Labor

LABOR LAW 1 | ATTY.
DISINI | 3A 2010-2011 NOTES

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PART I: INTRODUCTORY MATERIALS

SECTION 1. LABOR LAW IN GENERAL

1.01 Labor Law Defined

LABOR LAW: law governing the rights and duties of the employer and the
employee with respect to the terms and conditions of employment, and with
respect to labor disputes arising from collective bargaining respecting such
terms and conditions

1.02 Law Classification (3 Branches)

LABOR STANDARDS LAW: sets out the minimum terms, conditions and
benefits of employment that employers must provide or comply with and to
which employees are entitled as a matter of legal right.

Labor standards, as defined by jurisprudence, are the minimum
requirements prescribed by existing laws, rules and regulations relating to
wages, hours of work, cost-f-living allowance, and other monetary and
welfare benefits, including occupational, safety and health standards
(Maternity Childrens Hospital v Secretary of Labor, GR No. 78909, June 30,
1989).

LABOR RELATIONS LAW: defined the status, rights and duties, and the
institutional mechanisms, that govern the individual and collective
interactions of employers, employees or their representatives.

WELFARE LAWS (SOCIAL LEGISLATION): laws that provide particular
kinds of protection or benefits to society or segments thereof in furtherance
of social justice.

*SOCIAL JUSTICE: the aim, reason and justification of labor laws.

Cases (Labor Standards)
Batong Buhay Goldmines, Inc. v De La Serna (312 SCRA 22)
Labor standards refers to the minimum requirements prescribed by existing
laws, rules and regulations relating to wages, hours of work, cost of living
allowance and other monetary and welfare benefits, including occupational,
safety and health standards.

Labor standards cases are governed by Article
128(b) of the Labor Code.

Pearanda v Baganga Plywood Corp. (489 SCRA 94)
Article 82 of the Labor Code exempts managerial employees from the
coverage of labor standards. Labor standards provide the working
conditions of employees, including entitlement to overtime pay and

premium pay for working on rest days. Under this provision, managerial
employees are those whose primary duty consists of the management of
the establishment in which they are employed or of a department or
subdivision.

1.03 Basis for Enactment of Labor Law

1. 1987 CONSTITUTION

ART. II. SEC. 5: The maintenance of peace and order, the protection of
life, liberty and property and promotion of the general welfare are
essential for the enjoyment by all the people of the blessings of democracy.

ART. II, SEC. 18: The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their
welfare.

ART. XIII, SEC. 1: The Congress shall give highest priority to the
enactment of measures that protect and enhance the right of all the people
to human dignity, reduce social, economic and political inequalities, and
remove cultural inequities by equitably diffusing wealth and political power
for the common good.

To this end, the State shall regulate the acquisition, ownership, use and
disposition of property and its increments.

Cases (Police Power)
CMS Estate, Inc. v SSS (132 SCRA 106)
The SSS Law implements the general welfare mandate of the Constitution
and constitutes a legitimate exercise of the police power of the State, to
which the principle of non-impairment of the obligation of contract is not a
proper defense. It was enacted pursuant to the policy of the government to
develop, establish gradually and perfect a social security system which shall
be suitable to the needs of the people throughout the Philippines, and shall
provide protection against the hazards of disability, sickness, old age and
death (Sec. 2)

LABOR LAW 1 | ATTY. DISINI | 3A 2010-2011 NOTES

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1.04 Sources of Law

A. Labor Code and Related Special Legislation (including
Implementing Rules)

Cases
Mariveles Shipyard Corp. v CA (415 SCRA 573)
Petitioner cannot evade its liability by claiming that it had religiously paid
the compensation of guards as stipulated under the contract with the
security agency. Labor standards are enacted by the legislature to alleviate
the plight of workers whose wages barely meet the spiraling costs of their
basic needs. Labor laws are considered written in every contract.
Stipulations in violation thereof are considered null. Similarly, legislated
wage increases are deemed amendments to the contract. Thus, employers
cannot hide behind their contracts in order to evade their (or their
contractors or subcontractors) liability for noncompliance with the statutory
minimum wage.

B. Contract (Civil Code)

ART. 1305: A contract is a meeting of minds between two persons
whereby one binds himself, with respect to the other, to give something or
to render some service.

ART. 1306: The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order or public
policy.

Cases
Kasapian ng Malayang Manggagawa sa Coca-Cola v CA (487 SCRA
487)
The MOA, being a contract freely entered into by the parties, now
constitutes as the law between them, and the interpretation of its contents
purely involves an evaluation of the law as applied to the facts herein.

C. Collective Bargaining Agreement

BOOK 5, RULE I, SEC. 1 (J): CBA refers to the contract between a
legitimate labor union and the employer concerning wages, hours of work,
and all other terms and conditions of employment in a bargaining unit.

Cases
DOLE Phils., v Pawis ng Makabayang Obrero (395 SCRA 112)
The CBA is the norm of conduct between the parties and compliance
therewith is mandated by the express policy of the law.

D. Past Practices (Company Practices)

Requisites:
1. Freely, voluntarily and continuously given within a considerable
length of time
2. Not just a single instance (not granted only once)
3. Should have been done over a long period of time and must be
shown to have been consistent and deliberate
4. Not be by reason of a strict legal or contractual obligation, but by
reason of an act of liberality on the part of the employer

Cases
Arco Metal Products Co. v Samahan (554 SCRA 111)
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had
adopted a policy of freely, voluntarily and consistently granting full benefits
to its employees regardless of the length of service rendered. True, there
were only a total of seven employees who benefited from such a practice,
but it was an established practice nonetheless. Jurisprudence has not laid
down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary
company practice.

Thus, it can be six (6) years,

three (3) years, or even as
short as two (2) years.

Petitioner cannot shirk away from its responsibility
by merely claiming that it was a mistake or an error, supported only by an
affidavit of its manufacturing group head.

McLeod v NLRC (512 SCRA 222)
That at one time PMI reimbursed McLeod for his and his wifes plane tickets
in a vacation to London

could not be deemed as an established practice
considering that it happened only once. To be considered a "regular
practice," the giving of the benefits should have been done over a long
period, and must be shown to have been consistent and deliberate.

Davao Fruits Corporation v Associated Labor Union (225 SCRA 562)
The Supplementary Rules and Regulations put to rest all remaining doubts
as to the computation of the 13
th
months pay. Yet, DFC freely, voluntarily
and continuously computed and paid the 13
th
month pay including its items,
which were supposed to be excluded, payments for sick/vacation/maternity
leave; premiums for work done on rest days and special holidays; and pay
for regular holidays.

Samahang Manggagawa etc v NLRC (295 SCRA 171)
No benefits or privileges previously enjoyed by petitioner union and the
other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent
had granted an across-the-board increase pursuant to Republic Act No.
6727, that single instance may not be considered an established company
practice.

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American Wire and Cable Daily Rated Employees Union v American
Wire and Cable Co., Inc. (457 SCRA 684)
The giving of the bonus should have been done over a long period of time,
and must be shown to have been consistent and deliberate. The 35%
premium pay, notwithstanding the fact that it was deliberately given in
excess of that required by law, did not ripen into a company practice on
account of the fact that it was only granted for 2 years and with respondent
corporations express reservation that it cannot continue to grant the same
in view of the companys current financial situation.

Pag-asa Steel Works, Inc. v CA (486 SCRA 475)
To ripen into a company practice that is demandable as a matter of right,
the giving of the increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of liberality on the part of the
employer. Hence, even if the company continuously grants a wage increase
as mandated by a wage order or pursuant to a CBA, the same would not
automatically ripen into a company practice. In this case, petitioner granted
the increase under Wage Order No. NCR-07 on its belief that it was obliged
to do so under the CBA.

E. Company Policies

Cases
Suico v NLRC (513 SCRA 375)
Employers are allowed, under the broad concept of management
prerogative, to adopt company policies that regulate all aspects of personnel
administration including the dismissal and recall of workers.

Company policies or practices are binding on the parties. Some can ripen
into an obligation on the part of the employer, such as those, which confer
benefits on employees or regulate the procedures and requirements for their
termination.

China Banking Corporation v Borromeo (440 SCRA 622)
Company policies are generally binding and valid on the parties and must be
complied with until finally revised/amended unilaterally or preferably
through negotiation by competent authority unless shown to be grossly
oppressive or contrary to law.

Maneja v NLRC (290 SCRA 603)
Company personnel policies are guiding principles stated in broad, long-
range terms that express the philosophy or beliefs of an organizations top
authority regarding personnel matters. They deal with matters affecting
efficiency and wellbeing of employees and include, among others, the
procedure in the administration of wages, benefits, promotions, transfer and
other personnel movements, which are usually not spelled out in the
collective agreement. The usual source of grievances, however, is the rules
and regulations governing disciplinary actions.

1.05 Law and Worker

Cases
Amkor Technology v Juangco (512 SCRA 325)
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be expected that every labor
dispute will be automatically decided in favor of labor. Management also has
its own rights which, as such, are entitled to respect and enforcement in the
interest of simple fair play.

Cebu Royal Plant v Hon. Deputy Minister of Labor (153 SCRA 38)
Bias in favor of labor: We take this opportunity to reaffirm our concern for
the lowly worker who, often at the mercy of his employers, must look up to
the law for his protection. Fittingly, that law regards him with tenderness
and even favor and always with faith and hope in his capacity to help in
shaping the nation's future. It is error to take him for granted. He deserves
our abiding respect. How society treats him will determine whether the knife
in his hands shall be a caring tool for beauty and progress or an angry
weapon of defiance and revenge. The choice is obvious, of course. If we
cherish him as we should, we must resolve to lighten "the weight of
centuries" of exploitation and disdain that bends his back but does not bow
his head.

1.06 Labor Case

Cases
Enriquez v BPI (544 SCRA 593)
While it is true that rules of procedure are intended to promote rather than
frustrate the ends of justice, and the swift unclogging of court dockets is a
laudable objective, it nevertheless must not be met at the expense of
substantial justice.

This Court has time and again reiterated the doctrine
that the rules of procedure are mere tools aimed at facilitating the
attainment of justice, rather than its frustration. A strict and rigid
application of the rules must always be eschewed when it would subvert the
primary objective of the rules, that is, to enhance fair trials and expedite
justice. Technicalities should never be used to defeat the substantive rights
of the other party. Every party-litigant must be afforded the amplest
opportunity for the proper and just determination of his cause, free from the
constraints of technicalities.

Considering that there was substantial
compliance, a liberal interpretation of procedural rules in this labor case is
more in keeping with the constitutional mandate to secure social justice.


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Smart Communications v Astorga (542 SCRA 435)
Contrary to the CAs ratiocination, the RTC rightfully assumed jurisdiction
over the suit and acted well within its discretion in denying Astorgas motion
to dismiss. SMARTs demand for payment of the market value of the car or,
in the alternative, the surrender of the car, is not a labor, but a civil,
dispute. It involves the relationship of debtor and creditor rather than
employee-employer relations.

As such, the dispute falls within the
jurisdiction of the regular courts.

Emmanuel v BPI (544 SCRA 590): case cannot be located

Pioneer Concrete Products, Inc. v Todaro (524 SCRA 153)
Where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code,
other labor statutes or any collective bargaining agreement, it is the
Regional Trial Court that has jurisdiction.

In the present case, no employer-
employee relationship exists between petitioners and respondent. In fact, in
his complaint, private respondent is not seeking any relief under the Labor
Code, but seeks payment of damages on account of petitioners' alleged
breach of their obligation under their agreement to employ him. It is settled
that an action for breach of contractual obligation is intrinsically a civil
dispute.

In the alternative, respondent seeks redress on the basis of the
provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the
present action is within the realm of civil law, and jurisdiction over it
belongs to the regular courts.

Villamaria v CA (487 SCRA 571)
The rule is that, the nature of an action and the subject matter thereof, as
well as, which court or agency of the government has jurisdiction over the
same, are determined by the material allegations of the complaint in
relation to the law involved and the character of the reliefs prayed for,
whether or not the complainant/plaintiff is entitled to any or all of such
reliefs.

A prayer or demand for relief is not part of the petition of the cause
of action; nor does it enlarge the cause of action stated or change the legal
effect of what is alleged. In determining which body has jurisdiction over a
case, the better policy is to consider not only the status or relationship of
the parties but also the nature of the action that is the subject of their
controversy.

An employer-employee relationship is an indispensable jurisdictional
requisite. The jurisdiction of Labor Arbiters and the NLRC under Article 217
of the Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code,
other labor statutes or their collective bargaining agreement. Not every
dispute between an employer and employee involves matters that only the
Labor Arbiter and the NLRC can resolve in the exercise of their adjudicatory
or quasi-judicial powers. Actions between employers and employees where
the employer-employee relationship is merely incidental is within the
exclusive original jurisdiction of the regular courts. When the principal relief
is to be granted under labor legislation or a collective bargaining agreement,
the case falls within the exclusive jurisdiction of the Labor Arbiter and the
NLRC even though a claim for damages might be asserted as an incident to
such claim.

Lapanday Agricultural Development Corp v CA (324 SCRA 77)
Where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code,
other labor statutes or any collective bargaining agreement, it is the
Regional Trial Court that has jurisdiction. In its complaint, private
respondent is not seeking any relief under the Labor Code but seeks
payment of a sum of money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract. The action is
within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution of the issue involves the application of
labor laws, reference to the labor code was only for the determination of the
solidary liability of the petitioner to the respondent where no employer-
employee relation exists.

1.07 Case Decision

Cases
Philmore v Suganob (557 SCRA 439)
The policy of our judicial system is to encourage full adjudication of the
merits of an appeal. Procedural niceties should be avoided in labor cases, as
the provisions of the Rules of Court are applied only in a suppletory manner.
In addition, averments in the pleadings, not the title, are controlling in
determining the nature of the proceedings.

EDI Staff Builders International Inc. v Magsino (359 SCRA 212)
It has been settled that no undue sympathy is to be accorded to any claim
of a procedural misstep in labor cases. Such cases must be decided
according to justice and equity and the substantial merits of the
controversy.

Anino v NLRC (290 SCRA 489)
This case is an exception to the general rule that findings of fact of the NLRC
are to be accorded respect and finality on appeal. It is equally well-settled
that this Court will not uphold erroneous conclusions of the NLRC when it
reverses decisions of the labor arbiters or when the findings of facts, from
which its conclusions were based, are nor supported by substantial
evidence.
The Court finds occasion to remind courts and quasi-judicial bodies that "[a]
decision should faithfully comply with Section 14, Article VIII of the
Constitution which provides that no decision shall be rendered by any court

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[or quasi-judicial body] without expressing therein clearly and distinctly the
facts of the case and the law on which it is based. . . . It is a requirement of
due process and fair play that the parties to a litigation be informed of how
it was decided, with an explanation of the factual and legal reasons that led
to the conclusions of the court [or quasi-judicial body]. A decision that does
not clearly and distinctly stare the facts and the law on which it is based
leaves the parties in the dark as to how it was reached and is especially
prejudicial to the losing party, who is unable to pinpoint the possible errors
of the court [or quasi-judicial body] for review by a higher tribunal."

1.08 Management Function

RECOGNITION
1. It is the employers prerogative to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or
concern to provide certain disciplinary measures to implement said
rules and to assure that the same be complied with. At the same
time, it is one of the fundamental duties of the employee to yield
obedience to all reasonable rules, orders and instructions of the
employer and willful or intentional disobedience thereof, as a
general rule, justifies recission of the contract of service and the
preemptory dismissal of the employee.
2. The Court has always respected a companys exercise of its
prerogative to devise means to improve its operations. Thus, it has
held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including
hiring, work assignments, supervision and transfer of employees,
working methods, time, place and manner of work.

Cases
San Miguel Corp. v NLRC (551 SCRA 410)
An employer has the prerogative to prescribe reasonable rules and
regulations necessary for the proper conduct of its business, to provide
certain disciplinary measures in order to implement said rules and to assure
that the same would be complied with. An employer enjoys a wide latitude
of discretion in the promulgation of policies, rules and regulations on work-
related activities of the employees.

It is axiomatic that appropriate disciplinary sanction is within the purview of
management imposition. Thus, in the implementation of its rules and
policies, the employer has the choice to do so strictly or not, since this is
inherent in its right to control and manage its business effectively.
Consequently, management has the prerogative to impose sanctions lighter
than those specifically prescribed by its rules, or to condone completely the
violations of its erring employees. Of course, this prerogative must be
exercised free of grave abuse of discretion, bearing in mind the
requirements of justice and fair play.
Norkis Trading Co., Inc. v Gnilo (544 SCRA 278)
Well-settled is the rule that it is the prerogative of the employer to transfer
and reassign employees for valid reasons and according to the requirement
of its business. An owner of a business enterprise is given considerable
leeway in managing his business. Our law recognizes certain rights,
collectively called management prerogative as inherent in the management
of business enterprises. We have consistently recognized and upheld the
prerogative of management to transfer an employee from one office to
another within the business establishment, provided that there is no
demotion in rank or diminution of his salary, benefits and other privileges
and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. This
privilege is inherent in the right of employers to control and manage their
enterprises effectively.

The right of employees to security of tenure does not give them vested
rights to their positions to the extent of depriving management of its
prerogative to change their assignments or to transfer them. Managerial
prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.

Punzal v ETSI Technologies Inc (518 SCRA 66)
It is the prerogative of management to regulate, according to its discretion
and judgment, all aspects of employment. This flows from the established
rule that labor law does not authorize the substitution of the judgment of
the employer in the conduct of its business. Such management prerogative
may be availed of without fear of any liability so long as it is exercised in
good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of employees under special
laws or valid agreement and are not exercised in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite.

