between
jobs may stretch to months. During the second vacancy, the
employee is still considered a regular employee, but since there is
no job to do, the Court considers this a temporary lay-off without pay.
Hence he is still a regular employee who follows the “no work, no
pay” rule.
The same principle “temporary lay off” applies to a project
and seasonal employee/employment, who acquires regular
employment. Such employee can demand that he be rehired for the
next casual work. If the company hires someone else, then it is guilty
of illegal termination – illegally terminating the employee converted
to regular employee.
During the period that he is temporarily laid off, the worker
may seek work elsewhere. This will not negate his conversion to a
regular employee in the first company.
After the one year, the employee has the right to demand
that he be rehired for succeeding undertakings. Conversely,
management can demand and compel the employee to report for
work for the next undertaking. If the employee is working elsewhere,
then the employer can deem the employee as refusing to work, a
ground for disciplinary action and termination.
REMEMBER: A casual employee becomes regular after
completion of service of one year for the SAME task or nature of
tasks. He must complete the one year period for the SAME
tasks/nature of tasks. So let’s say for the second undertaking he was
hired as a driver, but in the first undertaking he was hired as a
waiter, then there is no conversion. The Principle in project or
seasonal employment that once a project/seasonal employee is
made to do tasks other than or outside of the work for which he was
hired makes him a regular employee, DOES NOT apply to casual
employment.
* The codal provisions are very important especially for bar
purposes. The cases are interpretations of the provisions. You must
know the provisions first before the cases.
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Seasonal Employment:
In this case, conversion occurs similar to project employees.
When they are continuously rehired for the same task/nature of task,
they become regular employees. During off-season, they are
temporarily laid off, without pay, but they are still considered regular
employees.
So during off-season, the relationship is still continuous.
“Regular seasonal employees”. Sir uses this term only because the
Court used it. But the correct term should be “seasonal employees
converted to regular employees. Anyway, the hiring must be for the
same task/nature of task. If not, there is no pattern for UNOD in
UTOB. Except in cases where the employer hires an “all around”
person. Obviously, not the same nature of task. But there is still that
pattern showing his services are UNOD in UTOB. So he becomes
regular as well. In the Phil. Tobacco case, the workers were hired
season after season after season. So obviously they were regular
employees.
Remember our discussion awhile ago, regarding project
employees, as to when to reckon an employee to be regular once
there is conversion? The same two scenarios apply to seasonal
employees. There is also no clear-cut answer to seasonal
employees. But it is easier to defend the first scenario that from day
one they were regular, it became manifest only after some time. Use
the principle of resolving all doubts in favor of labor. Otherwise it will
be difficult to defend the time of conversion.
Remember that once an employee is converted to a regular
employee, he should enjoy or derive all benefits covered by the CBA
that is given to regular employees. Now, look at the codal provision.
In effect, it says that if one is not regular, he is project/seasonal. If he
is not project/seasonal, he is casual. But there is another type of
employment created by jurisprudential rule:
Fixed Term employment:
Unlike project, where what is fixed is the term of completion
of the project, in Fixed Term, the PERIOD of employment is fixed.
The Court clarified that Fixed term is allowed only if:
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 it was entered into by both parties negotiating on a more-or-less
equal bargaining position
 the worker should not be coerced
 the worker should not be deprived of his workers rights as an
employee
 it must be a good faith agreement, not entered into by the
employer to circumvent the law on regular employment
This is the Brent ruling. The Court upheld this pursuant to
provisions on the Civil Code, that one must respect the terms of a
contract entered into by the parties. Is this correct? Partly yes,
essentially no. Yes the CC contains the provisions recognizing the
parties’ rights to fix the terms of a contract. But the CC itself says
that for employment relationship it is not the CC that applies but
rather the Labor Code. For a contract of employment is not an
ordinary contract-it is so vested with public interest that it should be
covered by special provisions. Even the CC points us back to special
laws.
Is the Brent doctrine applicable to any situation? No. It will
NOT apply to a factory and a factory worker. Remember that the
people involved in Brent were the school and an athletic director.
Similar to a probationary/project/seasonal employee being
made to work beyond the period/project/season, a fixed term
employee made to work beyond the fixed term should be considered
regular, because it negates the essence of fixed term employment.
Even if the parties bargained on equal footing. Second, is repeatedly
rehiring the fixed term employee through fixed term employment
contracts. The element of circumvention in this case is clearly
shown. It lacks one of the conditions under the Brent doctrine that
the fixed term employment must be done in good faith. Hence in the
second situation the employee should be deemed regular as well.
Remember that it is not a general rule that you can fix the
term of employment. It is an exceptional case that must be applied in
exceptional circumstances. The general rule is one is a regular
employee. Remember the rule in statutory construction – that
exceptions to the general rule must be construed strictly. So if you
are not sure whether the employee falls under one of the exceptional
circumstances, then he should be deemed regular. Is there a
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problem with that? There is none because an employer can hire an
employee as regular starting from day one.
B. SECURITY OF TENURE
LABOR CODE
Art. 277. Miscellaneous Provisions. —
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected
against dismissal except for a just or authorized cause
and without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall
furnish the workers whose employment is so sought to
be terminated a written notice containing a statement
of the cause for termination and shall afford the latter
ample opportunity to be heard and to defend himself
with the assistance of his representative if he so
desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by
the Department of Labor and Employment. Any
decision taken by employer shall be without prejudice
to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations
Commission. The burden of proving that the
termination was for a valid or authorized cause shall
rest on the employer. The Secretary of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate
official of the Department of Labor and Employment
before whom such dispute is pending that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off. (As amended by RA
6715)
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ART. 279. 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 to his backwages computed from the
time his compensation was withheld from him up to time of
his actual reinstatement. (As amended by RA 6715)
ART. 282. Termination by employer. — An employer
may terminate an employment for any of the following just
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
representative; and
(e) Other causes analogous to the foregoing.
ART. 283. Closure of establishment and reduction of
personnel. — The employer may also terminate the
employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this title, by
serving a written notice on the workers and the Department
of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the
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worker affected thereby shall be entitled to a separation pay
equivalent to at least one (1) month pay or to at least one
(1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
Art. 284. 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 the health of his co-employees:
Provided, That he is paid separation pay equivalent to at
least one month salary or to one-half month salary for
every year of service, whichever is greater, a fraction of at
least six months being considered as one whole year.
Art. 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 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 or his representative;
(3) Commission of a crime or offense by the
employer or his representative against the
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person of the employee or any of the immediate
members of his family; and
(4) Other causes analogous to any of the foregoing.
Art. 286. When employment not deemed terminated. —
The bona fide suspension of the operation of a business or
undertaking for a period not exceeding six 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 month from the resumption of
operations of his employer or from his relief from the
military or civic duty.
Art. 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 or other
agreements: Provided, however, That an employee’s
retirement benefits under any collective bargaining and
other agreements shall not be less than those provided
herein.
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 (1/2) month salary for
every year of service, a fraction of at least six (6) months
being considered as one whole year.
Page 38 of 149
Unless the parties provide for broader inclusions, the
term “one half (1/2) 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.
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.
OMNIBUS RULES IMPLEMENTING BOOK VI
SECTION 2. Security of tenure. — (a) In cases of regular
employment, the employer shall not terminate the service of an
employee except for just or authorized causes as provided by law,
and subject to the requirements of due process.
(b) The foregoing shall also apply in cases of probationary
employment; provided, however, that in such cases, termination of
employment due to failure of the employee to qualify in accordance
with the standards of the employer made known to the former at the
time engagement may also be a ground for termination of
employment.
(c) In cases of employment covered by contracting or
subcontracting arrangement, no employee shall be dismissed prior to
the expiration of the contract between the principal and contractor or
subcontractor as defined in Rule VIII-A, Book III of these Rules,
unless the dismissal is for just or authorized cause, or is brought
about by the completion of the phase of the contract for which the
employee was engaged, but in any case, subject to the requirements
of due process or prior notice.
(d) In all cases of termination of employment, the following
standards of due process shall be substantially observed:
For determination of employment based on just causes as defined in
Article 282 of the Labor Code:
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(i) A written notice served on the employee specifying the
ground or grounds for termination, and giving said employee
reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires is give
opportunity to respond to the charge, present his evidence, or rebut
the evidence presented against him.
(iii) A 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.
For termination of employment as defined in Article 283 of the Labor
Code, the requirement of due process shall be deemed complied
with upon service of a written notice to the employee and the
appropriate Regional Office of the Department of Labor and
Employment at least thirty days before effectivity of the termination,
specifying the ground or grounds for termination.
If the termination is brought about by the completion of a contract or
phase thereof, or by failure of an employee to meet the standards of
the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee within a
reasonable time from the effective date of termination.
SECTION 5. (a) Regular employment. The provisions of written
agreements to the contrary notwithstanding and regardless of the
oral agreements of the parties, employment shall be deemed regular
for purposes of Book VI of the Labor code where the employees has
been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the 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 job, work or service to be performed is seasonal in nature and
the employment is for the duration of the season.
(b) Casual employment. There is casual employment where an
employee is engaged to perform a job, work or service which is
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
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activity in which he is employed and his employment shall continue
while such activity exists.
Notwithstanding the foregoing distinctions every employee shall be
entitled to the rights and privileges and shall be subject to the duties
and obligations, as may be granted by law to regular employees
during the period of their actual employment.
SECTION 6. Probationary employment. — There is probationary
employment where the employee upon his engagement, is made to
undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable
standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:
(a) where the work for which the employee has been engaged is
learned or apprenticeable in accordance with the standards
prescribed by the Department of Labor and Employment, the period
of probationary employment shall be limited to authorized learnership
or apprenticeship, period which is applicable.
(b) Where the work is either learnable nor apprenticeable, the
period of probationary employment shall not exceed six months
reckoned from the date the employee actually started working.
(c) The services of any employee who has been engaged on
probationary basis may be terminated only for a just or authorized
cause, when he fails to qualify as a regular employee in accordance
with reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall
make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement. Where
no standards are made known to the employee at that time, he shall
be deemed a regular employee.
OMNIBUS RULES IMPLEMENTING BOOK V AS AMENDED BY
DO 40-03
RULE XXIII
CONTEMPT
Section 1. Direct contempt; Person guilty of misbehavior. - A
person guilty of misbehavior in the presence of or so near the
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Atty. Marlon Manuel
Secretary, the Chairman or any member of the Commission, Bureau
Director or any Labor Arbiter as to obstruct or interrupt the
proceedings before the same, including disrespect toward said
officials, offensive personalities toward others, or refusal to be sworn
or to answer as a witness or to subscribe an affidavit or deposition
when lawfully required to do so may be summarily adjudged in direct
contempt by said officials and punished by fines not exceeding five
hundred pesos (P500.00) or imprisonment not exceeding five (5)
days or both, if it be the Secretary, the Commission or members
thereof, or a fine not exceeding one hundred pesos (P100.00) or
imprisonment not exceeding one (1) day, or both, if it be the Bureau
Director or Labor Arbiter.
The person adjudged in direct contempt by a Labor Arbiter may
appeal to the Commission while the person adjudged in direct
contempt by the Bureau Director may appeal to the Secretary. The
execution of the judgment shall be suspended pending the resolution
of the appeal upon the filing by such person of a bond on condition
that he will abide by and perform the judgment should the appeal be
decided against him. The judgment of the Commission and the
Secretary is immediately executory and inappealable.
Section 2. Indirect contempt. -- Indirect contempt shall be dealt
with by the Secretary, Commission, Bureau Director or Labor Arbiter
in the manner prescribed under Rule 71 of the Revised Rules of
Court.
1. JUST CAUSES
(a) GROUNDS
SERIOUS MISCONDUCT
Asian Design & Manufacturing Corp. vs. Deputy Minister of
Labor, 142 SCRA 79
Page 40 of 149
Evelyn Chua-Qua vs. Clave, 189 SCRA 117
“Love has its reasons which reason itself does not know…”
Petitioner is a teacher in Tay Tung High School in Bacolod. She has
been teaching for 13 years when the dispute arose because a student,
one Booby Qua, was assigned to remedial instructions after class.
Because of this, they fell in love and eventually got married. Tay
Tung dismissed her on the ground of immorality or grave
misconduct.
Held:
1. On due process, there is no denial of due process where a party
was afforded an opportunity to present his side. Also, the
procedure by which issues are resolved based on position
papers, affidavits and other documentary evidence is
recognized as not violative of such right.
2. Now, on the merits. The determination of the legality of the
dismissal hinges on the issue of whether or not there is
substantial evidence to prove that the antecedent facts which
culminated in the marriage between petitioner and her student
constitute immorality and or grave misconduct. There is,
however no direct evidence on record which proves the
charges of immorality and grave misconduct by petitioner. It
would seem quite obvious that the avowed policy of the school
in rearing and educating children is being unnecessarily
bannered to justify the dismissal of petitioner. This policy,
however, is not at odds with and should not be capitalized on
to defeat the security of tenure granted by the Constitution to
labor. In termination cases, the burden of proving just and
valid cause for dismissing an employee rests on the employer
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and his failure to do so would result in a finding that the
dismissal is unjustified. The charge against petitioner not
having been substantiated, we declare her dismissal as
unwarranted and illegal.
St. Mary’s College vs. NLRC, 181 SCRA 62
Autobus Workers vs. NLRC, 291 SCRA 219
Ricardo E. Escanlar worked with Autobus as a Cutting Machine
Operator. He was later elected President of the Autobus Workers’
Union (AWU), the union for the rank and file employees. He was
transferred to another division and he allegedly used profane or
obscene language against his manager in the division. After
investigation, Escanlar was dismissed on gross misconduct.
Held:
1. Misconduct is improper or wrong conduct. It is the
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. The
misconduct must be of such a grave and aggravated character
and not merely trivial or unimportant. The charge of serious
misconduct finds ample support in the record. Petitioner failed
to satisfactorily rebut this accusation, his only defense being
self-serving denials.
2. It is the prerogative of management, in the interest of effective
operations, to transfer employees in good faith, if it means
better operations.
3. The twin requirements of notice and hearing constitute the
essential elements of due process. Due process of law simply
means giving opportunity to be heard before judgment is
rendered. In fact, there is no violation of due process even if
no hearing was conducted, where the party was given a chance
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to explain his side of the controversy. What is frowned upon is
the denial of the opportunity to be heard.
Samson v. NLRC, 330 SCRA 460
Samson was dismissed from work due to utterances of obscene,
insulting and offensive words, referring to or directed against the
company’s management committee.
Held: Invalid dismissal. The company argued that the actuation of
Samson constituted gross misconduct warranting his dismissal. The
court however said that misconduct is improper or wrong conduct. It
is the 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. The misconduct to
be serious must be of such grave and aggravated character and not
merely trivial and unimportant. Such misconduct, however serious,
must nevertheless, be in connection with the employee’s work to
constitute just cause for his separation.
In this case, the alleged misconduct of Samson, when viewed
in its context, is not of such serious and grave character as to warrant
his dismissal. The utterances were made during an informal
Christmas gathering of the company’s district sales managers. There
was probably a little bit of drinking going on. Employees should be
allowed wider latitude to freely express their sentiments during these
kinds of occasions.
The outbursts were not pointed to any senior employees and
were not intended to malign any person from the management. It
was just a reaction on a certain case involving the company. The
court did not consider it a case were utter lack of respect for
superiors was patent.
WILLFUL DISOBEDIENCE
Family Planning Organization of the Philippines vs. NLRC, 207
SCRA 415
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Cando vs. NLRC, 189 SCRA 666

Mabeza vs. NLRC, 271 SCRA 670

Norma Mabeza contends that she was made to sign by the hotel’s
management an instrument attesting to the latter’s compliance with
minimum wage and other labor standard provisions of law. She
refused to swear to the instrument however. She was chided by
management for her refusal to swear the affidavit. She went on LOA
but when she returned, she was not accepted. Filed case for illegal
dismissal.
Held:
1. It is settled that in termination cases the employer bears the
Gold City Integrated Port Services vs. NLRC, 189 SCRA 811 burden of proof to show that the dismissal is for just cause, the
failure of which would mean that the dismissal is not justified
and the employee is entitled to reinstatement.
2. The claim of abandonment by the employer cannot be
sustained as for abandonment to arise, there must be
concurrence of two things: 1) lack of intention to work; and 2)
the presence of overt acts signifying the employee’s intention
not to work. The fact that she returned after her LOA negates
an intention to abandon.
3. Loss of confidence as a just cause for dismissal was never
intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing
pretext as loss of confidence, if unqualifiedly given the seal of
approval by this Court, could readily reduce to barren form the
words of the constitutional guarantee of security of tenure.
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Having this in mind, loss of confidence should ideally apply
only to cases involving employees occupying positions of trust
and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer’s
money or property. To the first class belong managerial
employees, i.e., those vested with the powers or prerogatives
to lay down management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions;
and to the second class belong cashiers, auditors, property
custodians, etc., or those who, in the normal and routine
exercise of their functions, regularly handle significant
amounts of money or property. Evidently, an ordinary
chambermaid who has to sign out for linen and other hotel
property from the property custodian each day and who has to
account for each and every towel or bedsheet utilized by the
hotel’s guests at the end of her shift would not fall under any
of these two classes of employees for which loss of
confidence, if ably supported by evidence, would normally
apply.
Cosep vs. NLRC, 290 SCRA 704
Alma Cosep, et. al. were regular employees of Premiere
Development Bank at its Guadalupe Branch. When one of her co-
employees was suspended on alleged malversation of money
belonging to its clients, petitioners wrote an open letter which
criticized private respondent’s handling of the case. Bank sent to
each petitioner a memorandum dismissing them from the service
effective immediately, on the ground that they undermined the
interest of the bank.
Held:
1. For there be willful disobedience of the employer’s lawful
orders, as a just cause for dismissal of an employee, the
concurrence of at least two (2) requisites is needed: the
employee’s assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful
Page 43 of 149
and perverse attitude; and the order violated must have been
reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.
2. The Bank has not established nor presented sufficient basis for
the dismissal of petitioners from service on the ground of
serious misconduct. Misconduct is improper or wrong
conduct. It is the 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. The misconduct to be serious within the
meaning of the Act must be of such a grave and aggravated
character and not merely trivial or unimportant. Such
misconduct, however serious, must, nevertheless, be in
connection with the employee’s work to constitute just cause
for his separation.
Escobin vs. NLRC, 289 SCRA 48
PEFTOK is a watchman and protective agency while UP-NDC is a
corp. which is the owner/possessor of lands in Basilan. The
petitioners are guards hired to worl in guarding the plantation. Later,
they were dismissed by PISI for insubordination and grave
misconduct, as a result of their refusal to ring the bell in the evening
while on duty in the premises of the plantation. But it was revoked
upon intervention of Congressman. What the agency did was to
transfer them to Manila. Petitioners did not report to Manila.
Dismissed again for disobedience.
Held:
1. Disobedience, to be a just cause for termination, must be
willful or intentional, willfulness being characterized by a
wrongful and perverse mental attitude rendering the
employee’s act inconsistent with proper subordination. A
willful or intentional disobedience of such rule, order or
instruction justifies dismissal only where such 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.
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2. First, it was grossly inconvenient for petitioners, who were
residents and heads of families residing in Basilan, to
commute to Manila. Second, petitioners were not provided
with funds to defray their transportation and living expenses.
The right to transfer employees from one office to another —
provided there is no demotion in rank or diminution of salary,
benefits and other privileges — is judicially recognized as a
prerogative inherent in the employer’s right to effectively
control and manage the enterprise. But this principle is not at
issue here. The issue is whether petitioners’ alleged
disobedience constituted a just and valid cause to dismiss
them. It is obvious to us that the dismissal was effected with
mala fides, as it was intended to punish petitioners for their
refusal to heed their employer’s unreasonable directive.
3. Abandonment, as a just and valid cause for dismissal, requires
a deliberate, unjustified refusal of an employee to resume his
work, coupled with a clear absence of any intention of
returning to his work. No evidence was presented to establish
that petitioners relinquished their jobs.
4. Constructive discharge is an involuntary resignation resorted
to when continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank
and/or a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to
the employee. In this particular case, petitioners were not
constructively dismissed; they were actually dismissed without
just and valid cause.
Lagatic vs. NLRC, 285 SCRA 251
Lagatic was employed in May 1986 by Cityland as a marketing
specialist. He was tasked with making client calls and cold calls,
among others. Cold calls refer to the practice of prospecting for
clients through the telephone directory. Cityland requires the
submission of daily progress reports on the same.
Cityland issued a written reprimand to Lagatic for his
failure to submit cold call reports. Lagatic claimed that the same
Page 44 of 149
was an honest omission brought about by his concentration on other
aspects of his job. Cityland found said excuse inadequate and
suspended him for 3 days, with similar warning. Lagatic again
failed to submit cold call reports. He was verbally reminded to
submit the same. Instead of complying with said directive, he wrote
a note, “TO HELL WITH COLD CALLS! WHO CARES?” and
exhibited the same to his co-employees. To worsen matters, he left
the same lying on his desk where everyone could see it.
Held: An employee may be validly dismissed for violation of a
reasonable company rule or regulation adopted for the conduct of
the company business. An employer cannot rationally be expected
to retain the employment of a person whose…lack of regard for his
employer’s rules…has so plainly and completely been bared.
Willful disobedience requires the concurrence of at least
two requisites: the employee’s assailed conduct must have been
willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; and the order violated must have
been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.
The requirement of a hearing is complied with as long as
there was an opportunity to be heard, and not necessarily that an
actual hearing be conducted. Lagatic had an opportunity to be heard
as he submitted a letter reply to the charge. There is no necessity for
a formal hearing where an employee admits responsibility for an
alleged misconduct.
Additionally, there is no law which requires employers to
pay commissions, and when they do so, as stated in the letter-
opinion of the DOLE dated February 19, 1993, “there is no law
which prescribed a method for computing commissions. The
determination of the amount of commissions is the result of
collective bargaining negotiations, individual employment contracts
or established employer practice.” Sine the formula for the
computation of commissions was presented to and accepted by
Lagatic, such prescribed formula is in order. As to the allegation
that said formula diminishes the benefits being received by him
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whenever there is a wage increase, it must be noted that his
commissions are not meant to be in a fixed amount. In fact, there
was no assurance that he would receive any commission at all.
Non-diminution of benefits, as applied here, merely means that the
company may not remove the privilege of sales personnel to earn a
commission, not that they are entitled to a fixed amount thereof.
It is Cityland’s practice to offset rest day or holiday work
with equivalent time on a regular workday on the ground that the
same is authorized by DO 21, Series of 1990. Said D.O. was
misapplied in this case which it involves the shortening of the
workweek from 6 days to 5 days but with prolonged hours on those
5 days. Under this scheme, non-payment of overtime premiums was
allowed in exchange for longer weekends for employees. In the
instant case, Lagatic’s workweek was never compressed. Instead, he
claims payment for work over and above his normal 5 ½ days of
work in a week. Applying by analogy the principle that overtime
cannot be offset by under time, to allow offsetting would prejudice
the worker. He would be deprived of the additional pay for the rest
day work he has rendered and which is utilized to offset his
equivalent time off on regular workdays. To allow Cityland to do so
would be to circumvent the law on payment of premiums for the
rest they day and holiday work.
Notwithstanding the foregoing discussion, Lagatic failed to
show his entitlement to overtime and rest day pay due, to the lack of
sufficient evidence as to the number of days and hours when he
rendered overtime and rest day work. Entitlement to overtime pay
must first be established by proof that said overtime work was
actually performed, before an employee may avail of said benefit.
To support his allegations, Lagatic submitted in evidence minutes of
meetings wherein he was assigned to work on weekends and
holidays at Cityland’s housing projects. Said minutes do not prove
that he actually worked on said dates.
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NEGLIGENCE; ABANDONMENT
PAL vs. NLRC, 194 SCRA 139
Nathaniel Pinuela was ground equipment and tug operator for PAL.
He was 5 years employed when incident occurred. He was towing a
plane which crashed into a bridge causing damage to the plane. After
investigation, he was dismissed.
Held: Pinuela was comparing with other sanctions imposed by PAL
on other erring employees. The SC said: Lastly, Pinuela should not
compare the penalty of dismissal imposed on him in relation to lesser
sanctions previously meted by PAL on its other employees. We are
solely concerned here with the sufficiency of the evidence
surrounding Pinuela’s dismissal. Besides, Pinuela’s examples do not
involve a plane with a scheduled flight. A mere delay on petitioner’s
flight schedule due to aircraft damage entails problems like hotel
accommodations for its passengers, re-booking, the possibility of law
suits, and payment of special landing fees not to mention the soaring
costs of replacing aircraft parts. All told, Pinuela’s gross negligence
which called for dismissal is evident.
Judy Phils. vs. NLRC, 289 SCRA 755
Virginia Antiola was employed by petitioner Judy Philippines as an
assorter of baby infant dresses. Virginia Antiola was directed by her
supervisor, to sort out baby infant dresses pursuant to an instruction
sheet. She was subsequently made to explain her erroneous
assortment and packaging of 2,680 dozens of infant wear. She was
dismissed for negligence.
Held: Article 282(b) of the Labor Code requires that . . . such
neglect must not only be gross, it should be ‘Gross and habitual
neglect’ in character.” There is no doubt that Antiola was negligent,
nonetheless, her wrongdoing does not warrant dismissal inasmuch as
dismissal is the ultimate penalty that can be meted to an employee.
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NASUREFCO vs. NLRC, 286 SCRA 476
Del Monte vs. NLRC, 287 SCRA 71
Procesa Alsola was a packer paid by the hour in Del Monte Cagayan
de Oro. For incurring a total of 57 days of absences without
permission, she was sent a total of 17 show-cause letters requiring
her to explain her absences. Hence, she was dismissed after failure to
show cause.
Held:
1. The rule is that an employer’s power to discipline its workers
may not be exercised in an arbitrary manner as to erode the
constitutional guarantee of security of tenure. Here, the
company did not follow its own procedure when instead of
reprimanding and following the scales of penalties in
successive violations of rules, what they did was to dismiss her
outright.
2. Abandonment, as a just and valid ground for termination,
means the deliberate, unjustified refusal of an employee to
resume his employment. The burden of proof is on the
employer to show a clear and deliberate intent on the part of
the employee to discontinue employment. The intent cannot
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be lightly inferred or legally presumed from certain equivocal
acts. For abandonment to be a valid ground for dismissal, two
(2) elements must be proved: the intention of an employee to
abandon, coupled with an overt act from which it may be
inferred that the employee has no more intent to resume his
work. In the case at bar, these elements were not established.
VH Manufacturing, Inc. v. NLRC, GR 130957, January 19, 2000
Gamido was allegedly caught sleeping on the job. He was
terminated for violation of company rules which provide for a
penalty of separation for sleeping during work hours. He questioned
the decision.
Held: Not a valid termination. In termination disputes, the burden
of proof is always on the employer to prove that the dismissal was
for a just and valid cause. The records show that the allegation that
Gamido was sleeping was not substantiated by any convincing
evidence other than the bare allegation of the company. Also,
sleeping on the job is not always a valid ground for dismissal. The
court has only allowed termination of security guards whose duty
necessitates that they be awake and watchful at all times. While an
employer enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations, these directives must always be fair
and reasonable, and the corresponding penalties must be
commensurate to the offense involved and to the degree of the
infraction. Here, the dismissal under the circumstances appears to be
too harsh a penalty.
Jo v. NLRC, GR 121605, February 2, 2000, 324 SCRA 437
Mejila, a barber, got into an altercation with a co-barber. He
reported the incident to the labor department, which investigated the
matter and called several conferences for mediating the problem.
Mejila did not attend the meetings but turned over his keys to the
barber shop, took all his belongings and began working for another
barber shop. He then filed a complaint for illegal dismissal.
Held: There was abandonment, not illegal dismissal. To constitute
abandonment, there must be concurrence of the intention to abandon
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and some overt acts from which it may be inferred that the employee more determinative factor and being manifested by some overt acts.
concerned has no more interest in working. There must be a clear, Mere absence is not sufficient. To prove abandonment, the employer
deliberate and unjustified refusal to resume employment and a clear must show that the employee deliberately and unjustifiably refused
intention to sever the employer-employee relationship on the part of to resume his employment without any intention of returning. Here,
the employee. Here, such elements are present. no such intention was manifested. After getting his license, he
immediately reported for work. Plus, upon learning of his dismissal,
Metro Transit v. NLRC, 307 SCRA 747 he filed a case for illegal dismissal. A charge of abandonment is
Turing was dismissed for abandonment of work. He was always totally inconsistent with the immediate filing of a complaint for
absent without leave allegedly because of domestic problems (iniwan illegal dismissal.
ng asawa). He questioned the dismissal.
Held: Illegal dismissal. For abandonment of work to be a just and FRAUD / BREACH OF TRUST / LOST OF CONFIDENCE
valid cause for dismissal, there must be a deliberate and unjustified
refusal on the part of an employee to resume his employment. The Firestone Tire & Rubber Co. vs. Lariosa, 148 SCRA 187
burden of proof is on the employer to show an unequivocal intent on
the part of the employee to discontinue employment. To warrant a
finding of abandonment, there must be evidence not only of the
failure of an employee to report for work or his absence without
valid or justifiable reason, but also of his intention to sever the
employer-employee relationship. The second element is the more
determinative factor, being manifested by overt acts.
Here, Turing cannot be said to have abandoned his work.
No proof of overt acts showing clearly his intention to abandon his
work. Upon learning he had been dismissed, he filed an illegal
dismissal case. The court has ruled in so many cases that a timely
filing of an illegal dismissal case negates abandonment of work. International Harvester Macleod vs. IAC, 149 SCRA 641

Icawat v. NLRC, GR 133573, June 20, 2000

Yape, a driver, lost his driver’s license. He sought his employer’s
permission to go on leave to secure a new one. When he got his new
license, he reported for work but was informed that a new driver had
already taken his place. He filed a case for illegal dismissal.
Held: Illegal dismissal. To constitute abandonment, two elements
must concur : (1) the failure to report for work or absence without
valid or justifiable reason, and (2) a clear intention to sever the
employer-employee relationship, with the second element as the
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Caoile vs. NLRC, 299 SCRA 76
Caoile was hired by Coca-Cola as an Electronic Data Processing
Supervisor. He was later dismissed on the ground of loss of trust and
confidence for his involvement in an anomalous encashment of
check payments made by a contractor.
Held: Law and jurisprudence have long recognized the right of
employers to dismiss employees by reason of loss of trust and
confidence. In the case of supervisors or personnel occupying
positions of responsibility, loss of trust and confidence justifies
termination. This ground is premised from the fact that an employee
concerned holds a position of trust and confidence. This situation
holds where a person is entrusted with confidence on delicate
matters, such as custody, handling, or care of the employer’s
property. It must also be “work-related”.
Farrol v. CA, GR 133259, February 10, 2000
Farrol, a cashier, was dismissed for having cash shortage. It was due
to the violation of a company circular which requires daily and up-
to-date preparation of statistical reports and depositing of cash
collections twice a day. He requested that he be reinstated, then after
a while, manifested that he was willing to settle the case. When the
company denied the request, he sued for illegal dismissal.
Held: Illegal dismissal. It cannot be presumed that when there is
shortage, there is a corresponding breach of trust. Cash shortages in
a cashier’s work may happen, and when there is no proof that the
same was deliberately done for a fraudulent or wrongful purpose, it
cannot constitute breach of trust so as to render the dismissal from
work invalid. Assuming that there was breach of trust and
confidence, it was only the first infraction. Although the employer
has the prerogative to discipline or dismiss its employee, such
Page 48 of 149
prerogative cannot be exercised wantonly, but must be controlled by
substantive due process and tempered by the fundamental policy of
protection to labor enshrined in the constitution. Infractions
committed by an employee should merit only the corresponding
sanctions demanded by the circumstances. The penalty must be
commensurate with the act, conduct or omission imputed to the
employee and imposed in connection with the employer’s
disciplinary authority. Here, a lighter penalty would have been more
just considering it was just his first offense.
Deles v. NLRC, 327 SCRA 540, G.R. 121348
Deles was the shift supervisor of employer FPIC, and was tasked to
oversee the entire pipeline operation in the employer’s terminal. One
day, the quality of fuel delivered to FCPI’s pipelines suffered severe
downgrading of quality. Deles was placed under preventive
suspension. It was found that the mishap occurred due to the fact
that his subordinate failed to correctly execute his orders, and he
was found to have tampered with the pipeline equipment as well. He
was dismissed for loss of confidence.
Held: Valid dismissal. The ground of loss of trust and confidence
applies because Deles holds a position of trust and confidence.
The delicate nature of the business shows that the company
has to exercise extraordinary diligence in conducting its operations.
In this light, Deles is tasked to perform kay functions and is bound
by exacting work ethic. His position requires the full trust and
confidence of his employer in every exercise of managerial
discretion He tampered with very sensitive equipment which
exposed the complex and adjacent communities to the danger of a
major disaster that could be caused by tank explosions and
conflagration.
Dela Cruz v. NLRC, 268 SCRA 458
Dela Cruz was barred from the premises of the employer/company
and was handed a memorandum of her lay-off allegedly due to a
cost-saving program. Upon her return to work, she was put under
investigation for unauthorized possession of company property,
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equipment and supply punishable by outright dismissal (bag). She

was termiated for dishonesty. She filed a complaint for illegal
dismissal.
Held: The temporary lay-off was not valid. There should be good
faith. In this case, there was none. The company said it was for
cost-cutting. However, the court noted that Dela Cruz was the only
one laid-off. It was a sham.
In termination cases, the burden of proving just and
valid cause for dismissing an employee rests upon the Sulpicio Lines vs. Gulde, GR 149930, February 22, 2002
employer, and the latter’s failure to do so results in a finding
that the dismissal is unjustified. Although the alleged defense
of dela Cruz against the accusations against her were weak, the
employer must still show that the allegations are real. Akin to
a criminal case, the employer’s cause stands or falls on the
strength of is evidence, not on the weakness of the employee’s
defense. Here, the company was not able to show that dela
Cruz had violated the rules and that there was dishonesty on
her part.
National Bookstore vs. CA, GR 146741, February 27, 2002
An employer may terminate an employee due to loss of trust
and confidence. However, the loss must be based not on ordinary
breach by the latter of the trust reposed on him, but on willful breach.
A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable cause, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently. It must
rest on substantial grounds and not on the employer’s arbitrariness,
whims, caprices or suspicion, It should be genuine and not
IMMORALITY; SEXUAL HARRASMENT
simulated. Nor should it appear as a mere afterthought to justify
earlier action taken in bad faith or a subterfuge for causes which are
improper, illegal or unjustified. Here, the employee was not a Santos, Jr. vs. NLRC, 287 SCRA 117
managerial employee. Trust and confidence only applies to such Santos, a married man, was employed as a teacher by Hagonoy
employees. Institute. Likewise working as a teacher for Hagonoy was Mrs.
Arlene T. Martin, also married. In the course of their employment,
the couple fell in love. Thereafter, rumors regarding the couple’s
Gonzales vs. NLRC, March 26, 2001 relationship spread, especially among the faculty members and
school officials. What Hagonoy did was to advise Martin to take a
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LOA which Martin did not do. Based on her refusal, she was
dismissed.
Held:
1. Having an extra-marital affair is an affront to the sanctity of
marriage, which is a basic institution of society. Even our
Family Code provides that husband and wife must live
together, observe mutual love, respect and fidelity. As a
teacher, petitioner serves as an example to his pupils,
especially during their formative years and stands in loco
parentis to them. Consequently, it is but stating the obvious to
assert that teachers must adhere to the exacting standards of
morality and decency. There is no dichotomy of morality. A
teacher, both in his official and personal conduct, must display
exemplary behavior. He must freely and willingly accept
restrictions on his conduct that might be viewed irk-some by
ordinary citizens. In other words, the personal behavior of
teachers, in and outside the classroom, must be beyond
reproach. Accordingly, teachers must abide by a standard of
personal conduct which not only proscribes the commission of
immoral acts, but also prohibits behavior creating a suspicion
of immorality because of the harmful impression it might have
on the students. From the foregoing, it seems obvious that
when a teacher engages in extra-marital relationship,
especially when the parties are both married, such behavior
amounts to immorality, justifying his termination from
employment.
2. Having concluded that immorality is a just cause for
dismissing petitioner, it is imperative that the private
respondent prove the same. Since the burden of proof rests
upon the employer to show that the dismissal was for a just
and valid cause, the same must be supported by substantial
evidence. Here it was, so dismissal affirmed.
Page 50 of 149
Libres v. NLRC, 307 SCRA 675
Libres was put under investigation then was suspended for sexually
harassing a secretary. The findings were that he “touched a female
subordinate’s hand and shoulder, caressed her nape and told other
people that it was the girl who had hugged and kissed him or that she
responded to the sexual advances.” He questioned the suspension.
Held: Before R.A. 7877 (An Act Declaring Sexual Harassment
Unlawful in the Employment, Education or Training Environment
and for Other Purposes) was in effect, the Labor Arbiters had to rely
on the common connotation of sexual harassment as it is generally
understood by the public. It also relied upon the Managerial
Evaluation Committee Report (MEC) defining sexual harassment. It
said that “sexual harassment is an unwelcome or uninvited sexual
advance, request for sexual favors and other verbal or physical
conduct of sexual nature, and that such conduct unreasonably
interferes with the individual’s performance at work, or creates an
intimidating, hostile or offensive work environment.” The court
agreed that Libres, by his actions, had sexually harassed the
secretary. As a managerial employee, he is bound by more exacting
work ethics. He failed to live up to his standard of responsibility
when he succumbed to his moral perversity. And when such moral
perversity is perpetrated against his subordinate, he proves a
justifiable ground for his dismissal for lack of trust and confidence.
It is the right and duty of every employer to protect its employees
from oversexed superiors.
CRIME OR OFFENSE
Starlite Plastic Industrial Corp. vs. NLRC, 171 SCRA 315
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UNION SECURITY CLAUSE
MSMG-UWP v. Ramos, GR 113907, February 28, 2000
An intra-union dispute arose out of disputes from the election of
union officers. Several officers were dismissed from the union for
acts of disloyalty and inimical to the interest and violative of the
constitution and by-laws of the union. Since the union has a closed-
shop agreement in the CBA, the company terminated the ousted
union members.
Held: While a company may validly dismiss employees expelled by
the union for disloyalty under the union security clause of the CBA,
the dismissal should not be done hastily and summarily thereby
eroding the employees’ right to due process, self-organization and
security of tenure. The enforcement of union-security clauses is
authorized by law provided such enforcement is not characterized by
arbitrariness and always with due process. There must always be a
separate hearing conducted by the company before the expelled
union members are dismissed by the company.
(b) PROCEDURE IN TERMINATION
Salaw vs. NLRC, 202 SCRA 7
Espero Santos Salaw was employed by Associated Bank as a credit
investigator-appraiser. The police extorted a confession from to the
effect that he sold some foreclosed properties by the bank, the
proceeds of which he shared with a co-employee.
After a hearing, he was dismissed for alleged serious
misconduct or willful disobedience and fraud or willful breach of the
trust reposed on him.
Held:
Page 51 of 149
1. Under the Labor Code, an amended, the requirements for the
lawful dismissal of an employee by his employer are two-fold:
the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law
(Articles 279, 281, 282-284, New Labor Code), but the
rudimentary requirements of due process — notice of hearing
— must also be observed before an employee may be
dismissed. One does not suffice; without their concurrence, the
termination would, in the eyes of the law, be illegal.
2. The inviolability of notice and hearing for a valid dismissal of
an employee can not be over-emphasized. Those twin
requirements constitute essential elements of due process in
cases of employee dismissal. The requirement of notice is
intended to inform the employee concerned of the employer’s
intent to dismiss him and the reason for the proposed
dismissal; on the other hand, the requirement of hearing
affords the employee the opportunity to answer his employer’s
charges against him and accordingly to defend himself
therefrom before dismissal is effected. Neither one of these
two requirements can be dispensed with without running afoul
of the due process requirement of the Constitution.
3. The investigation of petitioner Salaw by the respondent
Bank’s investigating committee violated his constitutional
right to due process, in as much as he was not given a chance
to defend himself, as provided in Rule XIV, Book V of the
Implementing Rules and Regulations of the Labor Code
governing the dismissal of employees. Section 5 of the said
Rule requires that “the employer shall afford the worker ample
opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires.” Here
petitioner was perfunctorily denied the assistance of counsel
during the investigation to be conducted by the PDIC (not the
Phil. Dep. Ins. Corp, this is what they call their internal
discipline board). No reasons were proffered which vitiated
the denial with irregularity and unfairness. Significantly, the
dismissal of the petitioner from his employment was
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characterized by undue haste. The law is clear that even in the
disposition of labor cases, due process must not be
subordinated to expediency or dispatch. Otherwise, the
dismissal of the employee will be tainted with illegality.
4. In Santos v. NLRC (G.R. No. 76721, September 21, 1987, 154
SCRA 166), the SC held that “the normal consequences of a
finding that an employee has been illegally dismissed are,
firstly, that the employee becomes entitled to reinstatement to
his former position without loss of seniority rights and,
secondly, the payment of backwages corresponding to the
period from his illegal dismissal up to actual reinstatement.”
Wenphil vs. NLRC, 170 SCRA 69
Roberto Mallare was hired by Wendy’s as a crew member at its
Cubao Branch. Mallare had an altercation with a co-employee (near
the salad bar), Job Barrameda, as a result of which he was suspended
and subsequently dismissed. It is claimed by Wendy’s that Mallare
waived the right to investigation, hearing, etc.
Held:
1. Right not waived. Mere failure on the part of Mallare to
explain his actions after the incident is not a waiver.
2. The failure of petitioner to give private respondent the benefit
of a hearing before he was dismissed constitutes an
infringement of his constitutional right to due process of law
and equal protection of the laws.
3. HOWEVER, when Mallare was granted his rights to present
his side before the Labor arbiter, it was found that his
dismissal was indeed for just cause.The policy of ordering the
reinstatement to the service of an employee when it appears he
was not afforded due process, although his dismissal was
found to be for just and authorized cause should be re-
examined. It will be highly prejudicial to the interests of the
employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his
dismissal from employment.
Page 52 of 149
4. HOWEVER AGAIN, Wendy’s must nevertheless be held to
account for failure to extend to private respondent his right to
an investigation before causing his dismissal. It must be
imposed a sanction for its failure to give a formal notice and
conduct an investigation as required by law before dismissing
petitioner from employment. Tama na ang P1000 na parusa.
China City Restaurant Corp. vs. NLRC, 217 SCRA 443
Farrol v. CA, GR 133259, February 10, 2000
Farrol, a cashier, was dismissed for having cash shortage. It was due
to the violation of a company circular which requires daily and up-
to-date preparation of statistical reports and depositing of cash
collections twice a day. He requested that he be reinstated, then after
a while, manifested that he was willing to settle the case. When the
company denied the request, he sued for illegal dismissal.
Held: Illegal dismissal. It cannot be presumed that when there is
shortage, there is a corresponding breach of trust. Cash shortages in
a cashier’s work may happen, and when there is no proof that the
same was deliberately done for a fraudulent or wrongful purpose, it
cannot constitute breach of trust so as to render the dismissal from
work invalid. Assuming that there was breach of trust and
confidence, it was only the first infraction. Although the employer
has the prerogative to discipline or dismiss its employee, such
prerogative cannot be exercised wantonly, but must be controlled by
substantive due process and tempered by the fundamental policy of
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protection to labor enshrined in the constitution. Infractions
committed by an employee should merit only the corresponding
sanctions demanded by the circumstances. The penalty must be
commensurate with the act, conduct or omission imputed to the
employee and imposed in connection with the employer’s
disciplinary authority. Here, a lighter penalty would have been more
just considering it was just his first offense.
(c) DISPROPORTIONATE PENALTY
PAL vs. PALEA, 57 SCRA 489
ALU-TUCP v. NLRC, 302 SCRA 708
Felizardo was caught by a security guard bringing out company
property. He was dismissed for dishonesty and theft of company
property. The union questioned the dismissal.
Held: In this case, there is no question of Felizardo’s guilt. He stole
a pair of boots, a drinking container and 15 hamburger patties. The
question is whether dismissal is an appropriate penalty. The
employer has the inherent right to discipline, including that of
dismissing its employees for just causes. That right is, however,
subject to reasonable regulation. The court here decided that
dismissal was not proportionate to the gravity of the offense.
Considering the value of the articles stolen and the fact that he had
no previous record during his employment, he should not have been
terminated.
Page 53 of 149
(d) CONSTRUCTIVE DISMISSAL
JAM Transport vs. Flores, 220 SCRA 114
Phil. Japan Active Carbon Corp. v. NLRC, 171 SCRA 164
Olga, an Executive Secretary to the Executive VP and General
Manager was transferred to the Production Department as Production
Secretary. Said transfer was neither with reason or notice, nor
however was it with a change in salary and workload.
Issue: Whether Olga was constructively dismissed.
Held: Nope. A constructive discharge is a quitting because continued
employment is rendered impossible, unreasonable, or unlikely; as, an
offer involving a demotion in rank and a diminution in pay. Here,
Olga’s assignment as Production Secretary was not unreasonable as
it did not involve a demotion in rank (her rank was still that of a
dept. secretary) nor a change in workplace (the office is in the same
building) nor a diminution in pay, benefits, and privileges.
It is the employer’s prerogative to move its employees where
they will be most useful. Security of tenure does not give an
employee a vested right to his position as would deprive the
employer of this prerogative. A transfer using this prerogative is not
tantamount to constructive dismissal if such is not unreasonable,
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inconvenient, or prejudicial, or if it does not involve a demotion in relationship. Again, the filing of a complaint for illegal dismissal is
rank, or a diminution of salaries, benefits and other privileges. inconsistent with a charge of abandonment.