Torreda v Toshiba (515 SCRA 133)
The employers right to conduct the affairs of his business, according to its
own discretion and judgment, is well-recognized. An employer has a free
reign and enjoys wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline in its employees
and to impose penalties, including dismissal, upon erring employees. This is
a management prerogative, where the free will of management to conduct
its own affairs to achieve its purpose takes form.

The law, in protecting the
rights of workers, authorizes neither oppression nor self-destruction of the
employer.

Union Filipro v Nestle Phils. Inc. (449 SCRA 521)
Employers are accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This mass
of privileges comprises the so-called management prerogatives. In this

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connection, the rule is that good faith is always presumed. As long as the
companys exercise of the same is in good faith to advance its interest and
not for purpose of defeating or circumventing the rights of employees under
the law or a valid agreement, such exercise will be upheld.

Star Paper Corp. v Simbol (487 SCRA 228)
This company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. This management
prerogative is quite broad and encompassing for it covers hiring, work
assignment, working method, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. Except as provided for or limited
by special law, an employer is free to regulate, according to his own
discretion and judgment all the aspects of employment.

LIMITATIONS
1. Law, CBA, fair play and justice
2. Even as the law is solicitous of the welfare of employees, it must
also protect the rights of an employer to exercise what are clearly
management prerogatives. As long as the companys exercise of
those rights and prerogatives is in good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of
employees under the laws or valid agreements, such exercise will be
upheld.

Cases
Marival Trading Inc. v NLRC (525 SCRA 708)
Terminating employment is one of Marivals prerogatives as an employer.
As an employer, Marival has the right to regulate, according to its discretion
and best judgment, work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-
off of workers; and the discipline, dismissal and recall of workers.
Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and
regulations. This Court has upheld a companys management prerogatives
so long as they are exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws and valid agreements.

Tinio v CA (524 SCRA 533)
The act of management in reorganizing as well as transferring its employees
to achieve its stated objectives is a legitimate exercise of their management
prerogatives, barring any showing of bad faith which is absent in the instant
case.

1.09 Compromise and Waiver

The law frowns upon waivers and compromise as a general principle
because it is subject to abuse (the law recognizes that the situation is not of
even ad equal terms between the employer and the employee). However,
not all compromise and waivers are void or contrary to law. Labor law is not
meant to oppress employers. Just as it protects the employees, it also
protects employers. Theres a shared responsibilityemployees right to the
fruits of their labor and the employers rights to the return of their
capital/investment).

Test to determine the validity of compromise and waivers:
1. Voluntarily entered into
2. Proximate equality, no moral ascendancy over the other
3. Amount is reasonable and not unconscionable

ART. 227: Any compromise settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the assistance of
the Bureau or the regional office of the Department of Labor, shall be final
and binding upon the parties. The National Labor Relations Commission or
any court, shall not assume jurisdiction over issues involved therein except
in case of non-compliance thereof or if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or coercion.

ART. 2028 (NCC): A compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one
already commenced.

ART. 2036 (NCC): A compromise comprises only those objects which are
definitely stated therein, or which by necessary implication from its terms
should be deemed to have been included in the same.

A general renunciation of rights is understood to refer only to those that are
connected with the dispute which was the subject of the compromise.

Cases
Universal Robina v Caballeda (560 SCRA 115)
Generally, the law looks with disfavor on quitclaims and releases by
employees who have been inveigled or pressured into signing them by
unscrupulous employers seeking to evade their legal responsibilities and
frustrate just claims of employees.

They are frowned upon as contrary to
public policy. A quitclaim is ineffective in barring recovery of the full
measure of a worker's rights, and the acceptance of benefits therefrom does
not amount to estoppel.

In exceptional cases, the Court has accepted the validity of quitclaims
executed by employees if the employer is able to prove the following

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requisites: (1) the employee executes a deed of quitclaim voluntarily; (2)
there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good
customs or prejudicial to a third person with a right recognized by law. In
this case, petitioners failed to establish all the foregoing requisites.

Universal Staffing Services, Inc. v NLRD (559 SCRA 221)
Generally, deeds of release, waivers, or quitclaims cannot bar employees
from demanding benefits to which they are legally entitled or from
contesting the legality of their dismissal, since quitclaims are looked upon
with disfavor and are frowned upon as contrary to public policy. Where,
however, the person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a valid and binding
undertaking.

The burden of proving that the quitclaim or waiver was
voluntarily entered into rests on the employer.

Flight Attendants and Stewards Association of the Phil. v PAL (559
SCRA 252)
Quitclaims executed as a result of PALs illegal retrenchment program are
likewise annulled and set aside because they were not voluntarily entered
into by the retrenched employees; their consent was obtained by fraud or
mistake, as volition was clouded by a retrenchment program that was, at its
inception, made without basis. The law looks with disfavor upon quitclaims
and releases by employees pressured into signing by unscrupulous
employers minded to evade legal responsibilities. As a rule, deeds of
release or quitclaim cannot bar employees from demanding benefits to
which they are legally entitled or from contesting the legality of their
dismissal. The acceptance of those benefits would not amount to estoppel.
The amounts already received by the retrenched employees as consideration
for signing the quitclaims should, however, be deducted from their
respective monetary awards.

Hanjin etc. v Ibanez (555 SCRA 537)
The Quitclaims which the respondents signed cannot bar them from
demanding what is legally due them as regular employees. As a rule,
quitclaims and waivers or releases are looked upon with disfavor and
frowned upon as contrary to public policy. They are thus ineffective to bar
claims for the full measure of a worker's legal rights, particularly when the
following conditions are applicable: 1) where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or (2) where
the terms of settlement are unconscionable on their face.

To determine
whether the Quitclaims signed by respondents are valid, one important
factor that must be taken into account is the consideration accepted by
respondents; the amount must constitute a reasonable settlement
equivalent to the full measure of their legal rights.

In this case, the
Quitclaims signed by the respondents do not appear to have been made for
valuable consideration. Respondents, who are regular employees, are
entitled to backwages and separation pay and, therefore, the Quitclaims
which they signed cannot prevent them from seeking claims to which they
are entitled.

Michael Press v Galit (545 SCRA 23)
Waiver is a voluntary and intentional relinquishment or abandonment of a
known legal right or privilege.

It has been ruled that a waiver to be valid and
effective must be couched in clear and unequivocal terms which leave no
doubt as to the intention of a party to give up a right or benefit which legally
pertains to him. Hence, the management prerogative to discipline
employees and impose punishment is a legal right which cannot, as a
general rule, be impliedly waived.

Arellano v Powertech Corporation (542 SCRA 182)
We rebuke Powertechs unscrupulous and despicable act of using an
apparently valid compromise agreement to evade payment of its legal
obligation to petitioners. We will not allow employers to make a mockery of
our legal system by using legal means to perpetrate fraud. This should
serve as a warning to parties in labor cases to endeavor to achieve a just
and equitable resolution of their disputes and to enter into compromise
agreements in good faith.

SECTION 2. LABOR AND THE CONSTITUTION

2.01 Historical Background/Rationale

Cases
Antamok Goldfields Mining Co. v CIR (70 Phil. 340)
It should be observed at the outset that our Constitution was
adopted in the midst of surging unrest and dissatisfaction resulting
from economic and social distress which was threatening the
stability of governments the world over. General provisions were
inserted in the Constitution which are intended to bring about the
needed social and economic equilibrium between component
elements of society through the application of what may be termed
as the justitia communis advocated by Grotius and Leibnits many
years ago to be secured through the counterbalancing of economic
and social forces and opportunities which should be regulated, if not
controlled, by the State or placed, as it were, in custodia societatis.
"The promotion of social justice to insure the well-being and
economic security of all the people' was thus inserted as vital
principle in our Constitution. (Sec. 5, Art. II, Constitution.) And
in order that this declaration of principle may not just be an empty

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medley of words, the Constitution in various sections thereof has
provided the means towards its realization.
o Section 6 of Articles XIII declares that the State "shall afford
protection to labor, especially to working women and
minors, and shall regulated the relations between landowner
and tenant, and between labor and capital in industry and in
agriculture." It also states that "the State may provide for
compulsory arbitration."
o In extraordinary cases mentioned in section 16, Articles VI,
of the Constitution, the President of the Philippines may be
authorized by law, for a limited period and subject to such
restrictions as the National Assembly may prescribed, to
"promulgate rules and regulations to carry out a declared
national policy."
In our Bill of Rights we now find the following provision "The right
to form associations or societies for purposes not contrary to
law shall not be abridged." (Par. 6, section 1, art. III,
Constitution.)
By and large, these provisions in our Constitution all evince and
express the need of shifting emphasis to community interest with a
view to affirmative enhancement of human values. In conformity
with the constitutional objective and cognizant of the historical fact
that industrial and agricultural disputes had given rise to
disquietude, bloodshed and revolution in our country, the National
Assembly enacted Commonwealth Act No. 103 (Minimum wage
for laborers and maximum rental to be paid by tenants, and
to enforce compulsory arbitration), and, later, Commonwealth
Act. No. 213 (Regulation of labor organizations).
The statute was enacted in pursuance of what appears to be
deliberate embodiment of a new social policy, founded on the
conception of a society integrated not by independent
individuals dealing at arms' length, but by interdependent
members of a consolidated whole whose interests must be
protected against mutual aggression and warfare among and
between divers and diverse units which are impelled by
counter vailing and opposite individual and group interests,
and this is particularly true in the relationship between labor
and capital. Social and industrial disturbances which fifty years ago
were feudal-like and of isolated importance may now well result in a
serious strain upon the entire economic organism of the nation .
The policy of laissez faire has to some extent given way the
assumption by the government of the right of intervention
even in contractual relations affected with public interests.
In Commonwealth Act No. 103, and it, our Government no longer
performs the role of a mere mediator or intervenor but that
of the supreme arbiter.

2.02 Nature of Provision

Cases
PCL Shipping Phils., Inc. v NLRC (511 SCRA 44)
In carrying out and interpreting the Labor Code's provisions and its
implementing regulations, the employee's welfare should be the primordial
and paramount consideration. This kind of interpretation gives meaning and
substance to the liberal and compassionate spirit of the law as provided in
Article 4 of the Labor Code which states that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor] Code
including its implementing rules and regulations, shall be resolved in favor
of labor", and Article 1702 of the Civil Code which provides that "[i]n case of
doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer."

Phil. Airlines, Inc. v Santos (218 SCRA 415)
It is a fact that the sympathy of the Court is on the side of the laboring
classes, not only because the Constitution imposes such sympathy, but
because of the one-sided relation between labor and capital.

The
constitutional mandate for the promotion of labor is as explicit as it is
demanding. The purpose is to place the workingman on an equal plane with
management with all its power and influence in negotiating for the
advancement of his interests and the defense of his rights.

Under the policy
of social justice, the law bends over backward to accommodate the interests
of the working class on the humane justification that those with less
privileges in life should have more privileges in law.

2.03 1987 Constitution

A. Labor Sector

ART. II, SEC. 18: The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.

B. Protection of Labor

ART. XIII, SEC. 3: The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.

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It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to
expansion and growth.

7 Basic Rights of LaborRight to
1. Organize
2. Conduct collective bargaining or negotiation with management
3. Engage in peaceful concerted activities including strike in
accordance with law
4. Enjoy security of tenure
5. Work under humane conditions
6. Receive a living wage
7. Participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law

COMPARE
ART. XIV, SEC. 6 (1935): The State shall afford protection to labor,
especially to working women, and minors, and shall regulate the relations
between the landowner and tenant, and between labor and capital in
industry and in agriculture. The State may provide for compulsory
arbitration.

ART. II, SEC. 9 (1973): The State shall afford protection to labor,
promote full employment and equality in employment, ensure equal work
opportunities regardless of sex, race, or creed, and regulate the relation
between workers and employers. The State shall assure the rights of
workers to self-organization, collective bargaining, security of tenure, and
just and humane conditions of work. The State may provide for compulsory
arbitration.

to human dignity, reduce social, economic, and political inequalities, and

To this end, the State shall regulate the acquisition, ownership, use, and

ART. XIII, SEC. 3: see above.

ART. II, SEC. 10: The State shall promote social justice in all phases of
national development.

ART. II, SEC. 18: see above.

Cases
Lopez v Metropolitan Waterworks and Sewerage Authority (462
SCRA )
The Court has invariably affirmed that it will not hesitate to tilt the scales of
justice to the labor class for no less than the Constitution dictates that the
State . . . shall protect the rights of workers and promote their welfare. It
is committed to this policy and has always been quick to rise to defense in
the rights of labor, as in this case.

Protection to labor, it has been said, extends to all of labor--local and
overseas, organized and unorganized, in the public and private sectors.
Besides, there is no reason not to apply this principle in favor of workers in
the government. The government, including government-owned and
controlled corporations, as employers, should set the example in upholding
the rights and interests of the working class.

C. Social Justice

ART. II, SEC. 10: The State shall promote social justice in all phases of
national development.

ART. II, SEC. 5 (1935): The promotion of social justice to insure the well-
being and economic security of all the people should be the concern of the
State.

to human dignity, reduce social, economic, and political inequalities, and

To this end, the State shall regulate the acquisition, ownership, use, and


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ART. XIII, SEC. 2: The promotion of social justice shall include the
commitment to create economic opportunities based on freedom of initiative
and self-reliance.

DEFINITION: Cases
Enriquez v BPI (544 SCRA 453)
protection of the working class, it should not be supposed that every labor
dispute will be automatically decided in favor of labor. Management also has
its own rights, which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of its concern for those with less
privileges in life, this Court has inclined more often than not toward the
worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded us to the rule that justice is in every
case for the deserving, to be dispensed in the light of the established facts
and the applicable law and doctrine.

PLDT v Bolso (530 SCRA 550)
Upholding the employees interest in disregard of the employers right to
dismiss and discipline does not serve the cause of social justice. Social
justice ceases to be an effective instrument for the equalization of the
social and economic forces by the State when it is used to shield
wrongdoing.

Calalang v Williams (70 Phil. 726)
Humanization of laws and the equalization of social and economic forces by
the State so that justice in its rational and objective secular conception may
at least be approximated.

LIMITS OF USE: Cases
Heirs of Jugalbot v CA (518 SCRA 202)
On one final note, it may not be amiss to stress that laws which have for
their object the preservation and maintenance of social justice are not only
meant to favor the poor and underprivileged. They apply with equal force to
those who, notwithstanding their more comfortable position in life, are
equally deserving of protection from the courts. Social justice is not a
license to trample on the rights of the rich in the guise of defending the
poor, where no act of injustice or abuse is being committed against them.

As the court of last resort, our bounden duty to protect the less privileged
should not be carried out to such an extent as to deny justice to landowners
whenever truth and justice happen to be on their side. For in the eyes of the
Constitution and the statutes, EQUAL JUSTICE UNDER THE LAW remains the
bedrock principle by which our Republic abides.

Agabon v NLRC (442 SCRA 573)
Constitutional policy for full protection of labor is not a sword to oppress
employers.

PLDT v NLRC (164 SCRA 671)
Not intended to countenance wrongdoing simply because it is committed by
the underprivileged. Compassion for the poor is an imperative of every
humane society but only when the recipient is not a rascal claiming an
undeserved privilege.

2.04 Constitutional Rights and Labor Law

A. Management and the Constitution
General Rule: the Constitution protects and promotes the welfare of the
employees.

Exception: When the employer is right and the employee is wrong.

Cases
Sarocam v Interorient Maritime Enterprises, Inc. (493 SCRA 502)
We emphasize that the constitutional policy to provide full protection to
labor is not meant to be a sword to oppress employers. The commitment of
this Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right.c!

Dayan v Bayer of the Phil. Islands (369 SCRA 712)
Law, in protecting the rights of labor, authorizes neither oppression nor self-
destruction of an employer company which itself is possessed of rights that
must be entitled to recognition and respect.

B. Equal Work Opportunities

Cases
Francisco v NLRC (500 SCRA 690)
In affording full protection to labor, this Court must ensure equal work
opportunities regardless of sex, race or creed. Even as we, in every case,
attempt to carefully balance the fragile relationship between employees and
employers, we are mindful of the fact that the policy of the law is to apply
the Labor Code to a greater number of employees. This would enable
employees to avail of the benefits accorded to them by law, in line with the
constitutional mandate giving maximum aid and protection to labor,
promoting their welfare and reaffirming it as a primary social economic force
in furtherance of social justice and national development.


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Star Paper Corp. v Simbol (487 SCRA 228)
Article XIII, Sec. 3. The State shall afford full protection to labor, local and

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

workers and employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.

We note that since the finding of a bona fide occupational qualification
justifies an employers no-spouse rule, the exception is interpreted strictly
and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory
practice.

To justify a bona fide occupational qualification, the employer must
prove two factors: (1) that the employment qualification is reasonably
related to the essential operation of the job involved; and, (2) that there is
a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.

Lastly, the absence of a statute expressly prohibiting marital discrimination
in our jurisdiction cannot benefit the petitioners. The protection given to
labor in our jurisdiction is vast and extensive that we cannot prudently draw
inferences from the legislatures silence

that married persons are not
protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule that the
questioned policy is an invalid exercise of management prerogative.
Corollarily, the issue as to whether respondents Simbol and Comia resigned
voluntarily has become moot and academic.

C. Labor as Property

Cases
Executive Secretary v CA (429 SCRA 81)
A profession, trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work and
the right to make a living because these rights are property rights, the
arbitrary and unwarranted deprivation of which normally constitutes an
actionable wrong.
Nevertheless, no right is absolute, and the proper regulation of a profession,
calling, business or trade has always been upheld as a legitimate subject of
a valid exercise of the police power by the state particularly when their
conduct affects either the execution of legitimate governmental functions,
the preservation of the State, the public health and welfare and public
morals. According to the maxim, sic utere tuo ut alienum non laedas, it
must of course be within the legitimate range of legislative action to define
the mode and manner in which every one may so use his own property so
as not to pose injury to himself or others.