Singa Ship Management Phils. v. NLRC, 288 SCRA 692 Zafra vs. CA, GR 139013, September 17, 2002
Sangil worked on board the cruise vessel Crown Odyssey. A heated
argument with a Greek steward resulted to an altercation where
Sangil suffered a scalp injury. While Sangil was confined in a nearby
hospital, the ship left without him. The affidavit he executed before
the Philippine Consul revealed that the Greek crew continuously
ridiculed and even threatened him. He was then, repatriated.
Issue: Whether there was constructive dismissal.
Held: YUP. Constructive dismissal exists when there is a quitting
because continued employment is rendered impossible, unreasonable
or unlikely. It does not always involve diminution; an act of clear
discrimination, insensibility, or disdain by an employer may become
so unbearable on the part of the employee that it could foreclose any (e) PREVENTIVE SUSPENSION
choice by him except to forego his continued employment.
Here, Sangil quit because he feared for his life and his fear Manila Doctors Hospital v. NLRC, 135 SCRA 262
was well founded. The intense undercurrent between the Filipinos Macatubal, admitting his guilt for the loss of x-ray films at the
and the Greeks that could erupt into violence at the slightest Manila Doctors Hospital (MDH), implicated co-employees Cantor
provocation was apparent. Also, Sangil could not get any protection and Pepito. MDH suspended the latter and filed an application with
from the Greek ship captain, not even the slightest assurance of the NLRC for clearance to terminate them.
safety from him. Thus, Sangil’s decision to leave was not voluntary
Issue: Whether there was justification for the preventive suspension
but impelled by the legitimate desire for self-preservation.
of Cantor and Pepito.
Leonardo v. NLRC, 333 SCRA 589 Held: NONE. Preventive suspension can only be imposed if the
Fuerte, allegedly not meeting his sales quota, was transferred to continued employment of the employee poses a serious and
another company plant which resulted in the withdrawal of his imminent threat to the life or property of the employer or his co-
supervisor’s allowance. He protested his transfer and subsequently employees. Any preventive suspension before the filing of the
filed a case for illegal termination. application for clearance shall be considered working days and shall
be duly paid if the continued presence of the employee concerned
Held: Illegal dismissal. Fuerte’s act of staying off work are not
does not pose a serious threat to the life and property of the employer
indicative of abandonment. To constitute such a ground for
or of his co-employees. Here, there was no such threat. It was only
dismissal there must be (1) failure to report to work or absence
Macatubal who admitted responsibility for the loss and in fact, the
without valid or justifiable reason; and (2) a clear intention, as
fiscal’s office ordered the dismissal of the case filed against Cantor
manifested by some overt acts, to sever the employer-employee
and Pepito. Notwithstanding, MDH withheld the salaries of the
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latter. Thus, the latter are entitled to 50% of backwages from time of
suspension to finality of decision.
Philippine Airlines, Inc. v. NLRC, 292 SCRA 40
PAL preventively suspended Castro for grave misconduct after
government authorities apprehended him for violating a CB Circular.
An investigation was conducted and after 3 years & 6 months of
suspension, PAL issued a resolution finding him guilty but
nonetheless reinstating him explaining that the period within which
he was out of work shall serve as his penalty for suspension. Upon
reinstatement, Castro filed a claim against PAL for backwages and
salary increases granted under the CBA covering the period of his
suspension.
Issue: Whether an employee who has been preventively suspended
beyond the maximum 30-day period is entitled to backwages and
salary increases granted under the CBA during the period of his
suspension.
Held: YUP. Under §§ 3 & 4, Rule XIV of the Omnibus Rules, a
preventive suspension shall not exceed 30 days, after which the
employee must be reinstated to his former position. If the suspension
is extended, the employee shall be entitled to his salaries and other
benefits that may accrue to him during the period of such suspension.
2. AUTHORIZED CAUSES
(a) GROUNDS
INSTALLATION OF LABOR-SAVING DEVICES
Philippine Sheet Metal Workers Union vs. CIR, 46 OG 5462
Page 55 of 149
REDUNDANCY
Wiltshire File Co. v. NLRC, 193 SCRA 665
A Sales Manager after returning from a (business and pleasure) trip
abroad was terminated by Wiltshire Co. He tried to get an
explanation but he was left with letter merely handed to him by the
Security Guard. The letter justifies his dismissal on the ground of
redundancy.
The Sales Manager in his complaint before the L.A. for
illegal dismissal alleges that his position cannot be redundant
because nobody in the company was then performing the same
duties. The Co. in its answer invokes that termination was a cost
cutting measure as company had experienced unusually low volume
of orders and that it was forced to rotate employees in order to save
the company because of its continued experience of financial losses.
After review of records (audited financial losses), court
found that co was indeed suffering from serious financial losses.
While letter of termination used the word redundant, the letter also
referred to the company having incurred financial losses which in
fact has compelled the company to resort to retrenchment.
Redundancy in an employer’s personnel force DOES NOT
necessarily or even ordinarily refers to duplication of work. That
“no other person was holding the same position that an employee
held prior to the termination of his services,” does NOT show that
his position had not become redundant. (in a well organized corp.
hardly would there be any duplication of work/ 2 persons doing the
same work)
Redundancy , for the purposes of the Labor Code, exists
where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise.
A position is redundant where it is superfluous, and superfluity of a
position(s) may be the outcome of a number of factors like over-
hiring of workers, decreased volume of business, or dropping of a
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particular product line or service activity previously manufactured or
undertaken by the enterprise.
RETRENCHMENT
Asiaworld Publishing House vs. Ople, 152 SCRA 219
Almoite vs. Pacific Architects, 142 SCRA 623
Lopez Sugar v. FFW, 189 SCRA 179
Lopez Sugar filed an application to retrench (27) and retire (56)
some of its employees to prevent losses due to major economic
problems. It is doing so in exercise of its privilege under its CBA.
Union contests the application saying that it is violative of
security of tenure of its members and that to justify retrenchment,
there should be serious business reverses – it must be actual, real and
amply supported by sufficient and convincing evidence.
Court has enumerated four standard of justification of
retrenchment:
Page 56 of 149
1. The losses expected should be substantial and not merely de
minimis in extent.
2. The substantial loss apprehended must be reasonable imminent,
and such imminence can be perceived objectively and in good
faith by the employer.
3. Because the consequential nature of retrenchment, it must, be
reasonably necessary and likely to effectively prevent the
expected losses. The employer should have taken other
measures prior or parallel to retrenchment to forestall losses.
(i.e., cut other costs than labor costs)
4. The alleged losses if already realized, and the expected imminent
looses sought to be forestalled, must be proven by sufficient and
convincing evidence.
Whether an employer would imminently suffer serious or
substantial losses for economic reasons is essentially a question of
fact for the L.A. and NLRC to determine. In this case, no audited
financial statements were showing financial condition of petitioner
corporation were presented. Company made a passing reference to
cast reduction measures it had allegedly undertaken. It failed to
specify the cost reduction measures actually undertaken in goodfaith.
It asked some 110 casual workers to register after reducing its
workforce.
Anino vs. NLRC, 290 SCRA 489
Retrenchment is resorted to by an employer because of losses in the
operation of business occasioned by lack of work and considerable
reduction in the volume of business. It is a management prerogative
consistently recognized and affirmed by this Court, subject only to
faithful compliance with the substantive and procedural requirements
laid down by law and jurisprudence.
To justify retrenchment, the following requisites must be
complied with: “(a) the losses expected should 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
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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 a nutshell, the law recognizes a company’s right to retrench
employees when ‘made necessary or compelled by economic factors
that would otherwise endanger its stability or
existence.’…[R]etrenchment is only ‘a measure of last resort when
other less drastic means have been tried and found to be
inadequate.’”
International Hardware, Inc. vs. NLRC, 176 SCRA 256
Agro Commercial Services Agency vs. NLRC, 287 SCRA 420
Edge Apparel v. NLRC, 286 SCRA 302
Article 284 provides that an employer would be authorized to
terminate the services of an employee found to be suffering from any
disease if the employee’s continued employment is prohibited by law
or is prjudicial to his health or tho the health of his fellow
employees.
The installation of labor-saving devices contemplates the
installation of machinery to effect economy ad efficiency in the its
method of production.
Redundancy exists where the services of an employee are in
excess of what whould reasonably be demanded by the actual
requirements of the enterprise. A position is redundant when it is
superfluous, and superfluity of a position or positions chould be the
result of a number of factors, such as the overhiring of workers, a
decrease in the volume of business or the dropping of a particular
line or service previoulsy manyfactured or undertaken by the
enterprise. An employer has no legal obligation to keep on the
payroll employees more than the number needed for the operation of
the business. Retrenchment is, in many ways, a measure of last
resort when other less drastic means have been tried and found to be
inadequate.
Retrenchment, in contrast to redundancy, is an economic
ground to reduce the number of employees. In order to be justified,
the termination of employment by reason of retrenchment must be
due to business losses or reverses which are serious, actual and real.
Not every loss incurred or expected to be incurred by the employer
will justify retrenchment, since, in the nature of things, the
possibility of incurring losses is constantly present, in greater or
lesser degree, in carrying on the business operations. Retrenchment
is normally resorted by management during periods of business
reverses and economic difficulties occasioned by such events as
recession, industrial depression, or seasonal fluctuations.

Somerville Stainless Steel Corp. v. NLRC, 287 SCRA 420

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The law recognizes the company’s right to retrench employees when
“made necessary or compelled by economic factors that would
otherwise endanger its stability or existence. Retrenchment is only a
measure of last resort when other less drastic means have been tried
and found to be inadequate.
Philippine Tuberculosis Society, Inc. V. National Labor Union,
294 SCRA 567
[Retrenchment is] an act of the employer of dismissing employees
because of losses in the operation of a business, lack of work, and
considerable reduction in the volume of his business, a right
consistently recognized and affirmed by this Court.
However, the employer’s prerogative to layoff employees is
subject to certain limitations set forth in Lopez Sugar Corporation v.
Federation of Free Workers as follows: Firstly, the losses expected
should be substantial and not merely de minimis in extent. Itf the loss
purportedly sought to be forestalled by retrenchment is clearly shown
to be insubstantial and inconsequential in character, the bonafide
nature of the retrenchment would appear to be seriously in question.
Secondly, the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and in
good faith by the employer. There should, in other words, be a
certain degree of urgency for the retrenchment, which is after all a
drastic recourse with serious consequences for the livelihood of the
employees retired or otherwise laid off. Because of the consequential
nature of retrenchment, it must, thirdly, be reasonably necessary and
likely to effectively prevent the expected losses. The employer
should have taken other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs than labor costs. An employer
who, for instance, lays off substantial numbers of workers while
continuing to dispense fat executive bonuses and perquisites or so-
called “golden parachutes” can scarcely claim to be retrenching in
good faith to avoid losses.
To impart the constitutional meaning to the constitutional
policy of providing “full protection” to labor, the employer’s
prerogative to bring down labor costs by retrenching must be
Page 58 of 149
exercised essentially as measure of last resort, after less drastic
means---e.g., reduction of both management and rank and file
bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising
costs---have been tried and found wanting. Lastly, but certainly not
the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.
Retrenchment must be implemented in a just and proper
manner. As held in Asiaworld Publishing House, Inc. v. Ople: there
must be fair and reasonable criteria to be used in selecting
employees to be dismissed, such as: (a) less preferred status; (b)
efficiency rating (c) seniority.
Asian Alcohol Corp vs. NLRC, 305 SCRA 416
The condition of business losses is normally shown by audited
financial documents like yearly balance sheets and profit and loss
statements as well as annual income tax returns. It is our ruling that
financial statements must be prepared and signed by independent
auditors…It is necessary that the employer also show that its losses
increased through a period of time and that the condition of the
company is not likely to improve in the near future.
Redundancy exists when the service capability of the work
force is in excess of what is reasonably needed to meet the demands
on the enterprise. A redundant position is one rendered superfluous
by any number of factors, such as overhiring of workers, decreased
volume of business, dropping of particular product line previously
manufactured by the company or phasing out of a service activity
priorly undertaken by the business. Under these conditions, the
employer has no legal obligation to keep in its payroll more
employees than are necessary for the operation of its business.
Requisites for the implementation of a redundancy program:
1. Written notice served on both the employees and the DOLE
at least one month prior to the intended date of retrenchment;
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2. Payment of separation pay equivalent to at least one month
pay or at least month pay for every year of service,
whichever is higher;
3. Good faith in abolishing the redundant positions; and
4. Fair and reasonable criteria in ascertaining what positions
are to be declared redundant and accordingly abolished
CLOSURE
UFW vs. NLRC, 207 SCRA 435
Carmelcraft Corp. vs. NLRC, 186 SCRA 393
Del Mar Domestice Ent. v. NLRC, 282 SCRA 602
Complainants were dismissed by the Company during the strike for
alleged abandonment of work. The complainants protets that they
were only verbally informed that their services were no longer
Page 59 of 149
needed and that they were considered dismissed from work. They
now seek moral and exemplary damamges.
Company invokes that the strike was in gross violation of
CBA provision. It also claimed that during the height of the strike, a
fire of undtermined origin razed to the ground about 70% of the
company’s premises rendering the factory useless and inoperable.
The Labor Arbiter and NLRC ruled that the employees are
entitled to separation pay. Company claims that employees are not
entitled to separation pay because the abandoned their work.
SC: Ees entitled to Separation Pay because (1) No
abandonment - Ees have no intent to sever employement and (2)
Serious Business Losses Not proven by company.
Abandonment as a valid cause for termination requires a
deliberate, unjustified refusal of the employee to resume his
employment. Failure to report for work or absence without valid or
justifiable reason does not constitute abandonment if not coupled
with a clear intention to sever the employer-employee relationship.
In this case, employees reported for work after the factory was
burned, but the company informed them to wait for the resumption
of operations.
The company’s contention that “while the strike was in
progress, the factory building was razed by fire,” was not sustained
by the SC because such alleged serious business losses sustained by
company form the fire were not substantiated by competent
evidence. Financial statements audited by independent external
auditors constitute the normal method of proof of the profit and loss
performance of a company.
Although the fire caused losses to company, it failed to show
how such fire so affected the company’s financial health that it had
to close shop. To exempt an employer from the payment of
separation pay, he or she must establish by sufficient and
convincing evidence that the losses were serious, substantial and
actual.
Sundowner Development Corp. v Drilon, 180 SCRA 14
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Hotel Mabuhay, Inc., due to financial difficulties, sold all its assets
and personal properties to Sundowner. (blablabla, strike, complaint,
strike, dispute – a lot of events immaterial to the issue) This case was
subsequently filed by the Union representing the rank and file
employees of Mabuhay. This case involves several issues, all of
which revolve about the singular issue of whether or not Sundowner
may be compelled to absorb the employees of Mabuhay.
Held: NO. As a general rule, there is no law requiring a bona fide
purchaser of assets of an ongoing concern to absorb in its employ the
employees of the latter. The rule is that, unless expressly assumed,
labor contracts such as employment contracts and CBAs are not
enforceable against the transferee of an enterprise, labor contracts
being in personam and thus binding only the parties thereto.
(Implied from the obiter in the last sentence that when there is a
bone fide transfer of interest over an enterprise the CBA entered into
with the transferor does not bind the transferee: there exists no
contract bar to the filing of a petition for certification election since
there is actually no CBA with respect to the transferee/new
employer.)
MDD Supervisors & Confidential Employees Ass. Vs. Presidential
Assistant for Legal Affairs, 79 SCRA 40
Marina Port Services vs. Iniego, 181 SCRA 304
Page 60 of 149
Phil. Tobacco Flue-Curing and Redrying Corp. vs. NLRC, Dec. 10,
1998
Art. 283 of the Labor Code also requires the employer to furnish
both the employee and DOLE a written Notice of Closure at least
one month prior to closure. True, in the present case the Notices of
Termination were given to the employees on August 3, 1994, and the
intended date of closure was September 15, 1994. However, the
employees were in fact not allowed to work after August 3, 1994.
Therefore, the termination notices to the employees were given in
violation of the requisite one-month prior notice under Art. 283 of
the Labor Code.
This Court has previously ruled in Manila Hotel Company v. CIR
that seasonal workers who are called to work from time to time and
are temporarily laid off during off-season are not separated form
service in said period, but are merely considered on leave until re-
employed, viz.: “The nature of their relationshipx x x is such that
during off season they are re-employed, or when their services may
be needed. They are not strictly speaking separated from the service
but are merely considered as on leave of absence without pay until
they are re-employed.”
Valdez vs. NLRC, 286 SCRA 87
Under Art. 286 of the Labor Code, the bona fide suspension of the
operation of a business or undertaking for a period not exceeding 6
months shall not terminate employment. Consequently, when the
bona fide suspension of the operation of a business or undertaking
exceeds 6 months, then the employment of the employee shall be
terminated. By the same token and applying said rule by analogy, if
the employee was forced to remain without work or assignment for a
period exceeding 6 months, then he is in effect constructively
dismissed.
The so-called “floating status” of an employee should last
only for a legally prescribed period of time. When that “floating
status” of an employee lasts for more than 6 months, he may be
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considered to have been illegally dismissed from service. Thus, he is
entitled to the corresponding benefits for his separation, and this
would apply to the two types of work suspension heretofore noted,
that is, either of the entire business or of specific component thereof.
Resignation is inconsistent with the filing of a complaint of
illegal dismissal.
Resignation is defined as the voluntary act of an employee who finds
himself in a situation where he believes that personal reasons cannot
be sacrificed in favor of the exigency of the service, and, that he has
no other choice but to disassociate himself from his employment.
Resignation is a formal pronouncement of relinquishment of an
office. It must be made with the intention of relinquishment the
office accompanied by an act of relinquishment.
Sentinel Security Agency, Inc. vs. NLRC, 295 SCRA 123
Being sidelined temporarily is a standard stipulation in employment
contracts, as the availability of assignment for security guards is
primarily dependent on the contracts entered into by the agency with
third parties. Most contracts for security services, as in this case,
stipulate that the client may request the replacement of the guards
assigned to it. In security agency parlance, being placed “off detail”
or on floating status means “waited to be posted.” This circumstance
is not equivalent to dismissal, so long as such status does not
continue beyond a reasonable time.
Abandonment, as a just and valid cause for termination,
requires a deliberate and unjustified refusal of an employee to
resume his work, coupled with a clear absence of any intention of
returning to his or her work. Abandonment has recently been ruled
to be incompatible with constructive dismissal.
A floating status requires dire exigency of the employer’s
bona fide suspension of operation, business or undertaking. In
security services, this happens when the clients that do not renew
their contracts with a security agency are more than those that do and
the new ones that the agency gets.
Page 61 of 149
Cheniver Deco vs. NLRC, GR 122876, February 17, 2000
The company relocated from Makati to Batangas, in view of the
expiration of its lease of the land in Makati. It was informed by the
employees that they did not want to work in Batangas. The company
told them to report at the new site within seven days lest they be
considered to have lost interest in their work, and will be replaced.
Employees filed for illegal dismissal. Labor arbiter and NLRC found
that dismissal was not illegal, but awarded separation pay, which the
company contests. The company says that the employees should be
deemed to have voluntarily resigned from their jobs, and the transfer
of business is not tantamount to closure nor retrenchment.
Held: Separation pay awarded. The transfer of business amounts to a
cessation of the business in Makati. Art. 283 of the Labor Code
pertains to both complete cessation of all business operations and the
cessation of only a part of the company’s business. This exercise of
management prerogative to transfer is due to a reason beyond the
company’s control, but still it must pay to afford the employees some
relief.
NFL V. NLRC, 327 SCRA 158
Petitioners are employees of Patalon Coconut Estate (PCE)in
Zamboanga City. Due to the passage of the Comprehensive Agrarian
Reform Law, the PCE was awarded to PEARA, a cooperative
accredited by the Dept. of Agraraian Reform, and of which the
petitioners are members and co-owners. As a result, the employers
shut down the operation of PCE but did not award any separation
pay.
Held: Petitioners NOT entitled to separation pay. The closure
envisaged by Art. 283 of the Labor Code is one pursuant to a
unilateral and voluntary act of the employer. Art. 283 does not
contemplate a situation where the closure of the business is forced
upon the employer and ultimately for the benefit of the employees.
Hence, no separation pay is awarded where the closure was
due to the act of the government, a compulsory acquisition for
purposes of agrarian reform, where the petitioners themselves are
made the agrarian lot beneficiaries.
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De Leon vs. NLRC, May 30, 2001 retrench following the requirements of the law, and that failing to
comply with this could be tantamount to dismissing the employees.
Under Art 283 of the Labor Code, there are 3 basic
requirements for a valid retrenchment:
1. Retrenchment is necessary to prevent losses and such losses are
proven.
2. Written notice to the employees and to the DOLE at least one
month prior to the intended date of retrenchment;
3. Payment of separation pay equivalent to one month pay or at
least ½ month pay for every year of service. Whichever is
higher.
Lack of written notice to employees and to DOLE does not
make retrenchment illegal such that they are entitled to the payment
(b) PROCEDURE FOR TERMINATION
of backwages and separation pay in lieu of reinstatement as they
contend. It merely makes retrenchment defective.
Sebuguero v. NLRC, 248 SCRA 532
38 regular employees of GTI Sportswear were given temporary lay- Illegal retrenchment is when it is not proven that there’s
off notices due to aleged lack of work and havy losses cause by the imminent and actual serious losses or substantial losses – this entitles
cancellation of orders from abroad and by the garments embargo of employees to reinstatement and backwages.
1990.
SC: Article 283 of the Labor Code which covers retrenchment
speaks of permanent retrenchment as opposed to temporary lay-off
as in this case. There is no specific provision of law which treats of
a temporary retrenchment or lay-off and provides for the requisites in
effecting it or a period or duration therefor
To remedy this situation, 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. Six 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.
The temporary lay-off wherein the employees likewise cease
to work should also not last longer than 6 months. After six months,
the employees should either be recalled to work or permanently
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C. CONSEQUENCES OF DISMISSAL Anscor Transport vs. NLRC, 190 SCRA 147

(a) WITH CAUSE

Philippine National Construction Corp. vs. NLRC, 170 SCRA 207

PLDT vs. NLRC, 164 SCRA 671 Globe Mackay Cable and Wire Corp. vs. NLRC, 206 SCRA 701

(b) WITHOUT CAUSE

REINSTATEMENT

Pedrosa vs. Castro, 141 SCRA 252
Quijano v Mercury Drug Corp, 292 SCRA 109
Facts: Quijano was a warehouseman of Mercury Drug. He has been
working for the company for 8 yrs. Records show that his working
performance was good during this entire period. Sometime in 1990,
he exposed the existence of a “five-six” loan system in their
workplace operated by some of its officers. He then incurred the ire
of Altavano, the company’s manager, who operated usurious
transactions. Quijano was charged with violations of company
policies. Thereafter, he was terminated. He filed an illegal dismissal
case against the company. The Labor Arbiter ruled that Quijano was
indeed illegally dismissed and ordered the latter’s reinstatement. On
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appeal, the NLRC affirmed the finding of illegal dismissal, but
ordered that Quijano be given separation pay in lieu of reinstatement.
Quijano is now questioning the decision of the NLRC with regard to
the order of payment of separation pay in lieu of reinstatement.
Held: Quijano should be reinstated. Well-entrenched is the rule
that an illegally dismissed employee is entitled to reinstatement as a
matter of right. Case law, however, developed that where
reinstatement is not feasible, expedient or practical, as where
reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between the
employer and employee has been unduly strained by reason of their
irreconcilable differences, it would be more prudent to order
payment of separation pay instead of reinstatement. The doctrine of
“strained relations”, however, should be strictly applied so as not to
deprive an illegally dismissed employee of his right of reinstatement.
In the case at bar, the company’s charges of misbehavior against
Quijano cannot serve as basis to justify the latter’s dismissal, let
alone his non-reinstatement. The antagonism was caused
substantially, if not solely, by the misdeeds of the company’s
superiors. The Arbiter found that the charges against Quijano were
false and were merely filed by his superiors against him to punish
him for exposing their usurious loan operations. Hence, to deny
Quijano reinstatement due to the “strained relations” with his
accusers whose charges were found to be false would result in
rewarding the accusers and penalizing Quijano.
Capili v NLRC, 270 SCRA 488
Facts: Upon assumption of ownership and operation of public
utility jeepneys, Capili required the drivers to sign individual
contracts of lease of the jeeps to formalize their lessor-lessee
relationship. However, having gathered the impression that the
signing of the contract of lease was a condition precedent before they
could continue driving for Capili, all the drivers stopped plying their
assigned routes. Thereafter, they filed a complaint for illegal
dismissal and prayed for the grant of separation pay.
Page 64 of 149
Held: The drivers are not entitled to separation pay. The legal basis
for the award of separation pay is clearly provided by Art. 279 of the
Labor Code which states that the remedy for illegal dismissal is
reinstatement without loss of seniority rights plus backwages.
However, there may be instances where reinstatement is not a viable
remedy as where the relations between employer and employee have
been so severely strained that it is no longer advisable to order
reinstatement or where the employee decides not to be reinstated. In
such events, the employer will instead be ordered to pay separation
pay. But the award of separation pay cannot be justified solely
because of the existence of “strained relations” between the
employer and the employee. It must be given to the employee only as
an alternative to reinstatement emanating from illegal dismissal.
When there is no illegal dismissal, even if the relations are strained,
separation pay has no legal basis. In the case at bar, there was no
dismissal at all.
Buenviaje vs. VA, GR 147806, November 12, 2002
Filflex Industrial & Manufacturing Corp. vs. NLRC, Feb. 12, 1998
Philippine Tobacco Flue-Curing v NLRC, 300 SCRA 37
Facts: There are two groups of employees in this case, namely, the
Lubat group and the Luris group. The Lubat group is composed of
petitioner’s seasonal employees who were not rehired for the 1994
tobacco season. At the start of that season, they were merely
informed that their employment had been terminated at the end of the
1993 season. They claimed that petitioner’s refusal to allow them to
report for work without mention of any just or authorized cause
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constituted illegal dismissal. In their Complaint, they prayed for of the Luris group, the Supreme Court held that the amount of
separation pay, backwages, attorney’s fees and moral damages. On separation pay which seasonal workers should receive is one-half
the other hand, the Luris group is made up of seasonal employees (1/2) their respective average monthly pay during the last season
who worked during the 1994 season. On August 3, 1994, they they worked multiplied by the number of years they actually
received a notice informing them that, due to serious business losses, rendered service, provided that they worked for at least six months
petitioner planned to close its Balintawak plant and transfer its during a given year.
tobacco processing and redrying operations to Ilocos Sur. Although
the closure was to be effective Sept. 15, 1994, they were no longer WITHOUT LOSS OF SENIORITY OR OTHER RIGHTS
all9owed to work starting August 4, 1994. Instead, petitioner
awarded them separation pay computed according to the following Grolier International Inc., vs. Executive Labor Arbiter, 177 SCRA
formula: 196
total no. of days actually worked x daily rate x 15
days
total no. of working days in one year
In their Complaint, they claimed that the computation should
be based not on the above mathematical equation, but on the actual
number of years served. In addition, they contended that they were
illegally dismissed, and thus they prayed for backwages.
Held: The Supreme Court held that the Lubat group was indeed
illegally dismissed. The seasonal workers who are temporarily laid
off during off-season are not separated from service but merely
considered on leave. Thus, petitioner should be responsible for the
reinstatement of the Lubat group and the payment of their
backwages. However, since reinstatement is no longer possible as BACKWAGES
petitioner has already closed its Balintawak plant, respondent
members of the said group should instead be awarded normal Paramount Vinyl Products Corp. Vs. NLRC, 190 SCRA 525
separation pay (in lieu of reinstatement) equivalent to at least one
month pay, or one moth pay for every year of service, whichever is
higher. It must be stressed that the separation pay being awarded tot
he Lubat group is due to illegal dismissal; hence, it is different from
the amount of separation pay provided for in Article 283 in case of
retrenchment to prevent losses or in case of closure or cessation of
the employer’s business, in either of which the separation pay is
equivalent to at least one (1) month or one-half (1/2) month pay for
every year of service, whichever is higher. With regard to the claim Mariners Polytechnic School vs. Leogardo, 171 SCRA 597
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Lantion vs. NLRC, 181 SCRA 513
Pizza Inn vs. NLRC, 162 SCRA 773
Bustamante v NLRC, 265 SCRA 61
Facts: In this case, the company is questioning the decision of the
Court granting backwages to its illegally dismissed employees
computed from the time of their illegal dismissal up to the date of
their reinstatement. The company is insisting that salary earned
elsewhere by the employees should be deducted from the award of
backwages.
Held: The SC held that backwages to be awarded to an illegally
dismissed employee should not as a general rule, be diminished or
reduced by the earnings derived by him elsewhere during the period
of his illegal dismissal. The underlying reason for this ruling is that
the employee, while litigating the legality/illegality of his dismissal,
must still earn a living to support himself and his family while full
Page 66 of 149
backwages have to be paid by the employer as part of the price or
penalty he has to pay for illegally dismissing his employee. The clear
legislative intent of the amendment in RA 6715 is to give more
benefits to workers than was previously given them under the
Mercury Drug rule or the “deduction of earnings elsewhere” rule. A
closer adherence to the legislative policy behind RA 6715 points to
“full backwages” as meaning exactly that, i.e., without deducting
from backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal. Thus, petitioners
are entitled to their full backwages, inclusive of allowances and other
benefits or their monetary equivalent, from the time their actual
compensation was withheld from them up to the time of their actual
reinstatement.
Buhain vs. CA, GR 143709, July 2, 2002
PNCC v NLRC, 286 SCRA 329
Facts: The private respondent in this case is a carpenter who is part
of a regular work pool of the petitioner company. Sometime in 1979,
private respondent worked in petitioner’s project in the Middle East,
with a salary of $2.20 per hour. Upon completion of the project in
1984, private respondent returned to the Philippines. Petitioner then
failed to give him work in its local projects. Thereafter, private
respondent sued for illegal dismissal. NLRC ordered the
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reinstatement of private respondent to his former position and the
payment of his backwages for 3 years. This order was affirmed by
the SC which ordered the case to be remanded to the Labor Arbiter
for the computation of backwages. Petitioner is now questioning the
basis of the computation of the backwages (in computing the
backwages, NLRC used private respondent’s salary rate in the
Middle East). It claimed that private respondent’s backwages should
not be based on his salary abroad since his overseas employment
contract was for a definite term and that the project covered by the
said contract had been completed in 1984. It submitted its own
computation of private respondent’s backwages based on the latter’s
local wage rate at the time of his transfer to the overseas project.
Held: The basis of computation of private respondent’s backwages
should have been the local wage rate at the time of his transfer to the
overseas project and not his overseas rate. An illegally dismissed
employee is usually reinstated to his former position without loss of
seniority rights and paid backwages from the time he was separated
from work up to his actual reinstatement. The purpose of the
reinstatement is to restore the employee to the state or condition from
which he has been removed or separated. Backwages aim to
replenish the income that was lost by reason of the unlawful
dismissal. In the case at bar, records show that private respondent
was not illegally dismissed while working in the Middle East project
of the petitioner. His overseas assignment was a specific project and
for a definite period. Thus, when private respondent prayed for
reinstatement, he meant reinstatement to his position as a regular
member of petitioner’s work pool. If private respondent were given
local assignments after his stint abroad, he would have received the
local wage. This is the “loss” which backwages aim to restore.
Wenphil Corp. v NLRC, 170 SCRA 69
Facts: Mallare was dismissed after having an altercation with a co-
employee. The petitioner company failed to give Malare the benefit
of a hearing before he was dismissed.
Held: The Supreme Court held that although the dismissal of
Mallare is warranted as it was based on a just cause provided by the
Page 67 of 149
labor code, such dismissal is still considered as illegal because of the
failure of the petitioner company to observe due process in effecting
such dismissal. However, the employee should not be reinstated
because of non-compliance with the procedural requirements. The
employer cannot be forced to retain the services of an employee who
has committed a just cause for dismissal. But there must be a penalty
for violation of the right to procedural due process. The Supreme
Court awarded damages in the amount of P1,000 in this case.
Serrano v NLRC, GR 117040, January 27, 2000 & May 4, 2000
Facts: The employee in this case was dismissed for an authorized
cause. However, the requirement of due process was not observed by
the employer in effecting the dismissal.
Held: The Supreme Court held that the dismissal is still illegal
despite the fact that it is based on an authorized cause. This is
because of the employer’s failure to observe the requirement of due
process in effecting the dismissal. However, the Supreme Court held
that the employee is still not entitled to reinstatement because of the
presence of the authorized cause. But the Court awarded full
backwages from the time of dismissal up to the finality of the
decision plus separation pay.
Dela Cruz v NLRC, Nov. 20, 1998
Facts: The petitioner in this case is questioning the decision of the
Labor Arbiter and NLRC refusing the award of backwages to the
latter despite a finding of illegal dismissal.
Held: The Labor Arbiter and the NLRC committed grave abuse of
discretion in refusing to award backwages to petitioner simply
because the latter did not ask for such relief in his complaint. The
award of backwages resulting from the illegal dismissal of an
employee is a substantive right. Failure to claim backwages in a
complaint for illegal dismissal has been held to be a mere procedural
lapse which cannot defeat a right granted under substantive law.
Equitable v NLRC, 273 SCRA 352
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Facts: Atty. Sadac was appointed vice-president for the legal
department of the petitioner bank. He was also designated as the
bank’s general counsel. Sometime later, nine of the lawyer’s of the
bank’s legal department addressed a letter to the chairman of the
board of directors of the bank accusing Atty. Sadac of abusive
conduct, inefficiency, mismanagement and indecisiveness. The
charge was investigated and on the basis of the findings, a memo was
sent to Atty. Sadac asking him to voluntarily resign. He asked for a
full hearing but was not granted. Thus, he filed a complaint against
the bank for illegal dismissal and damages.
Held: There was illegal dismissal in this case. The dismissal was
without just cause and there was no notice and hearing. However,
the Supreme Court held that Atty. Sadac is not entitled to moral and
exemplary damages. Moral damages are recoverable when the
dismissal of an employee is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary
to good morals, good customs or public policy. Exemplary damages
may be awarded if the dismissal is effected in a wanton, oppressive
or malevolent manner. In this case, the Court is of the considered
view that petitioners have not motivated by malice or bad faith nor
have they acted in wanton, oppressive or malevolent manner such as
to warrant a judgment against them for moral and exemplary
damages. Malice or bad faith implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral
obliquity; it is different from the negative idea of negligence in that
malice or bad faith contemplates a state of mind affirmatively
operating with furtive design or ill will.
Millares v NLRC, 305 SCRA 500
Facts: In this case, petitioners were retrenched to prevent losses.
They are now contending the decision of the NLRC holding that the
Staff/Manager’s transportation and Bislig allowances did not form
part of the salary base used in computing the separation pay of
petitioners.
Held: The Supreme Court held that the decision of the NLRC is
correct. Separation pay when awarded to an illegally dismissed
Page 68 of 149
employee in lieu of reinstatement or to a retrenched employee should
be computed based not only on the basic salary but also on the
regular allowances that the employee had been receiving. The
Supreme Court, however, held that the disputed allowances were not
regularly received by the petitioners in this case. The receipt of an
allowance on a monthly basis does not ipso facto characterize it as
regular and forming part of salary because the nature of the grant is a
factor worth considering. The Supreme Court agree with the
observation of the Office of the Solicitor General that the subject
allowances were temporarily, not regularly, received by petitioners
because:
1. In the case of the housing allowance, once a vacancy occurs in
the company-provided housing accommodations, the employee
concerned transfers to the company premises and his housing
allowance is discontinued
2. The transportation allowance is in the form of advances for
actual transportation expenses subject to liquidation and given
only to employees who have personal cars
3. The Bislig allowance is given to Division Managers and
corporate officers assigned in Bislig, Surigao del Norte. Once the
officer is transferred outside Bislig, the allowance stops
Thus, the petitioners’ continuous enjoyment of the disputed
allowances was based on contingencies the occurrence of which
wrote finis to such enjoyment.
Fernandez v NLRC, 289 SCRA 433
Facts: In his decision, the labor arbiter granted varying amounts of
service incentive leave pay to the petitioners based on the length of
their tenure (the shortest was six years and the longest was thirty-
three years). The solicitor general recommended that the award of
service incentive leave be limited to three years.
Held: The award of service incentive leave should not be limited to
three years. The clear policy of the Labor Code is to grant service
incentive leave pay to workers in all establishments, subject to a few
exceptions. Service incentive leave is a right which accrues to every
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employee who has served “within 12 months, whether continuous or
broken reckoned from the date the employee started working,
including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy,
or that provided in the employment contracts, is less than 12 months,
in which case said period shall be considered as one year.” It is
commutable to its money equivalent if not used or exhausted at the
end of the year. Thus, to limit the award to three years is to unduly
restrict such right. Since a service incentive leave is clearly
demandable after one year of service or its equivalent period, and it
is one of the benefits which would have accrued if an employee was
not otherwise illegally dismissed, it is fair and legal that its
computation should be from the date of illegal dismissal up to the
date of reinstatement.
DAMAGES
Lim vs. NLRC, 171 SCRA 328
Estiva vs. NLRC, 225 SCRA 169
Quijano v Mercury Drug Corp, 292 SCRA 109
Facts: Quijano was a warehouseman of Mercury Drug. He has been
working for the company for 8 yrs. Records show that his working
performance was good during this entire period. Sometime in 1990,
he exposed the existence of a “five-six” loan system in their
workplace operated by some of its officers. He then incurred the ire
of Altavano, the company’s manager, who operated usurious
Page 69 of 149
transactions. Quijano was charged with violations of company
policies. Thereafter, he was terminated. He filed an illegal dismissal
case against the company. The Labor Arbiter ruled that Quijano was
indeed illegally dismissed and ordered the latter’s reinstatement. On
appeal, the NLRC affirmed the finding of illegal dismissal, but
ordered that Quijano be given separation pay in lieu of reinstatement.
Quijano is now questioning the decision of the NLRC with regard to
the order of payment of separation pay in lieu of reinstatement.
Held: Quijano should be reinstated. Well-entrenched is the rule
that an illegally dismissed employee is entitled to reinstatement as a
matter of right. Case law, however, developed that where
reinstatement is not feasible, expedient or practical, as where
reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between the
employer and employee has been unduly strained by reason of their
irreconcilable differences, it would be more prudent to order
payment of separation pay instead of reinstatement. The doctrine of
“strained relations”, however, should be strictly applied so as not to
deprive an illegally dismissed employee of his right of reinstatement.
In the case at bar, the company’s charges of misbehavior against
Quijano cannot serve as basis to justify the latter’s dismissal, let
alone his non-reinstatement. The antagonism was caused
substantially, if not solely, by the misdeeds of the company’s
superiors. The Arbiter found that the charges against Quijano were
false and were merely filed by his superiors against him to punish
him for exposing their usurious loan operations. Hence, to deny
Quijano reinstatement due to the “strained relations” with his
accusers whose charges were found to be false would result in
rewarding the accusers and penalizing Quijano.
Phil. Aeolus v NLRC, 331 SCRA 237
Facts: Cortez filed a case of illegal dismissal against the petitioner
company. In her complaint, she also prayed for damages in the event
that the illegality of her dismissal is sustained.
Held: The Supreme Court held that Cortez was indeed illegally
dismissed and that she is entitled to moral and exemplary damages.
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Anxiety was gradual in Cortez’s five-year employment. It began business losses and financial reverses were not amply shown or
when her plant manager showed an obvious partiality for her which proved.
went out of hand when he started to make it clear that he would
terminate her services if she would not give in to his sexual Pabalan vs. NLRC, 184 SCRA 495
advances. Sexual harassment is an imposition of misplaced
“superiority” which is enough to dampen an employee’s spirit in her
capacity for advancement. It affects her sense of judgment; it
changes her life. If for this alone Cortez should be adequately
compensated. Thus, for the anxiety, the seen and unseen hurt that she
suffered, petitioners should also be made to pay her moral damages,
plus exemplary damages, for the oppressive manner with which
petitioners effected her dismissal from the service, and to serve as a
forewarning to lecherous officers and employers who take undue
advantage of their ascendancy over their employees.

LIABILITY FOR MONETARY CLAIMS

Reahs’ Corp. v NLRC, 271 SCRA 247

Facts: Reahs’ Corporation closed its business allegedly due to poor
business. Its employees filed a case for illegal dismissal and
demanded for separation pay. The Labor Arbiter dismissed the case
for illegal dismissal but upheld the claims for separation pay. Reahs’
Corporation is contending that Art. 283 exempts establishments from
payment of separation pay when the closure of the business is due
to serious business losses or financial reverses.
Held: The dismissed employees are entitled to separation pay. The
grant of separation pay, as an incidence of termination of
employment under Art. 283, is a statutory obligation on the part of
the employer and a demandable right on the part of the employee,
except only where the closure or cessation of operations was due to
serious business losses or financial reverses and there is sufficient
proof of this fact or condition. In the absence of such proof of serous
business losses or financial reverses, the employer closing his
business is obligated to pay his employees and workers their
separation pay. In the case at bar, the corporation’s alleged serious
Asionics Phils. v NLRC, 290 SCRA 164
Facts: Asionics Phils. implemented a company-wide retrenchment
affecting 105 employees from a workforce that totaled 304. Among
the employees who were dismissed were Boaquina and Gayola. They
joined Lakas Union which staged a strike against Asionics Phils. The
Labor Arbiter declared the strike illegal, but declared that the
separation pay of the striking members as valid under the company-
wide retrenchment program. The company is contending that the
striking employees should not be entitled to separation pay because
of their involvement in the strike which was declared illegal.
Held: The employees are entitled to separation pay. The termination
of employment of the striking employees was due to the
retrenchment policy adopted by the company and not because of
their union activities. It should suffice to say that the retrenchment of
the employees has, in fact, preceded the declaration of strike.
The Court also held that Frank Yih, the President and
majority stockholder of the company cannot be held personally liable
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as nothing on record is shown that he has acted in bad faith or with
malice in carrying out the retrenchment program of the company.
PNCC v NLRC, 307 SCRA 218
Facts: Private respondents in this case were dismissed for serious
misconduct. He is now contending that he is entitled to separation
pay and mid-year bonus.
Held: The Supreme Court held that they are not entitled to
separation pay and mid-year bonus. An employee who is dismissed
for just cause is generally not entitled to separation pay. In some
cases, however, the Court awards separation pay to a legally
dismissed employee on the grounds of equity and social justice. This
is not allowed, though, when the employee has been dismissed for
serious misconduct or some other cause reflecting on his moral
character. Likewise, private respondents are not entitled to the mid-
year bonus they are claiming. The Supreme Court does not agree
with the Solicitor General’s contention that private respondents have
already earned their mid-year bonus at the time of their dismissal. A
bonus is a gift from the employer and the grant thereof is a
management prerogative. Petitioner may not be compelled to award
a bonus to private respondents whom it found guilty of serious
misconduct.
D. PREVENTIVE SUSPENSION; CONSTRUCTIVE DISMISSAL
Leonardo v. NLRC, 333 SCRA 589
At Reynaldo’s Marketing Corporation, Fuerte was a supervisor
receiving P122 a day, augmented by a weekly supervisor’s
allowance. Fuerte was later transferred to the Sucat plant for failure
to meet his sales quota and his allowance was withdrawn. He thus
filed a complaint for illegal dismissal.
Issue: Whether there was constructive dismissal.
Held: NOPE. An employer acts well within its rights in transferring
an employee as it sees fit provided there is no demotion in rank or
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diminution in pay. The two circumstances are deemed badges of bad
faith, and thus constitutive of constructive dismissal.
Here, although the transfer was undertaken beyond the
parameters above-mentioned, the employer does not deny that it was
really demoting Fuerte but, for cause. It should be borne in mind that
the right to demote an employee also falls within the category of
management prerogatives. An employer is entitled to impose
productivity standards for its workers, and in fact, non-compliance
may be visited with a penalty even more severe than demotion.
E. DISEASE
Cebu Royal Plant vs. Deputy Minister of Labor, 153 SCRA 38
Ramon Pilones handled ingredients in the processing of soft drinks.
Later he was removed due to “pulmonary tuberculosis minimal”. He
filed for illegal dismissal. Regional Director found in favor of
employer. However on appeal, the Minister ordered reinstatement, as
it was found that he was a permanent employee, and that the ailment
was not certified as incurable within six months as to justify
separation. Also, the Minister said that the employer should have
first obtained a clearance for termination of employment, as required
by the regulations then in force.
Employer insists he was a probationary employee at the time
he was dismissed. It is also argued that the regional director’s
findings should not be disturbed on appeal, since he had direct access
to the facts.
Held: Employee should be reinstated. It is shown that employee
continued working as usual way beyond the six-month period of
probation. Hence he was on permanent status at the time he was
dismissed. Also, the record does not contain the certification as
required by the Rules. The medical certificate offered by the
employer came from its own physician who was not a competent
public health authority, and merely stated the employee’s disease
without more.
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We may surmise that if the required certification was not
presented, it was because the disease was not of such a nature or
seriousness that it could not be cured within a period of six months
even with proper treatment. The court reaffirms its concern for the
lowly worker who, often at the mercy of his employers, must look up
to the law for his protection.
Tan v. NLRC, 271 SCRA 216
Ibutnandi was dismissed because he failed to present a medical
certificate from a government doctor certifying that he was already
cured of pulmonary tuberculosis (PTB), hence, already fit to work.
Issue: Whether Ibutnandi was validly dismissed.
Held: NOPE. It undeniable that Ibutnandi became afflicted with PTB
and that under Art. 284 of the Labor Code, an employer may
terminate the services of his employee 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 that of his co-employees.
However, the fact that an employee is suffering from such a disease
does not ipso facto make him a sure candidate for dismissal.
It is only where there is a prior certification from a
competent public authority that the disease is of such nature or at
such stage that it cannot be cured within 6 months even with proper
medical treatment that the employee could be validly terminated.
Here, there is absolutely nothing to show that the employer
obtained such certification. Rather, it was Ibutnandi who presented a
certificate from a doctor certifying that he was already fit to return to
work. The employer rejected this and insisted that Ibutnandi present
one issued by a government physician. According to the Rules, the
burden is on the employer, not the employee, to justify dismissal
with a certificate from public authority that the disease is not curable
within 6 months. Hence for failure of the employer to present one,
dismissal was not valid.
F. RETIREMENT
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REPUBLIC ACT NO. 7641
AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL
DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES, BY
PROVIDING FOR RETIREMENT PAY TO QUALIFIED
PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF
ANY RETIREMENT PLAN IN THE ESTABLISHMENT
Sec. 1. Article 287 of Presidential Decree No. 442,
as amended, otherwise known as the Labor Code of the
Philippines, is hereby amended to read as follows:
“Art. 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 herein.
“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 (1/2) month salary for
every year of service, a fraction of at least six (6) months
being considered as one whole year.
“Unless the parties provide for broader inclusions,
the term one-half (1/2) 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.
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“Retail, service and agricultural establishments or
operations employing not more than (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 provided under
Article 288 of this Code.”
Sec. 2. Nothing in this Act shall deprive any
employee of benefits to which he may be entitled under
existing laws or company policies or practices.
Sec. 3. This Act shall take effect fifteen (15) days
after its complete publication in the Official Gazette or in at
least two (2) national newspapers of general circulation,
whichever comes earlier.
Approved: December 9, 1992
PSVSIA v. NLRC, 271 SCRA 209
Federico worked for PVSIA as a security guard for 23 years. When
he turned 60, he tendered his “letter of resignation” citing as his
reasons his physical disability to perform his duties and desire to
spend the rest of his life in the province. He later sought termination
pay corresponding to his years of service, or retirement pay. PVSIA
rejected Federico’s claim.
Issue: Whether Federico is entitled to the benefits of RA 7641.
Held: NO. R.A 7641, enacted as a labor protection measure and as a
curative statute, applies to labor contracts still existing at the time the
statute took effect. Its benefits can be reckoned retroactively to the
time the employment contract started. However, two circumstances
must concur: (1) the claimant was still the employer’s employee at
the effectivity of the statute; (2) the claimant complies with the
requirements for eligibility under the statute for such retirement
benefits.
Here, only the second circumstance exists. Prior to the effectivity of
RA 7641, Federico already severed his employment with PVSIA
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when he tendered his “letter of resignation”. In fact the issue before
the NLRC was not the existence of the employer-employee
relationship between the parties; rather, considering the cessation of
his service, whether he was entitled to monetary awards.
Aquino v. NLRC, 206 SCRA 118
Petitioners’ services were terminated on the ground of retrenchment.
They receivd separation pay double than required by the Labor Code.
Later, they demanded retirement benefits invoking the retirement
plan of the company.
Issue: Whether receipt of separation pay precludes a claim for
retirement benefits.
Held: Not necessarily. Provided the CBA does not contain a
provision prohibiting the receipt of both termination and retirement
pay, an employee is entitled to both. Here, both the CBA and the
Retirement Plan contain no such prohibition. Hence, petitioners
should get retirement benefits in addition to separation pay.
Although the company paid separation pay double than that required
by law, this generosity does not excuse it from paying retirement
benefits because petitioners are not pleading for generosity but are
demanding their rights embodied in the CBA. When the employer
signed the CBA, it recognized the rights of the workers and did not
merely concede certain privileges to them out of generosity.
Producers Bank v. NLRC, 298 SCRA 517
Producers Bank was placed under a conservator. The bank’s
employees then demanded from the conservator the implementation
of the CBA provisions on retirement. The bank objected and a
deadlock ensued. The employees filed a complaint for ULP and
violations of the CBA. The bank countered that the employees have
already retired thus, there was no more employer-employee
relationship and therefore, the employees had no personality to sue.
Issues:
1. Whether the conservator can refuse to implement the CBA
provisions on retirement.
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2. Whether the employees have no personality to sue.
Held: NO to both.
1. A conservator cannot post-facto repudiate perfected transactions
in violation of the non-impairment clause of the Constitution. He
can only revoke contracts that are deemed to be defective. Since
he cannot rescind valid contracts, and since the CBA is the law
between the parties; the conservator cannot disallow the
implementation of the CBA provisions on retirement considering
that the ideals of social justice and labor protection are
guaranteed not only by the Labor Code but also by the
Constitution.
2. Retirement does not in itself affect employment status, especially
when it involves the rights and benefits due to an employee. The
retirement scheme is part of the employment package and the
benefits therefrom constitute a continuing consideration for
services rendered as well as an inducement for remaining with
the employer. Thus, when an employee has retired but his
benefits under the law or the CBA have not yet been given, he
still retains, for the purpose of prosecuting his claims, the status
of an employee entitled to protection under the Labor Code.
Capili v. NLRC, 273 SCRA 576
Capili, a school instructor was informed by his employer that under
the school’s retirement plan, it could retire him, arguing that the
employee has the option only in the absence of a retirement plan.
Issue: Whether an instructor of a private educational institution may
be compelled to retire at the age of 60 years.
Held: Article 287 of the Labor Code provides for two types of
retirement: compulsory at the age of 65; and optional, which is
primarily determined by the CBA, employment contract, or
employer’s retirement plan. In the absence of any provision on
optional retirement in a CBA, etc., an employee may optionally retire
at age 60 or more but not beyond 65 provided he has served at least 5
years in the establishment concerned. That prerogative is exclusively
lodged in the employee.
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By accepting the retirement benefits, Capili is deemed to have opted
to retire under the 3rd paragraph of Art. 287. Thereunder, he could
choose to retire upon age 60, provided it is before the age 65. It is
worth noting his statement that he had long been unjustly denied of
his retirement benefits since Aug 18,1993. He was entitled to
retirement benefits as early as that date but was denied thereof
without justifiable reason. This could only mean that he has already
acceded to his retirement, effective on such date - when he reached
the age of 60.
Progressive Development Corp. (PDC) v. NLRC, 344 SCRA 512
PDC’s retirement plan provides that any participant with twenty
years of service, regardless of age, may be retired at his option or at
the option of the company. Pursuant to the plan, a number of
employees were retired.
Issue: Whether the retirement program of the company is valid.
Held: Yes. The retirement plan under which the employees were
retired is valid for it forms part of the employment contract of the
company. In fact, the Bureau of Working Conditions of the DOLE
recognized the validity of the plan. The retirement plan now forms
part of the employment contract since it is made known to the
employees and accepted by them, and such plan has an express
provision that the company has the choice to retire an employee
regardless of age, with twenty years of service, said policy is within
the bounds contemplated by the Labor Code. In addition, a number
of employees had availed of the plan since its effectivity; thus the
plan has already been part of the employment contract of the
company.
PAL vs. ALPAP, GR 1433686, January 15, 2002
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G. RESIGNATION resignation at his whim and without the conformity of his

Metro Transit Organization v. NLRC, 284 SCRA 308
Garcia, a station teller at Metro Transit, left work for a few weeks to
look for his missing family. Upon his return (he didn’t find his
family), he was advised by Metro to resign. Still weighed down by
his serious family problem, he at once prepared a resignation letter
then left again to look for his family. Later, his resignation was
accepted.
Issue: Whether there was valid resignation.
Held: Metro Transit could have settled the problem of its employee
and avoided litigation had it listened judiciously to the Garcia’s
explanation for his absences. The objectives of social justice can be
realized only if employers in appropriate situations extend their hand
to their employees in dire need of help. The reinstatement of Garcia
is in keeping with established jurisprudence. A termination without
cause entitles a worker to reinstatement.
employer.
A resigned employee who wants his job back has to re-
apply therefor, and he shall have the status of a stranger who
cannot unilaterally demand an appointment. He cannot arrogate
unto himself the same position which he earlier decided to leave.
To allow him to do so would be to deprive the employer of his
basic right to choose whom to employ. An employer is free to
regulate, according to his own discretion and judgement, all
aspects of employment, including hiring.
Alfaro vs. CA, August 28, 2001

Philippines Today, Inc. v. NLRC, 267 SCRA 202

Alegre filed for a leave of absence citing medical reasons, which
were not proved. He also wrote a memorandum containing all his
grievances. He cleared his desk of personal belongings, did not
report back for work, and expressly manifested his intention to
resign. He, however, was not deprived of his chance to return to
work.
LECTURE
Issues:
1. Whether Alegre resigned. Termination of Employee
2. Whether he can unilaterally withdraw his resignation. Substantial requirements
Held:
1. Yes. The facts establish that Alegre resigned. What is the difference between just causes and authorized causes?
An authorized cause has nothing to do with acts allegedly committed
2. No. Resignations, once accepted may not be withdrawn without by the employee. A just cause has something to do with and is
the consent of the employer. If withdrawal is accepted, the precisely because of an act allegedly committed by the employee.
employee retains his job. If not, the employee cannot claim
illegal dismissal. An employer cannot backtrack on his
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This in turn will be used by the employer as a ground for
termination.
Just causes
Serious Misconduct. A willful misconduct is not always serious. A
misconduct is not necessarily a ground for termination. If it is not
serious, the misconduct will not justify termination.
Willful Disobedience. It must be willful disobedience. It is
characterized by a perverse attitude. That the employee deliberately
disobeyed the employer. Thus if the employer issues an ambiguous
order and the employee disobeyed the employer because he could
not understand the order, that disobedience cannot be a just cause for
termination. There must be an intent to defy a lawful order of the
employer. The order must be related to his work.
True or False. As long as there is gross misconduct or willful
disobedience committed by an employee, there is valid ground for
termination.
False. The serious misconduct or willful disobedience must be
committed by an employee in relation to his work.
Can an employee possibly commit a series of serious misconduct and
yet not be terminated by the employer?
Yes. It must be in connection with his work or must affect his work.
Serious misconduct must be in relation to his work. It can be a fight
which was committed inside the premises but outside office hours.
If the fight has nothing to do with the work of the employees and if
that fight did not interrupt, did not disrupt the work and did not affect
the working relationship of the employees in the performance of
their job, then such misconduct will not amount to a valid ground for
termination. But it is a misconduct. And it is serious, it injured. But
you have to be careful with examples and illustration. It is not
necessary that the misconduct be committed within the premises of
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the employer. The validity of the ground for termination based on
misconduct is not determined by the place of commission but by the
effect of the misconduct on the work of the employee. It can be
committed outside the premises of the company, it can be committed
outside office hours, but it can still affect the work of the employee
or his performance of the job.
Why should the misconduct be related or in connection with the
performance of the work? Because you are terminating the
employee because he is no longer fit to work and can no longer
function effectively. And that is your reason for termination. So if
the misconduct of the employee, however serious in character, if it
has nothing to do, and it does not affect the performance of the work
of the employee, it will not affect the employer-employee
relationship and therefore the employer should not have anything to
do with that misconduct. That will not justify termination. Thus it
has the work or affect the performance of the work. Even willful
disobedience. It must affect the performance of the work. In short if
the disobedience pertains to an order which has nothing to do with
the performance of the work, then that disobedience, no matter how
deliberate in character even if it amounts to defiance, has nothing to
do with the performance of the work and therefore has nothing to do
with the employer-employee relationship. And therefore cannot
justify termination by the employer. You have to go back to the
rationale why a particular ground is allowed to justify termination.
Remember that the general rule is you cannot terminate an employee,
these should be considered as the exceptions – these are the only
grounds. And the exceptions should be construed strictly and unless
you fall under one exception, then you cannot be considered as an
exception. Of course, we are discussing a case here which is
different from the other cases involving exceptions because in this
case we have a catch-all provision, saying that it may include other
cases not specifically mentioned.
Gross misconduct and willful disobedience are two different grounds
even if they are stated in one sentence. So you do not need an order
before you can have serious misconduct.
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Gross and habitual negligence. Negligence means failure to
exercise the diligence required of the job and it is without regard to
the consequences of your action. Should the negligence be work-
related? Yes, it must be neglect of duties. Duties of an employee,
not the duties of a good father or husband. So your negligence
which is not work-related will not be a ground for termination.
The negligence has to be gross and habitual. It should be a serious
negligence and must not be based on an isolated act but should be
habitual in character. Habitual means that there’s a pattern of the
negligent act.
Should the first offense of neglect of duties which is gross in
character be subject of disciplinary action? Yes. But not
termination. We are not saying that the first offense should be go
unnoticed by the employer. We are not condoning the offense of the
employee which is connected to his work which is gross negligence
in the performance of his duties. It should not go unpunished. What
we are saying however is that the punishment could not amount to
termination in that first instance. Because the law says that the
negligence should not only be gross but also habitual. The law is
clear. It says gross and habitual neglect. You do not see that in
misconduct. The misconduct only has gross. There is no
qualification that the misconduct should be also habitual.
There is no formula for habituality. You have to look at the
circumstances. It can be justified in some cases and not justified in
other cases. The justification will also depend on the seriousness of
the negligence. If the negligence is so serious and it was penalized
the first time, the second offense may justify termination. In short,
management is not required to wait for a third offense. But what is
clear is that the first offense is not a valid ground for termination if
the ground is negligence.
Page 77 of 149
What is different between misconduct and negligence? We have to
distinguish between misconduct and negligence because misconduct
is a ground for dismissal at the first instance.
Misconduct is a sin of commission. While negligence is a sin of
omission. In misconduct you do something. But in negligence you
failed to do something which is required of you. Remember that
difference, because in some cases, the court seemed to have confused
the two grounds. Minsan negligence lang, sinasabing misconduct.
And that is very important, because a single act of negligence cannot
be a ground for termination. So if you treat an act of negligence as
an act of misconduct, then the conclusion will be to terminate. In
short, the termination will be valid. But it should not be. Because
the misconduct is not really a misconduct but mere negligence which
although serious, if not habitual, is not a ground for termination.
Again, it’s very important to note the difference because in some
case, mere negligence may appear to be a misconduct and in fact in
particular decisions, the court will confuse negligence with
misconduct.
Some cases are examples of that particular ground, I assigned a case
of sleeping while on duty. It’s a very good example of how you
should treat each particular ground for termination because sleeping
while on duty is a ground for termination for some employees and
not a ground for termination for some other employees. Kung
security guard ka at natutulog ka while on duty, it can be a ground
for termination. However, if you are not a security guard, if you’re a
factory worker and nakatulog ka while on duty, that may not justify
termination according to the decision. So what is the rationale of
that? You always have to go back to the effect of the cause on the
performance of the job. If the cause does not have an effect or has a
limited effect on the performance of the job, it should not justify
termination. It will justify a disciplinary action which is not
termination.
Sleeping on the job is a sin of omission. In short, it’s not bad to
sleep. It’s not a misbehavior. But because you are sleeping, you are
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not doing your job. So the act of sleeping is a positive act which
means that you cannot do something else. And therefore, I don’t
think it can be considered a gross misconduct. If it can be
considered a misconduct at all. In short, the act of sleeping will not
be a justification for termination at the first instance, even if you’re a
security guard because it is negligence and not misconduct.
If you’re only job is to make sure that all equipment are turned off
and to make sure that nothing is left on which will cause an accident
and you failed to do that, the result is so gross, it can be akin to
misconduct. Are we saying that that negligence is misconduct and
are we confusing negligence with misconduct? No. We are going to
the last item, which is analogous. We are not saying that this
particular act of negligence is equivalent to misconduct. We are
saying that this is analogous to the first cause which is misconduct.
While it is good to distinguish between gross misconduct from gross
and habitual negligence, some extraordinary cases may fall under the
analogous reasons item, in which case a negligent act could be
considered a misconduct. But that doesn’t mean that we will equate
in all cases, negligence with misconduct.
Fraud or willful breach by employee of the trust reposed on him by
the employee. Fraud is always willful. It should always be
deliberate that’s why there is no need for the adjective willful in
fraud.
Loss of trust and confidence is one of the most abused ground for
termination.
The waiter example. Can a waiter be fired on the ground of loss of
trust and confidence? What if the waiter eats the food he is supposed
to serve?
Is your primary consideration in hiring the waiter your determination
that that waiter will not eat the food? NO, that is not the primary
reason for hiring the waiter. There is no trust reposed on the waiter
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that that waiter will not eat the food that he is supposed to serve. If
there is no trust, there can be no breach. Because the basis is breach
of trust. So when can that waiter be terminated for breach of trust?
In no case can the waiter be terminated for breach of trust because in
no case is trust reposed on the waiter.
Is the ground of loss of trust and confidence applicable to all
employees? No, only to employees to whom the employer has
reposed his trust and confidence.
Why do you say that the employer repose trust and confidence to a
cashier and not to a factory employee? Because the cashier handles
amounts of money of the employer. Those employees who are
primarily in charge of handling company funds, company money or
property.
There’s a difference between the handling of a cashier of the money
and the handling of the waiters. The waiters handling company
assets will be temporary and will not be the main function of that
particular employee as opposed to a cashier whose main function is
to handle and to account for company funds. Who else can be under
that category? A warehouse person for example. An officer in
charge of the custody of the warehouse where you have the supplies
and the raw materials of the management, I think that employee can
be terminated for breach of trust. But ordinary employees who are
performing jobs which are not primarily handling or in custody of
company property or assets cannot be terminated for breach of trust
and confidence. It has to be either misconduct or any other ground
but not breach of trust and confidence. Why? Because there can be
no breach if there is no trust reposed, no trust or confidence reposed
in the employee.
Why is there need for breach of trust as a ground? Why can’t it just
fall under serious misconduct?
Serious misconduct must be a positive act. It must be shown that the
employee clearly committed something. In breach of trust, that
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positive act may not be clearly committed. And yet who have
grounds to terminate an employee because of a particular breach of
trust and confidence.
But we have to be careful about that. In one case, the court said
there’s a difference between the treatment of managerial employees
and ordinary employees. For managerial employees, it would seem
that the ground of breach of confidence, you don’t need to point to a
particular misconduct, particularly to a particular act of the
managerial employee. In short, suspicion which is grounded on
factual circumstances may be enough. I repeat, suspicion which is
based on factual circumstances will justify the termination of a
managerial employee. Why? Because while there is no misconduct
which is clearly shown, but there is breach of trust and confidence.
However, the court said, that cannot be applied to non-managerial
employee. Meaning for non-managerial employees, you must show
a particular act of breach of trust and confidence. So in that case, for
managerial employees, you will find value in using breach of trust
instead of misconduct. Because an act or a set of facts will or may
justify breach of trust but not misconduct for a particular managerial
employee. So when it comes to that managerial employee, you will
terminate him not because of serious misconduct but due to breach of
trust which you can prove with other factual circumstances.
I think the category recited by Mr. Ariston (wowee, sikat!) can also
be considered as part of that set of employees which can be
terminated for breach of trust. Let’s say a secretary who handles
confidential information and confidential documents and mishandles
such documents, it can also be applied. Again, it has to be applied
strictly and you have to show the circumstances showing a clear
breach of trust.
So the only employees you can terminate for breach are managerial
employees and employees whose jobs primarily consists in handling
company properties and company funds.
Page 79 of 149
Again, be careful about the terms. Take note of the term used, it’s
willful breach. Willful breach is entirely different from simple loss
of trust and confidence. How is it different? When you say willful
breach, you are referring to a particular act of an employee. If you
simply say loss of trust or confidence, it’s simply the employer
losing trust and confidence in the employee. It’s not the ground
contemplated by the law. The ground mentioned is not simply loss
of trust which is subjective on the part of the employer, but breach of
trust which is a positive act on the part of the employee.
According to the decision of the Court, for managerial employees,
mere circumstantial evidence may be enough. But for cashiers, or
rank and file employees, you have to prove the acts constituting the
breach of trust. In short, the actual evidence of the positive act of the
employee which can be considered as a willful breach of trust. In
short, madali kang matanggal if you’re a managerial employee.
Commission of a crime. Is there need for an actual case? No. The
minimum requirement of the law is the commission. And can you
say that something is committed even before you file the case? Yes,
of course. The employer does not have the responsibility to file a
criminal case first or even to file it after or even report it to the police
before terminating an employee who has committed an offense
against the employer. You don’t need a case. You certainly don’t
need a conviction before you can do that. A mere commission of an
offense against the employer will justify termination.
We can use offense and crime interchangeably here. This is not a
penal law, the term crime against the “person” of the employer
should not be interpreted as an offense against the person (as
opposed to offenses against the chastity or liberty). I don’t think that
we have to place the technical meaning it has in criminal cases. I’ll
give you an example: If an employee committed an offense, let’s say
acts of lasciviousness against the daughter of the employer, that will
not fall under serious misconduct unless it’s work-related. But it
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should fall under this case. And I don’t think the employee can raise
the defense that “I did not commit a crime against persons.”
This ground is not work-related. The work-related qualification no
longer applies to subparagraph (d). Nakita mo sa labas yung
employer mo, sinaksak mo. You cannot claim “hey, that’s not work-
related.” I don’t think you can do that.
What if the employee says something to the employer which is
tantamount to oral defamation? Can the employee be terminated
based on that?
Depending on the gravity of what he said. Which will take us now to
the qualification that even if you have one of these things, even if
you have a ground under Article 282. It does not automatically mean
that termination is the proper remedy of the employer. Even if it can
be considered serious misconduct, the court in many cases will say,
you have to look at the circumstances, for example, length of service,
the effect of that serious misconduct, the value of the property
involved (if property was lost because of serious misconduct). And
the court said that penalty should be commensurate to the offense
committed. The term “offense committed” will certainly refer to the
offenses enumerated under Article 282. What I’m saying is that the
mere existence of an offense that fall under Article 282 will not
justify termination, if a penalty less severe will already be sufficient.
So hindi basta pumasok kayo under the definition, you will
terminate.
Other causes analogous to the foregoing. While I said that this
means have some leeway in considering other causes, again the
causes must be analogous to those items specifically stated in
subparagraphs. The term analogous should likewise be construed
narrowly. You cannot simply state that this is analogous to
subparagraph (a) or subparagraph (b), it has to be strictly construed.
And unless you can show a relation between that particular offense
and the offenses which are specifically allowed to be ground for
termination, then you cannot justify termination. Let me give you
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some examples, the court has allowed in some cases, the employer to
terminate employees based on the employee’s violated of the
employer’s Code of Conduct. But the offenses enumerated in the
Code of Conduct must not be remote from the nature of the offenses
enumerated under Article 282. So the employer is not limited to a, b,
c, d. The employer can impose additional causes but those causes
and the validity of those causes as justification for termination will
be judged on the basis of whether they are on the same in thrust as a,
b, c, d.
Procedural requirements. Three steps:
1. First notice – A notice to the employee of the intent of the
employer to dismiss
 Also known as a “show cause” letter
 Contents:
a. Ground relied upon
b. Facts which constitute the ground
 Cannot simply say that “this is the second
serious offense since January 22, 2002
c. Giving the employee the opportunity to prepare and
explain his side
d. Intention of the employer to dismiss
 It has to be clear in the letter. Simply asking the
employee to explain in writing the incident that
happen in a particular date and a particular
place. That is not a show cause letter. It’s a
show cause letter because the employee is
required to show cause why he or she should not
be dismissed from the employment. It is not
simply an explanation of an incident. The
employee must justify why he must not be
terminated by management and unless you have
that, the show cause letter is insufficient. You
have to notify the employee in advance that that
explanation letter is so important because it
could cause him or her his employment.
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2. A hearing to give the employee an opportunity to be heard
 Not really adversarial but employee may
have a lawyer with him if he wants
3. Second notice – a notice of dismissal
Authorized causes
Automation or labor-saving devices
Because of the installation of labor-saving devices, you no longer
need the services of employees.
How is it different from redundancy?
Redundancy is not the result of the installation of labor-saving
device. Is there a value for knowing the difference between labor-
saving device or redundancy?
Assuming you have this situation where the installation of labor-
saving device resulted in employees’ services being redundant –
meaning you don’t need the group of employees anymore because
you have installed a labor-saving device. Will the employee be
terminated due to installation of labor-saving device or redundancy?
Is there any difference in the consequences or the procedure of
terminating due to labor-saving device and redundancy?
If the installation of labor-saving device will mean that a group of
employees will no longer be required, I don’t think that there is any
reason to think about the difference of installation of labor-saving
device and redundancy. Termination due to installation of labor-
saving device or redundancy will have the same effect. The
procedure will be the same. The separation pay will be the same.
But not all redundancy will be the effect of installation of labor-
saving device. You can have redundancy which is the result of
dropping one product in the production line. You don’t need that
production line anymore. So while you haven’t installed a labor-
saving device, that is still redundancy.
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In redundancy, the employee terminated cannot claim that the
termination is invalid because he or she was the only one occupying
that particular position at the time of termination. We are not
referring to positions only, we are referring services of the
employees. And services may no longer be necessary even if you’re
the only person occupying that particular position. Di mo puedeng
sabihin na ako lang yung may ganun na trabaho sa kumpanya. Di
nga kailangan yung trabaho mo na yun e. Therefore, you are
redundant. Redundancy is not simply duplication. The services of
the redundant employee should be in excess of the needs or the
requirements of the business of the employer.
I have 15 employees doing a particular job. Then I hire a group of
employees through a subcontractor. Then I terminate the first 15
because of redundancy. Is that valid?
No. Because the services are not redundant because you still need a
group of employees to provide that service. But the Court in Serrano
made a statement appearing to justify that. That the hiring of
contractual employees and terminating regular employees because
they are no longer need. Small item of Serrano. But Serrano has
other portions which claim infamy. We know Serrano because of
something else, not that.
Retrenchment.
Termination of employee to prevent further losses involved in the
company.
Different from redundancy. Retrenchment pertains to prevention of
loss. In redundancy, there is no qualification that you are
terminating the employees because you are losing money. There is
no connection between redundancy and loss.
Is there value in determining the difference between retrenchment
and redundancy? The effect of retrenchment and redundancy as to
separation pay is different. In retrenchment, the employer pays less
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thus he has to prove loss before he can terminate due to
retrenchment.
What are the remedies of an illegally dismissed worker?
1. Reinstatement/separation pay and payment of backwages
Payment of full backwages from the time actually illegally
dismissed until actual reinstatement, or if reinstatement is not
possible, up to the finality of the decision. Full backwages means all
allowances he should have received. Basic rule in computing
backwages, whatever he should have received had he not been
illegally terminated.
In the case of Bustamante the Court said it is a penalty for the
employer, and since it is a penalty, then it is not in the nature of
compensatory damages. Rather it is in the nature of exemplary
damages. Hence it is not compensating for anything, rather it is
penalizing the employer for something. If it were compensatory in
nature, then earnings elsewhere should mitigate the damages or the
liability of the employer, because you need not compensate the
employee. The employee did not lose anything during that period. In
fact he earned something during that period. Hence whatever earned
elsewhere is immaterial in computing the amount to be paid as
backwages.
2. If reinstatement is impossible, separation pay should be given.
If reinstatement no longer possible, due to factual circumstances
or strained relations, separation pay to be reckoned from the date he
was hired in the company until finality of decision. Instead of
reinstatement, he should be paid an amount equivalent to one-month
pay for every year of service (this rate is based on jurisprudence. It is
not in the law). Remember, this is the formula to be applied as long
as it is found that at the point of termination, such was illegal. So, if
the employer alleges lawful dismissal on the ground of just or
authorized causes, but it is later proven that termination is illegal as
the ground does not exist, he is entitled to reinstatement. If
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impossible, then in lieu of that, separation pay equal to 1 month for
every year of service. Don’t confuse the formulas for separation pay
for termination due to authorized causes and illegal termination. For
instance a company closes in 1990 due to business losses. The
workers (e.g. who were hired in 1980) don’t believe that and file a
case, where eventually the Supreme Court finds that the closure was
fraudulent. The Court cannot order reinstatement due to the fact of
closure, but it can order the company to pay separation pay worth 1
month salary for every year of service. Case is final as of March 1,
2002. The company must pay separation pay from 1980 up to 2002,
and backwages from 1990 up to 2002. The separation pay is
supposed to replace the employee’s right to continue working. IT is
similar to retirement pay. On the other hand, backwages is supposed
to answer for compensation he should have received had he not been
dismissed illegally.
Now in the above example, if the employer paid the ½ month
rate per yr. of service, following the rules on authorized causes, then
he is obligated to pay only the difference (another ½ mo. per yr. of
service) if the Court finds the closure illegal. But since this is an
illegal dismissal claim, malamang hindi tinanggap ng employees ang
½ month for every year of service separation pay, as they are
contesting its validity. I would personally advise them not to receive
it. Such act on their part would be cited by the employer to show that
the termination is valid.
As a general rule, a waiver/quitclaim signed by the employees
cannot bar their right to question the validity of termination and reap
whatever amount due them if found to be illegally terminated. The
employees will not be estopped from questioning the legality of
termination even if they sign waivers or receive separation pay. But
if I were counsel for the workers, I would advise them not to receive
separation payments and sign under such quitclaim. It would be an
additional issue to be threshed out, but still, such fact of
receipt/acceptance would not estop the workers from questioning the
legality of the quitclaim or their dismissal.
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Let’s say eventually the courts find that there was a valid
dismissal due to authorized causes. The worker is entitled to such
separation pay even if he refused to receive it in the beginning. He is
not barred from claiming what is due him.
Now, remember it is the award of full amount of backwages that
serves as a penalty to the employer. The separation pay on the other
hand, is given as a form of remedy to the employee, since
reinstatement is impossible already.
The rate of separation pay should be based on the rate he should
have been receiving as of finality of judgment. In the above example,
it would be as of 2002. The point of this is because his years of
service is being counted up to 2002. It should be treated as if the
employee is being reinstated and he is retiring. Be careful, contrary
to this jurisprudential rule, some decisions will tell you the rate
should be as of the time when he was terminated, which is wrong.
All of this, separation pay in lieu of reinstatement, is purely
jurisprudential ruling. The only remedy provided in the Labor Code
is pure reinstatement. But the SC recognized the situation where this
may be impossible, and so it supplied what was missing in the law to
avoid injustice to the worker. Otherwise, the worker will not have a
remedy in case reinstatement is not possible.
Now strained relations means the relations would not be
workable-avoid the restoration of relations when the restoration
would not be good for both parties. It applies only to those positions
held in trust and confidence-managerial employees. This ground
cannot apply to rank and file employees. And filing a case, litigation
cannot be invoked to justify strained relations.
Remember to merit full credit you must answer, that the
employee is entitled to reinstatement to the former or an equivalent
position, without loss of seniority rights, and full backwages.
Page 83 of 149
Without loss of seniority rights – means that if by 2002, he
would have rendered 22 years of service had he not been terminated
in 1990, then when he returns in 2002, he should be given the same
seniority level as if he has not stopped working. So assuming that
because of the render of 22 years of service, he should have been
given a car by the company, when he is reinstated in 2002, he is
entitled to that car. However, insofar as salaries are concerned, if the
company has a salary scale that takes into consideration a job
weighing scale (looks at the seniority level vis-à-vis the rate), at the
time of reinstatement he should be placed on the level he should
have been had he not been terminated. But, promotions he could
have gotten will not be applicable UNLESS it operates automatically
because of the number of years worked. Usually promotions take
into consideration a lot of factors. Same with benefits-if these should
have attached automatically, as long as the employee rendered a
certain number of years of service, then the reinstated employee is
entitled to it.
All this is hinged on the phrase “as if the employee had not been
dismissed”. This same operative phrase in backwages applies in
reinstatement.
These remedies are applicable to a fixed term employment. For
example we have a valid fixed term contract good for ten years, then
the employee is illegally dismissed on the fifth year. Litigation lasted
beyond the ten-year term of the contract, but the Court found in favor
of the employee. Thus, the employee is entitled to backwages. The
backwages should be computed for good for five years only. Now,
reinstatement is impossible because the term has expired. So there is
no award of separation pay in lieu of reinstatement. Then the present
salaries of his contemporaries may be taken into consideration if the
raise in their salaries are purely attributable to length of service and
no other factors.
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“Payroll reinstatement” – where the employer implements the
reinstatement order by paying the employee his salaries pending
appeal, but he does not let the employee report for work.
In such a case, the employee may look for other work if he chooses
to do so, following the Bustamante doctrine.
If a collective bargaining agreement gives automatic raises
then this must be included in the payment of backwages. It covers
everything one should receive had he not been illegally terminated.
A probationary employee should be considered past the
probationary period and so entitled to the same principle under
Bustamante. He should be considered a regular employee otherwise
the backwages will not run, and the employer would be able to defeat
the rights of an illegally dismissed employee. Even without action, or
evaluation on the part of an employer, the mere lapse of time makes
a probie employee converted to regular. The employer should be
made to bear the cost for removing the opportunity of the employee
to convert to regular ee under ordinary circumstances. This is
premised under the idea that management illegally took the
opportunity away because the dismissal was illegal. This means the
employer was unable to show any cause to terminate the
probationary period.
Now Serrano complicates matters. Under the Wenphil
doctrine, the lack of procedural due process makes the dismissal
illegal, and awards damages because of this. However Serrano says
the lack of procedural due process makes the dismissal merely
INEFFECTUAL, and so the termination is effective only upon
finality of the decision, hence the employee is awarded backwages.
Why is Serrano bad? It is good as it increased the benefits of a
dismissed worker who cannot be reinstated because there is
just/authorized cause to dismiss him, but it is bad because it removed
the right of a worker to procedural due process-the procedural rights
prior to termination.
Page 84 of 149
Serrano did not say the dismissal is illegal. Worse it says the
employee is not entitled to due process at all, because it involves
private parties. Justice Mendoza in this case says such right may be
invoked only in relations against the Government. It argued using the
Constitutional provisions, not the Labor Code provisions! Your bar
chairman’s forte is Constitution. To a person who is good at using a
hammer, every problem is looked at as a nail. This case is a perfect
example. So you cannot invoke due process using Serrano. Serrano
is more of a Consti case but has repercussions beyond that. However,
this is penned by J. Mendoza, so don’t attack this case in your bar
exams ^_^.
If at the time of finality of judgment, the employer-
corporation has been dissolved, who becomes liable to pay
backwages? In some cases the Court pierced the veil of corporate
fiction, and allowed the employee to seek relief against the
corporation’s officers, because the employee did not have any other
available remedy.
CLASS NOTES
Illegal dismissal case is filed with the Labor Arbiter of the
NLRC. Remember that codal provision that proper interpretations of
company policies shall be coursed through the voluntary arbitrator.
However, if for example, an employee is dismissed because of the
application of the company’s code of conduct, and so there is a
dispute as to the proper interpretation and application of such, it is
still within the jurisdiction of the Labor Arbiter because it is mainly a
termination dispute which is under the jurisdiction of the LA.
A Labor Arbiter’s “immediate reinstatement order” is not final
pending appeal, however it is immediately executory. There is no
need to issue a writ of execution. Thus, pending appeal the employer
must implement the ruling. If it is not followed, file a motion to cite
the employer in contempt, if he refuses to implement the order. BUT
REMEMBER, the Labor Code refers only to the LA’s reinstatement
order as immediately executory, and nothing else. So for instance,
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the LA says the dismissal was valid, then on appeal the NLRC says
illegal dismissal-reinstate, such order is not immediately executory.
Now let’s take a little stroll down remedial law lane as applied to
illegal dismissal cases ^_^:
1. file with the Labor Arbiter
2. then appeal to Secretary of Labor
3. then to the Court of Appeals under Rule 65
4. file a Motion for Reconsideration
5. then to the Supreme Court under Rule 45.
The same procedure applies to strike cases and voluntary arbitrator’s
decisions.
It would be worthwhile to reflect upon the rationalization of
Zialcita, et al vs. Philippine Air Lines, a decision that emanated
from the Office of the President. There, a policy of Philippine Air
Lines requiring that prospective flight attendants must be single and
that they will be automatically separated from the service once they
marry, was declared void, it being violative of the clear mandate in
Article 136 of the Labor with regard discrimination against married
women.