Asuncion v NLRC (362 SCRA 56)
A workers employment is property in the constitutional sense. He cannot be
deprived of his work without due process.

Maneja v NLRC (290 SCRA 603)
It bears stressing that a worker's employment is property in the
constitutional sense. He cannot be deprived of his work without due process
of law. Substantive due process mandates that an employee can only be
dismissed based on just or authorized causes. Procedural due process
requires further that he can only be dismissed after he has been given an
opportunity to be heard. The import of due process necessitates the
compliance of these two aspects.

D. Due Process Requirements

Cases
Ang Tibay v CIR (59 Phil. 635)
Requirements:
1. Right to a hearing, includes the right of a party to present his own
case and submit evidence in support thereof.
2. The tribunal must consider the evidence presented.
3. Decision must be supported by evidence.
4. Evidence must be substantialmore than a mere scintilla, such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds equally reasonable would
opine otherwise.
5. Decision must be rendered on the evidence presented at the hearing
or at least contained in the records and disclosed to the parties
affected.
Only by confining the administrative tribunal to the evidence
disclosed to the parties, can the latter be protected in their right to
know and meet the case against them.
6. Independent consideration of judgemust not simply accept the
views of a subordinate in arriving at a decision.
7. Decision rendered in such a manner as to let the parties know the
various issues involved and the reasons for the decision rendered.


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Air Manila Inc. v Balatbat (38 SCRA 489)
Additional Requirement: A tribunal so constituted as to give him reasonable
assurance of honesty and impartiality, and one of competent jurisdiction.

Note: For termination cases, twin notice ruleNotice to Explain and Notice
of Termination (Agabon v NLRC, 442 SCRA 573)

Century Textile Mills, Inc. v NLRC (161 SCRA 528)
The twin requirements of notice and hearing 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 and the reason for the proposed dismissal; upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his
employer's charges against him and accordingly to defend himself therefrom
before dismissal is effected. Neither of these two requirements can be
dispensed with without running afoul of the due process requirement of the
1987 Constitution.

E. Liberty of Contract/Laissez-faire and State Interference

Cases
Phil. Association of Service Exporters v Drilon (163 SCRA 386)
"Protection to labor" does not signify the promotion of employment alone.
What concerns the Constitution more paramount is that such an
employment be above all, decent, just, and humane. It is bad enough that
the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these circumstances,
the Government is duty-bound to insure that our toiling expatriates have
adequate protection, personally and economically, while away from home.
In this case, the Government has evidence, an evidence the petitioner
cannot seriously dispute, of the lack or inadequacy of such protection, and
as part of its duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. It is not contested that it has in fact removed the
prohibition with respect to certain countries as manifested by the Solicitor
General.

The non-impairment clause of the Constitution, invoked by the petitioner,
must yield to the loftier purposes targeted by the Government. Freedom of
contract and enterprise, like all other freedoms, is not free from restrictions,
more so in this jurisdiction, where laissez faire has never been fully
accepted as a controlling economic way of life.

Leyte Land Transportation Co. v Leyte Farmers and Workers Union
(80 Phil. 842)
State still exercises control/power to interfere where the parties are not
equal in standing

F. Welfare State

Cases
Alalayan v NPC (24 SCRA 172)
The welfare state concept is not alien to the philosophy of our Constitution.
It is implicit in quite a few of its provisions. There is the clause on the
promotion of social justice to ensure the well-being and economic security of
all the people, as well as the pledge of protection to labor with the specific
authority to regulate the relations between landowners and tenants and
between labor and capital.

G. Participation in Decision Making Process

Cases
PAL v NLRC (225 SCRA 301)
Such provision in the collective bargaining agreement may not be
interpreted as cession of employees' rights to participate in the deliberation
of matters, which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of
discipline.

Indeed, industrial peace cannot be achieved if the employees are denied
their just participation in the discussion of matters affecting their rights.
Thus, even before Article 211 of the labor Code (P.D. 442) was amended by
Republic Act No. 6715, it was already declared a policy of the State, "(d) To
promote the enlightenment of workers concerning their rights and
obligations . . . as employees." This was, of course, amplified by Republic
Act No 6715 when it decreed the "participation of workers in decision and
policy making processes affecting their rights, duties and welfare." PAL's
position that it cannot be saddled with the "obligation" of sharing
management prerogatives as during the formulation of the Code, Republic
Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44;
Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet
founded in law when the Code was formulated, the attainment of a
harmonious labor-management relationship and the then already existing
state policy of enlightening workers concerning their rights as employees
demand no less than the observance of transparency in managerial moves
affecting employees' rights.

Petitioner's assertion that it needed the implementation of a new Code of
Discipline considering the nature of its business cannot be overemphasized.
In fact, its being a local monopoly in the business demands the most
stringent of measures to attain safe travel for its patrons. Nonetheless,
whatever disciplinary measures are adopted cannot be properly
implemented in the absence of full cooperation of the employees. Such

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cooperation cannot be attained if the employees are restive on account, of
their being left out in the determination of cardinal and fundamental matters
affecting their employment.

Phil. Association of Service Exporters v Drilon (163 SCRA 386)
The petitioners's reliance on the Constitutional guaranty of worker
participation "in policy and decision-making processes affecting their rights
and benefits" is not well-taken. The right granted by this provision, again,
must submit to the demands and necessities of the State's power of
regulation.

The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.

"Protection to labor" does not signify the promotion of employment alone.
What concerns the Constitution more paramount is that such an
employment be above all, decent, just, and humane. It is bad enough that
the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these circumstances,
the Government is duty-bound to insure that our toiling expatriates have
adequate protection, personally and economically, while away from home.
In this case, the Government has evidence, an evidence the petitioner
cannot seriously dispute, of the lack or inadequacy of such protection, and
as part of its duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. It is not contested that it has in fact removed the
prohibition with respect to certain countries as manifested by the Solicitor
General.

The non-impairment clause of the Constitution, invoked by the petitioner,
must yield to the loftier purposes targeted by the Government. Freedom of
contract and enterprise, like all other freedoms, is not free from restrictions,
more so in this jurisdiction, where laissez faire has never been fully
accepted as a controlling economic way of life.

This Court understands the grave implications the questioned Order has on
the business of recruitment. The concern of the Government, however, is
not necessarily to maintain profits of business firms. In the ordinary
sequence of events, it is profits that suffer as a result of Government
regulation. The interest of the State is to provide a decent living to its
citizens. The Government has convinced the Court in this case that this is its
intent. We do not find the impugned Order to be tainted with a grave abuse
of discretion to warrant the extraordinary relief prayed for.

SECTION 3. LABOR AND THE CIVIL CODE

3.01 Role of Law

ART. 1700: The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar
subjects.

Cases
Phil. Telephone and Telegraph Co. v NLRC (272 SCRA 596)
While it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not
be contrary to law, morals, good customs, public order, or public policy.
Carried to its logical consequences, it may even be said that petitioners
policy against legitimate marital bonds would encourage illicit or common-
law relations and subvert the sacrament of marriage.

Parenthetically, the Civil Code provisions on the contract of labor state that
the relations between the parties, that is, of capital and labor, are not
merely contractual, impressed as they are with so much public interest that
the same should yield to the common good. It goes on to intone that neither
capital nor labor should visit acts of oppression against the other, nor impair
the interest or convenience of the public. In the final reckoning, the danger
of just such a policy against marriage followed by petitioner PT&T is that it
strikes at the very essence, ideals and purpose of marriage as an inviolable
social institution and, ultimately, of the family as the foundation of the
nation. That it must be effectively interdicted here in all its indirect,
disguised or dissembled forms as discriminatory conduct derogatory of the
laws of the land is not only in order but imperatively required.

Brew Master International, Inc. v NAFLU (271 SCRA 275)
While the employer is not precluded from prescribing rules and regulations
to govern the conduct of his employees, these rules and their
implementation must be fair, just and reasonable. It must be underscored
that no less than our Constitution looks with compassion on the workingman
and protects his rights not only under a general statement of a state policy,

but under the Article on Social Justice and Human Rights,

thus placing labor
contracts on a higher plane and with greater safeguards. Verily, relations
between capital and labor are not merely contractual. They are impressed
with public interest and labor contracts must, perforce, yield to the common
good.


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3.02 Employer-Employee Standard of Conduct

ART. 1701: Neither capital nor labor shall act oppressively against the
other, or impair the interest or convenience of the public.

Mutual Obligation: The employers obligation to give his employees just
compensation and treatment carries with it the corollary right to expect
from the employee adequate work, diligence and good conduct.

A. Fair Treatment

Cases
Uypitching v Quiambao (510 SCRA 172)
The basic principle of human relations, embodied in Article 19 of the Civil
Code, provides:
Art. 19. Every person must in the exercise of his rights and in the
performance of his duties, act with justice, give every one his due,
and observe honesty and good faith.

Article 19, also known as the principle of abuse of right, prescribes that a
person should not use his right unjustly or contrary to honesty and good
faith, otherwise he opens himself to liability. It seeks to preclude the use of,
or the tendency to use, a legal right (or duty) as a means to unjust ends.

There is an abuse of right when it is exercised solely to prejudice or injure
another. The exercise of a right must be in accordance with the purpose for
which it was established and must not be excessive or unduly harsh; there
must be no intention to harm another. Otherwise, liability for damages to
the injured party will attach.

B. Law Compliance

Cases
Sarmiento v Tuico (162 SCRA 676)
It must be stressed that while one purpose of the return-to-work order is to
protect the workers who might otherwise be locked out by the employer for
threatening or waging the strike, the more important reason is to prevent
impairment of the national interest in case the operations of the company
are disrupted by a refusal of the strikers to return to work as directed. In
the instant case, stoppage of work in the firm will be hurtful not only to both
the employer and the employees. More particularly, it is the national
economy that will suffer because of the resultant reduction in our export
earnings and our dollar reserves, not to mention possible cancellation of the
contracts of the company with foreign importers. It was particularly for the
purpose of avoiding such a development that the labor dispute was certified
to the NLRC, with the return-to-work order following as a matter of course
under the law.
It is also important to emphasize that the return-to-work order not so much
confers a right as it imposes a duty; and while as a right it may be waived,
it must be discharged as a duty even against the worker's will. Returning to
work in this situation is not a matter of option or voluntariness but of
obligation. The worker must return to his job together with his co-workers
so the operations of the company can be resumed and it can continue
serving the public and promoting its interest. That is the real reason such
return can be compelled. So imperative is the order in fact that it is not
even considered violative of the right against involuntary servitude, as this
Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills.
The worker can of course give up his work, thus severing his ties with the
company, if he does not want to obey the order; but the order must be
obeyed if he wants to retain his work even if his inclination is to strike.

A. Employee Obedience and Compliance Employer Orders

Cases
Gustilo v Wyeth Phil. Inc. (440 SCRA 67)
It is the employer's prerogative to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or concern,
to provide certain disciplinary measures to implement said rules and to
assure that the same be complied with. At the same time, it is one of the
fundamental duties of the employee to yield obedience to all reasonable
rules, orders, and instructions of the employer, and willful or intentional
disobedience thereof, as a general rule, justifies rescission of the contract of
service and the preemptory dismissal of the employee.

GTE Directories Corp. v Sanchez (197 SCRA 452)
To sanction disregard or disobedience by employees of a rule or order laid
down by management, on the pleaded theory that the rule or order is
unreasonable, illegal, or otherwise irregular for one reason or another,
would be disastrous to the discipline and order that it is in the interest of
both the employer and his employees to preserve and maintain in the
working establishment and without which no meaningful operation and
progress is possible. Deliberate disregard or disobedience of rules, defiance
of management authority cannot be countenanced. This is not to say that
the employees have no remedy against rules or orders they regard as
unjust or illegal. They may object thereto, ask to negotiate thereon, bring
proceedings for redress against the employer before the Ministry of Labor.
But until and unless the rules or orders are declared to be illegal or improper
by competent authority, the employees ignore or disobey them at their
peril. It is impermissible to reverse the process: suspend enforcement of the
orders or rules until their legality or propriety shall have been subject of
negotiation, conciliation, or arbitration.


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PCIB v Jacinto (196 SCRA 697)
Any employee who is entrusted with responsibility by his employer should
perform the task assigned to him with care and dedication.

B. Public Policy

Cases
Avon Cosmetics Inc. v Luna (511 SCRA 376)
Public policy is that principle of the law, which holds that no subject or
citizen can lawfully do that which has a tendency to be injurious to the
public or against the public good. As applied to contracts, in the absence of
express legislation or constitutional prohibition, a court, in order to declare a
contract void as against public policy, must find that the contract as to the
consideration or thing to be done, has a tendency to injure the public, is
against the public good, or contravenes some established interests of
society, or is inconsistent with sound policy and good morals, or tends
clearly to undermine the security of individual rights, whether of personal
liability or of private property.

SECTION 4. LABOR AND INTERNATIONAL COVENANTS
(LABOR STANDARDS AND WELFARE LAW)

4.01 Universal Declaration of Human Rights

ART. 3: Everyone has the right to life, liberty and security of person.

ART. 7: All are equal before the law and are entitled without any
discrimination to equal protection of the law. All are entitled to equal
protection against any discrimination in violation of this Declaration and
against any incitement to such discrimination.

ART. 17:
1. Everyone has the right to own property alone as well as in
association with others.
2. No one shall be arbitrarily deprived of his property.

ART. 22: Everyone, as a member of society, has the right to social security
and is entitled to realization, through national effort and international co-
operation and in accordance with the organisation and resources of each
State, of the economic, social and cultural rights indispensable for his
dignity and the free development of his personality.

ART. 23:
1. Everyone has the right to work, to free choice of employment, to
just and favourable conditions of work and to protection against
unemployment.
2. Everyone, without any discrimination, has the right to equal pay for
equal work.
3. Everyone who works has the right to just and favourable
remuneration ensuring for himself and his family an existence
worthy of human dignity, and supplemented, if necessary, by other
means of social protection.
4. Everyone has the right to form and to join trade unions for the
protection of his interests.

ART. 24: Everyone has the right to rest and leisure, including reasonable
limitation of working hours and periodic holidays with pay.

ART.25:
1. Everyone has the right to a standard of living adequate for the
health and well-being of himself and of his family, including food,
clothing, housing and medical care and necessary social services,
and the right to security in the event of unemployment, sickness,
disability, widowhood, old age or other lack of livelihood in
circumstances beyond his control.
2. Motherhood and childhood are entitled to special care and
assistance. All children, whether born in or out of wedlock, shall
enjoy the same social protection.

4.02 International Covenant on Economic, Social and Cultural Rights

PART III
ART. 6:
1. The States Parties to the present Covenant recognize the right to work,
which includes the right of everyone to the opportunity to gain his living by
work which he freely chooses or accepts, and will take appropriate steps to
safeguard this right.
2. The steps to be taken by a State Party to the present Covenant to
achieve the full realization of this right shall include technical and vocational
guidance and training programmes, policies and techniques to achieve
steady economic, social and cultural development and full and productive
employment under conditions safeguarding fundamental political and
economic freedoms to the individual.

ART. 7: The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of work which
ensure, in particular:
(a) Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by men,
with equal pay for equal work;
(ii) A decent living for themselves and their families in accordance

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with the provisions of the present Covenant;
(b) Safe and healthy working conditions;
(c) Equal opportunity for everyone to be promoted in his employment to an
appropriate higher level, subject to no considerations other than those of
seniority and competence;
(d ) Rest, leisure and reasonable limitation of working hours and periodic
holidays with pay, as well as remuneration for public holidays

ART. 9: The States Parties to the present Covenant recognize the right of
everyone to social security, including social insurance.

ART. 11:
1. The States Parties to the present Covenant recognize the right of
everyone to an adequate standard of living for himself and his family,
including adequate food, clothing and housing, and to the continuous
improvement of living conditions. The States Parties will take appropriate
steps to ensure the realization of this right, recognizing to this effect the
essential importance of international co-operation based on free consent.
2. The States Parties to the present Covenant, recognizing the fundamental
right of everyone to be free from hunger, shall take, individually and
through international co-operation, the measures, including specific
programmes, which are needed:

(a) To improve methods of production, conservation and distribution of food
by making full use of technical and scientific knowledge, by disseminating
knowledge of the principles of nutrition and by developing or reforming
agrarian systems in such a way as to achieve the most efficient
development and utilization of natural resources;
(b) Taking into account the problems of both food-importing and food-
exporting countries, to ensure an equitable distribution of world food
supplies in relation to need.

4.03 International Covenant on Civil and Political Rights

PART III
ART. 8:
1. No one shall be held in slavery; slavery and the slave-trade in all their
forms shall be prohibited.
2. No one shall be held in servitude.
3.
(a) No one shall be required to perform forced or compulsory labour;
(b) Paragraph 3 (a) shall not be held to preclude, in countries where
imprisonment with hard labour may be imposed as a punishment for a
crime, the performance of hard labour in pursuance of a sentence to such
punishment by a competent court;
(c) For the purpose of this paragraph the term "forced or compulsory
labour" shall not include:
(i) Any work or service, not referred to in subparagraph (b),
normally required of a person who is under detention in
consequence of a lawful order of a court, or of a person during
conditional release from such detention;
(ii) Any service of a military character and, in countries where
conscientious objection is recognized, any national service required
by law of conscientious objectors;
(iii) Any service exacted in cases of emergency or calamity
threatening the life or well-being of the community;
(iv) Any work or service which forms part of normal civil obligations.