There a two instances where the Labor Arbiter has no

jurisdiction over termination disputes:
1) when the parties submit the question of illegal dismissal to
voluntary arbitration
2) when the dismissal has become basis for filing a notice of strike,
and the Secretary of Labor assumed jurisdiction, the Secretary
acquires jurisdiction over the termination dispute as well

When the voluntary arbitration decision is “final”, it may be

challenged before the Court of Appeals under Rule 65, because it is
the only mode or remedy available, as stated in the DBP case (I’m
not sure if this case is in the syllabus, but Sir cites this as recent case
doctrine). One cannot file under Rule 43, because the Labor Code
says the Voluntary Arbitrator’s decision is a final decision.
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XI. DISPUTE SETTLEMENT An order issued by the duly authorized

LABOR CODE
CHAPTER VI
Administration and Enforcement
Art. 128. Visitorial and enforcement power. —
(a) The Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation
officers, shall have access to employer’s records and
premises at any time of the day or night whenever
work is being undertaken therein, and the right to
copy therefrom, to question any employee and to
investigate any fact, condition or matter which may
be necessary to determine violations or which may
aid in the enforcement of this Code and of any labor
law, wage order or rules and regulations issued
pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to
issue compliance orders to give effect to the labor
standards provisions of this Code and other labor
legislation based on the findings of labor employment
and enforcement officers or industrial safety
engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall
issue writs of execution to the appropriate authority
for the enforcement of their orders, except in cases
where the employer contests the findings of the labor
employment and enforcement officer and raises
issues supported by documentary proofs which were
not considered in the course of inspection.
representative of the Secretary of Labor and
Employment under this article may be appealed to
the latter. In case said order involves 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 Secretary of Labor and Employment in the
amount equivalent to the monetary award in the
order appealed from. (As amended by RA 7730)
(c) The Secretary of Labor may likewise order stoppage
of work or suspension of operations of any unit or
department of an establishment when non-
compliance with the law or implementing rules and
regulations poses grave and imminent danger to the
health and safety of workers in the workplace. Within
twenty-four hours, a hearing shall be conducted to
determine whether an order for the stoppage of work
or suspension of operations shall be lifted or not. In
case the violation is attributable to the fault of the
employer, he shall pay the employees concerned their
salaries or wages during the period of such stoppage
of work or suspension of operation.
(d) It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render
ineffective the orders of the Secretary of Labor or his
duly authorized representatives issued pursuant to
the authority granted under this Article, and no
inferior court or entity shall issue temporary or
permanent injunction or restraining order or
otherwise assume jurisdiction over any case involving
the enforcement orders issued in accordance with this
Article.
(e) Any government employee found guilty of violation
of, or abuse of authority under this Article shall, after
appropriate administrative investigation, be subject to
summary dismissal from the service.
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(f) The Secretary of Labor may, by appropriate
regulations require employers to keep and maintain
such employment records as may be necessary in aid
of his visitorial and enforcement powers under this
Code.
Art. 129. Recovery of wages, simple money claims and
other benefits. — Upon complaint of any interested party,
the Regional Director of the Department of Labor and
Employment or any of the duly authorized hearing officers
of the Department is empowered, through summary
proceeding and after due notice, to hear and decide any
matter involving the recovery of wages and other monetary
claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household
service or househelper under this Code, arising from
employer-employee relations: Provided, That such
complaint does not include a claim for reinstatement:
Provided, further, That the aggregate money claims of each
employee or househelper do not exceed five thousand
pesos (P5,000). The Regional Director or hearing officer
shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same. Any
sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in a
special deposit account by, and shall be paid, on order of
the Secretary of Labor and Employment or the Regional
Director directly to the employee or househelper
concerned. Any such sum not paid to the employee or
househelper, because he cannot be located after diligent
and reasonable effort to locate him within a period of three
(3) years, shall be held as a special fund of the Department
of Labor and Employment to be used exclusively for the
amelioration and benefit of workers.
Any decision or resolution of the Regional Director
or hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of
this Code, within five (5) calendar days from receipt of a
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copy of said decision or resolution, to the National Labor
Relations Commission which shall resolve the appeal within
ten (10) calendar days from the submission of the last
pleading required or allowed under its rules.
The Secretary of Labor and Employment or his duly
authorized representative may supervise the payment of
unpaid wages and other monetary claims and benefits,
including legal interest, found owing to any employee or
househelper under this Code. (As amended by RA 6715)
TITLE II - National Labor Relations Commission
CHAPTER I
Creation and Composition
Art. 213. National Labor Relations Commission. —
There shall be a National Labor Relations Commission
which shall be attached to the Department of Labor and
Employment for program and policy coordination only,
composed of a Chairman and fourteen (14) members.
Five (5) members each shall be chosen from among
the nominees of the workers and employers organizations,
respectively. The Chairman and the four (4) remaining
members shall come from the public sector, with the latter
to be chosen from among the recommendees of the
Secretary of Labor and Employment.
Upon assumption into office, the members
nominated by the workers and employers organizations
shall divest themselves of any affiliation with or interest in
the federation or association to which they belong.
The Commission may sit en banc or in five (5)
divisions, each composed of three (3) members. The
Commission shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing
and disposition of cases before any of its divisions and
regional branches and formulating policies affecting its
administration and operations. The Commission shall
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exercise its adjudicatory and all other powers, functions,
and duties through its divisions. Of the five (5) divisions,
the first and second divisions shall handle cases coming
from the National Capital Region and the third, fourth and
fifth divisions, cases from other parts of Luzon, from the
Visayas and Mindanao, respectively. The divisions of the
Commission shall have exclusive appellate jurisdiction over
cases within their respective territorial jurisdiction.
The concurrence of two (2) Commissioners of a
division shall be necessary for the pronouncement of a
judgment or resolution. Whenever the required
membership in a division is not complete and the
concurrence of two (2) Commissioners to arrive at a
judgment or resolution cannot be obtained, the Chairman
shall designate such number of additional Commissioners
from the other divisions as may be necessary.
The conclusions of a division on any case submitted
to it for decision shall be reached in consultation before the
case is assigned to a member for the writing of the opinion.
It shall be mandatory for the division to meet for purposes
of the consultation ordained therein. A certification to this
effect signed by the Presiding Commissioner of the division
shall be issued, and a copy thereof attached to the record
of the case and served upon the parties.
The Chairman shall be the Presiding Commissioner
of the first division, and the four (4) other members from
the public sector shall be the Presiding Commissioners of
the second, third, fourth and fifth divisions, respectively. In
case of the effective absence or incapacity of the Chairman,
the Presiding Commissioner of the second division shall be
the Acting Chairman.
The Chairman, aided by the Executive Clerk of the
Commission, shall have administrative supervision over the
Commission and its regional branches and all its personnel,
including the Executive Labor Arbiters and Labor Arbiters.
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The Commission, when sitting en banc, shall be
assisted by the same Executive Clerk, and, when acting thru
its divisions, by said Executive Clerk for its first division and
four (4) other Deputy Executive Clerks for the second, third,
fourth and fifth divisions, respectively, in the performance
of such similar or equivalent functions and duties as are
discharged by the Clerk of Court and Deputy Clerks of Court
of the Court of Appeals. (As amended by RA 6715)
Art. 214. Headquarters, branches and provincial
extension units. — The Commission and its First, Second,
and Third divisions shall have their main offices in
Metropolitan Manila, and the fourth and fifth divisions in the
cities of Cebu and Cagayan de Oro, respectively. The
Commission shall establish as many regional branches as
there are regional offices of the Department of Labor and
Employment, sub-regional branches or provincial extension
units. There shall be as many labor Arbiters as may be
necessary for the effective and efficient operation of the
Commission. Each regional branch shall be headed by an
Executive Labor Arbiter. (As amended by RA 6715)
Art. 215. Appointment and qualifications. — The
Chairman and other Commissioners shall be members of the
Philippine Bar and must have been engaged in the practice
of law in the Philippines for at least fifteen (15) years, with
at least five (5) years experience or exposure in the field of
labor-management relations, and shall preferably be
residents of the region where they are to hold office. The
Executive Labor Arbiters and Labor Arbiters shall likewise be
members of the Philippine Bar and must have been engaged
in the practice of law in the Philippines for at least seven (7)
years, with at least three (3) years experience or exposure
in the field of labor-management relations: Provided,
however, that incumbent Executive Labor Arbiters and
Labor Arbiters who have been engaged in the practice of
law for at least five (5) years may be considered as already
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qualified for purposes of reappointment as such under this
Act.
The Chairman and the other Commissioners, the
Executive Labor Arbiters and Labor Arbiters shall hold office
during good behavior until they reach the age of sixty-five
(65) years, unless sooner removed for cause as provided by
law or become incapacitated to discharge the duties of their
office.
The Chairman, the Division Presiding Commissioners
and other Commissioners shall all be appointed by the
President, subject to confirmation by the Commission on
Appointments. Appointment to any vacancy shall come from
the nominees of the sector which nominated the
predecessor. The Executive Labor Arbiters and Labor
Arbiters shall also be appointed by the President, upon
recommendation of the Secretary of Labor and
Employment, and shall be subject to the Civil Service Law,
rules and regulations.
The Secretary of Labor and Employment shall, in
consultation with the Chairman of the Commission, appoint
the staff and employees of the Commission, and its regional
branches as the needs of the service may require, subject
to the Civil Service Law, rules and regulations, and upgrade
their current salaries, benefits and other emoluments in
accordance with law. (As amended by RA 6715)
Art. 216. Salaries, benefits and other emoluments. —
The Chairman and members of the Commission shall
receive an annual salary at least equivalent to, and be
entitled to the same allowances and benefits as, those of
the Presiding Justice and Associate Justices of the Court of
Appeals, respectively. The Executive Labor Arbiters shall
receive an annual salary at least equivalent to that of an
Assistance Regional Director of the Department of Labor
and Employment and shall be entitled to the same
allowances and benefits as that of a Regional Director of
said Department. The Labor Arbiters shall receive an annual
Page 89 of 149
salary at least equivalent to, and be entitled to the same
allowances and benefits as, that of an Assistant Regional
Director of the Department of Labor and Employment. In no
case, however, shall be the provision of this Article result in
the diminution of existing salaries, allowances and benefits
of the aforementioned officials. (As amended by RA 6715)
CHAPTER II
Powers and Duties
Art. 217. Jurisdiction of Labor Arbiters and the
Commission. —
(a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for
decision without extension, even in the absence of
stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim for reinstatement,
those cases that workers may file involving
wages, rate of pay, hours of work and other
terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
(5) Cases arising from any violation of Article 264 of
this Code, including questions involving the
legality of strikes and lockouts; and
(6) Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee
relations, including those of persons in domestic
or household service, involving an amount
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exceeding five thousand pesos (P5,000.00),
whether or not accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or
implementation of collective bargaining agreements
and those arising from the interpretation or
enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration
as may be provided in said agreements. (As amended
by RA 6715)
Art. 218. Powers of the Commission. — The
Commission shall have the power and authority:
(a) To promulgate rules and regulations governing the
hearing and disposition of cases before it and its
regional branches, as well as those pertaining to its
internal functions and such rules and regulations as
may be necessary to carry out the purposes of this
Code;
(b) To administer oaths, summon the parties to a
controversy, issue subpoenas requiring the attendance
and testimony of witnesses or the production of such
books, papers, contracts, records, statements of
accounts, agreements, and others as may be material
to a just determination of the matter under
investigation, and to testify in any investigation or
hearing conducted in pursuance of this Code;
(c) To conduct investigation for the determination of a
question, matter or controversy within its jurisdiction,
proceed to hear and determine the disputes in the
absence of any party thereto who has been summoned
or served with notice to appear, adjourn its hearings
to any time and place, refer technical matters or
Page 90 of 149
accounts to an expert and to accept his report as
evidence after hearing of the parties upon due notice,
direct parties to be joined in or excluded from the
proceedings, correct, amend, or waive any error,
defect or irregularity, whether in substance or in form,
give all such directions as it may deem necessary or
expedient in the determination of the dispute before it,
and dismiss any matter or refrain from further
hearing or from determining the dispute or part
thereof, where it is trivial or where further proceedings
by the Commission are not necessary or desirable;
and
(d) To hold any person in contempt direct or indirectly and
impose appropriate penalties therefor in accordance
with law.
A person guilty of misbehavior in the presence
of or so near the Chairman or any member of the
Commission or any Labor Arbiter as to obstruct or
interrupt the proceedings before the same, including
disrespect toward said officials, offensive personalities
toward others, or refusal to be sworn or to answer as
a witness, or to subscribe an affidavit or deposition
when lawfully required to do so, may summarily
adjudged in direct contempt by said officials and
punished by fine not exceeding five hundred pesos
(P500) or imprisonment not exceeding five (5) days,
or both if it be the Commission or a member thereof,
or by a fine not exceeding one hundred pesos (P100)
or imprisonment not exceeding one (1) day, or both if
it be a Labor Arbiter.
The person adjudged in direct contempt by a
Labor Arbiter may appeal to the Commission and the
execution of the judgment shall be suspended pending
the resolution of the appeal upon the filing of subject
person of a bond on condition that he will abide by
and perform the judgment of the Commission should
the appeal be decided against him. Judgment of the
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Commission on direct contempt is immediately
executory and unappealable. Indirect contempt shall
be dealt with by the Commission or Labor Arbiter in
the manner prescribed under Rule 71 of the Revised
Rules of Court; and
(e) To enjoin or restrain any actual or threatened
commission of any or all prohibited or unlawful acts or
to require the performance of a particular act in any
labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to
any party: Provided, That no temporary or permanent
injunction in any case involving or growing out of a
labor dispute as defined in this Code shall be issued
except after hearing the testimony of witnesses, with
opportunity for cross-examination, in support of the
allegations of a complaint made under oath, and
testimony in opposition thereto, if offered, and only
after a finding of fact by the Commission, to the
effect:
(1) That prohibited or unlawful acts have been
threatened and will be committed and will be
continued unless restrained, or have been
committed and will be continued unless
restrained, but no injunction or temporary
restraining order shall be issued on account of
any threat, prohibited or unlawful act, except
against the person or persons, association or
organization making the threat or committing
the prohibited or unlawful act or actually
authorizing or ratifying the same after actual
knowledge thereof;
(2) That substantial and irreparable injury to
complainant’s property will follow;
(3) That, as to each item of relief to be granted,
greater injury will be inflicted upon complainant
by the denial of relief than will be inflicted upon
defendants by the granting of relief;
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(4) That complainant has no adequate remedy at
law; and
(5) That the public officers charged with the duty to
protect complainant’s property are unable or
unwilling to furnish adequate protection.
Such hearing shall be held after due and
personal notice thereof has been served, in such
manner as the Commission shall direct, to all known
persons against whom relief is sought, and also to the
Chief Executive and other public officials of the
province or city within which the unlawful acts have
been threatened or committed charged with the duty
to protect complainant’s property: Provided, however,
That if a 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, such a
temporary restraining order may be issued upon
testimony under oath, sufficient, if sustained, to justify
the Commission in issuing a temporary injunction
upon hearing after notice. Such a temporary
restraining order shall be effective for no longer than
twenty (20) days and shall become void at the
expiration of said twenty (20) days. No such
temporary restraining order or temporary injunction
shall be issued except on condition that 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 caused by the 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.
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The undertaking herein mentioned shall be
understood to constitute an agreement entered into by
the complainant and the surety upon which an order
may be rendered in the same suit or proceeding
against said complainant and surety, upon a hearing
to assess damages, of which hearing complainant and
surety shall have reasonable notice, the said
complainant and surety submitting themselves to the
jurisdiction of the Commission for that purpose. But
nothing herein contained shall deprive any party
having a claim or cause of action under or upon such
undertaking from electing to pursue his ordinary
remedy by suit at law or in equity: Provided, further,
That the reception of evidence for the application of a
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. (As amended by
RA 6715)
Art. 219. Ocular inspection. — The Chairman, any
Commissioner, Labor Arbiter or their duly authorized
representatives may at any time during working hours
conduct an ocular inspection on any establishment, building,
ship or vessel, place or premises, including any work,
material, implement, machinery, appliance or any object
therein, and 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 the
investigation.
Art. 220. Compulsory Arbitrators. — The Commission
or any Labor Arbiter shall have the power to seek the
assistance of other government officials and qualified
private citizens to act as compulsory arbitrators on cases
referred to them and to fix and assess the fees of such
compulsory arbitrators, taking into account the nature of
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the case, the time consumed in hearing of the case, the
professional standing of the arbitrators, the financial
capacity of the parties, and the fees provided in the Rules of
Court. (Repealed by Sec. 16, BP Blg. 130).
Art. 221. Technical rules not binding and prior resort to
amicable settlement. — In any proceeding before the
Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be
controlling, and it is the spirit and intention of this Code that
the Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively, without regard
to technicalities of law or procedure, all in the interest of
due process. In any proceeding before the Commission or
any Labor Arbiter, the parties may be represented by legal
counsel but it shall be the duty of the Chairman, any
Presiding Commissioner or Commissioner or any Labor
Arbiter to exercise complete control of the proceedings at all
stages.
Any provision of law to the contrary notwithstanding, the
Labor Arbiter shall exert all efforts towards the amicable
settlement of a labor dispute within his jurisdiction on or
before the first hearing. The same rule shall apply to the
Commission in the exercise of its original jurisdiction. (As
amended by RA 6715)
Art. 222. Appearances and fees. —
(a) Non-lawyers may appear before the Commissioner or
any Labor Arbiter only:
1. If they represent themselves; or
2. If they represent their organization or members
thereof.
(b) No attorney’s fees, negotiation fees or similar charges
of any kind arising from any collective bargaining
negotiations or conclusion of the collective agreement
shall be imposed on any individual member of the
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contracting union: Provided, however, That attorney’s
fees may be charged against union funds in an
amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the
contrary shall be null and void.
CHAPTER III
Appeal
Art. 223. Appeal. — Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. Such
appeal may be entertained only on any of the following
grounds:
(a) If there is prima facie evidence of abuse of discretion
on the part of the Labor Arbiter;
(b) If the decision, order or award 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 Commission in the
amount equivalent to the monetary award in the judgment
appealed from.
In any event, 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. 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
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payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.
To discourage frivolous or dilatory appeals, the
Commission or the Labor Arbiter shall impose reasonable
penalty, including fines or censures, upon the erring parties.
In all cases, the appellant shall furnish a copy of the
memorandum of appeal to the other party who shall file an
answer not later than ten (10) calendar days from receipt
thereof.
The Commission shall decide all cases within twenty
(20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be final and
executory after ten (10) calendar days from receipt thereof
by the parties.
Any law enforcement agency may be deputized by
the Secretary of Labor and Employment or the Commission
in the enforcement of decisions, awards, or orders. (As
amended by RA 6715)
Art. 224. Execution of decisions, orders, or awards. —
(a) The Secretary of Labor and Employment or any Regional
Director, the Commission or any Labor Arbiter or Med-
Arbiter, or the voluntary arbitrator or panel of
voluntary arbitrators may, motu propio or on motion
of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it
becomes final and executory, 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, or the Labor Arbiter or Med-Arbiter, or
voluntary arbitrator or panel of voluntary arbitrators.
In any case, it shall be the duty of the responsible
officer to separately furnish immediately the counsel
of record and the parties with copies of said decisions,
orders or awards. Failure to comply with the duty
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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 Labor Arbiters and voluntary
arbitrators or panel of voluntary arbitrators, including
the imposition of administrative fines which shall not
be less than five hundred pesos (P500.00) nor more
than ten thousand pesos (P10,000.00). (As amended
by RA 6715).
Art. 225. Contempt powers of the Secretary of Labor
and Employment. — In the exercise of his powers under this
Code, the Secretary of Labor and Employment may hold any
person in direct or indirect contempt and impose the
appropriate penalties therefor.
TITLE III
Bureau of Labor Relations
Art. 226. Bureau of Labor Relations. — The Bureau of
Labor Relations and the Labor Relations Divisions in the
regional offices of the Department of Labor and Employment
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) calendar days to
act on labor cases before it, subject to extension by
agreement of the parties. (As amended by RA 6715)
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Art. 254. Injunction prohibited. — No temporary or
permanent injunction or restraining order in any case
involving or growing out of labor disputes shall be issued by
any court or other entity, except as otherwise provided in
Articles 218 and 264 of this Code. (As amended by BP Blg.
227)
TITLE VII-A
Grievance Machinery and Voluntary Arbitration
Art. 260. Grievance machinery and voluntary
arbitration. — The parties to a collective bargaining
agreement shall include therein provisions that will ensure
the mutual observance of its terms and conditions. They
shall establish a machinery for the adjustment and
resolution of grievances arising from the interpretation or
implementation of their collective bargaining agreement and
those arising from the interpretation or enforcement of
company personnel policies.
All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days from
the date of its submission shall automatically be referred to
voluntary arbitration prescribed in the collective bargaining
agreement.
For this purpose, parties to a collective bargaining
agreement shall name and designate in advance a voluntary
arbitrator or panel of voluntary arbitrators, or include in the
agreement a procedure for the selection of such voluntary
arbitrator or panel of voluntary arbitrators, preferably from
the listing of qualified Voluntary Arbitrators duly accredited
by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary
Arbitrators, as may be necessary, pursuant to the selection
procedure agreed upon in the collective bargaining
agreement, which shall act with the same force and effect
as if the voluntary arbitrator or panel of voluntary
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arbitrators have been selected by the parties as described
above. (As added by RA 6715)
Art. 261. Jurisdiction of voluntary arbitrators and panel
of voluntary arbitrators. — The Voluntary Arbitrator or panel
of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies
referred to in the immediately preceding Article.
Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining
Agreement. For purposes of this Article, gross violations of a
Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of
such agreement.
The Commission, its Regional Offices and the
Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and
shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the
collective bargaining agreement. (As added by RA 6715)
Art. 262. Jurisdiction over other labor disputes. — The
voluntary arbitrator or panel of voluntary arbitrators, upon
agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and
bargaining deadlocks. (As added by RA 6715)
Art. 262-A. Procedures. — The voluntary arbitrator or
panel of voluntary arbitrators shall have the power to hold
hearings, receive evidences and take whatever action is
necessary to resolve the issue or issues subject of the
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dispute, including efforts to effect a voluntary settlement
between parties.
All parties to the dispute shall be entitled to attend
the arbitration proceedings. The attendance of any third
party or the exclusion of any witness from the proceedings
shall be determined by the voluntary arbitrator or panel of
voluntary arbitrators. Hearings may be adjourned for cause
or upon agreement by the parties.
Unless the parties agree otherwise, it shall be
mandatory for the voluntary arbitrator or panel of voluntary
arbitrators to render an award or decision within twenty
(20) calendar days from the date of submission of the
dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or
panel of Voluntary Arbitrators shall contain the facts and the
law on which it is based. It shall be final and executory after
ten (10) calendar days from receipt of the copy of the
award or decision by the parties.
Upon motion of any interested party, the voluntary
arbitrator or panel of voluntary arbitrators or the Labor
Arbiter in the region where the movant resides, in case of
the absence or incapacity of the voluntary arbitrator or
panel of voluntary arbitrators for any reason, may issue a
writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom
the parties may designate in the submission agreement to
execute the final decision, order or award. (As added by RA
6715)
Art. 262-B. Cost of Voluntary Arbitration and Voluntary
Arbitrator’s fee. — The parties to a Collective Bargaining
Agreement shall provide therein a proportionate sharing
scheme on the cost of Voluntary Arbitration including the
Voluntary Arbitrator’s fee. The fixing of fee of Voluntary
Arbitrators or panel of Voluntary Arbitrators, whether
shouldered wholly by the parties or subsidized by the
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Special Voluntary Arbitration Fund, shall take into account
the following factors:
(a) Nature of the case;
(b) Time consumed in hearing the case;
(c) Professional standing of the voluntary arbitrator;
(d) Capacity to pay of the parties; and
(e) Fees provided for in the Revised Rules of Court. (As
added by RA 6715)
Art. 263. Strikes and Lockouts.
(g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the
Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect
of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at
the time of assumption or certification, all striking or
locked out employees shall immediately return to work
and the employer shall immediately resume operations
and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the
Commission may seek the assistance of law
enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue
to enforce the same.
In line with the national concern for and the
highest respect accorded to the right of patients to life
and health, strikes and lockouts in hospitals, clinics
and similar medical institutions shall, to every extent
possible, be avoided, and all serious efforts, not only
by labor and management but government as well, be
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exhausted to substantially minimize, if not prevent,
their adverse effects on such life and health, through
the exercise, however legitimate, by labor of its right
to strike and by management to lockout. In labor
disputes adversely affecting the continued operation of
such hospitals, clinics or medical institutions, it shall
be the duty of the striking union or locking-out
employer to provide and maintain an effective skeletal
workforce of medical and other health personnel,
whose movement and services shall be unhampered
and unrestricted, as are necessary to insure the
proper and adequate protection of the life and health
of its patients, most especially emergency cases, for
the duration of the strike or lockout. In such cases,
therefore, the Secretary of Labor and Employment
may immediately assume, within twenty four (24)
hours from knowledge of the occurrence of such a
strike or lockout, jurisdiction over the same or certify
it to the Commission for compulsory arbitration. For
this purpose, the contending parties are strictly
enjoined to comply with such orders, prohibitions
and/or injunctions as are issued by the Secretary of
Labor and Employment or the Commission, under pain
of immediate disciplinary action, including dismissal or
loss of employment status or payment by the locking-
out employer of backwages, damages and other
affirmative relief, even criminal prosecution against
either or both of them.
The foregoing notwithstanding, the President of
the Philippines shall not be precluded from
determining the industries that, in his opinion, are
indispensable to the national interest, and from
intervening at any time and assuming jurisdiction over
any labor dispute in such industries in order to settle
or terminate the same.
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(h) Before or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to
voluntary arbitration.
(i) The Secretary of Labor and Employment, the
Commission or the voluntary arbitrator or panel of
voluntary arbitrators shall decide or resolve the
dispute within thirty (30) calendar days from the date
of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. The
decision of the President, the Secretary of Labor and
Employment, the Commission or the voluntary
arbitrator or panel of voluntary arbitrators shall be
final and executory ten (10) calendar days after
receipt thereof by the parties. (As amended by RA
6715)
TITLE IX
Special Provisions
Art. 273. Study of labor-management relations. — The
Secretary of Labor and Employment shall have the power
and it shall be his duty to inquire into:
(a) The existing relations between employers and
employees in the Philippines;
(b) The growth of associations of employees and the
effect of such associations upon employer-employee
relations;
(c) The extent and results of the methods of collective
bargaining in the determination of terms and
conditions of employment;
(d) The methods which have been tried by employers and
associations of employees for maintaining mutually
satisfactory relations;
(e) Desirable industrial practices which have been
developed through collective bargaining for settling
differences;
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(f) The possible ways of increasing the usefulness and
efficiency of collective bargaining for settling
differences; cda
(g) The possibilities for the adoption of practical and
effective methods of labor-management cooperation;
(h) Any other aspects of employer-employee relations
concerning the promotion of harmony and
understanding between the parties; and
(i) The relevance of labor laws and labor relations to
national development.
The Secretary of Labor and Employment shall also
inquire into the causes of industrial unrest and take all the
necessary steps within his powers as may be prescribed by
law to alleviate the same, and shall from time to time
recommend the enactment of such remedial legislation as in
his judgment may be desirable for the maintenance and
promotion of industrial peace.
Art. 274. Visitorial power. — The Secretary of Labor
and Employment or his duly authorized representative is
hereby empowered to inquire into the financial activities of
legitimate labor organizations upon the filing of a
complainant under oath and duly supported by the written
consent of at least twenty percent (20%) of the total
membership of the labor organization concerned and to
examine their books of accounts and other records to
determine compliance or non-compliance with the law and
to prosecute any violations of the law and the union
constitution and by-laws: Provided, That such inquiry or
examination shall not be conducted during the sixty (60)
day freedom period nor within thirty (30) days immediately
preceding the date of election of union officials. (As
amended by RA 6715)
Art. 275. Tripartism and tripartite conferences. —
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(a) Tripartism in labor relations is hereby declared a State
policy. Towards this end, workers and employers shall,
as far as practicable, be represented in decision and
policy-making bodies of the government.
(b) The Secretary of Labor and Employment or his duly
authorized representatives may from time to time call
a national, regional, or industrial tripartite conference
of representatives of government, workers and
employers for the consideration and adoption of
voluntary codes of principles designed to promote
industrial peace based on social justice or to align
labor movement relations with established priorities in
economic and social development. In calling such
conference, the Secretary of Labor and Employment
may consult with accredited representatives of
workers and employers. (As amended by RA 6715)
Art. 277. Miscellaneous Provisions.
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected
against dismissal except for a just or authorized cause
and without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall
furnish the workers whose employment is so sought to
be terminated a written notice containing a statement
of the cause for termination and shall afford the latter
ample opportunity to be heard and to defend himself
with the assistance of his representative if he so
desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by
the Department of Labor and Employment. Any
decision taken by employer shall be without prejudice
to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations
Commission. The burden of proving that the
termination was for a valid or authorized cause shall
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rest on the employer. The Secretary of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute in the
event of a prima facie finding by the appropriate
official of the Department of Labor and Employment
before whom such dispute is pending that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off. (As amended by RA
6715)
TITLE II
Prescription of Offenses and Claims
Art. 290. Offenses. — Offenses penalized under this
Code and the rules and regulations issued pursuant thereto
shall prescribe in three years.
All unfair labor practices arising from Book V shall be
filed with the appropriate agency within one year from
accrual of such unfair labor practice; otherwise, they shall
be forever barred.
Art. 291. Money claims. — All money claims arising
from employer-employee relations accruing during the
effectivity of this Code shall be filed within three 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 year from the date
of such effectivity, and shall be processed or determined in
accordance with 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 and Employment not later than March 31, 1975;
otherwise they shall be forever barred. These claims shall
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be processed and adjudicated in accordance with the law
and rules at the time their causes of action accrued.
Art. 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.
EXECUTIVE ORDER NO. 126, AS AMENDED BY EXECUTIVE
ORDER NO. 251
EXECUTIVE ORDER NO. 126
REORGANIZING THE MINISTRY OF LABOR AND
EMPLOYMENT AND FOR OTHER PURPOSES
RECALLING that the reorganization of the
government is mandated expressly in Article II, Section I
(a), and Article III of the Freedom Constitution;
HAVING IN MIND that pursuant to Executive Order
No. 5 (1986), it is directed that necessary and proper
changes in the organizational and functional structures of
the government, its agencies and instrumentalities, be
effected in order to promote efficiency and effectiveness in
the delivery of public services;
CONSIDERING that it has become necessary to
introduce critical structural and functional changes in the
Ministry of Labor and Employment to make it more
responsive to the urgent demands of national economic
recovery;
Page 99 of 149
BELIEVING that the same Ministry has to streamline
its operations by rationalizing its functions, structure and
organization to make it more efficient and effective in
undertaking its principal mission of translating the declared
policy of the state on labor into meaningful program on
employment promotion, manpower development and
utilization, advancement of workers’ welfare, provision for a
decent living wage and other just and humane conditions of
work and promotion of sound and stable industrial harmony
as essential components of national economic recovery and
development;
RECOGNIZING that women and rural workers have a
vital role in nation-building, the same Ministry has to create,
promote and develop the conditions for their full utilization,
including their protection and welfare.
NOW, THEREFORE, I, CORAZON C. AQUINO, by the
powers vested in me by the sovereign will of the Filipino
People and the Freedom Constitution, do hereby order:
SEC. 1. Title. — This Executive Order shall otherwise
be known as the Reorganization Act of the Ministry of Labor
and Employment.
SEC. 2. Reorganization. — The Ministry of Labor and
Employment, hereinafter referred to as Ministry, is hereby
reorganized, structurally and functionally in accordance with
the provisions of this Executive Order.
SEC. 3. Declaration of Policy. — It is the declared
policy of the State to afford protection to labor, promote full
employment, ensure equal work opportunities regardless of
sex, race, or creed, and regulate the relations between
workers and employers. The State shall assure the rights of
the workers to self-organization, collective bargaining,
security of tenure, and just and human conditions of work.
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SEC. 4. Mandate and Objectives. — The Ministry shall
be the primary policy, programming, coordinating and
administrative entity of the Executive Branch of the
government in the field of labor and employment. It shall
assume primary responsibility for:
(a) The promotion of gainful employment opportunities
and the optimization of the development and
utilization of the country’s manpower resources;
(b) The advancement of workers’ welfare by providing for
just and humane working conditions and terms of
employment;
(c) The maintenance of industrial peace by promoting
harmonious, equitable, and stable employment
relations that assure equal protection for the rights of
all concerned parties.
SEC. 5. Powers and Functions. — In pursuit of its
mandate, the Ministry shall have the following powers and
functions:
(a) Formulate and recommend policies, plans and
programs for manpower development, training,
allocation, and utilization;
(b) Protect and promote the interest of every citizen
desiring to work locally or overseas by securing for
him the most equitable terms and conditions of
employment, and by providing social and welfare
services;
(c) Regulate the employment of aliens, including the
establishment of a registration and/or work permit
system for such aliens;
(d) Formulate general guidelines concerning wage and
income policy;
(e) Recommend necessary adjustments in wage
structures with a view to developing a wage system
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that is consistent with national economic and social
development plans;
(f) Provide for safe, decent, humane and improved
working conditions and environment for all workers,
particularly women and young workers;
(g) Maintain harmonious, equitable and stable labor
relations system that is supportive of the national
economic policies and programs;
(h) Uphold the right of workers and employers to organize
and to promote free collective bargaining as the
foundation of the labor relations system;
(i) Provide and ensure the fair and expeditious settlement
and disposition of labor and industrial disputes
through collective bargaining, grievance machinery,
conciliation, mediation, voluntary arbitration,
compulsory arbitration as may be provided by law,
and other modes that may be voluntarily agreed upon
by the parties concerned.
SEC. 6. Minister of Labor and Employment. — The
authority and responsibility for the exercise of the mandate
of the Ministry and for the discharge of its powers and
functions shall be vested in the Minister of Labor and
Employment, hereinafter referred to as the Minister, who
shall be appointed by the President and who shall have
supervision and control over the Ministry. For such
purposes, the Minister shall have the following powers and
functions:
(a) Advise the President on the promulgation of
executive/administrative orders, other regulative
issuances and legislative proposals on matters
pertaining to labor and employment;
(b) Formulate policies, guidelines, rules and regulations
and other issuances necessary to carry out Ministry
policies, plans, programs and projects;
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(c) Issue orders, directives, rules and regulations and
other issuances to carry out labor and employment
policies, plans, programs and projects;
(d) Provide overall direction, supervision, and control over
all offices under the Ministry to ensure effective and
efficient implementation of its policies, plans,
programs and projects;
(e) Coordinate with other government offices, labor,
organizations, employers associations, and any other
group to carry out the mandate of the Ministry;
(f) Evaluate the policy, plans, programs and project
accomplishment of the Ministry;
(g) Prepare reports for the President and for the public;
(h) Delegate authority for the performance of any function
to officers and employees of the Ministry;
(i) Exercise such other powers and functions as may be
provided by law or assigned by the President.
Sec. 7. Office of the Secretary. — The Office of the
Secretary shall consist of the Secretary and his immediate
staff. In addition, there is hereby created in the Office of the
Secretary a Joint RP-US Lab or Committee Staff Unit which
shall provide technical and other necessary services to the
Philippine panel in the Joint Labor Committee created under
the RP-US Base Labor Agreement and for other special
projects. The Unit who shall be headed by a Head Executive
Assistant who shall be assisted by five (5) Staff Assistants.
(As amended by E.O. No. 251)
SEC. 8. Deputy Minister. — The Minister shall be
assisted by not more than four (4) Deputy Ministers who
shall be appointed by the President upon the
recommendation of the Minister. The Minister is hereby
authorized to delineate and assign the respective functional
areas of responsibility of the Deputy Ministers, provided,
that such responsibility shall be with respect to the mandate
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and objectives of the Ministry; and provided, further, that
no Deputy Minister shall be assigned primarily
administrative responsibilities. Within his functional area of
responsibility, a Deputy Minister shall have the following
functions:
(a) Advise and assist the Minister in the formulation and
implementation of the Ministry’s policies, plans,
programs and projects;
(b) Oversee the operational activities of the Ministry;
(c) Coordinate the programs and projects of the Ministry
for efficient and effective administration;
(d) Serve as deputy for the Minister;
(e) Perform, when so designated, the power and functions
of the Minister, during the latter’s absence or
incapacity; and
(f) Perform such other functions as may be provided by
law or assigned by the Minister to promote the
efficiency and effectiveness in the delivery of public
services.
SEC. 9. Assistant Ministers. — The Minister shall
likewise be assisted by not more than four (4) Assistant
Ministers who shall be appointed by the President upon the
recommendation of the Minister. The Minister is hereby
authorized to delineate and assign the respective areas of
functional responsibility of the Assistant Ministers. Within
his functional area of responsibility, an Assistant Minister
shall assist the Minister and Deputy Ministers in the
formulation, determination and implementation of laws,
policies, plans, programs and projects on labor and shall
oversee the day-to-day administration and supervision of
the constituent units of the Ministry.
SEC. 10. Structural Organization. — The Ministry shall
consist of the Ministry proper comprising the Office of the
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Minister, the Office of the Deputy and Assistant Ministers,
the Services and the Staff Bureaus, and its Regional Offices.
SEC. 11. Planning Service. — The Planning Service
shall provide the Ministry with efficient, effective and
economical services relating to planning, programming,
project development and evaluation, and the development
and implementation of a management information system.
SEC. 12. Administrative Service. — The Administrative
Service shall provide the Ministry with efficient, effective
and economical services relating to records, management,
supplies, equipment, collections, disbursements, building
administration and maintenance, security and custodial
work.
SEC. 13. Human Resource Development Service. —
The Human Resource Development Service shall provide the
Ministry with a program and corresponding projects that
shall make available training, education and development
opportunities needed to upgrade the levels of competence
and productivity of Ministry managers and personnel. It
shall absorb the powers and functions of the Administrative
Service in relation to the development and administration of
personnel programs including selection and placement,
development, performance evaluation, employee relations
and welfare.
SEC. 14. Financial Management Service. — The
Financial and Management Service shall be responsible for
providing the Ministry with efficient, effective and
economical services relating to budgetary, financial,
management improvement and internal control matters.
SEC. 15. Legal Service. — The Legal Service shall
provide legal advice and service to Ministry officers and
employees; prepare informative or clarificatory opinions on
labor laws, rules and regulations for uniform interpretation
Page 102 of 149
thereof; answer legal queries from the public; assist the
Office of the Solicitor General in suits involving the Ministry
or its officers or employees or act as their principal counsel
in all actions taken in their official capacity or other causes
before judicial or administrative bodies.
SEC. 16. International Labor Affairs Service. — The
International Labor Affairs Service shall be responsible for
monitoring the observance and implementation of all
obligations, courtesies, and facilities required by
international labor affairs, particularly the International
Labor Organization, the Conference of Asian Pacific Labor
Ministries, the ASEAN Labor Ministers Meeting of which the
Philippines is a member, and related international labor
standards and agreements reached in various international
labor forums, treaties, and other multilateral, bilateral or
multi-bilateral agreements in the area of labor and
employment; provide staff support and policy guidelines to
the Minister in the supervision, monitoring and reporting of
the activities of the Philippine overseas labor officers
assigned in different countries; serve as the instrumentality
of the Ministry for technical cooperation, programs and
activities with other countries and international institutions.
SEC. 17. Information and Publication Service. — The
Information and Publication Service shall be responsible for
promoting rapport and understanding between the Ministry
and the public through the development of public relations
programs and the dissemination of accurate and updated
information on labor and employment, by means of
publications and media coverages of special events and
related matters on the Ministry’s policies, plans, programs,
and projects; shall likewise be responsible for providing
answers to queries from the public regarding the Ministry’s
policies, rules, regulations, programs, activities and
services.
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SEC. 18. Bureaus. — The following staff bureaus of the
Department are hereby retained and shall continue to have
the same functions, except as otherwise provided herein:
(a) Bureau of Local Employment;
(b) Bureau of Women and Minors, which hereby renamed
as the Bureau of Women and Young Workers;
(c) Bureau of Rural Workers;
(d) Bureau of Labor Relations, which shall continue to
perform its present functions except those to be
absorbed by the National Mediation and Conciliation
Board as provided under Sec. 29 (c) hereof; and
(e) Bureau of Working Conditions. (As amended by E.O.
251)
SEC. 19. Attached Agencies. — The following agencies
shall continue to be attached to the Ministry for policy and
program coordination and administrative supervision:
(a) National Wages Council;
to as the Institute, which shall attached to the Department
of Labor and Employment for policy and program
coordination and administrative supervision. The Institute
shall absorb the research and publication functions of the
Institute of Labor and Manpower Studies which is hereby
abolished in accordance with Sec. 29(b) of this Executive
Order. The Institute, to be headed by an Executive Director,
assisted by a Deputy Executive Director, shall have the
following functions:
(a) Undertake research and studies in all areas of labor
and manpower policy and administration.
(b) Review the rationale of existing legislation and
regulations and analyze the cost involved in the
implementation of such legislation against the benefits
expected to be derived;
(c) Study and develop innovative and indigenous
approaches towards the promotion harmonious and
productive labor-management relations, and the
improvement of workers’ welfare services;

(b) Philippine Overseas Employment Administration; (d) Develop and undertake research programs and
projects in collaboration with other national agencies
(c) Employees Compensation Commission which is hereby to enhance the Department’s capability to participate
reorganized to include the Executive Director of the in national decision and policy making;
ECC as an ex-officio member of the Commission;
asia dc (e) Enter into agreements with international or bilateral
agencies for the carrying out of the foregoing
(d) The National Manpower and Youth Council; functions;
(e) The National Labor Relations Commission; (f) Expand the scope of its research interests into other
(f) The Welfare Fund for Overseas Workers’ countries and regions;
Administration which is hereby renamed as the (g) Publish its research studies for dissemination to
Overseas Workers’ Welfare Administration; government as well as to all concerned parties; and
(g) Maritime Training Council; and (h) Perform such other functions as may be provided by
(h) National Maritime Polytechnic Foundation. law or assigned by the Secretary. (As amended by
E.O. 251)
SEC. 20. Institute For Labor Studies. — There is hereby SEC. 21. Bureaus of Labor and Employment Statistics.
created an Institute for Labor Studies, hereinafter referred — A Bureau of Labor and Employment Statistics is hereby
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Atty. Marlon Manuel
created and shall absorb the functions of the Labor
Statistics Service which is hereby abolished in accordance
with Sec. 29 (b). The Bureau shall have the following
functions:
(a) Formulate, develop and implement plans and
programs on the labor statistical system in order to
provide the government with timely, accurate and
reliable data on labor and employment;
(b) Conduct nationwide surveys and studies which will
generate trends and structures on labor and
employment;
(c) Develop and prescribe uniform statistical standards,
nomenclatures and methodologies for the collection,
processing, presentation and analysis of labor and
employment data;
(d) Establish appropriate mechanisms for the coordination
of all statistical activities in the Ministry and for
collaboration with other government and private
agencies including international research organizations
in the conduct of surveys and studies in the area of
labor and employment;
(e) Disseminate statistical information and provide
statistical services/advice to the users by establishing
a data bank and issuing the Bureau’s statistical
materials and research findings;
(f) Develop and undertake programs and projects geared
towards the enhancement of the technical competence
of the Ministry on theories, techniques and
methodologies for the improvement of the labor
statistical system;
(g) Monitor and exercise technical supervision over the
statistical units in the Ministry and its agencies; and
(h) Perform such other functions as may be provided by
law or assigned by the Minister.
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SEC. 22. National Conciliation and Mediation Board. — A
National Conciliation and Mediation Board, herein referred to
as the “Board”, is hereby created and which shall absorb the
conciliation mediation and voluntary arbitration functions of
the Bureau of Labor of Relations in accordance with Sec. 29
(c) hereof. The Board shall be composed of an Administrator
and two (2) Deputy Administrators. It shall be an attached
agency under the administrative supervision of the
Secretary of Labor and Employment.
The Administrators and the Deputy Administrators
shall be appointed by the President upon recommendation
of the Secretary of Labor and Employment. There shall be
as many Conciliators-Mediators as the needs of the public
service require, who shall have at least three (3) years of
experience in handling labor relations and who shall be
appointed by the Secretary.
The Board shall have its main office in Metropolitan
Manila and its Administrators shall exercise supervision over
Conciliators-Mediators and all its personnel. It shall
establish as many branches as there are administrative
regions in the country, with a many Conciliator-mediators
as shall be necessary for its effective operation. Each
branch of the Board shall be headed by an Executive
Conciliator-Mediator.
The Board shall have the following functions:
(a) Formulate policies, programs, standards, procedures,
manuals of operation and guidelines pertaining to
effective mediation and conciliation of labor disputes;
(b) Perform preventive mediation and conciliation
functions;
(c) Coordinate and maintain linkages with other sectors of
institutions, and other government authorities
concerned with matters relative to the prevention and
settlement of labor disputes;
(d) Formulate policies, plans, programs, standards,
procedures, manuals of operation and guidelines
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pertaining to the promotion of cooperative and
nonadversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes of
dispute settlements;
(e) Administer the voluntary arbitration program;
maintain/update a list of voluntary arbitrations;
compile arbitration awards and decisions;
(f) Provide counselling and preventive mediation
assistance particularly in the administration of
collective agreement; awards and decisions;
(g) Monitor and exercise technical supervision over the
Board programs being implemented in the regional
offices; and
(h) Perform such other functions as may be provided by
law or assigned by the Secretary.
A Tripartite Voluntary Arbitration Advisory Council is
hereby created and attached to the National Conciliation
and Mediation Board. The Tripartite Voluntary Arbitration
Advisory Council shall advise the National Conciliation Board
on matters pertaining to the promotion of voluntary
arbitration as the preferred mode of dispute settlement.
The Tripartite Voluntary Arbitration Advisory Council
shall consist of the Administrator of the National Conciliation
and Mediation Board as Chairman, one other member from
the government, two members representing labor, and two
other members representing management. The members
shall be appointed by the President to serve for a term of
three (3) years. The Chairman and Members thereof shall
serve without compensation. (As amended by E.O. 251)
SEC. 23. Transfer. — The National Productivity
Commission is hereby transferred from the National
Economic Development Authority and attached to the
Ministry in accordance with Sec. 29 (c) hereof. The
Commission shall primarily deal with productivity promotion
and enhancement, education and training,
coordination/monitoring, funding and the conduct of special
and policy studies directly related to its activities. It shall
have the Minister of Trade and Industry as Chairman and
the Minister of Labor and Employment as Vice-Chairman.
Sec. 24. Regional Offices, District Offices and Provincial
Extension Units. — The Department is hereby authorized to
establish, operate and maintain such Department-wide
Regional Offices, District Offices and Provincial Extension
Units in each of the administrative regions of the country,
insofar as necessary to promote economy and
efficiency in the delivery of its services. Each Regional Office
shall be headed by a Regional Director who shall have
supervision and control thereof. The Regional Director,
whenever necessary, shall be assisted by an Assistant
Regional Director. A Regional Office shall have, within its
regional areas, the following functions:
(a) Implement laws, policies, plans, programs, projects,
rules and regulations of the Department;
(b) Provide economical, efficient and effective service to
the people;
(c) Coordinate with regional offices of other departments
and agencies;
(d) Coordinate with local government units;
(e) Perform such other functions as may be provided by
law or assigned by the Secretary. (As amended by
E.O. 251)
SEC. 25. New Structure and Pattern. — Upon approval
of this Executive Order, the officers and employees of the
Ministry shall in a holdover capacity, continue to perform
their respective duties and responsibilities and receive the
corresponding salaries and benefits unless in the meantime
they are separated from government service pursuant to
Executive Order No. 17 (1986) or Article III of the Freedom
Constitution.
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The new position structure and staffing pattern of
the Ministry shall be approved and prescribed by the
Minister for the Ministry within one hundred twenty (120)
days from the approval of this Executive Order and the
authorized positions created thereunder shall be filled with
regular appointments by him or by the President as the case
may be. Those incumbents whose positions are not included
therein or who are not reappointed shall be deemed
separated from the service. Those separated from the
service shall receive the retirement benefits to which they
may be entitled under existing laws, rules and regulations.
Otherwise, they shall be paid the equivalent of one-month
basic salary for every year of service, or the equivalent
nearest fraction thereof favorable to them on the basis of
the highest salary received, but in no case shall such
payment exceed the equivalent of 12 months salary.
No court or administrative body shall issue any writ
or preliminary injunctions or restraining order to enjoin the
separation/replacement of any officer or employee affected
under this Executive Order.
SEC. 26. Prohibition Against Reorganizational Change.
— No change in the reorganization herein prescribed shall
be valid except upon prior approval of the President for the
purpose of promoting efficiency and effectiveness in the
delivery of public services.
SEC. 27. Funding. — Funds needed to carry out the
provisions of this Executive Order shall be taken from funds
available in the Ministry.
SEC. 28. Implementing Authority of Minister. — The
Minister shall issue such rules, regulations and other
issuances as may be necessary to ensure the effective
implementation of the provisions of this Executive Order.
Page 106 of 149
SEC. 29. Transitory Provisions. — In the
abolition/transfer of entity/functions as prescribed in the
Executive Order, the following rules shall be provided:
(a) Any transfer of entities shall include the functions,
appropriations, funds, records, equipment, facilities,
other properties, assets, and liabilities and of the
transferred entity as well as the personnel thereof as
may be necessary, who shall, in a holdover capacity,
continue to perform their respective duties and
responsibilities and receive the corresponding salaries
and benefits unless in the meantime they are
separated from government service pursuant to
Executive Order No. 17 (1986) or Article III of the
Freedom Constitution. Those personnel from the
transferred entity whose positions are not included in
the new position structure and staffing pattern
approved by the Minister or who are not reappointed
shall be entitled to the benefits provided in the second
paragraph of Sec. 25 hereof.
(b) Any transfer of functions which results in the abolition
of the entity that has exercised such transferred
functions shall include as may be necessary, to the
proper discharge of the transferred functions, the
appropriations, funds, records, equipment, facilities,
other assets, and personnel of the entity from which
such functions have been transferred. The remaining
appropriations and funds shall revert to the General
Fund and the remaining records, equipment, facilities
and other assets shall be allocated to such appropriate
units as the Minister shall determine or otherwise shall
be disposed of, in accordance with the Auditing Code
and other pertinent laws, rules and regulations. The
liabilities, if any, of the abolished entity shall be
treated likewise in accordance with the Auditing Code
and other pertinent laws, rules and regulations.
Incumbents of the abolished entity shall, in a holdover
capacity continue to perform their respective duties
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Atty. Marlon Manuel
and responsibilities and receive the corresponding
salaries and benefits unless in the meantime they are
separated from government service pursuant to
Executive Order No. 17 (1986) or Article III of the
Freedom Constitution. Any such personnel whose
position is not included in the new position structure
and staffing pattern approved by the Minister or who
is not reappointed shall be entitled to the benefits
provided in the second paragraph of Sec. 25 hereof.
(c) Any transfer of functions which does not result in the
abolition of the entity that has exercised such
transferred functions shall include the appropriations,
funds, records, equipment, facilities, other assets as
well as the personnel of the entity from which such
functions have been transferred that are necessary to
the proper discharge of such transferred functions.
The liabilities, if any, which have been incurred in
connection with the discharge of the transferred
functions shall be allocated in accordance with the
Auditing Code and the pertinent laws, rules and
regulations. Such personnel shall, in a holdover
capacity, continue to perform their respective duties
and responsibilities and receive the corresponding
salaries and benefits unless in the meantime they are
separated from government service pursuant to
Executive Order No. 17 (1986) or Article III of the
Freedom Constitution. Any such personnel whose
position is not included in the new position structure
and staffing pattern approved by the Minister or who
is not reappointed shall be entitled to the benefits
provided in the second paragraph of Sec. 25 hereof.
(d) In case of the abolition of an entity which does not
result in the transfer of its functions to another entity,
the appropriations and funds of the abolished entity
shall revert to the General Fund, while the records,
equipment, facilities and other assets thereof shall be
allocated to such appropriate units as the Minister
Page 107 of 149
shall determine or otherwise shall be disposed of in
accordance with the Auditing Code and other pertinent
laws, rules and regulations. The liabilities, if any, of
the abolished entity shall be treated in accordance
with the Auditing Code and other pertinent laws, while
the personnel thereof shall be entitled to the benefits
provided in the second paragraph of Sec. 25 hereof.
SEC. 30. Change of Nomenclatures. — In the event of
the adoption of a new Constitution which provides for a
presidential form of government, the Ministry shall be called
Department of Labor and Employment and the titles of
Minister, Deputy Minister, and Assistant Minister shall be
changed to Secretary, Undersecretary, and Assistant
Secretary, respectively.
SEC. 31. Notice or Consent Requirement. — If any
reorganizational change herein authorized is of such
substance or materiality as to prejudice third persons with
rights recognized by law or contract such that notice to or
consent of creditors is required to be made or obtained
pursuant to any agreement entered into with any of such
creditors, such notice or consent requirement shall be
complied with prior to the implementation of such
reorganizational change.
SEC. 32. Separability Clause. — Any portion or
provision of this Executive Order that may declared
unconstitutional shall not have the effect of nullifying other
portions or provisions hereof as long as such remaining
portions can still subsist and be given effect in their
entirety.
SEC. 33. Repealing Clause. — All laws, ordinances,
rules, regulations, other issuances or parts thereof, which
are inconsistent with this Executive Order, are hereby
repealed or modified accordingly.
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Atty. Marlon Manuel
SEC. 34. Effectivity. — This Executive Order shall take
effect immediately upon its approval.
APPROVED in the City of Manila, Philippines, this 31st day of
January, in the year of Our Lord, nineteen hundred and
eighty-seven
A. JURISDICTION; PROCEDURE
Guico, Jr. v. Quisumbing, 298 SCRA 667
Pursuant to Art. 128 LC, the DOLE-Regional Director inspected
Copylandia Services & Trading finding these violations as regards
21 copier operators: underpayment of wages and 13th month pay and
no service incentive leave pay. Copylandia argues that the Regional
Director has no jurisdiction over the complaint because the
individual monetary claims of the employees exceeded P5000 and
under Art. 129 LC and the IRR jurisdiction is with the Labor Arbiter.
Issue: Whether the Regional Director has jurisdiction
Held: YES. Following Servando v. Sec. of Labor and Employment,
the enactment of R.A. No. 7730, amending Art. 138(b) LC did away
with the rule that the visitorial powers of the SOLE to order and
enforce compliance with labor standards laws cannot be exercised
where the individual claim exceeds P5,000.
Maneja v. NLRC, 290 SCRA 603
Manila Midtown Hotel dismissed Maneja for dishonesty thereby
violating company policies. Maneja filed a complaint for illegal
dismissal. The Labor Arbiter found for Maneja—it assumed
jurisdiction under Art. 217 despite acknowledging that under the Art
217(c) matters involving the implementation and interpretation of
existing company policies falls within the ambit of grievance
procedure under the CBA, then, if unresolved, subject to voluntary
arbitration. NLRC dismissed the case for lack of jurisdiction of the
LA; voluntary arbitration should have been conducted.
Issue: Whether the LA has jurisdiction
Page 108 of 149
Held: YES. Pursuant to Art. 217 LC, termination cases fall under the
original and exclusive jurisdiction of the LA. Art. 217(c) should be
read in conjunction with Art. 261 which grants to voluntary
arbitrators the original and exclusive jurisdiction to hear and decide
all unresolved grievances arising from the interpretation and
implementation of the CBA and those arising from the interpretation
or enforcement of company personnel policies. In this case, Maneja’s
termination is not an unresolved grievance. Morevoer, Maneja’s
dismissal does not fall within the phrase “grievances arising from the
interpretation and implementation of the CBA and those arising from
the interpretation or enforcement of company personnel policies”
because only disputes involving the union and company shall be
referred to the grievance machinery or voluntary arbitrators. Here,
the union neither objected nor dissented to the dismissal. Following
Sanyo Phils. Workers Union-PSSLU v. Canizares, since there has
been an actual termination, the matter falls within the jurisdiction of
the LA. Maneja’s dismissal does not call for the interpretation or
enforcement of company personnel policies but is a termination
dispute under the LA’s jurisdiction.
St. Martin Funeral Homes v. NLRC, 295 SCRA 494
The remedy of an aggrieved party from a decision by the NLRC is to
timely file a motion for reconsideration as a precondition for any
further or subsequent remedy, and then seasonably file a petition for
certiorari under Rule 65 to the Court of Appeals. Bottom-line
rationale: SC had to divest its dockets of labor cases. N.B. From the
CA you go to the SC via Rule 45.
NFL v. Laguesma, 304 SCRA 405
The Med-Arbiter dismissed ANGLO-KMU’s petition for
certification election on the ground that the submission of the
documents evidencing the due creation of a local was made after the
lapse of the freedom period. SOLE set aside Med-Arbiter’s
resolution. NFL now before SC via Rule 65.
Held: SC did not rule on the merits; rather it applied the St. Martin
ratio and referred the case to the CA. Specifically, the SC observed
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that the LC and its IRR generally do not provide for any mode of
reviewing the decision of the SOLE, except for 2 instances where
there is specific mention of a remedy from a SOLE decision: (1) Sec.
15, Rule IX, Book V, IRR—SOLE decision on appeal from the Med-
Arbiter’s decision on a petition for certification election shall be final
and executory, but the implementation of the SOLE’s decision
affirming the Med-Arbiter’s decision to conduct a certification
election “shall not be stayed unless restrained by the appropriate
court”; (2) Sec. 5, Rule V, Rules on the Disposition of Labor
Standards Cases in Regional Offices—”the filing of a petition for
certiorari before the SC shall not stay the decision of the [appealed]
order or decision unless the aggrieved party secures a temporary
restraining order from the Court.” SC finds that it is procedurally
feasible and practicable that petitions for certiorari under Rule 65
against the decisions of the SOLE rendered under the LC and its IRR
be filed initially in the CA. Thus, SC reads “the appropriate court” in
no. (1) to refer to the CA; while no. (2) cannot be read to mean that
the petition can only be filed with the SC, rather it should be read in
relation to the pertinent laws on the concurrent original jurisdiction
of the SC and CA in Rule 65 petitions.
Vivero v. CA, 344 SCRA 268
The CBA between AMOSUP (union) and Hanseatic Shipping
required that unresolved disputes after recourse to grievance
machinery shall be referred to a Volunatry Arbitration Committee.
Vivero, an AMOSUP member, was repatriated by Hanseatic. Vivero
filed a complaint for illegal dismissal. Grievance proceedings were
held in vain, thus Vivero filed a complaint with the POEA. Pending
POEA case, Hanseatic moved to dismiss due to lack of jurisdiction
because Vivero failed to refer the case to a Voluntary Arbitration
Committee pursuant to the CBA. The case eventually ended up with
the NLRC pursuant to RA 8042. The LA dismissed the complaint for
want of jurisdiction—CBA provided for referral to a Voluntary
Arbitration Committee should grievance committee fail to settle the
Page 109 of 149
dispute and Art. 261 LC mandates original and exclusive jurisdiction
of voluntary arbitrators. NLRC set aside LA decision, holding that
referral to arbitration is voluntary. CA reversed.
Issue: Whether the NLRC is deprived of jurisdiction over illegal
dismissal cases whenever a CBA provides for grievance machinery
and voluntary arbitration proceedings.
Held: NO. CA DECISION SET ASIDE; CASE REMANDED TO LA.
Following SMC v. NLRC’s construction of the phrase “all other
disputes” in Art. 262, it is not sufficient to merely say that parties to
the CBA agree on the principle that “all disputes” should first be
submitted to a voluntary arbitrator. There is a need for an express
stipulation in the CBA that illegal termination disputes should be
resolved by a voluntary arbitrator or panel of voluntary arbitrators,
since the same fall within a special class of disputes that are
generally within the exclusive original jurisdiction of LA’s. Absent
such express stipulation, “all disputes” should be construed as
limited to areas of conflict traditionally within the jurisdiction of
voluntary arbitrators—disputes relating to contract-interpretation,
contract-implementation, or interpretation or enforcement of
company personnel policies. Illegal termination disputes does not fall
under any of these categories.
In this case, while the parties did agree to make termination
disputes the proper subject of voluntary arbitration, such submission
remains discretionary upon the parties. The CBA provisions on Job
Security (Sec. 4, Art. XVII) use the word “may,” thereby showing
the intention of the parties to submit illegal termination dispute to the
jurisdiction of the LA, rather than to a voluntary arbitrator. Vivero
validly exercised his option to submit his case to a LA when he filed
his complaint with the proper government agency.
Where under the CBA, both Union and the employer are
responsible for selecting an impartial arbitrator or for convening an
arbitration committee, yet neither made a move towards this end, the
employee should not be deprived of his legitimate recourse because
of the refusal of both Union and employer to follow the grievance
procedure. Here AMOSUP did not inform Vivero of his option to
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Atty. Marlon Manuel
settle the case through voluntary arbitration, and Hanseatic did not
timely invoke the provision in their CBA requiring the referral of
their unresolved disputes to a VA once it becomes apparent that the
grievance machinery failed to resolve it prior to the filing of the case
before the proper tribunal.
Luzon Dev’t Bank v. Association of LDB Employees, 249 SCRA
162
This case is the precursor to St. Martin. SC discussed arbitration
within the labor law context: compulsory vs. voluntary, voluntary
arbitrator under Art. 261/262, LC vs. Labor Arbiter under Art. 217.
Pertinently, SC notes that while there is an express mode of appeal
from the decision of a LA (i.e., NLRC under Art. 228), RA 6715 is
silent with respect to an appeal from the decision of a VA. Past
practice has equated the VA with the NLRC or the CA in that
certiorari to the SC is the remedy. Now, the SC views this illogical
and imposes an unnecessary burden upon it. Under the rulings in
Volkschel Labor Union v. NLRC and Oceanic Bic Division v.
Romero, it follows that the VA enjoys in law the status of a quasi-
judicial agency but independent of, and apart from, the NLRC since
his decisions are not appealable to the latter. More accurately, a VA
is comprehended within the concept of a quasi-judicial
instrumentality whose decisions fall under the exclusive appellate
jurisdiction of the CA under RA 7902, amending BP 129. Moreover,
the SC reads Sec 22 of the Arbitration Law as equating the award or
decision of the voluntary arbitrator with that of the RTC.
Consequently, in a petition for certiorari from that award or decision,
the CA must be deemed to have concurrent jurisdiction with the SC.
Thus, as a matter of policy, the SC shall henceforth remand to the
CA petitions of this nature for proper disposition.
Villaruel v. NLRC, 284 SCRA 399
Guarino was master baker of spouses Villaruel’s bakery and earns
P40/day. After he asked for a P10 increase the Villaruels told him to
no longer report for work. Guarino filed a complaint for illegal
dismissal. LA dismissed the complaint finding that there is no
Page 110 of 149
employer-employee relationship between the two, giving credence to
the Villaruel’s claim that Guarino is not an employee but a partner.
NLRC reversed, finding Guarino a regular employee.
Issue: Whether NLRC committed GAD in finding that Guarino is a
regular employee and that he did not abandon the partnership and in
directing payment of salary differentials et al.
Held: NO. The petition essentially raises a factual issue. SC’s
jurisdiction under Rule 65 does not include correction of the NLRC’s
evaluation of the evidence but is confined to issues of jurisdiction or
grave abuse of discretion. An abuse of discretion does not
necessarily follow because there is a reversal by the NLRC of a
decision of the LA. Neither does the mere variance in the evidentiary
assessment of the NLRC and that of the LA warrant another full
review of the facts. In this case, NLRC’s ruling is supported by
substantial evidence.
Manila Central Line Corp. v. MCL Free Workers Union-NFL, 290
SCRA 690
Due to a bargaining deadlock and after failure to resolve the same
with the aid of the NCMB, the union petitioned for compulsory
arbitration. LA rendered a decision embodying provisions of a new
CBA. NLRC denied employer’s appeal. Before SC, employer aver
that NLRC erred in upholding the jurisdiction of the LA, contending
that the policy of the law now is to encourage resort to conciliation
and voluntary arbitration.
Held: Art. 262, LC provides that upon agreement of the parties, the
VA shall also hear and decide all other labor disputes including ULP
and bargaining deadlocks. This is what the parties did in this case.
After the NCMB failed to resolve the deadlock, the union petitioned
for compulsory arbitration. Although the union’s petition was for
“compulsory arbitration,” the subsequent agreement of petitioner to
submit the matter for arbitration in effect made the arbitration a
voluntary one. The essence of voluntary arbitration, after all, is that it
is by agreement of the parties, rather than compulsion of law, that a
matter is submitted for arbitration. It does not matter that the person
chosen as arbitrator is a labor arbiter who is charged with the
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Atty. Marlon Manuel
compulsory arbitration of certain labor cases. There is nothing in the
law that prohibits these labor arbiters from also acting as voluntary
arbitrators as long as the parties agree to have him hear and decide
their dispute.
National Union of Bank Employees v. Lazaro, 157 SCRA 123
Commercial Bank & Trust Co. entered into a CBA with its union.
During the time for re-negotiation, CBTC suspended negotiations.
Eventually CBTC merged with BPI. Union filed a case against
CBTC and BPI for specific performance and damages with the CFI
alleging, inter alia, that BPI induced CBTC to violate its existing
CBA. CFI dismissed for lack of jurisdiction.
Issue: Whether regular courts may take cognizance of claims for
damages arising from a labor controversy.
Held: NO. This case is a ULP controversy within the original and
exclusive jurisdiction of the LA and the exclusive appellate
jurisdiction of the NLRC. The claim against BPI consists mainly of
the civil aspect of the ULP charge referred to under Art. 247. The act
complained of falls under the broad scope of ULP under Art. 248(a)
& (g). Since it involves collective bargaining—whether it involved
an accompanying violation of the Civil Code—it may rightly be
categorized as ULP. The civil implications thereof do not defeat its
nature as a fundamental labor offense. The fact that BPI was not the
employer when the act was committed does not abate a recourse to
the LA. It should be noted that BPI assumed all the assets and
liabilities of CBTC.
San Jose v. NLRC, 294 SCRA 336
San Jose filed with the LA a case for money claim (underpayment of
retirement benefits) against Ocean Terminal Services, Inc. LA
decided in his favor. NLRC reversed on jurisdictional grounds,
arguing that since San Jose’s claim is based on the CBA thus arising
from an interpretation or implementation for a CBA, the LA lacks
jurisdiction over the case under Art. 217(c), LC.
Issue: Whether the NLRC erred in dismissing the case
Page 111 of 149
Held: NO. (N.B. please refer to the Code) An analysis of Arts. 217,
261 and 262 indicates that:
1. The jurisdiction of the LA and VA or Panel of VAs over cases
enumerated in these articles can possibly include money claims
in one form or another.
2. The cases where the LA has original and exclusive jurisdiction
are enumerated in Art. 217 and that of the VA or Panel of VAs
in Art. 261.
3. The original and exclusive jurisdiction of LA s is qualified by an
exception, i.e., Art. 217(c) and Art. 262. The original and
exclusive jurisdiction of the LA under Art. 217(c) for money
claims is limited only to those arising from statutes or contracts
other than a CBA.
4. The jurisdiction of VA or Panel of VAs is provided for in Arts.
261 and 262.
From the foregoing, the NLRC correctly ruled that the LA
had no jurisdiction over San Jose’s money claim-underpayment of
retirement benefits, as the controversy involved an issue arising from
the interpretation or implementation of a provision of the CBA. It is
the VA or Panel of VAs who has jurisdiction.
SMC v. Ectuban, 319 SCRA 704
Claiming poor sales performance, SMC encouraged its Mandaue
City Brewery regular employees, including respondents, to avail of
the retrenchment program, which the latter did in 1981, 1982 and
1983. In 1985, respondents learned that SMC had never really been
in distress but was growing in sales during the time of the
retrenchment and that it hired new employees. In 1986, they filed a
complaint to annul the retrenchment program. LA dismissed due to
prescription. NLRC affirmed. In 1993, respondents filed with RTC a
complaint for damages against SMC. SMC moved to dismiss, RTC
granted, arguing that the complaint is a labor dispute. CA reversed
Issue: Whether RTC has jurisdiction
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Held: NO. Under the REASONABLE CAUSAL CONNECTION RULE, if
there is a reasonable causal connection between the claim asserted
and the employer-employee relations, then the case is within the
jurisdiction of our labor courts. In the absence of such nexus, it is the
regular courts that have jurisdiction. In this case, while respondents
insist that their action is for the declaration of nullity of their
“contract of termination,” what is inescapable is that fact that it is
really an action for damages emanating from employer-employee
relations. First, their claim for damages is grounded on SMC’s
deception—a case of illegal dismissal. Second, the prayer and
allegations in their LA complaint and RTC complaint are almost
identical, save for the exclusion of prayer for reinstatement and
substitution of claim for backwages with claim for actual damages in
the latter. These are telltale signs that respondents’ claim for
damages is intertwined with their having been separated from their
employment without just cause and, thus, has a reasonable causal
connection with their employer-employee relations with SMC.
Accordingly, jurisdiction lies with the LA under Art. 217, para. 4.
Lapanday Agricultural Dev’t Corp. v CA, 324 SCRA 39
Commando Security Services and Lapanday entered into a Guard
Service Contract. Commando demanded that the contract be
upgraded in compliance with 2 wage orders increasing the minimum
wage, Lapanday refused. The contract expired without the
implementation of the wage orders. Commando filed a complaint
with RTC which ruled in its favor. CA affirmed. Lapanday, inter
alia, assails jurisdiction of regular courts.
Issue: Whether RTC has jurisdiction
Held: YES. In its complaint Commando is not seeking any relief
under the Labor Code but seeks payment of a sum of money and
damages on account of Lapaday’s alleged breach of its obligation
under their contract. The action is within the realm of civil law,
hence regular courts have jurisdiction. While the resolution of the
issue involves the application of labor laws, reference to the labor
code was only for the determinations of the solidary liability of
Lapanday to Commando where no employer-employee relationship
Page 112 of 149
exists. In the cases enumerated in Art. 217, an employer-employee
relationship is an indispensable jurisdictional requirement, and there
is none in this case. (N.B. on the merits, Commando lost because in
order for Lapanday to be liable the former should have actually paid
the adjusted wages of the guards. This it did not, thus it had no cause
of action.)
Abbot Laboratories Phils., Inc. v. Abbot Labs Employees Union,
323 SCRA 392
Abbot filed for the cancellation of certificate of registration of ALEU
due to procedural infirmities. Regional Director-BLR cancelled.
ALEU appealed to SOLE, who referred the matter to the BLR
Director, who reversed. Abbot appealed to SOLE. SOLE refused to
act on the ground that it had no jurisdiction to review the decision of
the BLR on appeals in cancellation cases emanating from the
Regional Offices.
Issue: Whether SOLE can review BLR decisions rendered in its
appellate jurisdiction over decisions of the Regional Director in cases
involving cancellation of certificates of registration of labor unions
Held: NO. Pursuant to Rule VIII, Book V, IRR, the appellate
jurisdiction of the SOLE is limited only to a review of cancellation
proceedings decided by the BLR in the exercise of its exclusive and
original jurisdictions. The SOLE has no jurisdiction over decisions
of the BLR rendered in exercise of its appellate power to review the
decision of the Regional Director in a petition to cancel the union’s
certificate of registration, said decision being final and unappealable.
The remedy of an aggrieved party is to seasonably avail of Rule 65.
Deltaventures Resources, Inc. v. Cabato, 327 SCRA 521
LA found that respondents were illegally dismissed, ordering Green
Mountain Farm, Roberto Ongpin and Almus Alabe to pay the former
various amounts. SC denied appeal. Respondents moved for issuance
of writ of execution, which LA granted. The Sheriff levied on real
property owned by Ongpin and scheduled its public auction. A
month before the auction, Deltaventures filed a third-party claim
asserting ownership over the property. LA suspended auction. Later,
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Deltaventures filed with RTC a complaint for injunction and
damages, with a prayer for the issuance of a TRO against the Sheriff.
RTC Judge issued TRO. Eventually, RTC ruled that it cannot enjoin
the execution of a decision of the NLRC, with which it is of equal
rank.
Issue: Whether RTC may take cognizance of petitioner’s complaint
and consequently provide the injunctive relief sought
Held: NO. Petitioner filed the third-party claim before the court a
quo by reason of a writ of execution issued by the NLRC-CAR
Sheriff against a property to which it claims ownership. Ostensibly
the complaint before the trial court was for the recovery of
possession and injunction, but in essence it was an action challenging
the legality or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the LA and the Deputy
Sheriff implementing the writ. The complaint was in effect a motion
to quash the writ of execution of a decision rendered on a case
properly within the jurisdiction of the LA, to wit: Illegal Dismissal
and Unfair Labor Practice. Considering the factual setting, it is then
logical to conclude that the subject matter of the third party claim is
but an incident of the labor case, a matter beyond the jurisdiction of
RTCs. Precedents abound confirming the rule that said courts have
no jurisdiction to act on labor cases or various incidents arising
therefrom, including the execution of decisions, awards or orders.
Jurisdiction to try and adjudicate such cases pertains exclusively to
the proper labor official concerned under the DOLE. To hold
otherwise is to sanction split jurisdiction which is obnoxious to the
orderly administration of justice. Petitioner failed to realize that by
filing its third-party claim with the deputy sheriff, it submitted itself
to the jurisdiction of the NLRC acting through the LA. It failed to
perceive the fact that what it is really controverting is the decision of
the LA and not the act of the deputy sheriff in executing said order
issued as a consequence of said decision rendered.
Bañez v. Valdevilla, 331 SCRA 584
Petitioner filed a complaint for illegal dismissal against Oro Mktg.,
Inc. LA ruled in his favor. NLRC affirmed. SC dismissed Oro’s
Page 113 of 149
petition for certiorari. Later, Oro filed a complaint for damages
against petitioner with the RTC. Petitioner moved to dismiss on the
ground of lack of jurisdiction over the subject matter of the action,
res judicata, splitting of causes of action, and forum-shopping. RTC
denied.
Issue: Whether RTC has jurisdiction
Held: NO. Presently, and as amended by R.A. 6715, the jurisdiction
of Labor Arbiters and the NLRC in Article 217 is comprehensive
enough to include claims for all forms of damages “arising from the
employer-employee relations.” Whereas this Court in a number of
occasions had applied the jurisdictional provisions of Article 217 to
claims for damages filed by employees, we hold that by the
designating clause “arising from the employer-employee relations”
Article 217 should apply with equal force to the claim of an
employer for actual damages against its dismissed employee, where
the basis for the claim arises from or is necessarily connected with
the fact of termination, and should be entered as a counterclaim in
the illegal dismissal case. There is no mistaking the fact that Oro’s
claim against petitioner for actual damages arose from a prior
employer-employee relationship. In the first place Oro would not
have taken issue with petitioner’s “doing business of his own” had
the latter not been concurrently its employee. Second, and more
importantly, to allow RTC to proceed with the instant action for
damages would be to open anew the factual issue of whether
petitioner’s installment sale scheme resulted in business losses and
the dissipation of Oro’s property.
Clearly, respondent court’s taking jurisdiction over the
instant case would bring about precisely the harm that the lawmakers
sought to avoid in amending the Labor Code to restore jurisdiction
over claims for damages of this nature to the NLRC. This is, of
course, to distinguish from cases of actions for damages where the
employer-employee relationship is merely incidental and the cause
of action proceeds from a different source of obligation. Thus, the
jurisdiction of regular courts was upheld where the damages, claimed
for were based on, malicious prosecution, or breach of contract, as
when the claimant seeks to recover a debt from a former employee or
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seeks liquidated damages in enforcement of a prior employment Alcantara vs. CA, GR 143397, August 6, 2002
contract.