4.04 Conventions and Recommendations of the International Labor
Organization (ILO)

International Conventions: Cases
International School Alliance of Educators v Quisumbing (333 SCRA
13)
Generally, these conventions recognize the rights already enumerated in our
Constitution
a. Right to work, free choice of employment
b. Equal pay for equal work (to prevent discrimination): Persons who
work with substantially equal qualifications, skill, effort and
responsibility under similar conditions, should be paid similar
salaries.

SECTION 5. THE LABOR CODE OF THE PHILIPPINES

5.01 Decree Title
5.02 Effectivity
5.03 Policy Declaration

ART. III, SEC. 3 (CONSTITUTION)

5.04 Rational, Spirit, Intent

Cases
Magallanes v Sun Yat Sen Elementary School (542 SCRA 78)
The Labor Code was promulgated to promote the welfare and well-being of
the working man. Its spirit and intent mandate the speedy administration of
justice, with least attention to technicalities but without sacrificing the
fundamental requisites of due process.


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5.05 Applicability

General Rule: Applies alike to ALL workers, whether agricultural or non-
agricultural

Exception: As may otherwise have been provided

A. Requisite Relationship

Cases
Uy v Buenao (484 SCRA 628)
Employer-Employee Relationship is importantit is jurisdictional for
provisions of the Labor Code on post-employment to apply.

B. TestGOCC

Cases
Light Railway Transit Authority v Venus (485 SCRA 301)
Under the present state of the law, the test in determining whether a
government-owned or controlled corporation is subject to the Civil Service
Law is the manner of its creation such that government corporations created
by special charter are subject to its provisions while those incorporated
under the general Corporation Law are not within its coverage.

C. International Agencies

Cases
Ebro III v NLRC (261 SCRA 399)
General Rule: Labor Code is NOT applicable. The grant of immunity from
local jurisdiction to the International Organization is clearly necessitated by
their international character and respective purposes. The objective is to
avoid the danger of partiality and interference by the host country in their
internal workings. The exercise of jurisdiction by the DOLE in these
instances would defeat the very purpose of immunity, which is to shield the
affairs of international organizations, in accordance with international
practice, from political pressure or control by he host country to the
prejudice of the member State of the organization, and to ensure the
unhampered performance of their functions.

Exception: If theres abuse or any injustice created due to this exemption
from suit, the remedy of the employee is to ask the Philippines to withdraw
the grant of immunity from suit. Then the legal process and provisions of
law in the Philippines will apply.

D. School Teachers

Cases
Chiang Kaishek College v CA (437 SCRA 171)
Public School Teachers are governed by the Civil Service Law.
Private School Teachers, on the issue of security of tenure (permanent
status determination), are governed by the Manual for Private School issued
by the DECS and not the Labor Codeonly suppletory.

National Mines and Allied Workers Union v San Ildefonso College etc
(299 SCRA 24)
On the issue of whether the individual petitioners were permanent
employees, it is the Manual of Regulations for Private Schools, and not the
Labor Code, which is applicable. This was settled in University of Sto. Tomas
v. NLRC, where we explicitly ruled that for a private school teacher to
acquire permanent status in employment and, therefore, be entitled to
security of tenure, the following requisites must concur: (1) the teacher is a
full-time teacher; (2) the teacher must have rendered three (3) consecutive
years of service; and (3) such service must have been satisfactory.

E. Religious Corporations

Cases
Austria v NLRC (312 SCRA 410)
If ecclesiastical affairs, the Labor Code cannot apply.
If not ecclesiastical affairs, the Labor Code applies.

Ecclesiastical Affairs: involves the relationship between the church and its
members and relate to the matter of faith, religious doctrines, worship and
governance of the congregation.

F. Managerial Employees

Cases
Penaranda v Baganga Plywood Corp. (489 SCRA 94)
coverage of labor standards. Labor standards provide the working conditions
of employees, including entitlement to overtime pay and premium pay for
working on rest days. Under this provision, managerial employees are
"those whose primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision."

The Implementing Rules of the Labor Code state that managerial employees
are those who meet the following conditions:
"(1) Their primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision thereof;

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"(2) They customarily and regularly direct the work of two or more
employees therein;
"(3) They have the authority to hire or fire other employees of lower rank;
or their suggestions and recommendations as to the hiring and firing and as
to the promotion or any other change of status of other employees are
given particular weight."

5.06 Rule Making Power

DOLE, as the lead agency in enforcing laws, possesses rule-making power in
the enforcement of the Labor Code.
A rule or regulation that exceeds the DOLEs rule-making authority is VOID.

LimitationRule Making PowerPolicy Instructions

Cases
Sonza v ABS-CBN Broadcasting Group (431 SCRA 583)
SONZA argues that Policy Instruction No. 40 issued by then Minister of
Labor Blas Ople on 8 January 1979 finally settled the status of workers in
the broadcast industry. Under this policy, the types of employees in the
broadcast industry are the station and program employees.

Policy Instruction No. 40 is a mere executive issuance which does not have
the force and effect of law. There is no legal presumption that Policy
Instruction No. 40 determines SONZAs status. A mere executive issuance
cannot exclude independent contractors from the class of service providers
to the broadcast industry. The classification of workers in the broadcast
industry into only two groups under Policy Instruction No. 40 is not binding
on this Court, especially when the classification has no basis either in law or
in fact.

Rizal Empire Insurance Group v NLRC (150 SCRA 565)
Petitioners claim, among other things, that respondent Commission
committed a grave abuse of discretion amounting to lack of jurisdiction in
arbitrarily dismissing petitioners' appeal on a technicality (Rollo, p. 9). It
invokes the Rules of Court provision on liberal construction of the Rules in
the interest of substantial justice.

It will be noted however, that the foregoing provision refers to the Rules of
Court. On the other hand, the Revised Rules of the National Labor Relations
Commission are clear and explicit and leave no room for interpretation.

Moreover, it is an elementary rule in administrative law that administrative
regulations and policies enacted by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law, and are
entitled to great respect (Espanol v. Philippine Veterans Administration, 137
SCRA 314 [1985]).

Under the above-quoted provisions of the Revised NLRC Rules, the decision
appealed from in this case has become final and executory and can no
longer be subject to appeal.

Even on the merits, the ruling of the Labor Arbiter appears to be correct;
the consistent promotions in rank and salary of the private respondent
indicate he must have been a highly efficient worker, who should be
retained despite occasional lapses in punctuality and attendance. Perfection
cannot after all be demanded.

CBTC Employees Union v Clave (141 SCRA 9)
In excluding the union members of herein petitioner from the benefits of the
holiday pay law, public respondent predicated his ruling on Section 2, Rule
IV, Book III of the Rules to implement Article 94 of the labor Code
promulgated by the then Secretary of labor and Policy Instructions No. 9.

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely,
'employees who are uniformly paid by the month'. While the additional
exclusion is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it constitutes a taking away
or a deprivation which must be in the law if it is to be valid. An
administrative interpretation which diminishes the benefits of labor more
than what the statute delimits or withholds is obviously ultra vires.

5.07 Law Interpretation

ART. 1702: In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living of the laborer.

A. Liberal Construction

Cases
Manaya v Alabang Country Club (525 SCRA 144)
Indeed, there is no room for liberality in the instant case as it would render
futile the very purpose for which the principle of liberality is adopted. As so
rightfully enunciated, the liberal interpretation in favor of labor stems from
the mandate that the workingmans welfare should be the primordial and
paramount consideration. This Court has repeatedly ruled that delay in the
settlement of labor cases cannot be countenanced. Not only does it involve
the survival of an employee and his loved ones who are dependent on him
for food, shelter, clothing, medicine and education; it also wears down the
meager resources of the workers to the point that, not infrequently, they
either give up or compromise for less than what is due them.


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Duncan Association etc. v Glaxo Wellcome (438 SCRA 343)
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor
to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights, which
are also entitled to respect and enforcement in the interest of fair play.

Salinas v NLRC (319 SCRA 54)
It is basic and irrefragable rule that in carrying out and interpreting the
provisions of the Labor Code and its implementing regulations, the
workingman's welfare should be the primordial and paramount
consideration. The interpretation herein made gives meaning and substance
to the liberal and compassionate spirit of the law enunciated in Article 4 of
Labor Code that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and
regulations shall be resolved in favor of labor".

B. In favor of laborRationale

Cases
Acuna v CA (489 SCRA 658)
It is a time-honored rule that in controversies between a worker and his
employer, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the workers
favor.

The policy is to extend the applicability of the decree to a greater
number of employees who can avail of the benefits under the law, which is
in consonance with the avowed policy of the State to give maximum aid and
protection to labor.

Asian Transnational Corp. v CA (425 SCRA 478)
Holiday pay is a legislated benefit enacted as part of the Constitutional
imperative that the State shall afford protection to labor.

Its purpose is not
merely "to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced
to take a rest, he earns what he should earn, that is, his holiday pay."

It is
also intended to enable the worker to participate in the national celebrations
held during the days identified as with great historical and cultural
significance.

In any event, Art. 4 of the Labor Code provides that all doubts in the
implementation and interpretation of its provisions, including its
implementing rules and regulations, shall be resolved in favor of labor. For
the working mans welfare should be the primordial and paramount
consideration.
Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the
Labor Code provides that "Nothing in the law or the rules shall justify an
employer in withdrawing or reducing any benefits, supplements or payments
for unworked regular holidays as provided in existing individual or collective
agreement or employer practice or policy."

Abella v NLRC (152 SCRA 140)
To give life and meaning to the compassion and liberal spirit of the law, and
to extend its applicability to a greater number of employees, who can avail
of the benefits under the law.

C. Doubt: resolve in favor of labor (liberal construction). Theres doubt
when the law is susceptible to 2 or more interpretations, both or all
of which are correct.

Cases
Clemente v GSIS (152 SCRA 500)
That Pedro Clementes work as janitor at a hospital and a skin clinic
increased his risk of contracting leprosy and other ailments is not an
unreasonable conclusion. The conservative posture of GSIS and the ECC is
not consistent with the liberal interpretation of the Labor Code and the
social justice guarantee of the Constitution in favor of workers. It clashes
with the injunction in the Labor Code (Art. 4) that as a rule, doubts should
be resolved in favor of the claimant-employee.

Carolinas arguments of recurrence of an already cured disease or
contracting of a new disease due to increased risks are more plausible.
When there are two or more possible explanations regarding the issue of
compensability, that which favors the claimant must be chosen.

D. No Doubt: no room for interpretation

Cases
Bonifacio v GSIS (146 SCRA 276)
While we do not dispute petitioner's contention that under the law, in case
of doubt in the implementation and interpretation of the provisions of the
Labor Code, including its implementing rules and regulations, the doubt
shall be resolved in favor of the laborer, we find that the same has no
application in this case since the pertinent provisions of the Labor Code
leave no room for doubt either in their interpretation or application.

E. Sweeping Interpretation

Cases
Bravo v Employees Compensation Commission (143 SCRA 101)
In denying Bravos claim for disability benefits, the Court was aware of the
mandate that social legislation should be applied in consonance with the

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principle of social justice and protection to labor. However, it cannot adopt a
sweeping interpretation of the law in favor of labor lest it engages in judicial
legislation.

F. Factual Considerations and Rationality

Cases
That there should be care and solicitude in the protection and vindication of
the rights of workingmen cannot be gainsaid; but that care and solicitude
cannot justify disregard of relevant facts or eschewal of rationality in the
construction of the text of applicable rules in order to arrive at a disposition
in favor of an employee who is perceived as otherwise deserving of
sympathy and commiseration.

G. Equity and Moral Consideration

Cases
Manning International Corp. v NLRC (195 SCRA 155)
Equity has been defined as justice outside law, being ethical rather than
jural or belonging to the sphere of morals than law. It is grounded on
precepts of conscience and not on any sanction of positive law. However,
considerations of equity and social justice cannot prevail over against the
expressed provision of the labor laws allowing dismissal of employees for
cause and without any provision for separation pay.

H. Fairness

Cases
Reliance Surety and Insurance Co., Inc. v NLRC (193 SCRA 365)
As a general rule, the sympathy of the Court is on the side of the laboring
classes, not only because the Constitution imposes sympathy but because of
the one-sided relation between labor and capital. The Court must take care,
however, that in the contest between labor and capital, the results achieved
are fair and in conformity with the rules. We will not accomplish that
objective here by approving the act of the National Labor Relations
Commission which we hold to constitute a grave abuse of discretion.

I. Balancing Conflicting Claims

Cases
Duncan Association etc. v Glaxo Wellcome Phils. Inc. (438 SCRA
343)
The sympathy of the Court is on the side of the laboring classes, not only
because the Constitution imposes sympathy but because of the one-sided
relation between labor and capital. The Court must take care, however, that
in the contest between labor and capital, the results achieved are fair and in
conformity with the rules.

To say, as both the Arbiter and the respondent Commission do, that that
declaration, "you are dismissed from the service effective immediately,"
should be construed merely as a suspension, not a dismissal, from
employment, is illogical if not downright ludicrous. They attempt to justify
this conclusion by adverting to a PAL circular dated June 15, 1966 to the
effect that "(a)n employee charged with any crime inimical to the company's
interest shall be placed under preventive suspension until the final
adjudication of his case," and construe this as a complete foreclosure or
prohibition of any alternative or concurrent action on PAL's part, such as the
imposition of administrative sanctions or penalties; in other words, any
disciplinary action against an erring employee was absolutely dependent on
the outcome of the criminal action against the latter, no disciplinary
measure of any nature being permissible against the employee "until the
final adjudication" of his criminal case. It is a construction that has nothing
to support it, is contrary to common sense, and one certainly not justified
by the recorded facts.

His assertion thereof after seventeen (17) years from his discharge from
employment can only mean that he slept on his rights or that his counsel
did not share the respondent Commission's belief in the soundness of the
theory. His claim must thus be rejected as time-barred, as being
unpardonably tardy.

SECTION 6. WORK RELATIONSHIP

6.01 Work Relationship

A. Definitions

EMPLOYER
Includes any person acting directly or indirectly in the interest of an
employer in relation to an employee and shall include the
government and all its branches, subdivisions and instrumentalities,
all government-owned and controlled corporations and institutions,
as well as non-profit private institutions or organizations (Art. 97
(b), Labor Code)
Any person, natural or juridical, employing the services of the
employee (Art. 167 (f), Labor Code).
Any person acting in the interest of an employer, directly or
indirectly. The term shall not include any labor organization or any
of its officers or agents except when acting as employer (Art. 212
(e), Labor Code).


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EMPLOYEE
Includes any individual employed by an employer (Art. 97 (c),
Labor Code)
Any person compulsorily covered by the GSIS under Commonwealth
Act No. 186, as amended, including the members of the AFP, and
any person employed as casual, emergency, temporary, substitute,
or contractual, or any person compulsorily covered by the SSS
under RA No. 1161, as amended (Art. 167 (g), Labor Code).
Any person in the employ of an employer. The term shall not be
limited to the employees of a particular employer, under the Code
so explicitly states. It shall include any individual whose work has
ceased as a result of or in connection with any current labor dispute
or because of any unfair labor practice if he has not obtained any
other substantially equivalent and regular employment (Art. 212
(f), Labor Code).

*PERSON: an individual, partnership, association, corporation, business
trust, legal representatives or any organized group of persons (Art. 97 (a),
Labor Code).

POLICY INSTRUCTION NO. 40 (1979)
The station employees are those whose services are engaged to discharge
functions which are usually necessary and desirable to the operation of the
station and whose usefulness is not affected by changes of programs,
ratings, or formats. They always observe normal working hours.

They include employees whose talents, skills or services are engaged by the
station without particular reference to any specific program or undertaking,
and are not allowed by the station to be engaged or hired by other stations
or persons even if such employees do not observe normal working hours.
Examples of station employees include those in the stations staff services
such as those working in the administration, financial services, human
resources development and legal departments.

Program employees, on the other hand, are those whose skills, talents or
services are engaged by the station for a particular or specific program or
undertaking and who are not required to observe normal working hours
such that on some days they work for less than eight (8) hours and on other
days beyond the normal work hours observed by station employees.

They are allowed to enter into employment contracts with other persons,
stations, advertising agencies or sponsoring companies. Program
employees include the actors, producers, directors and announcers of
specific television or radio programs.

Cases (Employee)
Uy v Villanueva (526 SCRA 73)
To determine whether there was an employer-employee relationship
between petitioners and private respondent, the Court has consistently used
the four-fold test. The test calls for the determination of (1) whether the
alleged employer has the power of selection and engagement of an
employee; (2) whether he has control of the employee with respect to the
means and methods by which work is to be accomplished; (3) whether he
has the power to dismiss; and (4) whether the employee was paid wages.
Of the four, the control test is the most important element.

An employee usually occupies no office and generally is employed not by
action of the directors or stockholders but by the managing officer of the
corporation who also determines the compensation to be paid to such
employee.

United Pepsi-Cola Supervisory Union v Laguesma (288 SCRA 15)
The term manager generally refers to anyone who is responsible for
subordinates and other organization resources.[1] As a class, managers
constitute three levels of a pyramid:
Top Management
_________________
Middle Management
_________________
First Line Management
(also called Supervisor)
____________________
____________________
Operatives Or Operating Employees
FIRST-LINE MANAGERS The lowest level in an organization at which
individuals are responsible for the work of others is called first-line or first-
level management. First-line managers direct operating employees only;
they do not supervise other managers. Example of first-line managers are
the foreman or production supervisor in a manufacturing plant, the
technical supervisor in a research department, and the clerical supervisor in
a large office. First-level managers are often called supervisors.