Atlas vs. NLRC, GR 142244, November 18, 2002

NDC-Guthrie Plantations, Inc. vs. NLRC, August 9, 2001

Union of Nestlea Workers vs. Nestle Phils., GR 148303, October

17, 2002

Nova vs. Judge Dames, March 28, 2001

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B. PROCEDURE
Maricalum Mining Corp. vs. NLRC, 298 SCRA 378
The certificate of non-forum shopping as provided by this Court
Circular 04-94 is mandatory and should accompany pleadings filed
before the NLRC. Court Circular No. 04-94 is clear and needs no
further interpretation.
The NLRC is a quasi-judicial agency, hence, initiatory
pleadings filed before it should be accompanied by a certificate of
non-forum-shopping.
Philtranco Service Enterprise, Inc. vs. NLRC, 288 SCRA 585
“Sec. 1, Rule IV of the 1990 NLRC Rules additionally provides that,
‘for purposes of venue, workplace shall be understood as the place or
locality where the employee is regularly assigned when the cause of
action arose.’
From the foregoing, it is obvious that the filing of the
complaint with the National Capital Region Arbitration Branch was
proper, Manila being considered as part of Nieva’s workplace by
reason of his plying the Legaspi City-Pasay City route.
It should be noted that a petition for certiorari under Rule 65
of the Rules of Court will prosper only if there is a showing of grave
abuse of discretion or an act without or in excess of jurisdiction on
the part of the National Labor Relations Commission. It does not
include an inquiry as to the correctness of the evaluation of evidence
which was the basis of the labor official or officer in determining his
conclusion. It is not for this Court to re-examine conflicting
evidence, re-evaluate the credibility of witnesses, nor substitute the
findings of fact of an administrative tribunal which has gained
expertise in its special field.
Vinta Maritime Co., Inc vs. NLRC, 284 SCRA 656
Issue: Rendering the assailed resolution and decisions without a full-
blown trial on the merits
Held: Trial is Not Indispensable in Administrative Due Process
Page 115 of 149
Petitioners claim that Respondent Commission gravely abused its
discretion in upholding the POEA’s decision, which was based on
the position papers and documents submitted by the parties in view
of a motion for trial which remained unacted upon. They insist that a
hearing was an indispensable condition before a judgment could be
rendered in this case.
We do not agree. Although bound by law and practice to
observe due process, administrative agencies exercising quasi-
judicial powers are nonetheless free from the rigidity of certain
procedural requirements.
As applied to these proceedings, due process requires
only an opportunity to explain one’s side In labor cases, this
Court has consistently held that due process does not
necessarily mean or require a hearing, but simply an
opportunity or a right to be heard. The requirements of due
process are deemed to have been satisfied when parties are
given the opportunity to submit position papers. The holding of
an adversarial trial is discretionary on the labor arbiter and the
parties cannot demand it as a matter of right. More often than
not, a litigant may be heard more creditably through pleadings
than through oral arguments. In administrative proceedings,
technical rules of procedure and evidence are not strictly
applied; administrative due process cannot be fully equated
with due process in its strict judicial sense. Due process was
designed to afford an opportunity to be heard, and an actual
verbal hearing need not always be held. The necessity of
conducting a hearing is addressed to the sound discretion of the
labor arbiter.
These rules equally apply to cases filed with the Philippine
Overseas Employment Administration Adjudication Office. Sec. 6
of Rule III, Book VII of the POEA Rules and Regulations of 1991
categorically states that proceedings before a POEA hearing officer
is non-litigious, although they are still subject to the requirements of
due process. Under the POEA Rules in force at the time the
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complaint was filed, summary judgments — in which the pleadings,
affidavits and evidence submitted are sufficient to render a decision
— are allowed under Sec. 4. Where the parties fail to agree on an
amicable settlement and summary judgment is not appropriate, a
judgment based on position papers may be resorted to under Section
5. Where there are complicated factual issues involved which cannot
be resolved through such means, the hearing officer may direct the
parties to submit suggested written clarificatory questions to be
propounded to the party concerned.
Tabang vs. NLRC, 266 SCRA 462
We agree with the findings of the NLRC that it is the SEC which has
jurisdiction over the case at bar. The charges against herein private
respondent partake of the nature of an intra-corporate controversy.
Similarly, the determination of the rights of petitioner and the
concomitant liability of private respondent arising from her ouster as
a medical director and/or hospital administrator, which are corporate
offices, is an intra-corporate controversy subject to the jurisdiction of
the SEC.
Contrary to the contention of petitioner, a medical director
and a hospital administrator are considered as corporate officers
under the by-laws of respondent corporation. Section 2(i), Article I
thereof states that one of the powers of the Board of Trustees is “(t)o
appoint a Medical Director, Comptroller/Administrator, Chiefs of
Services and such other officers as it may deem necessary and
prescribe their powers and duties.”
The president, vice-president, secretary and treasurer are
commonly regarded as the principal or executive officers of a
corporation, and modern corporation statutes usually designate them
as the officers of the corporation. However, other offices are
sometimes created by the charter or by-laws of a corporation, or the
board of directors may be empowered under the by-laws of a
corporation to create additional offices as may be necessary.
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
Page 116 of 149
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.
In the case at bar, considering that herein petitioner, unlike
an ordinary employee, was appointed by respondent corporation’s
Board of she is deemed an officer of the corporation. Perforce,
Section 5(c) of Presidential Decree No. 902-A, which provides that
the SEC exercises exclusive jurisdiction over controversies in the
election or appointment of directors, trustees, officers or managers of
corporations, partnerships or associations, applies in the present
dispute. Accordingly, jurisdiction over the same is vested in the SEC,
and not in the Labor Arbiter or the NLRC.
Prangan vs. NLRC, 289 SCRA 142
Prangan was hired for security services by Masagana Security
Services Corp and was assigned to Cat House Bar and Restaurant
until the latter’s closure. Prangan filed a complaint against
Masagana for underpayment and non-payment of wages and other
benefits. Masagana rejected the claim and alleged that it is a mere
agent and the real liability is attached with Cat House, as direct
employer.
Held: (on the issue of evidence)
In the instant case, there is no dispute that matters concerning an
employee’s actual hours of work are within the ambit of
management prerogative. When an employer alleges that his
employee works less than the normal hours of employment as
provided for in the law, he bears the burden of proving his allegation
with clear and satisfactory evidence.
The NLRC relied solely on the supposed daily time records
submitted by the employer. But this is not substantial evidence to
prove Prangan worked only four hours a day. Prangan asserted that
his signature in the DTRs were forged. This was hardly controverted
by the employer, who did not even try to submit employment
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contracts, payrolls, notice of assignment, cash vouchers or any other
convincing evidence.
Rubberworld, vs .NLRC, April 14, 1999
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 Relations Commission
(NLRC) and the labor arbiters.
Labor Claims Included In Suspension Order
The law is clear: upon the creation of a management committee or
the appointment of a rehabilitation receiver, all claims for actions
“shall be suspended accordingly.” No exception in favor of labor
claims is mentioned in the law. Since the law makes no distinction or
exemptions, neither should this Court. Ubi lex non distinguit nec nos
distinguere debemos. Allowing labor cases to proceed clearly defeats
the purpose of the automatic stay and severely encumbers the
management committee’s time and resources. The said committee
would need to defend against these suits, to the detriment of its
primary and urgent duty to work towards rehabilitating the
corporation and making it viable again. To rule otherwise would
open the floodgates to other similarly situated claimants and forestall
if not defeat the rescue efforts. Besides, even if the NLRC awards the
claims of private respondents, as it did, its ruling could not be
enforced as long as the petitioner is under the management
committee.
In Chua v. National Labor Relations Commission, we ruled
that labor claims cannot proceed independently of a bankruptcy
Page 117 of 149
liquidation proceeding, since these claims “would spawn needless
controversy, delays, and confusion.” With more reason, allowing
labor claims to continue in spite of a SEC suspension order in a
rehabilitation case would merely lead to such results.
Article 217 of the Labor Code should be construed not in
isolation but in harmony with PD 902-A, according to the basic rule
in statutory construction that implied repeals are not favored. Indeed,
it is axiomatic that each and every statute must be construed in a way
that would avoid conflict with existing laws. True, the NLRC has
the power to hear and decide labor disputes, but such authority is
deemed suspended when PD 902-A is put into effect by the
Securities and Exchange Commission.
PALABOK: Preference in Favor of Workers in Case of Bankruptcy
or Liquidation
The preferential right of workers and employees under Article 110 of
the Labor Code may be invoked only upon the institution of
insolvency or judicial liquidation proceedings. Indeed, it is well-
settled that “a declaration of bankruptcy or a judicial liquidation
must be present before preferences over various money claims may
be enforced.” But debtors resort to preference of credit — giving
preferred creditors the right to have their claims paid ahead of those
of other claimants — only when their assets are insufficient to pay
their debts fully. The purpose of rehabilitation proceedings is
precisely to enable the company to gain a new lease on life and
thereby allow creditors to be paid their claims from its earnings. In
insolvency proceedings, on the other hand, the company stops
operating, and the claims of creditors are satisfied from the assets of
the insolvent corporation. The present case involves the
rehabilitation, not the liquidation, of petitioner-corporation. Hence,
the preference of credit granted to workers or employees under
Article 110 of the Labor Code is not applicable.
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Alemar’s Sibal and Sons, Inc., vs. NLRC, GR 114761, Jan. 19,
2000
Facts: In 1985, Labor Arbiter rendered a decision ordering Penalosa
to pay private respondent separation pay equivalent to one-half (½)
month pay for every year of service. At the hearing held in 1988,
petitioner and private respondent agreed to the computation of the
separation pay. Thus, Labor Arbiter Jose de Vera directed petitioner
to pay the agreed amount of P20,736.53 representing 10% of the
total amount of the separation pay due the complainants on May 16,
1988.
On June 10, 1988, the Rehabilitation Receiver of petitioner
submitted a Manifestation with Motion, alleging that petitioner was
not yet in a position to comply with the directive of Labor Arbiter de
Vera for the reason that it was still under Rehabilitation Receivership
by virtue of the order of the Securities and Exchange Commission
(SEC) dated August 1, 1984. Thus, it sought deferment of such
payment until the SEC will issue an order formally approving the
rehabilitation of petitioner and allowing complainants to file their
claims with the Rehabilitation Receiver.
Held: We note that at the time this petition had been filed on May 4,
1994, petitioner had been placed under rehabilitation receivership.
Jurisprudence has established that a stay of execution may be
warranted by the fact that a petitioner corporation has been placed
under rehabilitation receivership. However, it is undisputed that on
March 5, 1997, the Securities and Exchange Commission issued an
order approving the proposed rehabilitation plan of petitioner and
placing it under liquidation pursuant to Presidential Decree 902-A.
Subject to the control of the SEC, the liquidator was ordered to
“wind up the affairs of the corporation, continue to manage the
corporation for purposes of liquidation in order to protect the interest
of its creditors and avoid dissipation, loss, wastage, or destruction of
the remaining assets and other properties of the corporation and to
ensure orderly payment of claims against such corporation in
accordance with applicable laws.”
Page 118 of 149
Thus, petitioner pointed out that the SEC’s order suspending
all claims against it pending before any other court, tribunal or body
was pursuant to the rehabilitation receivership proceedings. Such
order was necessary to enable the rehabilitation receiver to
effectively exercise its powers free from any judicial or extra-judicial
interference that might unduly hinder the rescue of the distressed
company. Since receivership proceedings have ceased and
petitioner’s rehabilitation receiver and liquidator, has been given the
imprimatur to proceed with corporate liquidation, the cited order of
the Securities and Exchange Commission has been rendered functus
officio. Thus, there is no legal impediment for the execution of the
decision of the Labor Arbiter for the payment of separation pay.
Considering that petitioner’s monetary obligation to private
respondent is long overdue and that petitioner has signified its
willingness to comply with such obligation by entering into an
agreement with private respondent as to the amount and manner of
payment, petitioner can not delay satisfaction of private respondent’s
claim. However, due to events subsequent to the filing of this
petition, private respondent must present its claim with the
rehabilitation receiver and liquidator of petitioner, subject to the
rules on preference of credits.
Diamonon vs. DOLE, GR 108951, Mar. 7, 2000
When the Constitution and by-laws of both unions dictated the
remedy for intra-union dispute, such as petitioner’s complaint against
private respondents for unauthorized or illegal disbursement of
unions funds, this should be resorted to before recourse can be made
to the appropriate administrative or judicial body, not only to give
the grievance machinery or appeals’ body of the union the
opportunity to decide the matter by itself, but also to prevent
unnecessary and premature resort to administrative or judicial
bodies. Thus, a party with an administrative remedy must not merely
initiate the prescribed administrative procedure to obtain relief, but
also pursue it to its appropriate conclusion before seeking judicial
intervention. This rule clearly applies to the instant case. The
underlying principle of the rule on exhaustion of administrative
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remedies rests on the presumption that when the administrative body,
or grievance machinery, as in this case, is afforded a chance to pass
upon the matter, it will decide the same correctly. Petitioner’s
premature invocation of public respondent’s intervention is fatal to
his cause of action.
Evidently, when petitioner brought before the DOLE his complaint
charging private respondents with unauthorized and illegal
disbursement of union funds, he overlooked or deliberately ignored
the fact that the same is clearly dismissible for non-exhaustion of
administrative remedies
Asuncion vs. NLRC, July 31, 2001
Food Terminal, Inc. vs. NLRC, April 27, 2001
Page 119 of 149
Curaza vs. NLRC, Marh 15, 2001
C. Appeal; Judicial Review
Mabuhay Dev’t Industries vs. NLRC, 288 SCRA 1
MENDOZA, J p: (BAR EXAMINER!)
Art. 223 of the Labor Code, which provides:
Appeal. — Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders.
Indeed, as already stated, a copy of the Labor Arbiter’s
decision was served on private respondents’ counsel on August 18,
1989 but they filed an appeal memorandum only on August 30, 1989
and paid the appeal fees only on September 1, 1989. As a rule, the
perfection of an appeal in the manner and within the period
prescribed by law is jurisdictional and failure to perfect an appeal as
required by law renders the judgment final and executory. There may
be exceptional cases, however, where, as pointed out in City Fair
Corporation v. NLRC, greater injustice may occur if an appeal is not
given due course than if the reglementary period to appeal were
strictly followed. In such cases, proceedings before such agencies as
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the NLRC need not adhere strictly to technicalities to attain
substantial justice.
In the case at bar, the NLRC was justified in giving Art. 223
of the Labor Code a liberal application because, as will presently be
shown, there is no clear evidence to prove that private respondents
were liable for the loss of merchandise. In addition, petitioners did
not oppose private respondents’ appeal or question the jurisdiction of
the NLRC until an adverse judgment was rendered against them.
Petitioners were thus estopped to deny the jurisdiction of the NLRC
Philippine Scout Veterans Security and Investigation Agency, Inc.
vs. NLRC, December 4, 1998
Article 221 of the Labor Code provides that in any proceeding before
the Commission or any of the Labor Arbiters, the rules of evidence
prevailing in courts of law or equity shall not be controlling. It is the
spirit and intention of the Code that the Commission and its members
as well as the Labor Arbiters use all reasonable means to ascertain
the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, all in the interest of due process.
Clearly, respondent NLRC committed grave abuse of
discretion by strictly applying procedural technicalities in the case
before it, in complete disregard of established policy of the Labor
Code and jurisprudence. In affirming the doctrine that the
Commission and the Labor Arbiters may avail themselves of all
reasonable means to speedily ascertain the facts of a controversy, we
uphold the power of respondent NLRC to consider even on appeal
such other and additional documentary evidence from the parties if
only to support their contentions. This is in accord with the well
settled doctrine that rules of procedure and evidence should not be
applied in a very rigid and technical sense in labor cases and that
technicality should not be allowed to stand in the way of equitably
and completely resolving the rights and obligations of the parties.
Alcosero vs. NLRC, 288 SCRA 129
Petitioners Alcosero et al. wrote DOLE Regional Director presenting
their claims for unpaid wages and 13th month pay against Apex
Page 120 of 149
Mining Co., Inc. for 1990. In a conference before the LA, Apex did
not contest some of the collectibles presented by petitioners. LA
ordered Apex to pay. Eventually, Apex did, with petitioners signing
corresponding receipts and quitclaims. Later petitioners submitted
another certificate of net collectibles for the years 1991 and 1992,
with added claims for vacation and sick leave pay, and uniform
allowances. LA ruled for petitioners. NLRC reversed. Petitioners
went to the SC via Rule 65, without previously filing a motion for
reconsideration of the NLRC decision. One of the petitioners
explained such omission: Alcosero (who was deputized by the others
via a special power of attorney) refused to see their counsel, and
delay in contacting the other petitioners.
Issue: Whether certiorari lies despite petitioners’ failure to move for
reconsideration
Held: NO. It is settled that the filing of a motion for reconsideration
of the order, resolution or decision of the tribunal, board or office is,
subject to well-recognized exceptions, a condition sine qua non to
the institution of a special civil action for certiorari. The rationale
therefor is that the law intends to afford the tribunal, board or office
an opportunity to rectify the errors and mistakes it may have lapsed
into before resort to the courts of justice can be had. Petitioners’
explanation concerning their failure to move for reconsideration is
not sufficient justification for dispensing with the requirement. In
fact, it is not even among the recognized exceptions to the above
rule. Certiorari cannot be resorted to as a shield from the adverse
consequences of petitioners’ own omission to file the required
motion for reconsideration. It is worth stressing that certiorari will lie
only if there is no appeal nor any other plain, speedy and adequate
remedy in the ordinary course of law against the acts of the NLRC.
In the instant case, the remedy expressly provided by law was a
motion for reconsideration, which was not only expected to be but
would actually have provided an adequate and more speedy remedy
than the present petition for certiorari. Also, Sec. 2, pars. (a), (b) and
(c), Rule VIII, of the New Rules of Procedure of the NLRC
specifically provides for the finality of the decision of the
Commission after the lapse of the 10-day reglementary period. Thus,
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without the required motion for reconsideration nothing prevented
the resolution of the NLRC from becoming final and executory.
Petitioners cannot now, by an overdue strategy, question the
correctness of the resolution.
PNCC V. NLRC, 292 SCRA 266
Petitioner did not file a motion for reconsideration stating that it was
not aware of the appeal interposed by private respondents, as it was
not furnished a copy of private respondents’ memorandum of appeal.
Instead, petitioner directly filed this petition for certiorari.
After a careful examination of the records, the Court fully
agrees with the Solicitor General’s view that the proceedings before
the NLRC were tainted with due process violation. It appears that
petitioner was not a participant in the appeal interposed by private
respondents. Apparently, such non-participation was never
petitioner’s choice as the record is bereft of any indication that
petitioner was ever informed or notified of private respondents’
appeal. There is no proof that petitioner was furnished a copy of
private respondents’ Memorandum of Appeal, nor was it required to
comment thereon. No reference is made whatsoever in the NLRC
Decision to any argument, position or comment raised by petitioner
in response to the appeal. That petitioner was denied due process is
well-substantiated.
The NLRC’s grave omission to afford petitioner a chance to
be heard on appeal is a clear violation of its constitutional right and
has the effect of rendering its judgment null and void.
It is a cardinal rule in law that a decision or judgment is
fatally defective if rendered in violation of a party-litigant’s right to
due process
Petitioner’s non-filing of a motion for reconsideration of the
NLRC’s decision is understandable considering that it was deprived
of due process. The Court has ruled that a motion for reconsideration
may be dispensed with prior to commencement of an action for
certiorari where the decision is a patent nullity or where petitioner
was deprived of due process.
Page 121 of 149
UERM vs. National Labor Relations Commission, 269 SCRA 70
The applicable law is Article 223 of the Labor Code, as amended by
Republic Act No. 6715, which provides: “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 Commission in
the amount equivalent to the monetary award in the judgment
appealed from.” We have given a liberal interpretation to this
provision.
In YBL (Your Bus Line) v. NLRC , 190 SCRA 164 (1990)
we ruled: “. . . that while Article 223 of the Labor Code, as amended
by Republic Act No. 6715, requiring a cash or surety bond in the
amount equivalent to the monetary award in the judgment appealed
from for the appeal to be perfected, may be considered a
jurisdictional requirement, nevertheless, adhering to the principle
that substantial justice is better served by allowing the appeal on the
merits threshed out by the NLRC, the Court finds and so holds that
the foregoing requirement of the law should be given a liberal
interpretation.”
Then too, in Oriental Mindoro Electric Cooperative, Inc. v.
National Labor Relations Commission (246 SCRA 801 [1995]), we
held: “The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that an appeal by the
employer may be perfected “only upon the posting of a cash or
surety bond.” The word “only” makes it perfectly clear, that the
lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer’s appeal
may be perfected. The requirement is intended to discourage
employers from using an appeal to delay, or even evade, their
obligation to satisfy their employees’ just and lawful claims.
Considering, however, that the current policy is not to strictly follow
technical rules but rather to take into account the spirit and intention
of the Labor Code, it would be prudent for us to look into the merits
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of the case, especially since petitioner disputes the allegation that
private respondent was illegally dismissed.”
Biogenerics vs. NLRC, Sept.8, 1999
The requirement of a cash or surety bond for the perfection of an
appeal from a Labor Arbiter’s monetary award is jurisdictional; non-
compliance therewith is fatal and renders the award final and
executory. Corollarilly, failure to file a motion for reconsideration of
a resolution of the National Labor Relations Commission (NLRC) as
a requisite sine qua non in pursuing any further relief or subsequent
remedy likewise gives a stamp of finality to the resolution.
We have ruled that the implementing rules of respondent
NLRC are unequivocal in requiring that a motion for reconsideration
of the order, resolution or decision of respondent Commission should
be seasonably filed as a precondition for pursuing any further or
subsequent recourse, otherwise, the order, resolution or decision
would become final and executory after ten (10) calendar days from
receipt thereof. 9 Obviously, the rationale therefor is that the law
intends to afford the NLRC an opportunity to rectify such errors or
mistakes it may have committed before resort to courts of justice can
be had. This merely adopts the rule that the function of a motion for
reconsideration is to point out to the court the error it may have
committed and to give it a chance to correct itself. Subsequent
issuance by the NLRC of the questioned Resolution dated 5 June
1995 was, therefore, a mere surplusage sought only to formalize the
finality of the order. On the other hand, the motion for
reconsideration thereon by petitioners was futile and belated as there
was already a final judgment.
It is obvious that since no appeal bond was posted by
petitioners, no appeal was perfected from the decision of the Labor
Arbiter, for which reason the decision sought to be appealed to the
NLRC had in the meantime become final and executory and
therefore immutable.
Appeals from decisions of the Labor Arbiter are governed by
the provisions of Rule VI of the New Rules of Procedure of the
NLRC Thus it is clear that the appeal from any decision, award or
Page 122 of 149
order of the Labor Arbiter to the NLRC shall be made within ten (10)
calendar days from receipt of such decision, award or order, and
must be under oath, with proof of payment of the required appeal fee
accompanied by a memorandum of appeal. In case the decision of
the Labor Arbiter involves a monetary award, the appeal is deemed
perfected only upon the posting of a cash or surety bond also within
ten (10) calendar days from receipt of such decision in an amount
equivalent to the monetary award. The mandatory filing of a bond
for the perfection of an appeal is evident from the aforequoted
provision that the appeal may be perfected only upon the posting of
cash or surety bond. It is not an excuse that the over P2 million
award is too much for a small business enterprise, like the petitioner
company, to shoulder. The law does not require its outright payment,
but only the posting of a bond to ensure that the award will be
eventually paid should the appeal fail. What petitioners have to pay
is moderate and reasonable sum for the premium for such bond.
D. EXECUTION
Pioneer Texturing vs. NLRC, 280 SCRA 806
Pioneer argues that an order for reinstatement is not self-executory;
that there must be a writ of execution which may be issued by the
NLRC or by the Labor Arbiter motu proprio or on motion of an
interested party. Further that even if a writ of execution was issued, a
timely appeal coupled by the posting of appropriate supersedeas
bond, effectively forestalled and stayed execution of the
reinstatement order of the Labor Arbiter. As supporting authority,
petitioners emphatically cite and bank on the case of Maranaw Hotel
Resort Corporation (Century Park Sheraton Manila) v. NLRC , 238
SCRA 190.
Complainant de Jesus, maintains that petitioner should have
reinstated her immediately after the decision of the Labor Arbiter
since the law mandates that an order for reinstatement is immediately
executory. An appeal, she says, could not stay the execution of a
reinstatement order for she could either be admitted back to work or
merely reinstated in the payroll without need of a writ of execution.
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De Jesus argues that a writ of execution is necessary only for the
enforcement of decisions, orders, or awards which have acquired
finality. In effect, de Jesus is urging the Court to re-examine the
ruling laid down in Maranaw.
Issue: Whether or not an order for reinstatement needs a writ of
execution.
Held: Article 223 of the Labor Code, as amended by R.A. No. 6715
pertinently provides:
“ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained
only on any of the following grounds:
xxx xxx xxx
“In any event, 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.
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.
The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.”
The amendment introduced by R.A. No. 6715 employs the
phrase “shall immediately be executory” without qualification. As a
rule, “shall” when used in a statute, is mandatory. An appeal or
posting of bond, by plain mandate of the law, could not even
forestall nor stay the executory nature of an order of reinstatement.
In conformity with the executory nature of the reinstatement
order, Rule V, Section 16 (3) of the New Rules of Procedure of the
NLRC strictly requires the Labor Arbiter to direct the employer to
immediately reinstate the dismissed employee.
A closer examination shows that the necessity for a writ of
execution under Article 224 applies only to final and executory
decisions which are not within the coverage of Article 223. Article
Page 123 of 149
224 states that the need for a writ of execution applies only within
five (5) years from the date a decision, an order or award becomes
final and executory. It can not relate to an award or order of
reinstatement still to be appealed or pending appeal which Article
223 contemplates. The provision of Article 223 is clear that an award
for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is to make an
award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award
would certainly betray and run counter to the very object and intent
of Article 223, i.e., the immediate execution of a reinstatement order.
The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons.
Co Tuan vs. NLRC, 289 SCRA 415
Judgment was rendered for the complainant CLUP against
respondent Buda Enterprises. A writ of execution was issued and 5
parcels of land allegedly belonging to Buda Enterprises but later
found to be registered under the names of the petitioners Co Tuan, et
al., were levied upon. Upon learning of such levy, the petitioners
filed an Urgent Motion to Quash the Writ of Execution, claiming that
they hold valid and lawful title to the said properties. The motion
was granted and complainants appealed to the NLRC asking that the
Labor Arbiter be ordered to implead the petitioners as respondents,
and praying that the sale between the petitioners and Buda
Enterprises, be declared void. The NLRC directed the Labor Arbiter
to implead the petitioners and to conduct a hearing to determine
whether the sale of the land was made to avoid the payment of their
claims. The Labor Arbiter issued an order holding that his Office
was incompetent to determine whether fraud tainted the questioned
sale.
Complainants again appealed such decision, contending that
the Labor Arbiter gravely abused its discretion in ignoring the
directives of the Commission to implead the petitioners and conduct
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a hearing. On appeal, the NLRC ruled that the Labor Arbiter erred in
not impleading the petitioners.
Aggrieved, petitioners have come to this Court, theorizing
that NLRC is incompetent to determine the legality of the sale
between the petitioners and the respondent company, the task being
judicial in nature.
Held: The Petition was granted.
A government functionary like the respondent labor arbiter
is incompetent to make a determination of the issue on hand. The
task is judicial and the proceedings must be adversary. In a long line
of cases, this Court has pronounced that the power of the court, or
the NLRC, for that matter, to execute its judgment extends only to
properties unquestionably belonging to the judgment debtor.
Therefore, if the property under levy does not belong to the judgment
debtor in the NLRC case, it could not be validly 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.
SGS Far East Ltd. Vs. NLRC, 286 SCRA 335
A complaint for underpayment of wages and violation of labor
standard laws, was filed by Philippine Social Security Labor Union
Federation (PSSLU) and thirteen (13) of its members. The case was
amicably settled when the parties executed a compromise agreement
where the 13 complainants will be paid P50,000.00 and there shall be
no change in the terms and conditions governing the employment of
all the 13 complainants in this case. Thus, the NLRC Case was
dismissed.
3 years later, 4 of the complainants filed a Manifestation and
Motion alleging that violated the August 4, 1982 Compromise
Agreement. Petitioner SGS filed a Motion to Dismiss alleging that
Labor Arbiter had no jurisdiction to decide private respondents’
Motion and Manifestation which raised a cause of action not covered
Page 124 of 149
by the Compromise Agreement. The Labor Arbiter rendered
judgment ordering respondents to pay the four (4) individual
complainants P20,129.43 each; to reinstate them with backwages for
three (3) years.
SGS appealed to the NLRC. The NLRC reversed the Labor
Arbiter and ruled that the latter had no jurisdiction and that private
respondents should file a new case. Private respondents filed a
Petition for Certiorari before the SC who resolved that Labor Arbiter
had jurisdiction to decide the claims of private respondents.
The case was referred to a different labor arbiter for
execution. The Labor Arbiter required the parties to submit their
respective computations of the monetary award given in the decision
of first Labor Arbiter. Private respondents’ computation reached
P4,806,052.41. The computation of petitioners merely totalled
P298,552.48. The Labor Arbiter issued a writ of execution for the
amount of P4,806,052.41. Petitioners appealed the writ to the NLRC.
But the NLRC dismissed it holding it has no jurisdiction because this
was merely the implementation of a SC decision.
Held: The SC held that NLRC gravely abused its discretion in
refusing to assume jurisdiction over the appeal of the petitioners. Its
refusal is based on the general rule that “after a decision has become
final, the prevailing party becomes entitled as a matter of right to its
execution, that it becomes merely the ministerial duty of the court to
issue the execution.” The general rule, however, cannot be applied
where the writ of execution is assailed as having varied the decision.
In the case at bar, petitioners have vigorously assailed the correctness
of the computation of the Labor Arbiter. They also alleged it has
materially altered the decision of first arbiter. If petitioners are
correct, they are entitled to the remedy of appeal to the NLRC. The
NLRC is vested with authority to look into the correctness of the
execution of the decision and to consider supervening events that
may affect such execution.
IMIDC vs. NLRC, 331 SCRA 640
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In September 1984, a complaint with the Department of Labor and
Employment, against INIMACO for payment of separation pay and
unpaid wages. Judgment was rendered in favor of complainants. The
Labor Arbiter issued an Alias Writ of Execution. Petitioner filed a
“Motion to Quash Alias Writ of Execution and Set Aside Decision,”
3 alleging the alias writ of execution altered and changed the tenor of
the decision by changing the liability of therein respondents from
joint to solidary, by the insertion of the words “AND/OR” between
“Antonio Gonzales/Industrial Management Development
Corporation and Filipinas Carbon and Mining Corporation, et al.”
The Labor Arbiter denied the motion.
Issue: The only issue in this petition is whether petitioner’s liability
pursuant to the Decision of the Labor Arbiter dated March 10, 1987,
is solidary or not.
Held: The SC ruled that petitioner INIMACO’s liability is not
solidary but merely joint and that the respondent NLRC acted with
grave abuse of discretion in upholding the Labor Arbiter’s Alias Writ
of Execution and subsequent Orders to the effect that petitioner’s
liability is solidary. Well-entrenched is the rule that solidary
obligation cannot lightly be inferred. In the dispositive portion of the
Labor Arbiter, the word “solidary” does not appear. It is already a
well-settled doctrine in this jurisdiction that, when it is not provided
in a judgment that the defendants are liable to pay jointly and
severally a certain sum of money, none of them may be compelled to
satisfy in full said judgment. The dispositive part of a decision or
order is the controlling factor as to settlement of rights of the parties.
Once a decision or order becomes final and executory, it is removed
from the power or jurisdiction of the court which rendered it to
further alter or amend it. It thereby becomes immutable and
unalterable and any amendment or alteration which substantially
affects a final and executory judgment is null and void for lack of
jurisdiction, including the entire proceedings held for that purpose.
An order of execution which varies the tenor of the judgment or
exceeds the terms thereof is a nullity.
Tag Fibers vs. NLRC, 344 SCRA 2000
Page 125 of 149
Petitioner Tag Fibers, Inc. absorbed respondents from its
predecessors, Smith Bell and Company as regular and permanent
employees until they were all terminated because of company losses.
Later petitioner Tag Fibers, Inc. re-hired respondents Ricardo
Abanes and twenty (20) others effective on the day after the
termination of their employment as piece-rate workers. When
petitioners learned that respondents filed a complaint for violation of
the Minimum Wage Law petitioners prohibited them from working.
Respondents filed with the Labor Arbiter a complaint for illegal
dismissal. The Labor Arbiter rendered a decision ordering Tag Fibers
to reinstate complainants to their respective former positions without
loss of seniority rights and privileges and to pay P10,858.68. The
petitioners paid respondents the full amount of the monetary award
of P10,858.68, but refused to reinstate the respondents.
Consequently, the issue of reinstatement was set for a conference
between the parties.
Respondents filed a motion to direct petitioners to pay them
backwages in view of petitioners’ refusal to reinstate them. The
Labor Arbiter issued a resolution finding that strained relationship
existed between the employer and employees and resolved to grant
respondents the sum of P27,300.00 each or a total of P573,300, in
the concept of separation pay of P2,730.00 each per year of service
from February 1983 to June 1993
Issue: Petitioners contend that the monetary aspect of the judgment
dated January 11, 1985 has been satisfied and the Labor Arbiter’s
authority to enforce judgment is merely ministerial; hence, the Labor
Arbiter cannot modify or vary the final and executory decision of the
NLRC.
Held: The petition is meritorious.
Under Rule 39, Section 6, 1964 Revised Rules of Court, a
judgment may be executed on motion within five (5) years from the
date of its entry or from the date it becomes final and executory.
After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. This rule applies
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to the case as the Rules of Court are applicable to labor cases in a
suppletory capacity.
In this particular case, the of the Labor Arbiter became final.
Hence, the Labor Arbiter had no jurisdiction when he set a
conference on March 23, 1993. The conference could no longer be
lawfully convoked. When the NLRC issued the resolution ordering
the petitioner to pay separation pay from February 1983 to June
1993, it modified its own final judgment, and worse, acted without
jurisdiction. The finality of a decision is a jurisdictional event that
cannot be made to depend on the convenience of a party.
Yupangco Cotton Mills vs. CA, GR 126322, January 16, 2000
E. INJUNCTION
PAL vs. NLRC, 287 SCRA 672
Can the National Labor Relations Commission (NLRC), even
without a complaint for illegal dismissal filed before the labor
arbiter, entertain an action for injunction and issue such writ
enjoining petitioner Philippine Airlines, Inc. from enforcing its
Orders of dismissal against private respondents, and ordering
petitioner to reinstate the private respondents to their previous
positions?
Page 126 of 149
Private respondents are flight stewards of the petitioner.
Both were dismissed from the service. Aggrieved by said dismissal,
private respondents filed with the NLRC a petition for injunction
praying that PAL be ordered to reinstate petitioners to their former
positions pending the hearing of this case. Injunction was granted by
the NLRC.
Hence, the present recourse.
Held: In labor cases, Article 218 of the Labor Code empowers the
NLRC —
“(e) To enjoin or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the performance
of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any
party or render ineffectual any decision in favor of such party.
From the foregoing provisions of law, the power of the
NLRC to issue an injunctive writ originates from “any labor dispute”
upon application by a 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.
The petition for injunction directly filed before the NLRC is
in reality an action for illegal dismissal. This is clear from the
allegations in the petition which prays for; reinstatement of private
respondents; award of full backwages, moral and exemplary
damages; and attorney’s fees. As such, the petition should have been
filed with the labor arbiter who has the original and exclusive
jurisdiction to hear and decide the case.
The jurisdiction conferred by the foregoing legal provision
to the labor arbiter is both original and exclusive, meaning, no other
officer or tribunal can take cognizance of, hear and decide any of the
cases therein enumerated. On the other hand, the NLRC shall have
exclusive appellate jurisdiction over all cases decided by labor
arbiters as provided in Article 217(b) of the Labor Code. In short, the
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jurisdiction of the NLRC in illegal dismissal cases is appellate in
nature and, therefore, it cannot entertain the private respondents’
petition for injunction which challenges the dismissal orders of
petitioner. Article 218(e) of the Labor Code does not provide blanket
authority to the NLRC or any of its divisions to issue writs of
injunction, considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary remedy
in ordinary labor disputes. Thus, the NLRC exceeded its jurisdiction
when it issued the assailed Order granting private respondents’
petition for injunction and ordering the petitioner to reinstate private
respondents.
MSF vs. CA, 311 SCRA 785
A labor dispute arose between Philtread and its Union, as a result of
which picketing was done outside the gate of Philtread’s plant.
Secretary of Labor Nieves Confesor assumed jurisdiction over the
labor dispute and certified it for compulsory arbitration. She enjoined
the Union from striking and Philtread from locking out members of
the Union.
On December 9, 1994, during the pendency of the labor
dispute, Philtread entered into a Memorandum of Agreement with
Siam Tyre wherein Philtread’s plant and equipment would be sold to
a new company petitioner MSF Tire and Rubber, Inc., 80% of which
would be owned by Siam Tyre and 20% by Philtread, while the land
on which the plant was located would be sold to another company,
60% of which would be owned by Philtread and 40% by Siam Tyre.
This was done and the Union was informed of the purchase
of the plant by MSF. MSF then asked the Union to desist from
picketing outside its plant and to remove the banners, streamers, and
tent which it had placed outside the plant’s fence.
As the Union refused MSF’s request, a complaint for
injunction with damages was filed against the Union before the
Regional Trial Court of Makati. The Union moved to dismiss the
complaint alleging lack of jurisdiction on the part of the trial court. It
insisted that the parties were involved in a labor dispute and that
Page 127 of 149
MSF, being a mere “alter ego” of Philtread, was not an “innocent
bystander.”
The motion to dismiss was denied and injunctive relief
granted. The Union filed a petition for certiorari and prohibition
before the Court of Appeals. The appellate court rendered a decision
granting the Union’s petition and ordering the trial court to dismiss
the civil case for lack of jurisdiction. Hence, this petition for review.
Issue: Petitioner asserts that its status as an “innocent bystander”
with respect to the labor dispute between Philtread and the Union
entitles it to a writ of injunction from the civil courts and that the
appellate court erred in not upholding its corporate personality as
independent of Philtread’s.
Held: The “innocent bystander” rule is as follows:
The right to picket as a means of communicating the facts of
a labor dispute is a phase of the freedom of speech guaranteed by the
constitution. The right is, however, not an absolute one. While
peaceful picketing is entitled to protection as an exercise of free
speech, we believe the courts are not without power to confine or
localize the sphere.
Thus the right may be regulated at the instance of third
parties or “innocent bystanders” if it appears that the inevitable result
of its exercise is to create an impression that a labor dispute with
which they have no connection or interest exists between them and
the picketing union or constitute an invasion of their rights. Thus, an
“innocent bystander,” who seeks to enjoin a labor strike, must satisfy
the court that aside from the grounds specified in Rule 58 of the
Rules of Court, it is entirely different from, without any connection
whatsoever to, either party to the dispute and, therefore, its interests
are totally foreign to the context thereof.
In the case at bar, petitioner cannot be said not to have such
connection to the dispute. As correctly observed by the appellate
court:
Coming now to the case before us, we find that the
“negotiation, contract of sale, and the post transaction” between
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Philtread, as vendor, and Siam Tyre, as vendee, reveals a legal
relation between them which, in the interest of petitioner, we cannot
ignore. To be sure, the transaction between Philtread and Siam Tyre,
was not a simple sale whereby Philtread ceased to have any
proprietary rights over its sold assets. On the contrary, Philtread
remains as 20% owner of private respondent and 60% owner of
Sucat Land Corporation which was likewise incorporated in
accordance with the terms of the Memorandum of Agreement with
Siam Tyre, and which now owns the land were subject plant is
located. This, together with the fact that private respondent uses the
same plant or factory; similar or substantially the same working
conditions; same machinery, tools, and equipment; and manufacture
the same products as Philtread, lead us to safely conclude that private
respondent’s personality is so closely linked to Philtread as to bar its
entitlement to an injunctive writ. Stated differently, given its close
links with Philtread as to bar its entitlement to an injunctive writ.
Stated differently, given its close links with Philtread, we find no
clear and unmistakable right on the part of private respondent to
entitle it to the writ of preliminary injunction it prayed for below.
Deltaventures vs. Cabato, 327 SCRA 521
A decision was rendered by Executive Labor Arbiter declaring the
respondents guilty of Illegal Dismissal and Unfair Labor Practice and
ordering them to pay the complainants. The Sheriff proceeded to
enforce the writ by levying upon a real property, registered in the
name of Roberto Ongpin. A month before the scheduled auction sale
of the real property, herein petitioner filed before the Commission a
third-party claim asserting ownership over the property. Petitioner
then filed with the Regional Trial Court of La Trinidad, Benguet a
complaint for injunction and damages. Respondent Judge eventually
dismissed the complaint.
Issue: The core issue is whether or not the trial court may take
cognizance of the complaint filed by petitioner and consequently
provide the injunctive relief sought.
Held: Petitioner filed the third-party claim before the court a quo by
reason of a writ of execution against a property to which it claims
Page 128 of 149
ownership. Ostensibly the complaint before the trial court was for the
recovery of possession and injunction, but in essence it was an action
challenging the legality or propriety of the levy vis-a-vis the alias
writ of execution, including the acts performed by the Labor Arbiter
and the Deputy Sheriff implementing the writ. The complaint was in
effect a motion to quash the writ of execution of a decision rendered
on a case properly within the jurisdiction of the Labor Arbiter, it is
then logical to conclude that the subject matter of the third party
claim is but an incident of the labor case, a matter beyond the
jurisdiction of regional trial courts.
Petitioner failed to realize that by filing its third-party claim
with the deputy sheriff, it submitted itself to the jurisdiction of the
Commission acting through the Labor Arbiter. It failed to perceive
the fact that what it is really controverting is the decision of the
Labor Arbiter and not the act of the deputy sheriff in executing said
order issued as a consequence of said decision rendered.
Petitioner should have filed its third-party claim before the
Labor Arbiter, from whom the writ of execution originated, before
instituting said civil case.
F. PRESCRIPTION
Mendoza vs. NLRC, 287 SCRA 51
Petitioner was employed by respondent Baliwag Transit, Inc. as a
passenger bus driver. The bus driven by petitioner was heavily
damaged in an accident. Petitioner was “grounded” and advised by
respondent Baliwag to wait for the result of the police investigation
and the actions that might be taken by the owners of the other
vehicles. Petitioner patiently waited. Realizing that he has waited too
long, petitioner requested respondent Baliwag to reinstate him as he
needed money to support his family. But, private respondent
formally informed him to look for another job because the
management has terminated his services on account of the May 20,
1983 vehicular accident. Petitioner filed a complaint against
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respondent Baliwag for illegal dismissal, damages and attorney’s
fees before the Arbitration Branch of the NLRC.
In answer, respondent Baliwag denied petitioner’s allegation
contending that petitioner was not dismissed but abandoned his job
after the incident of May 30, 1983. Respondent likewise asserted that
petitioner’s cause of action had long prescribed and that he is guilty
of laches in not asserting his right sooner.
Labor Arbiter rendered a decision in favor of respondent
Baliwag.
Held: The SC held that the private respondent’s right of action could
not have accrued from the mere fact of the occurrence of the mishap
on August 10, 1974, as he was not considered automatically
dismissed on that date. At best, he was deemed suspended from his
work. Hence, there existed no justification at that time for private
respondent to demand reinstatement and no opportunity warrant
either for the petitioner to reject that demand.
The Court agrees with the private respondent that May 10,
1980, is the date when his cause of action accrued, for it was then
that the petitioner denied his demand for reinstatement and so
committed the act of omission ‘constituting a breach of the
obligation of the defendant to the plaintiff.’ The earlier requests
made by him having been warded off with indefinite promises, and
the private respondent not yet having decided to assert his right, his
cause of action could not be said to have then already accrued. The
issues had not yet been joined, so to speak. This happened only when
the private respondent finally demanded his reinstatement on May 2,
1980, and his demand was categorically rejected by the petitioner on
May 10, 1980.
Applying the aforesaid ruling, petitioner’s cause of action
accrued only in December 1986 when respondent Baliwag formally
dismissed him from the service.
Thus, it is clear from the foregoing, that the action for illegal
dismissal filed by petitioner had not yet prescribed.
Laureano vs. CA, 324 SCRA 414
Page 129 of 149
Plaintiff Laureano was offered a contract of employment as an
expatriate B-707.
Sometime in 1982, defendant, hit by a recession, initiated
cost-cutting measures. On October 5, 1982, defendant informed
plaintiff of his termination effective November 1, 1982. Plaintiff
filed the instant case for damages due to illegal termination of
contract of services before the court a quo.
Defendant filed its answer reiterating the grounds relied
upon in its motion to dismiss and further arguing that plaintiff is
barred by laches, waiver, and estoppel from instituting the complaint
and that he has no cause of action . The trial court handed down its
decision in favor of plaintiff. This was reversed by the CA saying
that the period of 4 years has prescribed.
Issue: Petitioner raises the issue of whether his action is one based
on Article 1144 or on Article 1146 of the Civil Code. According to
him, his termination of employment effective November 1, 1982,
was based on an employment contract which is under Article 1144,
so his action should prescribe in 10 years as provided for in said
article. Thus he claims the ruling of the appellate court based on
Article 1146 where prescription is only four (4) years, is an error.
Held: The SC however stated that neither Article 1144 nor Article
1146 of the Civil Code is here pertinent. What is applicable is Article
291 of the Labor Code, viz:
“ARTICLE 291. Money claims. — All money claims arising
from employee-employer 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.
What rules on prescription should apply in cases like this one has
long been decided by this Court. In illegal dismissal, it is settled, that
the ten-year prescriptive period fixed in Article 1144 of the Civil
Code may not be invoked by petitioners, for the Civil Code is a law
of general application, while the prescriptive period fixed in Article
292 of the Labor Code [now Article 291] is a SPECIAL LAW
applicable to claims arising from employee-employer relations. It
should be noted further that Article 291 of the Labor Code is a
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special law applicable to money claims arising from employer-
employee relations; thus it necessarily prevails over Article 1144 of
the Civil Code, a general law. Hence the cause of action has
prescribed.
Petitioner also claims that the running of the prescriptive period
was tolled when he filed his complaint for illegal dismissal before
the Labor Arbiter of the National Labor Relations Commission.
However, this claim deserves scant consideration; it has no legal leg
to stand on. In Olympia International, Inc. vs. Court of Appeals, it
was held that “although the commencement of a civil action stops the
running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the
same position as though no action had been commenced at all.”
G. QUITCLAIMS; COMPROMISE AGREEMENTS
Periquet vs. NLRC, 186 SCRA 724
The petitioner was dismissed as toll collector by the Construction
Development Corporation of the Philippines, private respondent
herein, for willful breach of trust and unauthorized possession of
accountable toll tickets allegedly found in her purse during a surprise
inspection. Claiming she had been “framed,” she filed a complaint
for illegal dismissal and was sustained by the labor arbiter, who
ordered her reinstatement within ten days “without loss of seniority
rights and other privileges and with full back wages to be computed
from the date of her actual dismissal up to date of her actual
reinstatement.”
On appeal, this order was affirmed in toto by public
respondent NLRC. On March 11, 1989, almost nine years later, the
petitioner filed a motion for the issuance of a writ of execution of the
decision. The motion was granted by the executive labor arbiter.
However, the NLRC sustained the appeal of the CDCP holding that
the motion for execution was time-barred, having been filed beyond
the five-year period prescribed by both the Rules of Court and the
Labor Code. The petitioner contends that this decision is tainted with
grave abuse of discretion and asks for its reversal.
Page 130 of 149
Held: The original decision called for her reinstatement within ten
days from receipt thereof following its affirmance by the NLRC on
August 29, 1980, but there is no evidence that she demanded her
reinstatement or that she complained when her demand was rejected.
What appears is that she entered into a compromise agreement with
CDCP where she waived her right to reinstatement and received
from the CDCP the sum of P14,000.00 representing her back wages
from the date of her dismissal to the date of the agreement.
Dismissing the compromise agreement, the petitioner now claims she
was actually reinstated only on March 16, 1987, and so should be
granted back pay for the period beginning November 28, 1978, date
of her dismissal, until the date of her reinstatement. She conveniently
omits to mention several significant developments that transpired
during and after this period that seriously cast doubt on her candor
and bona fides.
Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction, But where it is shown that the person
making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a
valid and binding undertaking. As in this case.
Agoy vs. NLRC, 252 SCRA 588
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Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Anino vs. NLRC, 290 SCRA 489
Complainants allege that they are employees of respondent Hinatuan
Mining Corporation (HMC) holding supervisory positions.
Sometime in September 1993, complainants planned the formation
of a supervisors union with HMC.
On or about 03 November 1993, HIMSU formally notified
the company of its legal existence through a letter addressed to
SALVADOR B. ZAMORA III, President of respondent HMC. It
formally informed the company of its desire for a collective
bargaining agreement and submitted its proposals.
The company, complainant claims, completely ignored the
union’s proposals and did not answer HIMSU about it, which
constrained the union to file an unfair labor practice case against
HMC on 13 May 1994. In order to weaken and if possible destroy
the union, respondents, in the guise of retrenchment, dismissed the
complainants who are the active leaders of the union.
Issue: Whether or not the National Labor Relations Commission
likewise exceeded its jurisdiction in recognizing the
waivers/quitclaims executed by petitioners as an effective bar to this
complaint
Private respondents also insist that petitioners’ acceptance of
separation benefits and execution of waivers and quitclaims negate
their claim of illegal dismissal. The waivers and quitclaims allegedly
constitute valid and binding contracts between petitioners and
respondent corporation.
Held: The recognized and accepted doctrine is that a dismissed
employee who has accepted separation pay is not necessarily
estopped from challenging the validity of his or her dismissal.
Neither does it relieve the employer of legal obligations.
Waivers and quitclaims, on the other hand, are generally
looked upon with disfavor.
Golden Donuts vs. NLRC, 322 SCRA 294:
Complainants were members of KMDD-CFW who staged a strike on
November 16, 1989. a Complaint with Prayer for Preliminary
Page 131 of 149
Injunction was filed by Golden Donuts, Inc. on January 9, 1990,
seeking to declare the strike illegal and to dismiss all officers of the
union and members who participated in the commission of illegal
acts; to pay petitioner actual, moral and exemplary damages, plus
attorney’s fees. After KMU’s Atty. Pontenciano Flores was retained
as counsel by the union and strikers, and sensing the gravity of the
penalties attendant to the strike resorted to, including the financial
award that may be due the Golden Donuts, Inc. and civil liabilities
that may be awarded thereafter, said counsel pleaded for a
compromise. Hence, on July 16, 1990, a compromise agreement was
entered into by the KMDD-CFW and Golden Donuts, Inc.
Out of the said 262 striking force, only the complainants
disagree and did not receive the amount due, arguing that the
compromise agreement was entered into by their counsel and the
President of the Union without their individual consent and/or
authority and that the same was not approved nor ratified by the
majority of the union membership.
On January 29, 1993, the Labor Arbiter rendered a decision
upholding the dismissal of private respondents and ruling that they
were bound by the compromise agreement entered into by the union
with petitioners. On appeal, the NLRC issued a resolution ordering
respondent to reinstate complainants to their former positions
without loss of seniority rights and back-wages limited to three years
from the time of their dismissal.
Issues: The questions presented in the petition are: (1) whether or
not a union may compromise or waive the rights to security of tenure
and money claims of its minority members, without the latter’s
consent, and (2) whether or not the compromise agreement entered
into by the union with petitioner company, which has not been
consented to nor ratified by respondents minority members has the
effect of res judicata upon them.
As a consequence of a negative ruling on the foregoing issues,
there arises the issue of whether private respondents are entitled to
monetary benefits subject of their individual complaints.
Held: The petition is without merit.
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Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
First, even if a clear majority of the union members agreed to a
settlement with the employer, the union has no authority to
compromise the individual claims of members who did not consent
to such settlement. Rule 138 Section 23 of the 1964 Revised Rules of
Court requires a special authority before an attorney may
compromise his client’s litigation. “The authority to compromise
cannot lightly be presumed and should be duly established by
evidence.”
In the case at bar, minority union members did not authorize
the union to compromise their individual claims. Absent a showing
of the union’s special authority to compromise the individual claims
of private respondents for reinstatement and back wages, there is no
valid waiver of the aforesaid rights. As private respondents did not
authorize the union to represent them in the compromise settlement,
they are not bound by the terms thereof.
Second, money claims due to laborers cannot be the object
of settlement or compromise effected by a union or counsel without
the specific individual consent of each laborer concerned. The
beneficiaries are the individual complainants themselves. The union
to which they belong can only assist them but cannot decide for
them. 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 or the union had any authority
to waive the accrued rights pertaining to the dissenting minority
members, even under a collective bargaining agreement which
provided for a ‘union shop’.
We have consistently ruled that “a compromise is governed
by the basic principle that the obligations arising therefrom have the
force of law between the parties.”
Consequently, private respondents may pursue their
individual claims against petitioners before the Labor Arbiter.
Page 132 of 149
The judgment of the Labor Arbiter based on the compromise
agreement in question does not have the effect of res judicata upon
private respondents who did not agree thereto.
“A compromise, once approved by final orders of the court
has the force of res judicata between the parties and should not be
disturbed except for vices of consent or forgery.” A compromise is
basically a contract perfected by mere consent. “Consent is
manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract.” A
compromise agreement is not valid when a party in the case has not
signed the same or when someone signs for and in behalf of such
party without authority to do so.
Viewed in light of the foregoing legal principles, the
conclusion is inescapable that private respondents are not bound by
the compromise agreement entered into by the union without their
consent. They have not waived their right to security of tenure nor
can they be barred from entitlement of their individual claims.
Since the Labor Arbiter found no evidence showing that
private respondents committed any illegal act during the strike,
petitioners’ failure to reinstate them after the settlement of the strike
amounts to illegal dismissal, entitling them to the twin reliefs of
reinstatement and back wages.
PCEA vs PCMC, 340 SCRA 383
The Union is the certified sole and exclusive collective bargaining
agent of all rank and file employees in Philippine Carpet
Manufacturing Corporation. Jonathan Barquin is a union member
who was hired by the company as casual worker
By virtue of Wage order No. 4 and 4-A the Union demanded
an across-the-board implementation, threatening legal action against
the company in the event that the said demand is denied. The
Company’s position is that the employees are not covered by Wage
order No. 4 and 4-A for the reason that nobody in the company is
receiving a salary of P145.00 a day. In the meantime, Jonathan
Barquin received a notice dated March 14, 1996 from the company,
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Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
advising him that his services were to be terminated effective at the
close of working hours on April 13, 1996. In lieu of the 30-day
notice requirement for his termination, he was placed on forced leave
status effective March 15, 1996 but was paid in full for the duration
of the said leave. The company justified Baquin’s separation from
the service as a valid act of retrenchment. While the Union averred
that the separation is tantamount to illegal dismissal resorted to by
the company to avoid compliance with the provisions of Wage Order
4 and 4-A.
Failing to resolve the issues in the mediation level, the
parties agreed to submit the case for voluntary arbitration. On August
3, 1996, the voluntary arbitrator ruled that Jonathan Barquin
(BARQUIN) was hastily dismissed to avoid compliance with Wage
Order Nos. 4 and 4-A, but held that he is not entitled to reinstatement
because he received his separation pay and voluntarily signed the
Deed of Release and Quitclaim and acquiesced to his separation. The
Court of Appeals on appeal affirmed the decision.
Issue: The only issue posed now concerns the reinstatement of
BARQUIN. In essence, the petitioners maintain that since both the
voluntary arbitrator and the Court of Appeals found that petitioner,
BARQUIN, was illegally dismissed, he is entitled to reinstatement as
a matter of right pursuant to Article 279 of the Labor Code.
Respondents, on the other hand, maintain that the consideration
therein was a fair and full settlement of the amount legally due to
BARQUIN who never alleged that he was physically threatened or
intimidated into signing the quitclaim.
Held: The petition is meritorious.
It is not disputed that the respondent company was guilty of
illegal dismissal in terminating BARQUIN’s employment. In holding
that although BARQUIN was illegally dismissed he was not entitled
to reinstatement, both the Court of Appeals and the voluntary
arbitrator upheld the validity of the Deed of Release and Quitclaim
that BARQUIN signed after concluding that he voluntarily signed
the same for the reason that the respondent company did not coerce
Page 133 of 149
or intimidate him into signing and receiving his separation pay, and
consequently ruled that he waived his right to reinstatement.
The SC said the validity of quitclaims executed by laborers
has long been recognized in this jurisdiction. Not all waivers and
quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement of the
claims of the employee, it is binding on the parties and may not later
be disowned simply because of a change of mind. Such legitimate
waivers resulting from voluntary settlements of laborer’s claims
should be treated and upheld as the law between the parties.
However, when as in this case, the voluntariness of the execution of
the quitclaim or release is put into issue, then the claim of employee
may still be given due course. The law looks with disfavor upon
quitclaims and releases by employees pressured into signing the
same by unscrupulous employers minded to evade legal
responsibilities.
In the present case, both the Court of Appeals and the
voluntary arbitrator erred in concluding that BARQUIN voluntarily
signed the Deed of Release and Quitclaim. Records reveal that the
respondent company informed BARQUIN that his services were
being terminated on the ground of retrenchment as the company was
constrained to reduce the number of its personnel “due to the
tremendous drop of production output since about the last quarter of
1994 up to the present”. However, this claim was rejected by both
the voluntary arbitrator and the Court of Appeals, which ruled that
the respondent company failed to prove that it was suffering from
actual poor financial condition and that it was “doubtful if the
retrenchment of one helper in the production department earning
P145.00 a day would avert losses of the company”. Instead, the
voluntary arbitrator found that the respondent company had an
ulterior motive behind BARQUIN’s dismissal and that only he was
singled out and retrenched by the respondent company. The
voluntary arbitrator went as far as saying that BARQUIN’s hasty
dismissal in the guise of retrenchment was a feeble attempt at
circumventing the law. 26 It was shown that BARQUIN was the
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Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
only employee earning P145.00 a day and was qualified to receive
the mandated wage increase granted by Wage Order Nos. 4 and 4-A.
An increase in his salary would cause a wage distortion in
the wage structure of the company, which would necessitate the
adjustment of the wages of its other employees. 27 It is therefore
reversible error to hold, despite such findings, that BARQUIN
voluntarily signed the quitclaim for the only logical conclusion that
can be drawn is that the respondent company feigned that it was
suffering business losses in order to justify retrenchment and
consequently enable it to terminate the services of BARQUIN in
order to prevent the wage distortion. Respondent company’s lack of
candor and good faith in informing BARQUIN that he was being
terminated due to a valid retrenchment and not because it sought to
avoid compliance with the mandated wage increases amounted to a
deception which led BARQUIN to the mistaken belief that there was
legal ground for retrenchment and prompted him to acquiesce to his
termination and sign the quitclaim. Verily, had the respondent
company not misled BARQUIN into believing that there was a
ground to retrench, it is not difficult to believe that he would have
thought twice before signing the quitclaim inasmuch there was no
reason for the termination of his employment.
Contrary to the assumption of both the Court of Appeals and
the voluntary arbitrator, the mere fact that BARQUIN was not
physically coerced or intimidated does not necessarily imply that he
freely or voluntarily consented to the terms of the quitclaim.
Moreover, as correctly pointed out by the petitioners, this Court has
ruled in Salonga vs. National Labor Relations Commission 32 that it
is the employer (respondent company) and not BARQUIN who has
the burden of proving that the quitclaim was voluntarily entered into
by him. 33 The Court of Appeals therefore erred in ruling that the
burden of proof to show that the deed of Release and Quitclaim was
signed and executed voluntarily was on BARQUIN.
BARQUIN’s consent to the quitclaim cannot be deemed as
being voluntarily and freely given inasmuch as his consent was
vitiated by mistake or fraud, we have no recourse but to annul the
same.
Page 134 of 149
Lecture on Labor Standards and Dispute Settlement
1. OVERTIME PAY
The most common is Overtime pay. The most common benefit on
top pf the regular basic salary. What is overtime pay? What is it for?
For work beyond 8 hours. You have to be clear on that. Even if the
normal hours of work is less than 8 hours, anything beyond that
regular hours of work but which is not exceeding 8 hours of work per
day is not overtime. Clear about that?
a) Ascertain the hourly rate
Let us say that an employee had 10 hours of work in a
particular day, that means 8 regular plus 2 overtime equals overtime
pay. For example, he earns P320/ day.
The most common mistake, and I see this year after year
after year, is they use the daily rate in computing the hourly overtime
rate. It is totally erroneous.
Assuming you have 2 hours of overtime, you cannot use this
daily rate, kasi kung meron kang ibang claim. The first thing that
you should do is divide the daily rate by 8, assuming 8 hours yung
regular time n’ya. You’ll get 40. Tama ba?
One important tip in taking computation, always identify
what you get after the formula, after the computation.
b) Determine what rate should be applied
So, for example, this. What is this P40? This is the hourly rate for
work within 8 hours, right? That the first thing you have. Now, you
know that you have to compute the overtime pay for 2 hours of
work. How would you do it? P40 per hour multiplied by how much?
It depends on the day, diba?
There are 2 overtime rates. One is 25% (OT for ordinary
day), the other is 30%.(for non-ordinary days)
So, before you even start computing overtime, determine
first what rate you are concerned with. If it’s a normal day, you can
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
apply 25%. What you can do is multiply immediately by 125%,
that’s one way, that’s a short cut. Bakit shortcut? Because the
product you have here is the total compensation for that hour. Hindi
lang yung overtime premium.
Ok, let’s do it the long way. Sometimes the long way is also
beneficial because you’re isolating the overtime premium. If you’re
asked for overtime pay, then you have to add the basic.
P40 multiplied by 25%, that’s 10. What is P10? Again, you
have to identify the product. What is that? That’s the overtime
premium. That’s not the overtime pay ha. This is the overtime
premium per hour. Overtime pay is the basic pay + overtime
premium. So you have to add this to P40, so you have P50 - this is
the hourly overtime pay. Hindi overtime premium ha, kundi
overtime pay, overtime pay. That incorporates the P40 per hour.
Kung shinort cut natin, kung P40 x 125%, doon din babagsak sa P50.
Shinortcut ko lang, mathematically, process lang ‘yun. Nothing
legal about this.
c) Multiply by the number of hours of overtime work
Now, after getting this, what do you do? You multiply by the
number of hours of overtime work. In this case, 2. What do we
have? You have P100. This is the total overtime pay for that
particular day. For 2 hours of overtime work.
Be careful about the question you are answering. If the question asks
for overtime pay, then just encircle and just write the overtime pay.
Huwag ninyong idagdag kasi kapag idinagdag ninyo, kapag tinignan
ng examiner . . . . assuming you have a simple computation . . . . let’s
say sa finals, kapag and hinahanap ko ay overtime pay lang, kapag
binigyan ninyo ako ng total compensation per day. Then I will
simply check the figures against the correct answer then kapag mali
yan, mali yan. Be careful about the question. If the question asks for
overtime pay, then you have to write this. If the question asks for
total compensation for the day, then you add this to P320 then you
get P420. That’s the total compensation for 10 hours of work on an
ordinary day.
Page 135 of 149
2. HOLIDAYS AND SPECIAL DAYS
Assuming . . . . OK. Lagay natin sa holiday. Wala nang
regular holiday and special holiday. We only have holiday and
special day. ‘Yun lang ‘yung 2 categories. Bakit parang nagulat
kayo? Wala na ‘yung distinction na regular holiday and special
holiday, wala. What we have is holiday and special day. Wala nang
regular holiday, wala nang special holiday. We only have holidays
and special days. We have 10 holidays and we only have 2 special
days. Plus the non-annual special days. What do we mean by non-
annual special days? Elections, although walang nakalagay sa
calendar natin this year, sa 2004. Hindi yan naka-kalendaryo, every
year wala yan, pinapasok lang. Like the announced EDSA
commemoration day. Hindi ‘yan holiday, that’s a special day.
You have to know the 10 holidays pero its easy if you know
the 2, kasi what are the holidays that we know that fall under
holidays? What are the 2 special days? December 31 and November
1. Last days of the year and All Saints Day, ‘yun lang. All other
holidays that we know are properly called holidays, not special days.
What is the importance of determining whether a day is a holiday or
an important special day? Holiday if unworked, you get the regular
pay. So assuming, we are using this P320. For that unworked day,
nasa bahay ka lang, natulog ka lang, you still get the P320. But a
special day, if unworked you get nothing. Kaya noong panahon ni
Presidente Ramos, ang lagi nyang excuse kapag may nagsasabi na
dapat may holiday ito para may long weekend for something,
sinasabi ni President Ramos, kawawa naman yung mga daily wage
earners because daily wage earners do not earn anything. Kapag
monthly ka kasi, hindi gaano material yung holidays dahil hindi
naman mababago yung monthly pay mo, diba? Kahit ilan pa yung
holiday for that given month. Yung sweldo mo ng February which
has 28 days will be the same as your salary for January and March,
diba? Kahit magkaiba yung number of day. So, for monthly paid
employees, wala ngang effect yan. May effect yan sa daily wage
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
workers or sa weekly paid employees because unworked special day
will not be compensated.
If the holiday is worked, that will be twice the regular wage. So,
P320, nagtrabaho ka, P640. What’s the rationale? Kung hindi ka
nga nagtrabaho may P320 ka na, e nagtrabaho ka, doble na. Ganoon
kasimple lang yun. Kung natulog ka, sumweldo ka na, e bakit ka pa
magtratrabaho? Kung pinagtrabaho ka pa, dapat bayaran ka pa ulit
of your pay for that day.
Special day. Let’s talk about that. Dapat ba twice? Hinde
kasi special day lang yan. So apply the OT premium of 30% to the
special day if workerd only.
overtime pay when worked on a holiday:
P640, how much is that in terms of hourly rate? P640
divided by 8 is P80. If you multiply P80 by the overtime premium,
not 25% because this is a holiday. The overtime premium is 30% for
a holiday. So, P80 by 30%, that means you’ll get P24. What is P24?
P24 is the overtime premium for work worked beyond 8 hours on a
holiday, in this case. So, to get the overtime pay per hour, you add
this, so you have P104. What is that amount? P104 is overtime pay,
that is not overtime premium ha. Overtime pay for work performed
beyond 8 hours on a holiday.
Ok . . . . you have 2 hours of overtime , , , , then you simply
multiply this by 2, and you’ll get P208. P208 is the total overtime
pay for 2 hours of overtime work on that holiday. And you add that
to the holiday pay, to the compensation for work performed on a
holiday of P640 to get the daily pay for that day. Any questions?
Q: Sir, P80 + P24 = P104 is overtime pay for work performed on a
holiday. That’s the hourly rate?
A: OO, kasi, hourly lang ang P80 e, diba? One hour lang yan e. 2
hours ang overtime mo. P80 multiply that by 2. Kaya kailangan you
have to identify. I receive answers in the examinations, nalilito sila.
Minsan nalilimutan nila i-multiply by the number of hours of
Page 136 of 149
overtime work, kasi nga hindi mo . . . nakakalimutan na kung ano na
yung nakuha mo sa dami ng computation. Dapat every step, once
you get an amount, identify what that amount is.
In rare years, April 9 may fall on a Good Friday or a Holy
Thursday. In which case . . . the Department of Labor issued a
circular . . . that will be equivalent, if worked, that will be equivalent
to 300%. Nagdoble and holiday. Isang beses lang mangyayari yan,
sa April 9 lang mangyayari yan. Imposibleng magdoble and pasko at
bagong taon diba? Imposibleng mangyari yan sa June 12,
Independence day and let’s say, Rizal day. Imposible yan. Kaya
lang nangyayari yan kasi Holy Week is movable and April 9 is close
to that period. Alam ninyo ba kung paano kumukuha ng holy week?
It’s dependent on the moon. It’s not decided by the Pope or the
Church pero tinitignan yan sa . . . I’m not sure about the cycle, but it
has something to do with the lunar cycle, so movable ‘yan. And
April 9 is masyadong close to that period. So, minsan nagpapatong
ang April 9 and either Holy Thursday or Good Friday, in which case
you have 2 holidays falling on the same day. Sabi ng Department of
Labor, dahil dalawang holiday ‘yan, if unworked, twice kaagad ang
pay mo. Kapag nagtrabaho ka, e di thrice. Logical. Bihirang-bihira
lang mangyari yan.
work on a holiday falling on a rest day
If the holiday falls on your rest day, what will happen? Start
with the holiday pay. Maghoholiday pay ka muna. So, you have
P640. The P640 and multiply that by 30% or 130% to get the daily
rate for work performed on a holiday which happens to be your rest
day.
If the holiday is January 1, nagkataon na ang January 1 falls
on a Thursdays and Thursday is your scheduled rest day, so again,
similar to the principle that we have applied with the overlapping of
April 9 and Holy Thursday or Good Friday, nag overlap yung dapat
ay non-working days mo. Dapat dalawang pahinga mo na yon, dapat
may non-working day ka sa January 1 and non-working day ka for
Thursday, nagkataon nag overlap. So, what do you do?
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Magooverlap din ang benefits. You compute the daily rate for the
worked holiday first and then you compute the 30% rest day
premium. Rest day premium is computed on a daily basis, hindi
hourly rest day premium yun. Hindi ka nagcocompute ng hourly rest
day premium pay. Any question about that? So ganoon lang yun,
magpapatong lang kayo. Unahin lang yung holiday and then
compute rest day premium.
Q: Sir, would it make a difference if the scheme of payment is
monthly?
A; It will. Why? Because . . . ano ang . . . . mahihirapan if you have
monthly pay? The difficulty is in determining the daily rate, diba?
Pinag-aawayan. Kasi in this case, we earn a certain amount of daily
rate. What if you are earning let us say P8574. Because of the
formula . . . this is by month and this is gross. How will you
compute the daily rate? Kasi, walang problema kung regular na
overtime, doon sa spread across the whole month kasi 24 and
number of hours a day lang yan. E what if, on that particular month,
isang araw ka lang nagovertime, 2 oras lang ang overtime mo. So,
kailangan mong kunin ang daily rate diba? What will be your daily
rate if you are given a monthly pay of P8574? Dito pumapasok ang
issue about the divisor. Saan mo ididivide yan? It depends on the
company policy. There’s no formula. There’s no legal formula for
computation of the daily rate for monthly paid employees. The only
requirement is that the monthly pay if divided by the divisor to get
the daily rate should not produce an amount lower than minimum
wage.
So, ano ang divisor mo? Pwedeng 30 days, in which case
even unworked days are paid. Ok lang yun. Or pwedeng bawasin
yung unworked day. So, you can have 24 days. So, nagiiba-iba yan.
The most common formula is to multiply this by 12 and use the
divisor:
Monthly rate x 12
Divisor
Page 137 of 149
I don’t think this will be asked in the bar examinations but
just so you’d know how to compute overtime pay for monthly paid
employees. You apply the divisor which is used by the company,
based on company policy.
Q: Will that divisor be the actual number of days worked by the
employee?
A: Not necessarily because some companies are paying their
employees even for days that are not worked. In which case, the
divisor may include unworked days.
Q: Sir, you said that the company can use any divisor . . . . .
A: Yes.
Q: . . . . .as long as when you divide the salary, you will come up
with an amount not less than the minimum wage. Sir, so they can
circumvent the law and use, put there like 20?
A: Well, hindi naman. Of course the divisor . . . nag-iiba-iba yung
divisor because of the days you deduct. So hindi pwedeng
magimbento ka. Nagiiba-iba lang kasi yung iba and dinededuct lang
lahat ng Sundays and holidays, yung iba idinededuct pati Saturdays.
Kaya depende nga on the company policy.
Multiply it by 12 atsaka ka gagamit ng divisor na ginagamit ng
company. And the divisor is sometimes determined by 365 days
minus the holidays minus the special days minus the 52 Sundays.
(question was asked but inaudible . . . )
A: No because you are computing the daily rate, iba ang usapan
kapag 13th month
Q: Sir, iba pa ba yung computation kapag “kinsenas”?
A: Kapag “kinsenas”, that’s monthly. You are being paid twice a
month because the law requires the employees be paid at least twice
a month at intervals not exceeding 15 days.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Q: Sir, so monthly paid ‘yun?
A: Monthly paid
Q: Sir, so again, of you’re weekly paid, iba na naman siya?
A: Mag-iiba na naman, kasi some weekly paid employees are paid
according to the number of days worked lang. So kapag nagabsent
ka, tatlong araw ka lang nagtrabaho for that week, kinocompute lang
yung tatlong araw, similar to daily paid workers. Theoretically, it’s
daily, at the end of the day babayaran ka na pero iniipon lang, pero
ang computation mo on a daily basis pa rin.
Minimum daily wage is P250 but there is and additional COLA. The
latest wage order provides for a COLA not for an increase in the
minimum wage. Just to make sure that by September you’ll know if
a new wage order is issued, I’ll just . . . . Yes?
Q: (sorry inaudible ulit but I’m assuming it is a question on a worked
holiday falling on a rest day with overtime – based on Atty.
Manuel’s answer)
A: O, Holiday and rest day. Magkano and holiday pay niya? P640
diba? Multiply by 30%. What do you get?
Q: P832 for the day
A: Times 130% na yan?
Q: Yes, Sir.
A: P832. So what is P832? This is your payment for the holiday