MIDDLE MANAGERS The term middle management can refer to more than
one level in an organization. Middle managers direct the activities of other
managers and sometimes also those of operating employees. Middle
managers principal responsibilities are to direct the activities that
implement their organizations policies and to balance the demands of their
superiors with the capacities of their subordinates. A plant manager in an
electronics firm is an example of a middle manager.

TOP MANAGERS Composed of a comparatively small group of executives,
top management is responsible for the overall management of the

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organization. It establishes operating policies and guides the organizations
interactions with its environment. Typical titles of top managers are chief
executive officer, president, and senior vice-president. Actual titles
vary from one organization to another and are not always a reliable guide to
membership in the highest management classification.

"Managerial employee" is one who is vested with powers or prerogatives to
lay down and execute management policies and/or to hire, transfer,
suspend, lay off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this
Book.

"Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment."

Managerial employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for membership in
a labor organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own.

B. Employer-Employee Relationship
Four-Fold Testthe test calls for the determination of
(1) Whether the alleged employer has the power of selection and
engagement of an employee;
(2) Whether he has control of the employee with respect to the means
and methods by which work is to be accomplished;
(3) Whether he has the power to dismiss; and
(4) Whether the employee was paid wages.
Of the four, the control test is the most important element.

FACTUAL TEST
Cases
Television and Production Exponents Inc v Servana (542 SCRA 578)
Jurisprudence is abound with cases that recite the factors to be considered
in determining the existence of employer-employee relationship, namely:
(a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control
the employee with respect to the means and method by which the work is to
be accomplished. The most important factor involves the control test. Under
the control test, there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control
not only the end achieved but also the manner and means used to achieve
that end.

Remington Industrial Sales Corp. v Castaneda (507 SCRA 391)
The determination of the existence of an employer-employee relationship is
defined by law according to the facts of each case, regardless of the nature
of the activities involved.

Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment. It is a form of neglect of duty; hence, a just cause
for termination of employment by the employer under Article 282 of the
Labor Code, which enumerates the just causes for termination by the
employer. For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee
relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employee
has no more intention to work. The intent to discontinue the employment
must be shown by clear proof that it was deliberate and unjustified.

ESTABLISHED
Cases
Miguel v JCT Group, Inc. (453 SCRA 529)
The test for determining an employer-employee relationship hinges on
resolving who has the power to select employees, who pays for their wages,
who has the power to dismiss them, and who exercises control in the
methods and the results by which the work is accomplished. The last factor,
the control test, is the most important. In resolving the status of an MOA,
the test for determining an employer-employee relationship has to be
applied.

Wack-Wack Golf and Country Club v NLRC (456 SCRA 280)
An independent contractor is one who undertakes job contracting, i.e., a
person who: (a) carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof; and (b) has substantial capital or
investment in the form of tools, equipments, machineries, work premises
and other materials which are necessary in the conduct of the business.

Jurisprudential holdings are to the effect that in determining the existence of
an independent contractor relationship, several factors may be considered,
such as, but not necessarily confined to, whether or not the contractor is
carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to
assign the performance of specified pieces of work; the control and

NIKKI HIPOLITO
23
supervision of the work to another; the employers power with respect to
the hiring, firing, and payment of the contractors workers; the control of
the premises; the duty to supply premises, tools, appliances, materials and
labor; and the mode, manner and terms of payment.

FACTORS
Cases
Pacific Consultants International Asia, Inc. v Schonfeld (516 SCRA
209)
Jurisprudence is firmly settled that whenever the existence of an
employment relationship is in dispute, four elements constitute the reliable
yardstick: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct. It is the so-called "control test"
which constitutes the most important index of the existence of the
employer-employee relationshipthat is, 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. Stated otherwise, 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.

Gabriel v Bilon (515 SCRA 29)
[T]he relationship between jeepney owners/operators and jeepney drivers
under the boundary system is that of employer-employee and not of lessor-
lessee because in the lease of chattels the lessor loses complete control over
the chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the
case of jeepney owners/operators and jeepney drivers, the former exercises
supervision and control over the latter. The fact that the drivers do not
receive fixed wages but get only that in excess of the so-called "boundary"
[that] they pay to the owner/operator is not sufficient to withdraw the
relationship between them from that of employer and employee.

Philippine Global Communicators, Inc. v De Vera (459 SCRA 260)
The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test, to wit: [1] the
selection and engagement of the employee; [2] the payment of wages; [3]
the power of dismissal; and [4] the power to control the employees
conduct, or the so-called control test, considered to be the most important
element.

CONTROL TEST
Cases
Lopez v MWSS (462 SCRA 425)
For purposes of determining the existence of employer-employee
relationship, the Court has consistently adhered to the four-fold test,
namely: (1) whether the alleged employer has the power of selection and
engagement of an employee; (2) whether he has control of the employee
with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether
the employee was paid wages. Of the four, the control test is the most
important element.

It is axiomatic that the existence of an employer-employee relationship
cannot be negated by expressly repudiating it in an agreement and
providing therein that the employee is "not an MWSS employee" when the
terms of the agreement and the surrounding circumstances show otherwise.
The employment status of a person is defined and prescribed by law and not
by what the parties say it should be.

UERMMMC-RDU v Laguesma, cited in Felix v Buenaseda (240 SCRA
139): citation cannot be located

R Transport Corp. v Ejandra (428 SCRA 725)
Denying the existence of an employer-employee relationship, petitioner
insists that the parties agreement was for a contract of lease of services.
We disagree. Petitioner is barred to negate the existence of an employer-
employee relationship. In its petition filed before this Court, petitioner
invoked our rulings on the right of an employer to dismiss an employee for
just cause. Petitioner maintained that private respondent was justifiably
dismissed due to abandonment of work. By adopting said rulings, petitioner
impliedly admitted that it was in fact the employer of private respondent.
According to the control test, the power to dismiss an employee is one of
the indications of an employer-employee relationship.

Petitioners claim that
private respondent was legally dismissed for abandonment was in fact a
negative pregnant: an acknowledgement that there was no mutual
termination of the alleged contract of lease and that private respondent was
its employee. The fact that petitioner paid private respondent on
commission basis did not rule out the presence of an employee-employer
relationship. Article 97(f) of the Labor Code clearly provides that an
employees wages can be in the form of commissions.

Insular Life v NLRC (179 SCRA 459)
Not every form of control that the hiring party reserves to himself over the
conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship
between them in the legal or technical sense of the term. A line must be
drawn somewhere, if the recognized distinction between an employee and

NIKKI HIPOLITO
24
an individual contractor is not to vanish altogether. Realistically, it would be
a rare contract of service that gives untrammelled freedom to the party
hired and eschews any intervention whatsoever in his performance of the
engagement.

Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second, which address
both the result and the means used to achieve it. The distinction acquires
particular relevance in the case of an enterprise affected with public
interest, as is the business of insurance, and is on that account subject to
regulation by the State with respect, not only to the relations between
insurer and insured but also to the internal affairs of the insurance
company.

ECONOMIC TEST
Cases
Sevilla v CA (160 SCRA 171)
In general, we have relied on the so-called right of control test, "where the
person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such
end." Subsequently, however, we have considered, in addition to the
standard of right-of control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, in
determining the existence of an employer-employee relationship.

Francisco v NLRC (500 SCRA 690)
There are instances when, aside from the employers power to control the
employee with respect to the means and methods by which the work is to
be accomplished, economic realities of the employment relations help
provide a comprehensive analysis of the true classification of the individual,
whether as employee, independent contractor, corporate officer or some
other capacity.

The better approach would therefore be to adopt a two-tiered test involving:
(1) the putative employers power to control the employee with respect to
the means and methods by which the work is to be accomplished; and (2)
the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which
would take into consideration the totality of circumstances surrounding the
true nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the
worker over the period of the latters employment.

Thus, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the
employers business; (2) the extent of the workers investment in
equipment and facilities; (3) the nature and degree of control exercised by
the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment
in that line of business.

The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that
line of business.

AGREEMENT
Cases
Chavez v NLRC (448 SCRA 478)
The existence of an employer-employee relationship cannot be negated by
expressly repudiating it in a contract and providing therein that the
employee is an independent contractor when, as in this case, the facts
clearly show otherwise. Indeed, the employment status of a person is
defined and prescribed by law and not by what the parties say it should be.

San Miguel Corp. v Aballa (461 SCRA 392)
In legitimate labor contracting, the law creates an employer-employee
relationship for a limited purpose, i.e., to ensure that the employees are
paid their wages. The principal employer becomes jointly and severally liable
with the job contractor, only for the payment of the employees wages
whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees.

In labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal
employer.

The Contract of Services between SMC and Sunflower shows that the parties
clearly disavowed the existence of an employer-employee relationship

NIKKI HIPOLITO
25
between SMC and private respondents. The language of a contract is not,
however, determinative of the parties relationship; rather it is the totality of
the facts and surrounding circumstances of the case. A party cannot dictate,
by the mere expedient of a unilateral declaration in a contract, the character
of its business, i.e., whether as labor-only contractor or job contractor, it
being crucial that its character be measured in terms of and determined by
the criteria set by statute.

Lopez v MWSS (462 SCRA 428)
MWSS makes an issue out of the proviso in the Agreement that specifically
denies the existence of employer-employee relationship between it and
petitioners. It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in an agreement
and providing therein that the employee is "not an MWSS employee" when
the terms of the agreement and the surrounding circumstances show
otherwise. The employment status of a person is defined and prescribed by
law and not by what the parties say it should be.

Sonza v ABS-CBN Broadcasting Corp. (431 SCRA 381)
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former. In this case, SONZA
failed to show that these rules controlled his performance. We find that
these general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs
that comply with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the
conduct of the other party in relation to the services being rendered may be
accorded the effect of establishing an employer-employee relationship. The
facts of this case fall squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and
the means used to achieve it.

Insular Life Assurance Co. Ltd. v NLRC (287 SCRA 476)
It is axiomatic that the existence of an employer-employee relationship
cannot be negated by expressly repudiating it in the management contract
and providing therein that the employee is an independent contractor
when the terms of agreement clearly show otherwise. For, the employment
status of a person is defined and prescribed by law and not by what the
parties say it should be. In determining the status of the management
contract, the four-fold test on employment earlier mentioned has to be
applied.

BROADCAST-TALENTS-PERFORMERS
Cases
Television etc. v Servana (542 SCRA 578)
In concluding that respondent was an employee of TAPE, the Court of
Appeals applied the "four-fold test" in this wise:
First. The selection and hiring of petitioner was done by private
respondents. In fact, private respondents themselves admitted having
engaged the services of petitioner only in 1995 after TAPE severed its
relations with RPN Channel 9.

By informing petitioner through the Memorandum dated 2 March 2000, that
his services will be terminated as soon as the services of the newly hired
security agency begins, private respondents in effect acknowledged
petitioner to be their employee. For the right to hire and fire is another
important element of the employer-employee relationship.

Second. Payment of wages is one of the four factors to be considered in
determining the existence of employer-employee relation. . . Payment as
admitted by private respondents was given by them on a monthly basis at a
rate of P5,444.44.

Third. Of the four elements of the employer-employee relationship, the
"control test" is the most important. x x x

The bundy cards representing the time petitioner had reported for work are
evident proofs of private respondents control over petitioner more
particularly with the time he is required to report for work during the
noontime program of "Eat Bulaga!" If it were not so, petitioner would be
free to report for work anytime even not during the noontime program of
"Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still gets his compensation
for being a "talent." Precisely, he is being paid for being the security of "Eat
Bulaga!" during the above-mentioned period. The daily time cards of
petitioner are not just for mere record purposes as claimed by private
respondents. It is a form of control by the management of private
respondent TAPE.

Dumpit-Murillo v CA (524 SCRA 290)
An employer-employee relationship was created when the private
respondents started to merely renew the contracts repeatedly fifteen times
or for four consecutive years.

The practice of having fixed-term contracts in the industry does not
automatically make all talent contracts valid and compliant with labor law.

NIKKI HIPOLITO
26
The assertion that a talent contract exists does not necessarily prevent a
regular employment status.

The duties of petitioner as enumerated in her employment contract indicate
that ABC had control over the work of petitioner. Aside from control, ABC
also dictated the work assignments and payment of petitioners wages. ABC
also had power to dismiss her. All these being present, clearly, there
existed an employment relationship between petitioner and ABC.

ABS-CBN v Nazareno (503 SCRA 204)
In the case at bar, however, the employer-employee relationship between
petitioner and respondents has been proven.

First. In the selection and engagement of respondents, no peculiar or unique
skill, talent or celebrity status was required from them because they were
merely hired through petitioners personnel department just like any
ordinary employee.

Second. The so-called talent fees of respondents correspond to wages
given as a result of an employer-employee relationship. Respondents did
not have the power to bargain for huge talent fees, a circumstance negating
independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their
work unsatisfactory, and respondents are highly dependent on the petitioner
for continued work.

Fourth. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that respondents
are independent contractors.

The presumption is that when the work done is an integral part of
the regular business of the employer and when the worker, relative
to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such
employee and not an independent contractor. The Court will peruse
beyond any such agreement to examine the facts that typify the parties
actual relationship.

METHOD WAGE PAYMENT
Cases
Almirez v Infinite Corp Technology Corp. (481 SCRA 364)
As for the designation of the payments to petitioner as "salaries," it is not
determinative of the existence of an employer-employee relationship.
"Salary" is a general term defined as "a remuneration for services given." It
is the above-quoted contract of engagement of services-letter dated
September 30, 1999, together with its attachments, which is the law
between the parties. Even petitioner concedes rendering service "based on
the contract," which, as reflected earlier, is bereft of a showing of power of
control, the most crucial and determinative indicator of the presence of an
employer-employee relationship.

Lazaro v SSS (435 SCRA 472)
The fact that Laudato was paid by way of commission does not preclude the
establishment of an employer-employee relationship. In Grepalife v. Judico,

the Court upheld the existence of an employer-employee relationship
between the insurance company and its agents, despite the fact that the
compensation that the agents on commission received was not paid by the
company but by the investor or the person insured. The relevant factor
remains, as stated earlier, 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.

HOURS OF WORK
Cases
Lazaro v SSS (435 SCRA 472)
Neither does it follow that a person who does not observe normal hours of
work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc.
v. Maalat, the employer similarly denied the existence of an employer-
employee relationship, as the claimant according to it, was a "supervisor on
commission basis" who did not observe normal hours of work. This Court
declared that there was an employer-employee relationship, noting that
"[the] supervisor, although compensated on commission basis, [is] exempt
from the observance of normal hours of work for his compensation is
measured by the number of sales he makes."

PROOF
Cases
Television etc. v Servana (542 SCRA 578)
The bundy cards representing the time petitioner had reported for work are
evident proofs of private respondents control over petitioner more
particularly with the time he is required to report for work during the
noontime program of "Eat Bulaga!" If it were not so, petitioner would be
free to report for work anytime even not during the noontime program of
"Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still gets his compensation
for being a "talent." Precisely, he is being paid for being the security of "Eat
Bulaga!" during the above-mentioned period. The daily time cards of
petitioner are not just for mere record purposes as claimed by private
respondents. It is a form of control by the management of private
respondent TAPE.

We find the annexes submitted by the private respondents insufficient to
prove that herein petitioner is indeed an independent contractor. None of

NIKKI HIPOLITO
27
the above conditions exist in the case at bar. Private respondents failed to
show that petitioner has substantial capital or investment to be qualified as
an independent contractor. They likewise failed to present a written contract
which specifies the performance of a specified piece of work, the nature and
extent of the work and the term and duration of the relationship between
herein petitioner and private respondent TAPE.

Lopez v Bodega City (532 SCRA 56)
It is a basic rule of evidence that each party must prove his affirmative
allegation. If he claims a right granted by law, he must prove his claim by
competent evidence, relying on the strength of his own evidence and not
upon the weakness of that of his opponent.

The test for determining on whom the burden of proof lies is found in the
result of an inquiry as to which party would be successful if no evidence of
such matters were given.

In filing a complaint before the Labor Arbiter for illegal dismissal based on
the premise that she was an employee of respondent, it is incumbent upon
petitioner to prove the employee-employer relationship by substantial
evidence.

Indeed, if petitioner was really an employee of respondents for that length
of time, she should have been able to present salary vouchers or pay slips
and not just a single petty cash voucher. The Court agrees with respondents
that petitioner could have easily shown other pieces of evidence such as a
contract of employment, SSS or Medicare forms, or certificates of
withholding tax on compensation income; or she could have presented
witnesses to prove her contention that she was an employee of
respondents.

McLeod v NLRC (512 SCRA 222)
McLeod could have presented evidence to support his allegation of
employer-employee relationship between him and any of Filsyn, SRTI, and
FETMI, but he did not. Appointment letters or employment contracts,
payrolls, organization charts, SSS registration, personnel list, as well as
testimony of co-employees, may serve as evidence of employee status.

It is a basic rule in evidence that parties must prove their affirmative
allegations. While technical rules are not strictly followed in the NLRC, this
does not mean that the rules on proving allegations are entirely ignored.
Bare allegations are not enough. They must be supported by substantial
evidence at the very least.

Domasig v NLRC (261 SCRA 779)
It has long been established that in administrative and quasi-judicial
proceedings, substantial evidence is sufficient as a basis for judgment on
the existence of employer-employee relationship. No particular form of
evidence is required is required to prove the existence of such employer-
employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.

Substantial evidence has been defined to be such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, and its
absence is not shown by stressing that there is contrary evidence on record,
direct or circumstantial, for the appellate court cannot substitute its own
judgment or criterion for that of the trial court in determining wherein lies
the weight of evidence or what evidence is entitled to belief.