which is also your rest day. E may overtime ka ng 2 hours. Divide
this by 8, diba? Kasi this is the daily rate. Always divide by 8.
Always get the hourly rate in computing for overtime. Divide this by
8 so you will get how much? P104. What is P104? This is your
hourly rate for work performed on a holiday which is also a rest day.
So wala pang overtime. Magcompute ka ngayon. Times overtime
premium, which is 30%. P104 multiplied by 30% is P31.20. What
is P31.20? This is overtime premium for work performed on a
holiday which is also a rest day. Palaging ganoon para di ka
magkakamali ng add. You add the P31.20 to the P104, so what do
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you get? You get P135.20. What is P135.20? This is overtime pay
for work performed on a holiday which is also a rest day. Per hour,
hourly rate. How many hours of overtime do we have? 2. Multiply
it by 2 and you get the total pay for 2 hours of overtime for work
performed on a holiday which is also a rest day. Just add this to
P832 and then you’ll get the daily rate, the daily pay
Q: Sir, hindi ba pwedeng gawin ng employer na 10 hours regular
working day instead?
A: No, yung regular working day mo is 10 hours, ibig sabihin,
everyday may 2 hours kang overtime
Q: Sir, paano kung P400 per day pero 10 hours a day
A: That’s difficult kasi that’s a lump sum
(there’s a discussion that was inaudible)
A: If that is the case and I were acting as counsel for the worker, I’d
say, that is my daily rate and my daily rate for regular hours of work
is 8 hours, wala pang overtime yan. Kapag nag-away kayo . . . the
ambiguity is caused by the employer and that would be interpreted
against him. That should be the pay for normal hours of work
Before I proceed, please take note of Art 93 subpar c: work
performed on any special day shall be paid an additional
compensation of at least 30% of the regular wage of the employee.
Special holidays should be read as special day, marami nalilito dyan.
Where such holiday, meaning special day, 2nd day. Where such
holiday falls on an employee’s scheduled rest day, he shall be
entitled to an additional compensation of at least 50% of the regular
wage. So rest day = special day. Kapag special day kasi, plus 30%
ka, diba? Kapag rest day, plus 30% din. Pero kapag combined sila,
ginagawang 50%. Special day + rest day = plus 50%. Hindi 30%-
30%, plus 50%. Pero kapag holiday, compute the holiday pay first
than you apply the overtime rate for the special day
(Inaudible question asked by student)
A: Assuming wala pang overtime. The question is, how much will
an employee earn for work performed on a special day which
happens to be an employee’s scheduled rest day. It’s 150%. Huwag
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
kayo malilito so 150%, 130%, 125%. Is it simply a shortcut. Ang
overtime pay kasi is 25% , diba? Ginagawa mo yang by 125%.
Automatically idinadagdag mo na yung base. Shinortcut mo lang
yung procedure, hindi yon magic. HIndii yon mathematical magic.
Shinortcut ko lang kasi anyway idinadagdag mo din siya sa base pay.
125% or 130%
Q: Sir, if you work and it’s your rest day and special day, time 30%
diba? What if it’s a special day plus holiday tapos rest day mo pa?
A; That will only happen . . . dalawang holiday ‘yan kapag April 9.
April 9 is a holiday. Kapag sinabi mong special day . . . . . . . . . .kasi
ang special day dalawa lang, December 31 and November1, diba?
Hindi yan papatong sa holiday, on a normal year . . . . . Election mo
ay tumapat ng holiday, then cumulative yan, you compute. Multiply
it by 2, assuming this rate, multiply it by 30% for the rest day
premium, then you get the computation for the day
Again, the question is, special day ay tumapat sa holiday, magyayari
lang to, again, for declared special days, hindi yung November 1 or
December 31 kasi walang kalapit yung November 1 and December
31 na magoovrelap na holiday. Ok, nagdeclare si President
Macapagal-Arroyo ng holiday to celebrate something and that
happens to be a holiday which is also absurd because why would you
declare a special day on a day which is also a holiday. But assuming
that happens, assuming ang election ay fixed by law, and election is
a holiday. The computation, if it is worked, compute the 1st 8 hours
for the holiday then account for the rest day premium, multiply that
200%. After multiplying it by 2, that will be your base for
computing the 30% special day premium. Kapag nabuo mo na yung
special day and rest day, may 50% na idadagdag mo
Basta it’s a step by step process, dagdag lang kayo ng dagdag
May base pay ka, holiday times 2, rest day times 30 pa ulit, overtime
kung ano yung holiday rate mo multiply by 30%. May night shift
differential, times 10% only for the period covered
I-compartmentalize ninyo. Nagtrabaho ka ng ordinary day,
100% ang kita mo. Nagtrabaho ka ng holiday, 200% ang kita mo.
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Nagtrabaho ka ng holiday which is also your rest day, 230% ang kita
mo. Dagdag lang ng dagdag ng premium. So, ordinary day,
idinagdag mo yung holiday rate, idinagdag mo yung rest day rate, or
dinagdag mo yung special day rate, kinompute mo yung overtime
and then yung night shift differential
(inaudible question asked)
A: Yes, idadagdag. The 30% will be applied to your base pay. And
the base pay for a holiday, assuming it is worked, is 200%. So if the
holiday is a rest day, the 30% should be applied to the 200% na.
Hindi mo uunahin yung 30% saka mo imumultiply by 2, hinde
Q: Sir, paano kung nag-overtime tapos inabot hanggang 10:00, yung
25% pay tapos yung night shift differential . . . .
A : 35% ordinarily yun
3. NIGHT SHIFT DIFFERENTIAL
Night Shift Differential may complicate the computation.
Why? Because the overtime pay will now be computed in phases.
So, pwede kang magkaroon ng overtime work from 8 hours from 8
pm until 7 am the following day. In which case, iba yung
computation mo from 8 to 10, iba yung computation mo from 10 to
6, iba yung computation mo from 6 to 7. chop chop mo
Balik tayo sa P320 ha. Assuming itong 2 hours of work, and
schedule ng employee natapos yung 8 hours nya at 9 pm. 9pm
natapos and kayang 8 hours, Ok?
So the P320, the employee earned that by 9 pm. Nagtrabaho pa siya
until 11 pm. 2 hours of overtime. Magiiba na yung computation
natin. Bakit? Kasi from 9pm until 10 pm, you compute . . . ano ba
yung hourly rate? . . . hourly rate is P40 per hour, multiply by 25%.
So P10 + P40 = P50 per hour and since 1 hour lang yan, yung kinita
niya plus P50 lang. So, magkano yung kinita niya by 10pm? P320 +
P50. Now, 10 pm to 11 pm, meron na naman siyang overtime. So,
ito na yung gagamitin mo. P50 na overtime base pay niya + 10%
lang, what will you have? P320 + 50 + 55. So if you will now have
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
a difference of P5 for 9-10 overtime and for 10-11 overtime because
of 10% night shift
(inaudible question)
A; Hindi, hindi mo na idagdag tong P320. Sa principal s’ya
idadagdag. This accounts for the first 8 hours. Kapag dinagdag mo
yan dito tapos dinagdag mo ulit, parang holiday na yon, doble na.
P320 is for the first 8 hours, kita mo ng 9 to 10 ay P50, kita mo ng
10-11 ay P55. So P320 + 50 + 55. Remember, 50 is overtime pay
not just overtime premium, kasi overtime premium mo dito is P10
lang. . . . Yes?
Q: Sir, in that case, yung order you follow the . . . . . statement, it
will become . . . .P105 is your total overtime pay with night shift
differential?
A: That’s correct. Overtime pay with night shift differential. Pero
that’s not accurate, that might give the impression that the overtime
period is covered by night shift which is not true. Only half of the
overtime period is covered by the night shift provision
Q: What if the EE worked until 1 am and the next day is April 9?
A: O, that’s a complication, and that’s often asked in my classes.
What will happen? I think that in the computation of overtime pay,
you use the work day. What do I mean by that? The employer
cannot say hindi ka overtime kasi once lumampas na tayo ng 12, you
are starting a new day. No, as long as there is a continuity of work.
Nagsimula ka ng 8 am of one day, ang end of your work day is
7:59am of the following day. So, anything rendered within that
period is rendered within one day. And if that exceeds 8 hours of
work within that 24 hour work day, that should be considered
overtime pay, Kahit na lumampas na siya ng araw na calendar day.
However, for holidays, I think it is more beneficial for the employee
to consider the holiday pay starting 12mn specially if its Christmas
or New Year when you have to be at home by 12 midnight diba?
But there’s no legal provision applying to that special case.
Q: Sir, so in that case, sir, we are not sure of which base to use?
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A: Yes, that’s the confusion e, Will you use the base pay for April 8
or the base pay for April 9. April 9, holiday yun diba? So, sasabihin
mo holiday na yan, e di holiday pay na yan. Holiday rate na Yan
Q: Sir so, you can decide in favor of labor
A: In that case, I think it can be argued that way
Q: Sir, going to the other side, in fact an employee worked on April
9 up to 12 midnight upto the next day which it not a holiday . . .
Q: Then you do not use the ___?___computation for the worked
performed on April 10 because April 10 is not a holiday. Kaya
complicated yan. That can only happen if the company is operating
24 hours a day like hotels for example. But for ordinary factories
working under normal circumstances, the work day will fall under,
within the calendar day.
Q: Sir, what about if there are shifts and there is a change in
shifting? For example sir, your ordinary day, your first shift is from 8
to 2. From 8 to 4, and then your supposed to go back, ordinarily
you’re supposed to go back the next day pa. Pero sir for that . . .
inabutan ka ng change ng shift so instead of 8 ka the next day mag-
show up for work, you showed up at 2 am, so 2 to 8. Sir so what
happens there? It’s within the work day.
A: Yung natapos by 4? Natapos ka by 4, nagreport ka ng 2:00. are
you saying that will be considered overtime? Kasi yung shift mo
nag-start ng 8 e so matatapos yung work day mo at 8 am of the
following day. So pag nagtrabaho ka na kaagad at 2 am, I will say
that is overtime
Q: Sir, pwede bang sabihin naputol yung schedule. Yung work day
mo . . . . (blah blah)
A: I think you can argue it that way, pwede yung . Pero halimbawa,
may emergency lang, pinatrabaho ka pa, dahil wala yung ka-shift
mo, wala yung kapalit mo, I think that should be counted as overtime
pay. Because the idea is for work performed beyond 8 hours a day to
be compensated with a premium because it deprives you of the rest
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
that you should have after working for 8 hours. If that is the
rationale, then it should follow that work within the 24 hour work
day should be considered overtime.
Any questions on the computation? Basta do it step by step and you
will not have a hard time. Konting practice lang yan. AS long as
you know the rates
I will no longer discuss the meal periods no, you can just . . . . . . . .
Any questions on the computation? Somebody was asking about
wage distortions. We’ll discuss this mamaya, kapag bumalik na
yung nagtanong. There’s a question about offsetting, I will discuss
this later. Any other question?
Q: Sir not related to computation, sir for example, I’m a front desk
in a hotel natapos yung shift ko 2-10, tapos 10 hindi pa dumating
yung kapalit ko, can I refuse to extend?
A: As a general rule, overtime work cannot be compelled. Overtime
is not allowed. If you follow the law, it will only be allowed in
exceptional circumstances
Q: Sir, can you consider that as an exceptional circumstance, hindi
dumating yung kapalit mo?
A: if it will have an effect on , , , , may requirement yon diba? , , ,
Pwede siyang . . . . ano yan gas station?
Q: Hotel
A; Hotel. I don’t think it may qualify. But in most cases, hindi
naman ganoon kalaking violation if it can be considered a violation
4. WAGE DISTORTION
Q: Sir what about . . . . I don’t understand wage distortion
A: Ok, That’s important, you have to understand that.
You have employees A, B and C. Employee A is earning P300,
employee B is earning P400, employee C is earning P500 per day.
Bakit iba-iba ang sweldo nila? Kasi si A, 1 year pa lang, si B 3
years, si C ay 5 years na. So the wage gap between them is
accounted for by the gap in their years of service. Between A and B,
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ano ang difference mo? P100. That P100 is supposed to account for
the 2 years experience by B ahead of A. Kaya magkaiba. Between
B & C, you have a difference of P100 to account for the 2 years
difference, It may be dependent on the job and pay scale of the
company, assuming they have that.
Wage distortion as defined by law will only happen if there is a wage
order increasing the minimum wage. And it will not happen if the
wage order is applied across the board. Let’s give an example
A new wage order, Wage Order No. 1 is issued . . . ok, remember,
take not of the gap. The gap here is P100, the gap here is P100.
Wage Order No. 1 by the Regional Wage Board giving across the
board increases of P50 a day to employees covered. So this means
A, B & C are covered by the wage order. What will happen? Si A
ay P350, si B ay P450, si C ay P550. na-maintain yung gap na
P100? Yes. There’s still wage distortion, walang problem d’yan.
Unfortunately, most wage orders that will be issued now, will not be
across the board increases but will increase the minimum wage rate.
Assuming the minimum wage rate at the time Wage Order No. 2 is
issued is P350 per day. In the region where A, B & C are working,
A, B & C are employees of the same company ha, employees of the
same company. Ang sabi ng wage order, minimum wage is now
increased from P350 to P500. Generous, P150 ang increase
assuming. Ganyan ang ginawa nila. So what will happen? Is A’s
salary below the minimum wage rate? Yes, A’s salary is P350. The
new minimum wage rate is P500. P350 is lower than P500, diba?
Mag-iincrease ka from P350 to 500 so apektado ba si A? Yes.
Should A’s salary be increased? yes. Automatic ‘yan. A will now
be increased to 500. Si B? Is this salary below the minimum wage
rate? No .
But the wage order affects A, B and C’s salary scale. Before
P100 and difference ni A and B. Bakit P100? Kasi mas matagal si B
kay A. Ngayon pantay na sila, that’s not fair for B na pareho sila ng
sweldo. So there’s a wage distortion in this case, the wage gap of
100 is totally eliminated. The wage gap is totally eliminated.
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Between B and C what happened? The wage gap is reduced
by half. I would say that this is a wage distortion. I’ll argue that this
Is a substantial reduction, a severe contraction of the wage gap. If
it’s at least 50%. There’s no clear rule about that. In fact, I would
say, that if it is at least 50% then it is a severe contraction of the
wage gap. Is there a wage distortion here? Yes, there’s a wage
distortion here because there’s an elimination of the wage gap and
there’s a wage distortion here because assuming this will be upheld
later as the rule, at least 50% of the wage gap is eliminated. Severe
contraction, elimination. There is a wage distortion here.
Bakit na-distort? Kasi nawala na yung pagitan nila which accounts
for the years of service. Nabali wala na yung experience ni B at
yung experience ni C which was previously accounted for by the
difference in their salary rates. Because of the wage order, nasira
lahat yun, nadistort. That’s why you have a wage distortion. Should
that distortion be corrected? Yes, It there a way to correct it? The
law will not give us any formula. It is supposed to be negotiated by
the parties. ‘Yun nga ‘yung magulo sa batas e. Guguluhin mo yung
distortion tapos bahala na yung parties to decide. In most cases this
becomes the start of major disputes which may in some cases may
end up in strikes. Malinaw na ba yun? May wage distortion dyan.
Q: Sir, if there’s a wage distortion, the law requires that you do
something about it, it just doesn’t give you the outlet right?
A: The law says you have to negotiate for it. For the correction
Q: Sir, kasi yung wage order regional? So sir, for example, there’s
a bank and it has different branches and in one particular region
nagkaroon ng wage order so increase yung salary nila doon. For the
same position . . .
A: The same employer for the same position, will have different
rates. That’s OK, according to the Court, there’s no wage distortion
intra-region
Q: So, sir, there’s no compulsion to compel . . . .
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A: There’s nothing to correct because there is no distortion in the
first place. There is no distortion as defined by law. The distortion
may be internal to the company. So halimbawa, may Coca-Cola
driver, assuming the drivers are regular employees of Coca-Cola.
May planta ang Coca-Cola sa Valenzuela, Valenzuela is part of the
NCR. May planta ang Coca-Cola sa Meycauayan. Meycauayan is
part of Region 3. Magkaiba ang wage orders, magkaiba and regional
wage boards n’yan. Magkaiba and rate. Yung driver na naka-assign
sa Valenzuela may be earning higher than the driver who is assigned
to Maycauayan plant. Kahit pareho ang seniority level nila,
magkaiba yung sweldo nila. Is that distortion under the law? No
because distortion can only happen within a particular region. Hindi
ka pwede magcompare ng wages ng 2 employees even if they are
employed by the same employer if they are assigned to different
regions because they are covered by different wage orders and that is
precisely the rule for the regionalization of the determination of the
minimum wage. To account for the regional differences, but it may
be absurd na kapitbahay mo lang, Valenzuela and Meycauayan,
sabihin mo na 5 minutes away nandun ka na and yet you’re earning
differently. But if that will happen, that’s not a wage distortion
according to the court.
Again, wage distortion as defined by law will only happen if
there’s a wage order. So, a wage order triggers the distortion.
Assuming the negotiation did not produce settlement. What
is the logical next step? Assuming there’s a CBA. No, its not a
strikeable issue, it’s a grievance. It’s supposed to be a grievance to
be resolved through a grievance machinery in the CBA and if it is
not resolved by monetary computation
Kaya everytime na mag-iissue ng wage order, pinapadami lang ng
gobyerno and labor disputes dahil pinapag-away nila ang mga tao
5. OVERTIME AND UNDERTIME WORK
Let’s go back to overtime. There was one question about
overtime which I think should be discussed
Example, and pasok mo ay 8 am until 12 noon,1 hour lunch
break, lunch, again, until 1 pm, so naka ilang oras yun? 4. Diretso ka
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
hanggang 5 pm. Ito yung normal working schedule mo, 8 hours a
day. Bawas yung 1 hour, so 1 hour, bawas yan. 4 hours in the
morning, 4 hours in the evening or in the afternoon, Late ka na
dumating . . . eto yung weekly schedule mo … Monday dumating ka
ng 9am, Nahiya ka ngayon, late ako dumating, magtatrabaho ako
until 6 pm. Did you perform overtime work? No, 8 hours pa din.
Overtime work is not computed on the number of hours that exceeds
your work schedule. It is based, it is determined by the number of
hours that exceed 8 hours in your work day.
Halimbawa, Tuesday late na naman siya, 9am. Sabi niya,
hindi naman ako babayaran ng overtime, bakit mag-overtime ako?
So kakapalan ko na lang mukha ko, uwi na lang ako ng 5pm, hindi
na mahahalata yun, 1 hour. Wednesday, pumasok siya ng maaga,
marami siyang ginawa, nag-end s’ya ng 6pm. May overtime work
ba? Yes, from 5 to 6, that’s 1 hour overtime work.
Noong bayaran na, hindi siya binayaran ng overtime pay,
sabi ng employer, e kulang ka naman ng 1 hour dito e noong
Tuesday. 1 hour yang undertime. So hindi ka na namin babayaran,
quits na lang tayo. That’s not allowed. That’s prohibited. Why is
that prohibited? In effect if you will deduct from the employee the
equivalent of 1 hour here, the employee will still get something
because this is paid with a premium, so this cannot be offset with this
one.
The off-setting will not apply here because in the first place,
you do not have an undertime here. You do not have an overtime.
You have a _____?_____ that was compensated. Hindi yun mag-
aapply dito. There’s no undertime here. There’s no overtime. Ang
undertime you performed, you worked for less than your regular
number of hours.
Q: (inaudible)
A: Ok, forget about this, set this aside. Your regular work is from 8
am, your regular work is from 10 am to 12 noon, 1 hour lunch break,
tapos 1 pm ka ulit mag-resume and you will work until 4 pm. You
have 2 hours here in the morning and 3 hours here in the afternoon,
For a total of 5 hours. 5 hours ang normal hours of work. Ok lang
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ba yun? Yes because under the law, normal or regular hours or work
shall not exceed 8 hours per day, hindi sinabi na should be equivalent
to 8 hours per day.
What is the effect of this? Kapag nagtrabaho ka beyond
4:00, nagtrabaho ka until 7pm, you exceeded your regular work
schedule, but did you perform overtime work? Of course not. No
because overtime work should be anything in excess of 8 hours.
Ilang oras yun? 5 hours + 3 hours, 8 hours , walang overtime
Should you be compensated for the 3 hours? Yes, but not as
overtime pay. That is something that you should discuss and
negotiate with your employer. 5 hours lang ako dapat, e lagi akong
nag-eexceed ng hours, but that is not the statutory overtime work.
It’s compensable by the statutory overtime pay. In short, you will
not apply the 25% or 30% overtime rate.
Q: Sir, yung example na 5 hours, payable ng 320
A: 5 hours, 320
Q: yung 3 hours, divide mo ng 5 yung 320 times 3
A: But that is not statutory. You don’t have any statutory basis for
an automatic computation for the hourly rate for the 3 hours. So you
have to discuss that with you employer, but that’s a reasonable basis
for computing your compensation. Compute your hourly basis then
multiply it by 3. But what I’m saying is that it is not overtime and
that is not overtime pay
(inaudible question)
A: I will say there can be no offsetting. You have to pay the full
overtime pay. What will you do? Nalulugi ka na dahil lagging late
itong taong to? Tardiness can amount to habitual neglect of duties
which can amount to a valid ground for termination. Then I will not
advice, assuming I were counsel for the employer, I will not advice
automatic deductions of the salary that will be received by the
employee on account of tardiness, medyo delikado yun. That can be
considered as illegal deductions from wages
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
Q: Sir, for example, yung shift mo, something like 2 to 10 in the
evening and then may company policy na kung malate ka, they allow
you to make up for it, sir so for example you came in at 3 you go
home at 11 . . .
A: There should be night differential without overtime pay. That’s
clear, any work rendered between 10 and 6 should be compensated
by night differential. That’s independent of whether that period is
overtime work or regular hours or work. Walang connection. And
night differential is given for any work performed by any employee,
whether that employee is on permanent night shift work, whether
work is performed only for 1 day in a year. Basta’t nagtrabaho ang
isang tao between 10 in the evening until 6 the following morning,
may night shift differential yan na 10%, kahit hindi yan ang talagang
oras nya, nagkataon lang na may ni-rush sya umabot siya ng late. I
encountered one employer saying na hindi naman talaga night shift e,
wala siyang night shift differential. Of course not, any work
performed between 10 and 6 should be given night shift differential.
Q: Sir, clarification, Sir you said kanina na you cannot deduct kapag
nalate ka?
A: I will not advice it. Why? I will not advice it because I think that
employer is exposing itself to a possible charge of illegal deduction
of wages. Kung ako ang counsel for the employer, 1 hour, magkano
ba ang madededuct mo dyan? Konti lang yan, that would not matter,
kung siya i-sanction mo, verbal reprimand, warning, written
reprimand, 1 day suspension, then 5 days suspension then possibly
15 days suspension. Tapos naka-establish ka ng pattern, that can be
gross and habitual neglect which can be a ground for termination.
Q: (inaudible question)
A: The office of the job contractor? . . . .as long as you are working
within the region. It’s the place of work not the place of business of
the employer , it’s the place of work
Another point about overtime work. Overtime work without
the consent of the employer is not compensable. Hindi ka pwedeng
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mag-overtime lang ng overtime dahil nag-iipon ka. Gusto mong
bumili ng cellphone, sige mag overtime ako nag mag-overtime.
Management can refuse to pay that. If you cannot show that you
have been authorized to render overtime.
Q: Sir, for example, in again, your work is until 5 in the afternoon.
However, before leaving, you have to perform certain duties. For
example sir, stacking everything. What sir, what if you were able to
do that but sir in excess na of 8 hours?
A: That should be considered overtime. Some employers would
have the policy of paying overtime that will only exceed 30 minutes
Q: That’s valid sir?
A: I think yes, It’s reasonable, kasi medyo mahirap din e. It may be
tedious to compute overtime pay per minute. Nag-exceed ako ng 15
minutes therefore may 15 minutes overtime pay ako, I don’t think
that’s reasonable.
(inaudible question)
A: that was asked earlier and answered earlier
The general rule, if you follow the law, overtime can only be
compelled under exceptional circumstances. But some employees
would readily do it diba? The Employees would be willing to render
overtime work
There are some cases concerning the requirements, the
evidentiary requirement for claiming ng overtime.
If you were the employee and you say that you have not
been paid the minimum wage, the burden is on the employer to show
that you have been paid the minimum wage. Because it’s a negative
statement, it’s a negative claim. You cannot prove a negative claim.
Hindi mo pwedeng sabihin hindi n’ya ako binayaran, ipoprove ko na
hindi n’ya ako binayaran. Hindi ka nga binayaran e what proof do
you have? There employer would now have the burden to prove
payment. An in fact, this rule applies to any kind of payment
However, if it refers to overtime work, it is not automatic
that the employer would have the burden of proving that overtime
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
pay was not paid. Why? Because the employee must first prove that
overtime work was rendered. Because it is beyond regular, beyond
the normal hours of work. So kailangan mo ipakita na on this date I
have rendered 2 hours of work, this is unpaid. Only after you have
proved that you have rendered overtime work. Only after you have
claimed that you have not been paid that the burden will be shifted to
the employer to prove payment. What do you need? You need, if
you have daily service reports, if you’re using a Bundy clock, you
can show that as evidence. Once you’ve shown your schedule, the
employer would now have the burden of proving that payment was
made.
In one case, there was a dispute about the schedule of the
employee. Nag-settle sila na and schedule in employee ay from 5 am
until 8 hours after. So ang tanong ngayon, kailangan mo pa bang i-
prove ng employee and entitlement niya to nigh shift differential?
Hindi na, kasi automatic na yun e. Hindi yan kagaya ng overtime
naman na you have to prove overtime work. Kasi once you have
shown that your schedule is not disputed by the employer, that your
regular work will cover work rendered after 10 pm and before 6 am,
then automatic na may bight shift differential. So nag-iiba-iba yun.
For claim for unpaid wages, employer has the burden. For a
claim for unpaid overtime pay, burden is first on the employee to
show that overtime work was rendered and only then will the burden
be shifted to show payment for the overtime work. But for night
shift differential, if it has been established that the employee’s
regular work schedule will cover the period between 10 pm and 6am
the following day, then the employee need not prove anything for the
claim of night shift differential because it’s automatic. Anything
rendered between 10 and 6 should be given 10% night shift
differential.
Q: Sir going back . . . .can the employer compel the employee to
render service beyond the 5 hours but not lead to overtime?
A: If you look at the law, it is technically not compulsion for
overtime work because there is no overtime work. But if you look at
it at the point of view of contractual law, of the law on Obligations
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and Contracts, ang pinagusapan natin 5 hours lang ako e, hindi mo
ko pwedeng pilitin na dapat 8 hours. Kasi yun yung work schedule
na pinagusapan natin e. you are paying me for 5 hours, why do you
now force me to work for 8 hours? What is the practical effect of
this? The employee can justly refuse and the just refusal will not be
a ground for disciplinary action, it is as simple as that. Kapag
nagpapilit ka, sorry ka na lang, diba? Ano pang remedy ang
mahihingi mo e nagtrabaho ka na? Nagpaplit ka na?
But I think the more important question will come in when
the employee refuses the order to render overtime work or in this
case to render 3 hours of work beyond the regular schedule of the
employee, which Is only 5 hours per day. and such refusal is now
being used by the employer as a ground for termination. Ibang
usapan na yon. I will cite the provision prohibiting compulsion of
overtime work, and I will say that the refusal of the employee is
justified. And if It is justified, you cannot use that as a ground fro
disciplinary action
6. Jurisdiction
Q: I’ll ask a question not related to labor standards, Sir, about
jurisdiction, When it comes to money claims, Sir, the jurisdiction of
the Labor Arbiter and the other person . . . .
A: The Regional Director
Q: Sir, who has jurisdiction over money claims?
A: Over money claims, you have a P5000 limit per employee’s
claim. Beyond P5000, the Labor Arbiter . . . . ok, lets start with the
basics.
A money claim is a simple claim for unpaid benefits. It is not a
termination dispute. If it arose out of a termination, the employees
are asking for reinstatement not simply asking for unpaid wages and
benefits. Yun ang money claim. As a general rule, the Labor
Arbiter will only have jurisdiction over termination disputes and not
over money claims, However, if the money claim of the employee
exceeds P5000, that is per employee and not per complaint, kasi
pwedeng 5 employees sa isang complaint, at ang aggregate amount
nila is P10,000, you have to know the individual complaint, the
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
individual claim. Per employee, P5000 is the limit, beyond P5000,
the Regional Director does not have jurisdiction, jurisdiction is now
with the Labor Arbiter. However, if . . . ok, this issue between Art.
128 and Art. 129 of the Labor Code. Art. 128 speaks of the
enforcement and visitorial powers of the Secretary of Labor. Art.
129 speaks of the dispute regarding money claims and the
jurisdiction of the Regional Director.
What is the difference? Art. 128 is visitorial, Art. 129 is
adjudicatory. Adjudicatory - you have a case, you have a complaint
filed, you have to decide. The P5000 limit applies to the
adjudicatory powers under Art 129. It will not apply to the visitorial
and enforcement powers under Art 128. What do we mean by that?
Nagpa-inspect ka, and inspection is pursuant to the visitorial and
enforcement powers of the Secretary of Labor which can be
exercised through duly authorized representatives, specifically the
Regional Offices, the Regional Director and the representatives of
the Regional Director. Nagpadala na ng inspector, a Labor Inspector
Officer, sa isang company. Nag-report yung inspector, ah maraming
hindi nababayaran ng minimum wage ditto. At ito and computation
ng unpaid wage from the start of the effectivity of the new wage
order. Noong tiningnan mo, yung claim ng . . . yung unpaid benefits
to the employees, ang average nila is P8000.
Who has jurisdiction? The Regional Director or the Labor
Arbiter? The Regional Director will still retain jurisdiction, even if
the claim per employee exceeds P5000. Why? Because this is Art.
128 and not under Art. 129. And Art. 128, the enforcement and
visitorial powers of the Secretary of Labor which can be exercised
through the Regional Director is not limited by the P5000 limit. Are
we clear about that? Kapag nag-inspection ka, kapag visitorial-
enforcement powers, wala yung P5000 limit, kahit P25,000 yan per
employee, Regional Director pa din and may jurisdiction. Is that
clear? Read Art 128 and 129. Doon mo makikita how it is worded,
P5000 limit is applicable only to the adjudicatory powers, not for
visitoriaL and enforcement powers.
So, kung may violation ka, may union kayo, ayaw mo sa
Labor Arbiter, dahil wala kang tiwala sa NLRC, pa inspect ka. Mag-
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request ka ng inspection, mas madali sa Regional Office. Huwag
kang mag-file ng complaint sa Regional Office kasi kapag nagfile ka
ng complaint, adjudicatory yan. Magpa-inspect ka, mag-request ka
ng inspection at bantayan mo yung inspector, kapag hindi mo
binantayan, wala kang makukuha. Are we clear about the
distinction? The applicability of the P5000 limit?
Once there is a claim for reinstatement, it ceases to be a simple
money claim. It becomes a termination dispute. So, regardless of
the amount of the money claim involved, it is a termination dispute
under the jurisdiction of the Labor Arbiter. The Regional Director
does not have any jurisdiction. Pero madalas, kapag merong
complaint, nagcoconciliate sila, kapag walang nangyari, atsaka lang
nila ipapasa sa Labor Arbiter.
7. BONUSES AND BENEFITS
Q: Sir, what is the nature of the Service Incentive Leave?
A: The Vacation Leave and Sick Leave we know, are not statutory
benefits. They are additional benefits given out of practice in the
Phils. Pero wala yun. So if you work in a company which does not
give its employees 15 days sick leave ad 15 days vacation leave, the
company Is not violating any law. What should be given is just 5
days Service Incentive Leave.
Q: Sir, for example you have 15 days vacation leave and 15 days
sick leave . . .
A: Wala ka nang service incentive leave
Q: Sir, after 5 years, binawasan naging 10 . . .
A: Ah no, that’s diminution
Q: Is that ok, sir?
A: No, of course not. Once you have given benefits, you cannot
withdraw those benefits.
Q: Sir, is it the same, sir, if the company pays 15h month pay, you
cannot withhold the . . . . .?
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
A: It depends if the 15th month pay has become a policy of the
employer which is not dependent on the amount of profits earned for
a year.
Q: Sir, if it depends?
A: If it depends, then it will be in nature of a bonus and unless you
can show a pattern that they make it a clear company policy, giving
15th month pay to the employees, then it will remain a bonus which
is given not out of obligation. So, it cannot be demanded as any
other benefit.
Q: Sir, clarification regarding the bonuses, what happens if you are
able to prove a pattern and yet as in this case, there’s a receivership
problem, so sir what happens?
A: The problem with bonuses is that, in the first place, it is not a
statutory right. It is mainly given out of the generosity of the
employer. And it is given because of profits, diba? You will not
give bonuses if you have not earned profits. Yun yung simula. But
if it has become a policy of the employer, meaning you are now
expecting that as part of your compensation, then it becomes part of
your compensation package, which cannot be withdrawn. However,
I think it will be reasonable to say that if the company really cannot
afford it, the bonus, then the failure of the company to give the bonus
because it is in such a financial state that it cannot give such bonus, I
don’t think the company should be penalized for that. I don’t think
that will not be reasonable. As long as the company is paying 13th
month pay. The 13th month pay, ke-kumita ka or hindi, ke-lubog ka
na, kailangan mo magbayad niyan. That’s not based on profit, that’s
a statutory benefit. But still the general ruling if it has become a
company policy, it cannot be withdrawn
Q: Sir, I haven’t read this particular Department Order, D.O. No 18,
sir . . . . but does it have any bearing at all?
A: I just got D.O. No. 10 last week, I had a copy last . .. . Ok, the
only thing here is the new, supposedly the new rules on sub-
contracting which replaced D.O. No. 10 which repealed D.O. No. 3.
Page 147 of 149
I had a copy about 2 weeks ago and had a brief time to go over it. I
scanned it and my general impression, I might be wrong, I have to
read it provision per provision. Somebody in the office is doing the
comparison. My impression is that it retained, it simply retained the
good provisions of DO 10 and deleted the bad provisions. What are
the bad provisions? The enumeration in Sec. 6. Yun yung
natanggal, yung requirement of registration, nandoon pa din, co-
terminous contract requirement and contract of service provision.
So, mukhang wala naman gaanong problema. I did not notice any
particular provision that makes a new rule, mukhang wala namang
ganoon. Konti lang yun, maikli lang, mas maikli sa DO 10, mga 5
pages. I don’t have a copy . . .. next week
Q; . . . .does employer have the right to diminish benefits?
A: No because, I answered that question, considering the absence of
any provision giving such right kasi . . . the question is does the
employer have the right? If you say yes, you have to point out a
particular provision. But there is no such provision
Q: Sir so dapat negotiate that with the employee
A; it cannot be negotiated and the employees may waive some
benefits. The question of the validity of the waiver will be a
different issue
Q:(inaudible question again)
A: Yes, some employees would prefer o leave. Why? E makukuha
nila yung separation pay nila, diba? Another factor, staying in the
company will reduce benefits. Some are saying it’s a balance
between the right to security of tenure and the right to reasonable
benefits. I would think that some employees would prefer to be
terminated and in many cases termination of employees with the
corresponding payment of the separation pay may be beneficial to
the employees rather than stay in the company and receive reduced
benefits and be uncertain on what will happen later on, diba?
Did I assign the case of PAL, the dispute which happened in
1998, about the referendum by Erap? May referendum sila,
LABOR LAW REVIEWER
Ateneo Law 2003, 2nd Semester
Atty. Marlon Manuel
nagkaroon ng suspension ng CBA for 10 years. May group of
employees na nagcontest niyan, umakyat sa Supreme Court yung
petition. Ok, I don’t have a copy of that case right now. The
ponente is the dad of former Secretary of Labor Quisumbing, Justice
Quisumbing. The Court upheld the validity of the waiver, the
validity of the suspension of the CBA for 10 years. Essentially, the
Court said that the employees agreed to it and definitely the 10 year
suspension should apply. That the last portion of the decision, before
the dispositive portion is what is nice because it is totally erroneous.
Justice Quisumbing said, in lieu of the 10 year . . . . . there’s one
issue, if you uphold the validity of the 10 year suspension of the
CBA, ibig sabihin niyan, wala kang freedom period for 10 years.
Kasi ang freedom period doon pa towards the end of the CBA, of the
5 year period. E kapag sinuspend mo yang CBA, ibig sabihin, 10
years na walang pwedeng maka-challenge sa status ng incumbent
Bargaining Agent. Then that may be used by company unions.
Mag-C-CBA sila then mag-strike sila, madedelay yung CBA for 20
years and for 20 years walang pwedeng pumasok na ibang union.
That will work for the company. So problema yan. How did Justice
Quisumbing answer that? The good Justice said, I’m being sarcastic,
Justice Quisumbing said the 5 year representation period is in the
meantime held in abeyance. Hindi tumatakbo yung 5 year
representation period. Anong kalokohan yan? The law is clear,
representation is limited to 5 years. That’s the term of the CBA with
regard to representation aspect. Yan ang mahirap sagutin doon sa 10
year suspension kasi the 10 year suspension affects the 5 year
representation term. That is an argument against upholding the
validity of the suspension. Ginawa nila, binaliktad nila, inupheld
nila muna atsaka na lang ginawaan ng paraan yung 5 years. At ang
sinabi, held in abeyance. Lokohan yon diba? Held in abeyance. If
you’ll suspend the CBA, you’re holding in abeyance the 5 year
representation period. In effect, you are prolonging the status of the
incumbent bargaining agent. For the period you are suspending the
effectivity of the CBA A ___?___ doctrine. and that might be asked
in the Bar Examinations. You read that case, that might be asked in
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the Bar Examinations. Do you trust the examiners to abide by that
rule on cut-off?
8. EMPLOYER-EMPLOYEE RELATIONSHIP
Q: Sir, for example, in hotels, the services in the hotel, diba they
should be considered . . .
A: Regular, yes. Why? It’s part of he service that the hotel gives to
the guests.
Q: Sir, what if they are not considered as regular employees? Who
will you file the case against?
A: One way is to ask the union to do it and for the union . . . it’s
difficult kasi for the _____?____ to file the case e. So, one way . .. .
of addressing that issue and we have done this, not only for the
_____?_____ but also for valet parkers, for example, is for the union
to claim that these employees should be covered by the CBA being
regular employees. If the company refuses, then the union will file a
complaint
Q: Sir, what if the union itself doesn’t want to recognize these
people as part of the CBA?
A: Then the employees should act on their own. They should file a
case against the company for non-payment of benefits provided in
the CBA
Q: Sir, do they file a claim against the union?
A: No, of course not. The union is not obliged to give them
anything. If they are not members of the union, they cannot demand
anything from the union especially since the company is not
recognizing them and the union is also not recognizing them as part
of the bargaining unit.
Q: Sir, yung taxi drivers and jeepney drivers on the boundary
system, sir. Are they always considered employees or are there
times when they can be considered as mere lessees of the vehicles?
A; If you base your answer in Dinglasan, which was reiterated in a
2001 case. May bagong case, 2001. I included that in your case
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Atty. Marlon Manuel

diba? The court will tell you that the drivers should be considered
employees, so you can cite that if that is asked in the Bar
Examinations, I don’t think however that Dinglasan should be
applied s a general rule. I think you still have to examine the
relationship between the operator of the taxicabs and jeepneys vis-à-
vis the work of the employee concerned, of the worker. Kung wala
naman talagang control, I don’t think may control, wala naman
talaga e, even in Dinglasan, I don’t think may control of the worker
over the conduct of the work of the employee. The schedule in itself
will not amount to control over the means of work. So I don’t think
that’s a good decision but you still have it and it has been reiterated
very recently so . .. . I did not include Dinglasan but I think I
included something that reiterated Dinglasan . . . that’s why I did not
include Dinglasan
In fact, hindi ko na nga dinidiscuss yan dati e pero last year may
lumabas . . . I believe that . . . . I’ll give you the citation . . . I have it
in my 1st year, 1st sem list, so if you get hold of a copy of the 1st year,
1st sem list, then check or you can just read Dinglasan, it just
reiterated Dinglasan.

GOOD LUCK!!!