ABSENCE OF RELATIONSHIP
Cases
Lopez v Bodega City (532 SCRA 56)
Not every form of control that the hiring party reserves to himself over the
conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship
between them in the legal or technical sense of the term. A line must be
drawn somewhere, if the recognized distinction between an employee and
an individual contractor is not to vanish altogether. Realistically, it would be
a rare contract of service that gives untrammeled freedom to the party hired
and eschews any intervention whatsoever in his performance of the
engagement.

Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second, which address
both the result and the means used to achieve it.

It has been established that there has been no employer-employee
relationship between respondents and petitioner. Their contractual
relationship was governed by the concessionaire agreement embodied in the
1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as
shown by the letter of Yap to her dated February 15, 1995, their contractual
relationship was terminated by reason of respondents' termination of the
subject concessionaire agreement, which was in accordance with the
provisions of the agreement in case of violation of its terms and conditions.

Abante v Lamadrid etc (430 SCRA 368)
Applying the aforementioned test, an employer-employee relationship is
notably absent in this case. It is undisputed that petitioner Abante was a
commission salesman who received 3% commission of his gross sales. Yet
no quota was imposed on him by the respondent; such that a dismal

NIKKI HIPOLITO
28
performance or even a dead result will not result in any sanction or provide
a ground for dismissal. He was not required to report to the office at any
time or submit any periodic written report on his sales performance and
activities. Although he had the whole of Mindanao as his base of operation,
he was not designated by respondent to conduct his sales activities at any
particular or specific place. He pursued his selling activities without
interference or supervision from respondent company and relied on his own
resources to perform his functions. Respondent company did not prescribe
the manner of selling the merchandise; he was left alone to adopt any style
or strategy to entice his customers. While it is true that he occasionally
reported to the Manila office to attend conferences on marketing strategies,
it was intended not to control the manner and means to be used in reaching
the desired end, but to serve as a guide and to upgrade his skills for a more
efficient marketing performance. As correctly observed by the appellate
court, reports on sales, collection, competitors, market strategies, price
listings and new offers relayed by petitioner during his conferences to Manila
do not indicate that he was under the control of respondent.
14
Moreover,
petitioner was free to offer his services to other companies engaged in
similar or related marketing activities as evidenced by the certifications
issued by various customers.

DENIAL- NEGATIVE PREGNANT RULE
Cases
R Transport Corp. v Ejandra (428 SCRA 724)
A negative pregnant is a form of negative expression which carries with it an
affirmation or at least an implication of some kind favorable to the adverse
party. It is a denial pregnant with an admission of the substantial facts
alleged in the pleading. Where a fact is alleged with qualifying or modifying
language and the words of the allegation as so qualified or modified are
literally denied, has been held that the qualifying circumstances alone are
denied while the fact itself is admitted.

Petitioners claim that private respondent was legally dismissed for
abandonment was in fact a negative pregnant: an acknowledgement that
there was no mutual termination of the alleged contract of lease and that
private respondent was its employee. The fact that petitioner paid private
respondent on commission basis did not rule out the presence of an
employee-employer relationship. Article 97(f) of the Labor Code clearly
provides that an employees wages can be in the form of commissions.

6.02 Independent Contractor and Labor Contractor Only

ART. 106: Contractor or Subcontractor. Whenever an employer enters into
a contract with another person for the performance of the formers work,
the employees of the contractor and of the latters subcontractor, if any,
shall be paid in accordance with the provisions of this code.

In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in the same manner
and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations,
restrict or prohibit the contracting-out of labor to protect the rights of
workers established under this Code. In so prohibiting or restricting, he may
make appropriate distinctions between labor-only contracting and job
contracting as well as differentiations with these types of contracting and
determine who among the parties involved shall be considered the employer
for purposes of this Code, to prevent any violation or circumvention of any
provisions of this Code.

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, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which
are directly related to the principal business of such employer. In such
cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

ART. 107: Indirect Employer. The provisions of the immediately preceding
article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.

ART. 109: Solidary Liability. The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held
responsible with his contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct employees.

A. Independent Contractor
a. Management FunctionDetermination Needed

Cases
Manila Electric Co. v Quisumbing (302 SCRA 173)
Additionally, We recognize that contracting out is not unlimited; rather, it is
a prerogative that management enjoys subject to well-defined legal
limitations. As we have previously held, the company can determine in its
best business judgment whether it should contract out the performance of
some of its work for as long as the employer is motivated by good faith, and
the contracting out must not have been resorted to circumvent the law or

NIKKI HIPOLITO
29
must not have been the result of malicious or arbitrary action. The Labor
Code and its implementing rules also contain specific rules governing
contracting out (Department or Labor Order No. 10, May 30, 1997, Sections
1-25).

b. Trilateral Relationship

Cases
PAL v Ligan (547 SCRA 181)
In legitimate contracting, there exists a trilateral relationship under which
there is a contract for a specific job, work or service between the principal
and the contractor or subcontractor, and a contract of employment between
the contractor or subcontractor and its workers. Hence, there are three
parties involved in these arrangements, the principal which decides to farm
out a job or service to a contractor or subcontractor, the contractor or
subcontractor which has the capacity to independently undertake the
performance of the job, work or service, and the contractual workers
engaged by the contractor or subcontractor to accomplish the job, work or
service.

c. RequirementsIndependent Contractor

Cases
PAL v Ligan (547 SCRA 181)
One who claims to be an independent contractor has to prove that he
contracted to do the work according to his own methods and without being
subject to the employer's control except only as to the results.

Big AA Manufacturer v Antonio (484 SCRA 333)
We also agree that Eutiquio was not an independent contractor for he does
not carry a distinct and independent business, and he does not possess
substantial capital or investment in tools, equipment, machinery or work
premises.

He works within petitioners premises using the latters tools and
materials, as admitted by petitioner. Eutiquio is also under petitioners
control and supervision. Attesting to this is petitioners admission that it
allowed respondents to use its facilities for the "proper implementation" of
job orders. Moreover, the Implementing Guidelines regulating attendance,
overtime, deadlines, penalties; providing petitioners right to fire employees
or "contractors"; requiring the carpentry division to join petitioners exercise
program; and providing rules on machine maintenance, all reflect control
and supervision over respondents.

Lakas v Burlingame Corp. (524 SCRA 690)
Secretary that F. Garil is not an independent contractor.
First, F. Garil does not have substantial capitalization or investment in the
form of tools, equipment, machineries, work premises, and other materials,
to qualify as an independent contractor. No proof was adduced to show F.
Garils capitalization.

Second, the work of the promo-girls was directly related to the principal
business or operation of Burlingame. Marketing and selling of products is an
essential activity to the main business of the principal.

Lastly, F. Garil did not carry on an independent business or undertake the
performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, Burlingame.

d. DesirableUnnecessary

Cases
Manila Electric Co. v Benamira (463 SCRA 331)
The individual respondents can not be considered as regular employees of
the MERALCO for, although security services are necessary and desirable to
the business of MERALCO, it is not directly related to its principal business
and may even be considered unnecessary in the conduct of MERALCOs
principal business, which is the distribution of electricity.

Coca-Cola Bottlers Phil. Inc v NLRC (307 SCRA 131)
We perceive at the outset the disposition of the NLRC that janitorial services
are necessary and desirable to the trade or business of petitioner COCA
COLA. But this is inconsistent with our pronouncement in Kimberly
Independent Labor Union v. Drilon where the Court took judicial notice of
the practice adopted in several government and private institutions and
industries of hiring janitorial services on an "independent contractor basis."
In this respect, although janitorial services may be considered directly
related to the principal business of an employer, as with every business, we
deemed them unnecessary in the conduct of the employer's principal
business.

e. Proof

Cases
Oregas v NLRC (559 SCRA 153)
The Court succinctly ruled that there was no denial of due process despite
the failure of the lawyer to file a motion for reconsideration of the trial
court's order declaring his client to have waived the right to present
evidence. It was held that the party had the opportunity to be heard when
he assailed the trial court's decision through an appeal to the CA. The party
was not considered to have been deprived of due process of law even if he
had not been able to present evidence in his behalf and the trial court's
decision was based only on the evidence presented by the opposing party.


NIKKI HIPOLITO
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He had been able to present all his evidence and fully ventilate his
arguments before the LA, then on appeal before the NLRC, and even
in his petition for certiorari before the CA.

Akin to the aforementioned cases, herein petitioner's assertion, that he had
been denied due process of law due to the negligence of counsel, is hollow.
He had more than ample opportunity to be heard and fully thresh out his
case. The reason he proffers as a ground for this Court to nullify the CA
Decision - that his counsel's failure to notify him of the CA Decision and
move for the reconsideration thereof deprived him of due process had not
been clearly established so as to justify divergence from the long-settled
rule on finality of judgments and the principle that clients are bound by the
actions of their counsels. Hence, the Court is bound by the CA's Decision
which has become final and executory due to the simple negligence of
petitioner's former counsel in not filing a motion for reconsideration within
the reglementary period.

f. Employer-Employee Relationship

Cases
Mercury Drug Corp. v Libunao (434 SCRA 404)
In Soliman, Jr. v. Tuazon, we held that where the security agency recruits,
hires and assigns the works of its watchmen or security guards to a client,
the employer of such guards or watchmen is such agency, and not the
client, since the latter has no hand in selecting the security guards. Thus,
the duty to observe the diligence of a good father of a family cannot be
demanded from the said client:
... [I]t is settled in our jurisdiction that where the security agency,
as here, recruits, hires and assigns the work of its watchmen or
security guards, the agency is the employer of such guards or
watchmen. Liability for illegal or harmful acts committed by the
security guards attaches to the employer agency, and not to the
clients or customers of such agency. As a general rule, a client or
customer of a security agency has no hand in selecting who among
the pool of security guards or watchmen employed by the agency
shall be assigned to it; the duty to observe the diligence of a good
father of a family in the selection of the guards cannot, in the
ordinary course of events, be demanded from the client whose
premises or property are protected by the security guards.

Indeed, the petitioner had assigned Sido to help the management open and
close the door of the drug store; inspect the bags of customers as they
enter the store; and, check the receipts issued by the cashier to said
customers for their purchases. However, such circumstances do not
automatically make the security guard the employee of the petitioner, and,
as such, liable for the guard's tortious acts. The fact that a client company
may give instructions or directions to the security guards assigned to it,
does not, by itself, render the client responsible as an employer of the
security guards concerned and liable for their wrongful acts or omissions.

Private respondents were performing work, which are directly related to its
nature of business. Hence, they are deemed regular employees pursuant to
Art. 280 of the Labor Code.

They had been employed for a period ranging from 1 year 4 months to 11
years 10 months. The continuous employment indicates that their jobs are
directly necessary to the daily operation of petitioners business.

Private respondents were supervised, directed and controlled by PALs
regular employees. Thus, G.C. is a labor-only contractor who acted as mere
supplier of manpower.

g. Liability

Cases
Jaguar v Sales (552 SCRA 295)
Under Articles 106, 107 and 109 of the Labor Code, the joint and several
liability of the contractor and the principal is mandated to assure compliance
of the provisions therein including the statutory minimum wage. The
contractor, petitioner in this case, is made liable by virtue of his status as
direct employer. On the other hand, Delta Milling, as principal, is made the
indirect employer of the contractor's employees for purposes of paying the
employees their wages should the contractor be unable to pay them. This
joint and several liability facilitates, if not guarantees, payment of the
workers' performance of any work, task, job or project, thus giving the
workers ample protection as mandated by the 1987 Constitution.

MERALCO, etc. v NLRC (548 SCRA 315)
ART. 106. CONTRACTOR OR SUBCONTRACTOR x x x.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.

Taken together, an indirect employer (as defined by Article 107) can only be
held solidarily liable with the independent contractor or subcontractor (as
provided under Article 109) in the event that the latter fails to pay the
wages of its employees (as described in Article 106).

The joint and several liability of the principal with the contractor and
subcontractor were enacted to ensure compliance with the provisions of the

NIKKI HIPOLITO
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Labor Code, principally those on statutory minimum wage. This liability
facilitates, if not guarantees, payment of the workers" compensation,
thus, giving the workers ample protection as mandated by the 1987
Constitution.

Eparwa Security v Liceo de Cagayan (508 SCRA 370)
Art. 106. Contractor or subcontractor. Whenever an employer enters into
a contract with another person for the performance of the formers work,
the employees of the contractor and of the latters subcontractor, if any,
shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in the same manner
and extent that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit
the contracting out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among
the parties involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this
Code.

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, machineries, work premises, among others, and the
workers recruited and placed by such persons are performing activities
which are directly related to the principal business of the employer. In such
cases, the person or intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

Article 107. Indirect employer. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership, association
or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.

Article 109. Solidary liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall be held
provision of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct employers.

This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions therein
including the statutory minimum wage [Article 99, Labor Code]. The
contractor is made liable by virtue of his status as direct employer. The
principal, on the other hand, is made the indirect employer of the
contractors employees for purposes of paying the employees their wages
should the contractor be unable to pay them. This joint and several liability
facilitates, if not guarantees, payment of the workers performance of any
work, task, job or project, thus giving the workers ample protection as
mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII
Sec. 3].

LDCUs ultimate liability comes into play because of the expiration of the
Contract for Security Services. There is no privity of contract between the
security guards and LDCU, but LDCUs liability to the security guards
remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is
already precluded from asking LDCU for an adjustment in the contract price
because of the expiration of the contract, but Eparwas liability to the
security guards remains because of their employer-employee relationship.
In lieu of an adjustment in the contract price, Eparwa may claim
reimbursement from LDCU for any payment it may make to the security
guards. However, LDCU cannot claim any reimbursement from Eparwa for
any payment it may make to the security guards.

B. Labor Contract Only

Requisites and Prohibition
Cases
Mandaue etc. v Andales (548 SCRA 17)
Based on Article 106 of the Labor Code and Sections 5 and 7 of the
Implementing Rules, "labor-only" contracting exists when the following
criteria are present: (1) where the contractor or subcontractor supplying
workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among other
things; and the workers recruited and placed by the contractor or
subcontractor are performing activities which are directly related to the
principal business of such employer; or (2) where the contractor does not
exercise the right to control the performance of the work of the contractual
employee.

Aboitiz Haulers Inc. v Dimapatol (502 SCRA 271)
In determining whether or not a "labor-only" contracting exists, Art. 106 of
the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109
of the Labor Code, as amended, provides the following criteria: (1) where
the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work
premises, among other things; (2) the workers recruited and placed by such

NIKKI HIPOLITO
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persons are performing activities which are directly related to the principal
business of such employer; and (3) the contractor does not exercise the
right to control the performance of the work of the contractual employee. In
order that one is considered by law as a "labor-only" contractor, all three
aforementioned criteria need not be present. If the contractor enters into an
arrangement characterized by any one of the criteria provided, this would
be a clear case of "labor-only contracting." The clear phrasing of Section 5
of the Rules Implementing Articles 106 to 109 of the Labor Code, as
amended, support this interpretation.

In prohibiting "labor-only" contracting and creating an employer-employee
relationship between the principal and the supposed contractors employees,
the law intends to prevent employers from circumventing labor laws
intended to protect employees.

Maraguinot v NLRC (284 SCRA 539)
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.

C. Effects of Finding

Cases
Mandaue etc. v Andales (548 SCRA 17)
Factual findings of quasi-judicial bodies like the NLRC, when adopted and
confirmed by the CA and if supported by substantial evidence, are accorded
respect and even finality by this Court. The existence of an employer-
employee relationship is a factual matter that will not be delved into by this
Court, since only questions of law may be raised in petitions for review.

The
Court has recognized several exceptions to this rule, such as: (1) when the
findings are grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is based on
a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings, the CA went beyond the issues of the case, or
its findings are contrary to the admissions of both the appellant and the
appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10)
when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; and (11) when the CA
manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion. None of
these exceptions, however, has been convincingly shown by petitioners to
apply in the present case.

San Miguel Corp. v MAERC Integrated Services, Inc. (405 SCRA 579)
Well-established is the principle that findings of fact of quasi-judicial bodies,
like the NLRC, are accorded with respect, even finality, if supported by
substantial evidence. Particularly when passed upon and upheld by the
Court of Appeals, they are binding and conclusive upon the Supreme Court
and will not normally be disturbed.

Aboitiz Haulers, Inc. v Dimapatoi (502 SCRA 271)
Generally, the findings of fact made by the labor arbiter and the NLRC, as
the specialized agencies presumed to have the expertise on matters within
their respective fields, are accorded much respect and even finality, when
supported by ample evidence. However, when the findings of the labor
arbiter and the NLRC are contrary to the evidence on record, this Court shall
lay aside such erroneous findings.

SECTION 7. EMPLOYEE CLASSIFICATION

ART. 280, Labor Code: Regular and Casual Employment. The provisions
of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business of 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 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 as regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

SEC. 5, RULE 1, BOOK VI, OMNIBUS RULES: Regular and casual
employment. (a) The provisions of written agreements to the contrary
notwithstanding and regardless of the oral agreements of the parties, an
employment shall be considered to be regular employment for purposes of
Book VI of the Labor Code 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.

(b) Employment shall be deemed as casual in nature if it is not covered by

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the preceding paragraph; Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or not, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

(c) An employee who is allowed to work after a probationary period shall be
considered a regular employee.

7.01 Coverage
ART. 278, Labor Code: Coverage. The provisions of this Title shall apply
to all establishments or undertakings, whether for profit or not.

7.02 Employee Classification
Regular and Casual Employment (Art. 280)
Probationary Employment (Art. 281)

ART. 280, Labor Code: SEE ABOVE.

ART. 281, Labor Code: Probationary Employment. Probationary
employment shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been
engaged on a probationary basis as may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the
time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.

Recognition and Types
Cases
Glory Philippines Inc. v. Vergara (531 SCRA 253)
Article 280 of the Labor Code provides for three kinds of employees: (1)
regular employees or those who have been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of
the employer; (2) project employees or those 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; and (3) casual employees or
those who are neither regular nor project employees x x x.

Pangilinan v. General Milling Corp. (434 SCRA 159)
Article 280 of the Labor Code comprehends three kinds of employees: (a)
regular employees or those whose work is necessary or desirable to the
usual business of the employer; (b) project employees or those 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 services to be performed
is seasonal in nature and the employment is for the duration of the season;
and, (c) casual employees or those who are neither regular nor project
employees.

A regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as
against those which are undertaken for a specific project or are seasonal.
There are two separate instances whereby it can be determined that an
employment is regular: (1) if the particular activity performed by the
employee is necessary or desirable in the usual business or trade of the
employer; and, (2) if the employee has been performing the job for at least
a year.

In the case of St. Theresa's School of Novaliches Foundation vs. NLRC, we
held that Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period. We furthered that it does not
necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the
parties are forbidden from agreeing on a period of time for the performance
of such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee's duties.

Nature of Issue
Cases
Universal Robina Sugar Milling Corp. v. Caballeda (560 SCRA 115)
It is a well-established rule that a petition for review on certiorari under Rule
45 of the Rules of Court should raise only questions of law, subject to
certain exceptions. Whether or not Agripino was a seasonal/project
employee or a regular employee is a question of fact.

As such, this Court is
not at liberty to review the said factual issue because our jurisdiction is
generally limited to reviewing errors of law that the CA may have
committed. Time and again, we have held that this Court is not a trier of
facts, and it is not for us to re-examine and re-evaluate the probative value
of evidence presented before the LA, the NLRC and the CA, which formed
the basis of the assailed decision. Indeed, when their findings are in
absolute agreement, the same are accorded not only respect but even
finality as long as they are amply supported by substantial evidence.

In this case, it is noteworthy that the LA, the NLRC and the CA are one in
ruling that Agripino was not a casual employee much less a seasonal or
project employee. In their findings, Agripino was considered a regular
employee of URSUMCO. Consequently, such uniform finding of the LA, the
NLRC, and the CA binds this Court. We find no cogent reason to depart from
this ruling.


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Employer DeterminationEffect
Cases
San Miguel Corporation v. NLRC (297 SCRA 277)
protection of the working class, it should not be supposed that every dispute
will be automatically decided in favor of labor. Management has also rights,
which, as such, are entitled to respect and enforcement in the interest of
fair play. Although the Supreme Court has inclined more often than not
toward the worker and has upheld his cause in his conflicts with the
employer, such favoritism has not blinded the Court to the rule that justice
is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine.

The nature of ones employment does not depend on the will or word of the
employer. Nor on the procedure of hiring and the manner of designating
the employee, but on the nature of the activities to be performed by the
employee, considering the employers nature of business and the duration
and scope of the work to be done.

Private respondent was hired for a specific project that was not within the
regular business of the corporation. For petitioner is not engaged in the
business of repairing furnaces. Although the activity was necessary to
enable petitioner to continue manufacturing glass, the necessity therefor
arose only when a particular furnace reached the end of its life or operating
cycle. Or, as in the second undertaking, when a particular furnace required
an emergency repair. In other words, the undertakings where private
respondent was hired primarily as helper/bricklayer have specified goals and
purposes, which are fulfilled once the designated work was completed.
Moreover, such undertakings were also identifiably separate and distinct
from the usual, ordinary or regular business operations of petitioner, which
is glass manufacturing. These undertakings, the duration and scope of
which had been determined and made known to private respondent at the
time of his employment, clearly indicated the nature of his employment as a
project employee. Thus, his services were terminated legally after the
completion of the project.

Public respondent NLRCs decision (that Private respondent is a regular
employee), if upheld, would amount to negating the distinctions made in
Article 280 of the Labor Code. It would shunt aside the rule that since a
project employees work depends on the availability of a project,
necessarily, the duration of his employment is coterminous with the project
to which he is assigned. It would become a burden for an employer to retain
an employee and pay him his corresponding wages if there was no project
for him to work on.

Tabas v. California Manufacturing Co., Inc. v. NLRC (169 SCRA 497)
The existence of an employer-employees relation is a question of law and
being such, it cannot be made the subject of agreement. Hence, the fact
that the manpower supply agreement between Livi and California had
specifically designated the former as the petitioners' employer and had
absolved the latter from any liability as an employer, will not erase either
party's obligations as an employer, if an employer-employee relation
otherwise exists between the workers and either firm. At any rate, since the
agreement was between Livi and California, they alone are bound by it, and
the petitioners cannot be made to suffer from its adverse consequences.

7.03 Regular Employees
ART. 280, Par. 1, Labor Code: Regular and Casual Employment. The
provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of
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

ART. 280, Par. 2, Labor Code: An employment shall be deemed 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 as regular employee with respect
to the activity in which he is employed and his employment shall continue
while such activity exists.

ART. 281, Last Sentence, Labor Code: An employee who is allowed to
work after a probationary period shall be considered a regular employee.

ART. 75 (D), Labor Code: A commitment to employ the learners if they so
desire, as regular employees upon completion of the learnership. All
learners who have been allowed or suffered to work during the first two (2)
months shall be deemed regular employees if training is terminated by the
employer before the end of the stipulated period through no fault of the
learners.

The learnership agreement shall be subject to inspection by the Secretary of
Labor and Employment or his duly authorized representative.

TypesRegular Employees
Cases
Philips Semiconductors etc. v. Fadriquela (427 SCRA 208)
Article 280 of the Labor Code of the Philippines was emplaced in our statute

NIKKI HIPOLITO
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books to prevent the circumvention by unscrupulous employers of the
employees right to be secure in his tenure by indiscriminately and
completely ruling out all written and oral agreements inconsistent with the
concept of regular employment defined therein. The language of the law
manifests the intent to protect the tenurial interest of the worker who may
be denied the rights and benefits due a regular employee because of
lopsided agreements with the economically powerful employer who can
maneuver to keep an employee on a casual or temporary status for as long
as it is convenient to it. In tandem with Article 281 of the Labor Code,
Article 280 was designed to put an end to the pernicious practice of making
permanent casuals of our lowly employees by the simple expedient of
extending to them temporary or probationary appointments, ad infinitum.

The two kinds of regular employees under the law are (1) those engaged to
perform activities which are necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who have rendered
at least one year of service, whether continuous or broken, with respect to
the activities in which they are employed. The primary standard to
determine a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the 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. 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 of the employer. Hence,
the employment is also considered regular, but only with respect to such
activity and while such activity exists. The law does not provide the
qualification that the employee must first be issued a regular appointment
or must be declared as such before he can acquire a regular employee
status.

Nature of Work
Cases
Universal Robina Sugar Milling Corp v. Caballeda (560 SCRA 115)
Whether or not Agripino was a seasonal/project employee or a regular
employee is a question of fact.

As such, this Court is not at liberty to review
the said factual issue because our jurisdiction is generally limited to
reviewing errors of law that the CA may have committed. Time and again,
we have held that this Court is not a trier of facts, and it is not for us to re-
examine and re-evaluate the probative value of evidence presented before
the LA, the NLRC and the CA, which formed the basis of the assailed
decision. Indeed, when their findings are in absolute agreement, the same
are accorded not only respect but even finality as long as they are amply
supported by substantial evidence.

In this case, it is noteworthy that the LA, the NLRC and the CA are one in
ruling that Agripino was not a casual employee much less a seasonal or
project employee. In their findings, Agripino was considered a regular
employee of URSUMCO.

Magsalin v. National Organization etc. (403 SCRA 199)
Coca-Cola Bottlers Phils., Inc., is one of the leading and largest
manufacturers of softdrinks in the country. Respondent workers have long
been in the service of petitioner company. Respondent workers, when
hired, would go with route salesmen on board delivery trucks and undertake
the laborious task of loading and unloading softdrink products of petitioner
company to its various delivery points.
Even while the language of law might have been more definitive, the clarity
of its spirit and intent, i.e., to ensure a regular workers security of tenure,
however, can hardly be doubted. In determining whether an employment
should be considered regular or non-regular, the applicable test is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The
standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a fact
that can be assessed by looking into the nature of the services rendered and
its relation to the general scheme under which the business or trade is
pursued in the usual course. It is distinguished from a specific undertaking
that is divorced from the normal activities required in carrying on the
particular business or trade. But, although the work to be performed is only
for a specific project or seasonal, where a person thus engaged has been
performing the job for at least one year, even if the performance is not
continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the
employer. The employment of such person is also then deemed to be
regular with respect to such activity and while such activity exists.

Hacienda Fatima v. National Federation of Sugarcane Workers Food
and General Trade (396 SCRA 518)
For respondents to be excluded from those classified as regular employees,
it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one
season. The evidence proves the existence of the first, but not of the
second, condition. The fact that respondents with the exception of Luisa
Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva repeatedly
worked as sugarcane workers for petitioners for several years is not denied
by the latter. Evidently, petitioners employed respondents for more than
one season. Therefore, the general rule of regular employment is applicable.


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Skippers United v. NLRC (494 SCRA 661)
A seafarer is not a regular employee as defined in Article 280 of the Labor
Code. Hence, he is not entitled to full backwages and separation pay in lieu
of reinstatement as provided in Article 279 of the Labor Code. Seafarers are
contractual employees whose rights and obligations are governed primarily
by the POEA Standard Employment Contract for Filipino Seamen, the Rules
and Regulations Governing Overseas Employment, and, more importantly,
by Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas
Filipinos Act of 1995. While the POEA Standard Employment Contract for
Filipino Seamen and the Rules and Regulations Governing Overseas
Employment do not provide for the award of separation or termination pay,
Section 10 of R.A. 8042 provides for the award of money claims in cases of
illegal dismissals.

Lopez v. MWSS (462 SCRA 428)
Petitioners are indeed regular employees of the MWSS. The primary
standard of determining 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 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. Likewise, the
repeated and continuing need for the performance of the job has been
deemed sufficient evidence of the necessity, if not indispensability of the
activity to the business. Some of the petitioners had rendered more than
two decades of service to the MWSS. The continuous and repeated rehiring
of these bill collectors indicate the necessity and desirability of their
services, as well as the importance of the role of bill collectors in the MWSS.
PNOC-Energy Development Corp. v. NLRC (521 SCRA 222)
The applicable formula to ascertain whether an employment should be
considered regular or non-regular is the reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer.
9
As we held in Grandspan Development
Corporation v. Bernardo:

The principal test for determining whether particular employees are
properly characterized as "project employees," as distinguished from
"regular employees," is whether or not the project employees were
assigned to carry out a "specific project or undertaking," the
duration and scope of which were specified at the time the
employees were engaged for that project.

As defined, project employees are those workers hired (1) for a specific
project or undertaking, and (2) the completion or termination of such
project or undertaking has been determined at the time of the engagement
of the employee. However, petitioner failed to substantiate its claim that
respondents were hired merely as project employees. A perusal of the
records of the case reveals that the supposed specific project or undertaking
of petitioner was not satisfactorily identified in the contracts of respondents.

Another cogent factor, which militates against petitioners insistence that
the services of respondents were terminated because the projects for which
they were hired had been completed, is the fact that respondents contracts
of employment were extended a number of times for different or new
projects. It must be stressed that a contract that misuses a purported fixed-
term employment to block the acquisition of tenure by employees deserves
to be struck down for being contrary to law, morals, good customs, public
order and public policy.

Santiago v. CF Sharp Crew Management Inc. (527 SCRA 165)
We likewise do not see respondents failure to deploy petitioner as an act
designed to prevent the latter from attaining the status of a regular
employee. Even if petitioner was able to depart the port of Manila, he still
cannot be considered a regular employee, regardless of his previous
contracts of employment with respondent. In Millares v. National Labor
Relations Commission, the Court ruled that seafarers are considered
contractual employees and cannot be considered as regular employees
under the Labor Code. Their employment is governed by the contracts they
sign every time they are rehired and their employment is terminated when
the contract expires. The exigencies of their work necessitates that they be
employed on a contractual basis.

Hiring Extend Period
Cases
Hanjin etc. v. Ibanez (555 SCRA 337)
In a number of cases, the Court has held that the length of service or the
re-hiring of construction workers on a project-to-project basis does NOT
confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are
preferred. Employees who are hired for carrying out a separate job, distinct
from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time
of the employment, are properly treated as project employees and their
services may be lawfully terminated upon the completion of a project.
Should the terms of their employment fail to comply with this standard, they
cannot be considered project employees.

San Miguel Corp. v. NLRC (510 SCRA 181)
The act of hiring and re-hiring workers over a period of time without
considering them as regular employees evidences bad faith on the part of
the employer. Where, from the circumstances, it is apparent that periods
have been imposed to preclude the acquisition of tenurial security by the
employee, the policy, agreement or practice should be struck down as
contrary to public policy, morals, good customs or public order. In point of

NIKKI HIPOLITO
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law, any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall be liable for
the damage.

Raycor Aircon Systems, Inc. v. San Pedro (526 SCRA 429)
Consequently, the Court affirms the finding of the CA and the labor tribunals
that respondent became a regular employee after 23 months of rehiring.

Santiago v. CF Sharp Crew Management Inc. (527 SCRA 165)
Petitioner additionally claims that he should be considered a regular
employee, having worked for five (5) years on board the same vessel owned
by the same principal and manned by the same local agent. He argues that
respondents act of not deploying him was a scheme designed to prevent
him from attaining the status of a regular employee.

We do not see respondents failure to deploy petitioner as an act designed
to prevent the latter from attaining the status of a regular employee. Even if
petitioner was able to depart the port of Manila, he still cannot be
considered a regular employee, regardless of his previous contracts of
employment with respondent. In Millares v. National Labor Relations
Commission, the Court ruled that seafarers are considered contractual
employees and cannot be considered as regular employees under the Labor
Code. Their employment is governed by the contracts they sign every time
they are rehired and their employment is terminated when the contract
expires. The exigencies of their work necessitates that they be employed on
a contractual basis.

Contract to Contract
Cases
Beta Electric Corp. v. NLRC (182 SCRA 384)
The petitioner cannot rightfully say that since the private respondent's
employment hinged from contract to contract, it was ergo, "temporary",
depending on the term of each agreement. Under the Labor Code, an
employment may only be said to be "temporary" "where [it] has been fixed
for a specific undertaking the completion of or termination of which has
the work or services to be performed is seasonal in nature and the
employment is for the duration of the season." Quite to the contrary, the
private respondent's work, that of "typist-clerk" is far from being "specific"
or "seasonal", but rather, one, according to the Code, "where the employee
has been engaged to perform activities which are usually necessary or
desirable in the usual business." And under the Code, where one performs
such activities, he is a regular employee, "[t]he provisions of written
agreement to the contrary notwithstanding . . .

The fact that her employment has been a contract-to-contract basis can not
alter the character of employment, because contracts can not override the
mandate of law. Hence, by operation of law, she has become a regular
employee.

Universal Robina Corp. v. Catapang (473 SCRA 189)
It is obvious that the said five-month contract of employment was used by
petitioners as a convenient subterfuge to prevent private respondents from
becoming regular employees. Such contractual arrangement should be
struck down or disregarded as contrary to public policy or morals. To uphold
the same would, in effect, permit petitioners to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis,
thereby violating the employees security of tenure in their jobs.

Length of Time
Cases
Maraguinot v. NLRC (284 SCRA 539)
The length of time during which the employee was continuously re-hired is
not controlling, but merely serves as a badge of regular employment.

Abesco Construction and Development Corp. v. Ramirez (487 SCRA
9)
Length of service is not a controlling factor in determining the nature of
ones employment.

Seafarers
Cases
Dela Cruz v. Maersk (551 SCRA 285)
Seafarers are not covered by the term regular employment, as defined
under Article 280 of the Labor Code. This was reiterated in Coyoca v.
National Labor Relations Commission.
20
Instead, they are considered
contractual employees whose rights and obligations are governed primarily
by the POEA Standard Employment Contract for Filipino Seamen (POEA
Standard Employment Contract), the Rules and Regulations Governing
Overseas Employment, and, more importantly, by Republic Act No. 8042,
otherwise known as The Migrant Workers and Overseas Filipinos Act of
1995.
21
Even the POEA Standard Employment Contract itself mandates that
in no case shall a contract of employment concerning seamen exceed 12
months.

It is an accepted maritime industry practice that the employment of
seafarers is for a fixed period only. The Court acknowledges this to be for
the mutual interest of both the seafarer and the employer. Seafarers cannot
stay for a long and indefinite period of time at sea as limited access to shore
activity during their employment has been shown to adversely affect them.
Furthermore, the diversity in nationality, culture and language among the
crew necessitates the limitation of the period of employment.


NIKKI HIPOLITO
38
7.04 Project Employees
ART. 280, Par. 1, Labor Code: Regular and Casual Employment. The
provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business of
trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
the work or service to be performed is seasonal in nature and the

Defined
Cases
PNOC Energy Development Corp. v. NLRC (521 SCRA 227)
The principal test for determining whether particular employees are properly
characterized as "project employees," as distinguished from "regular
employees," is whether or not the project employees were assigned to carry
out a "specific project or undertaking," the duration and scope of which
were specified at the time the employees were engaged for that project.

As defined, project employees are those workers hired (1) for a specific
project or undertaking, and (2) the completion or termination of such
project or undertaking has been determined at the time of the engagement
of the employee.

However, petitioner failed to substantiate its claim that
respondents were hired merely as project employees. A perusal of the
records of the case reveals that the supposed specific project or undertaking
of petitioner was not satisfactorily identified in the contracts of respondents.

ALU-TUCP v. NLRC (234 SCRA 678)
The present case therefore strictly falls under the definition of "project
employees" on paragraph one of Article 280 of the Labor Code, as amended.
Moreover, it has been held that the length of service of a project employee
is not the controlling test of employment tenure but whether or not "the
employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee". (See Hilario Rada v. NLRC, G.R. No. 96078,
January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674
(1985).

Kiamco v. NLRC (309 SCRA 424)
The principal test for determining whether particular employees are properly
characterized as project employees, as distinguished from regular
employees, is whether or not the project employees were assigned to
carry out a specific project or undertaking, the duration (and scope) of
which were specified at the time the employees were engaged for that
project. As defined, project employees are those workers hired (1) for a
specific project or undertaking, and (2) the completion or termination of
such project or undertaking has been determined at the time of engagement
of the employee.

Under Policy Instruction No. 20 of the Secretary of Labor, project employees
are those employed in connection with a particular project. Non-project or
regular employees are those employed without reference to any particular
project.

Project Employees
Cases
Phil. Jai-Alai and Amusement Corp. v. Clave (126 SCRA 299)
Private respondents were hired for a specific project to renovate the main
building, where major repairs such as painting the main building, repair of
the roof, cleaning of clogged water pipes and drains, and other necessary
repairs were required. It was made known, and so understood at the start of
the hiring, that their services would last until the completion of the
renovation. They rendered service from February 2 to December 11, 1976,
almost 11 months, but less than a year.

The casual or limited character of private respondents' employment,
therefore, is evident. They were engaged for a specific project or
undertaking and fall within the exception provided for in Article 281 of the
Labor Code, supra. Not being regular employees, it cannot be justifiably said
that petitioner had dismissed them without just cause. They are not entitled
to reinstatement with full backwages.

Sandoval Shipyards Inc. v. NLRC (136 SCRA 674)
Policy Instructions No. 20 of the Secretary of Labor, which was issued to
stabilize employer-employee relations in the construction industry, provides:
Project employees are those employed in connection with a
particular construction project. Non-project (regular) employees are
those employed by a construction company without reference to any
particular project.

Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of
projects in which they have been employed by a particular
construction company. Moreover, the company is not required to
obtain clearance from the Secretary of Labor in connection with such
termination.

Imbuido v. NLRC (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

NIKKI HIPOLITO
39
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 instant case, petitioner
was engaged to perform activities which were usually necessary or desirable
in the usual business or trade of the employer, as admittedly, petitioner
worked as a data encoder for private respondent, a corporation engaged in
the business of data encoding and keypunching, and her employment was
fixed for a specific project or undertaking the completion or termination of
which had been determined at the time of her engagement, as may be
observed from the series of employment contracts between petitioner and
private respondent, all of which contained a designation of the specific job
contract and a specific period of employment.

Chua v. CA (440 SCRA 121)
In Violeta v. NLRC, this Court ruled that to be exempted from the
presumption of regularity of employment, the agreement between a project
employee and his employer must strictly conform to the requirements and
conditions under Article 280 of the Labor Code. It is not enough that an
employee is hired for a specific project or phase of work. There must also
be a determination of, or a clear agreement on, the completion or
termination of the project at the time the employee was engaged if the
objectives of Article 280 are to be achieved. This second requirement was
not met in this case.

Rationale
Cases
De Ocampo v. NLRC (186 SCRA 360)
Also noteworthy in this connection is Policy Instruction No. 20 of the
Department of Labor, providing that "project employees are not entitled to
separation pay if they are terminated as a result of the completion of the
project or any phase thereof in which they are employed, regardless of the
projects in which they had been employed by a particular construction
company." Affirmatively put, and interpreting it in the most liberal way to
favor the working class, the rule would entitle project employees to
separation pay if the projects they are working on have not yet been
completed when their services are terminated. And this should be true even
if their contracts have expired, on the theory that such contracts would have
been renewed anyway because their services were still needed.

It is the policy of the Constitution to afford protection to labor in recognition
of its role in the improvement of our welfare and the strengthening of our
democracy. An exploited working class is a discontented working class. It is
a treadmill to progress and a threat to freedom. Knowing this, we must
exert all effort to dignify the lot of the employee, elevating him to the same
plane as his employer, that they may better work together as equal partners
in the quest for a better life. This is a symbiotic relationship we must
maintain if such a quest is to succeed.

Employer Obligation
Cases
Hanjin etc. v. Ibanez (555 SCRA 337)
Petitioners call attention to the fact that they complied with two of the
indicators of project employment, as prescribed under Section 2.2(e) and (f)
of Department Order No. 19, Series of 1993, entitled Guidelines Governing
the Employment of Workers in the Construction Industry, issued by the
DOLE:
2.2 Indicators of project employment. - Either one or more of the
following circumstances, among others, may be considered as
indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for
which the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and is
made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in
connection with the particular project/undertaking for which
he is engaged.
(d) The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer.
(e) The termination of his employment in the
particular project/undertaking is reported to the
Department of Labor and Employment (DOLE)
Regional Office having jurisdiction over the workplace
within 30 days following the date of his separation
from work, using the prescribed form on employees'
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the
employer to pay completion bonus to the project
employee as practiced by most construction
companies. (Emphasis provided.)

Due to petitioners' failure to adduce any evidence showing that petitioners
were project employees who had been informed of the duration and scope
of their employment, they were unable to discharge the burden of proof
required to establish that respondents' dismissal was legal and valid.
Furthermore, it is a well-settled doctrine that if doubts exist between the
evidence presented by the employer and that by the employee, the scales of
justice must be tilted in favor of the latter. For these reasons, respondents
are to be considered regular employees of HANJIN.


NIKKI HIPOLITO
40
Finally, in the instant case, records failed to show that HANJIN afforded
respondents, as regular employees, due process prior to their dismissal,
through the twin requirements of notice and hearing. Respondents were not
served notices informing them of the particular acts for which their dismissal
was sought. Nor were they required to give their side regarding the charges
made against them. Certainly, the respondents' dismissal was not carried
out in accordance with law and was, therefore, illegal.

A.M. Oreta and Co. Inc. v. NLRC (176 SCRA 218)
The law is clear to the effect that in all cases involving employees engaged
on probationary period basis, the employer shall make known to the
employee at the time he is hired, the standards by which he will qualify as a
regular employee. Nowhere in the employment contract executed between
petitioner company and respondent Grulla is there a stipulation that the
latter shall undergo a probationary period for three months before he can
qualify as a regular employee. There is also no evidence on record showing
that the respondent Grulla has been appraised of his probationary status
and the requirements which he should comply in order to be a regular
employee. In the absence of this requisites, there is justification in
concluding that respondent Grulla was a regular employee at the time he
was dismissed by petitioner. As such, he is entitled to security of tenure
during his period of employment and his services cannot be terminated
except for just and authorized causes enumerated under the Labor Code
and under the employment contract.

x x x

The twin requirements of notice and hearing 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 and the reason for the proposed dismissal, while the requirement of
hearing affords the employee an opportunity to answer his employer's
charges against him and accordingly to defend himself therefrom before
dismissal is effected. Neither of these requirements can be dispensed with
without running afoul of the due process requirement of the Constitution
(Century Textile Mills, Inc., et al. v. NLRC, et al., G.R. No. 77859, May
25,1988).
Specific Period
Cases
Glory Philippines, Inc. v. Vergara (531 SCRA 253)
In Grandspan Development Corporation v. Bernardo, the Court held that the
principal test for determining whether particular employees are properly
characterized as project employees, as distinguished from regular
employees, is whether or not the project employees were assigned to
carry out a specific project or undertaking, the duration and scope of which
were specified at the time the employees were engaged for that project. As
defined, project employees are those workers hired (1) for a specific project
or undertaking, and (2) the completion or termination of such project or
undertaking has been determined at the time of engagement of the
employee.

In the instant case, respondents employment contracts failed to state the
specific project or undertaking for which they were allegedly engaged.
While petitioner claims that respondents were hired for the transaction with
Glory Japan, the same was not indicated in the contracts. As correctly
observed by the Court of Appeals, nothing therein suggested or even hinted
that their employment was dependent on the continuous patronage of Glory
Japan.

Further, the employment contracts did not indicate the duration and scope
of the project or undertaking as required by law. It is not enough that an
employee is hired for a specific project or phase of work to qualify as a
project employee. There must also be a determination of, or a clear
agreement on, the completion or termination of the project at the time the
employee was engaged, which is absent in this case.

Purefoods Corp. v. NLRC (283 SCRA 133)
Contrary to petitioner's submission, the private respondents could not be
regarded as having been hired for a specific project or undertaking. The
term "specific project or undertaking" under 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; the services employed are then
necessary and desirable in the employer's usual business only for the period
of time it takes to complete the project.
The fact that the petitioner repeatedly and continuously hired workers to do
the same kind of work as that performed by those whose contracts had
expired negates petitioner's contention that those workers were hired for a
specific project or undertaking only.

Labayog v. M.Y. San Biscuits, Inc. (494 SCRA 486)
Where the duties of the employee consist of activities, which are necessary
or desirable in the usual business of the employer, the parties are not
prohibited from agreeing on the duration of employment. Article 280 does
not proscribe or prohibit an employment contract with a fixed period
provided it is not intended to circumvent the security of tenure.

Two criteria validate a contract of employment with a fixed period: (1) the
fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress or improper pressure being brought to
bear on the employee and without any circumstances vitiating consent or,
(2) it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being

NIKKI HIPOLITO
41
exercised by the former on the latter. Against these criteria, petitioners'
contracts of employment with a fixed period were valid.

Each contract provided for an expiration date. Petitioners knew from the
beginning that the employment offered to them was not permanent but only
for a certain fixed period. They were free to accept or to refuse the offer.
When they expressed their acceptance, they bound themselves to the
contract.

In this case, there was no allegation of vitiated consent. Respondents did
not exercise moral dominance over petitioners. The contracts were mutually
advantageous to the parties. While respondents were able to augment
increased demand in production by hiring petitioners on an as-needed basis,
petitioners found gainful employment if only for a few months.

Simply put, petitioners were not regular employees. While their employment
as mixers, packers and machine operators was necessary and desirable in
the usual business of respondent company, they were employed temporarily
only, during periods when there was heightened demand for production.
Consequently, there could have been no illegal dismissal when their services
were terminated on expiration of their contracts. There was even no need
for notice of termination because they knew exactly when their contracts
would end. Contracts of employment for a fixed period terminate on their
own at the end of such period.

Contracts of employment for a fixed period are not unlawful. What is
objectionable is the practice of some scrupulous employers who try to
circumvent the law protecting workers from the capricious termination of
employment. Employers have the right and prerogative to choose their
workers. "The law, while protecting the rights of the employees, authorizes
neither the oppression nor destruction of the employer. When the law
angles the scales of justice in favor of labor, the scale should never be so
tilted if the result is an injustice to the employer."

Continuous Rehiring
Cases
Chua v. CA (440 SCRA 121)
Moreover, while it may be true that private respondents were initially hired
for specific projects or undertakings, the repeated re-hiring and continuing
need for their services over a long span of timethe shortest being two
years and the longest being eighthave undeniably made them regular
employees. This Court has held that an employment ceases to be co-
terminus with specific projects when the employee is continuously rehired
due to the demands of the employers business and re-engaged for many
more projects without interruption. The Court likewise takes note of the fact
that, as cited by the SSC, even the National Labor Relations Commission in
a labor case involving the same parties, found that private respondents
were regular employees of the petitioner.

C.E. Construction Corp. v. Cioco (437 SCRA 648)
We again hold that the fact that the WORKERS have been employed with
the COMPANY for several years on various projects, the longest being nine
(9) years, did not automatically make them regular employees considering
that the definition of regular employment in Article 280 of the Labor Code,
makes specific exception with respect to project employment. The re-hiring
of petitioners on a project-to-project basis did not confer upon them regular
employment status. The practice was dictated by the practical consideration
that experienced construction workers are more preferred. It did not change
their status as project employees.

Workpool Employees
Cases
Maraguinot v. NLRC (284 SCRA 539)
A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as
the effect of temporary cessation of work is concerned. This is beneficial to
both the employer and employee for it prevents the unjust situation of
"coddling labor at the expense of capital" and at the same time enables the
workers to attain the status of regular employees.

Aguilar Corp. v. NLRC (269 SCRA 596)
Members of a work pool from which a construction company draws its
project employees, if considered employees of the construction company
while in the work pool, are non-project employees or employees for an
indefinite period. If they are employed in a particular project, the
completion of the project or any phase thereof will not mean severance of
(the) employer-employee relationship.(Emphasis supplied)
Abesco Construction and Development Corp. v. Ramirez (487 SCRA
9)
Employees who are members of a work pool from which a company (like
petitioner corporation) draws workers for deployment to its different
projects do not become regular employees by reason of that fact alone. The
Court has enunciated in some cases that members of a work pool can
either be project employees or regular employees.

The principal test for determining whether employees are project
employees or regular employees is whether they are assigned to carry
out a specific project or undertaking, the duration and scope of which are
specified at the time they are engaged for that project. Such duration, as

NIKKI HIPOLITO
42
well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of
hiring.

Length of Service
Cases
Palomares v. NLRC (277 SCRA 439)
Length of service is not the controlling determinant of the employment
tenure of a project employee. As stated earlier, it is based on whether or
not the employment has been fixed for a specific project or undertaking, the
completion of which has been determined at the time of the engagement of
the employee. Furthermore, the second paragraph of Article 280, providing
that an employee who has rendered service for at least one (1) year, shall
be considered a regular employee, pertains to casual employees and not to
project employees such as petitioners.

Filipinas Pre-Fabricated Building Systems, Inc. v. Puente (453 SCRA
820)
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 services to be performed is seasonal in nature and the employment
is for the duration of the season. In D.M. Consunji, Inc. v. NLRC, this Court
has ruled that the length of service of a project employee is not the
controlling test of employment tenure but whether or not the employment
has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of
the employee.

In Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente, the
Court ruled that "the length of service of a project employee is not the
controlling test of employment tenure but whether or not the employment
has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of
the employee." Indeed, while length of time may not be the controlling test
for project employment, it is vital in determining if the employee was hired
for a specific undertaking or tasked to perform functions vital, necessary
and indispensable to the usual business or trade of the employer. Here,
respondents had been project employees several times over. Their
employment ceased to be coterminous with specific projects when they
were repeatedly re-hired by petitioner. Where the employment of project
employees is extended long after the supposed project has been finished,
the employees are removed from the scope of project employees and are
considered regular employees.

7.05 Casual Employees
ART. 280, Par. 2, Labor Code: An employment shall be deemed 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 as regular employee with respect
to the activity in which he is employed and his employment shall continue
while such activity exists.

Nature of Work
Cases
A.M. Oreta & Co., Inc. v. NLRC (176 SCRA 218)
It may be well to cite at this point Policy Instructions No. 12 of the then
Minister of Labor (Now Secretary of Labor and Employment) which provides:
PD 850 has defined the concept of regular and casual employment.
What determines regularity or casualness is not employment
contract, written or otherwise, but the nature of the job. If the job is
usually necessary or desireable to the main business of the
employer, the employment is regular. . .

One Year Service
Cases
Kimberly v. Drilon (185 SCRA 190)
The law thus provides for two. kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (2) those who
have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed. The individual
petitioners herein who have been adjudged to be regular employees fall
under the second category. These are the mechanics, electricians,
machinists machine shop helpers, warehouse helpers, painters, carpenters,
pipefitters and masons It is not disputed that these workers have been in
the employ of KIMBERLY for more than one year at the time of the filing of
the Petition for certification election by KILUSAN-OLALIA.
Owing to their length of service with the company, these workers became
regular employees, by operation of law, one year after they were employed
by KIMBERLY through RANK. While the actual regularization of these
employees entails the mechanical act of issuing regular appointment papers
and compliance with such other operating procedures as may be adopted by
the employer, it is more in keeping with the intent and spirit of the law to
rule that the status of regular employment attaches to the casual worker on
the day immediately after the end of his first year of service. To rule
otherwise, and to instead make their regularization dependent on the
happening of some contingency or the fulfillment of certain requirements, is
to impose a burden on the employee which is not sanctioned by law.

That the first stated position is the situation contemplated and sanctioned
by law is further enhanced by the absence of a statutory limitation before

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regular status can be acquired by a casual employee. The law is explicit. As
long as the employee has rendered at least one year of service, he becomes
a regular employee with respect to the activity in which he is employed. The
law does not provide the qualification that the employee must first be issued
a regular appointment or must first be formally declared as such before he
can acquire a regular status. Obviously, where the law does not distinguish,
no distinction should be drawn.

San Miguel Corporation v. Abella (461 SCRA 392)
The law of course provides for two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (2) those who
have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.

As for those of private respondents who were engaged in janitorial and
messengerial tasks, they fall under the second category and are thus
entitled to differential pay and benefits extended to other SMC regular
employees from the day immediately following their first year of service.

Integrated Contractor and Plumbing Works Inc. v. CA (464 SCRA
544)
While the actual regularization of these employees entails the mechanical
act of issuing regular appointment papers and compliance with such other
operating procedures as may be adopted by the employer, it is more in
keeping with the intent and spirit of the law to rule that the status of regular
employment attaches to the casual worker on the day immediately after the
end of his first year of service. To rule otherwise, and to instead make their
regularization dependent on the happening of some contingency or the
fulfillment of certain requirements, is to impose a burden on the employee,
which is not sanctioned by law.

7.06 ContractFixed Period

Tests Validity
Cases
Brent School v. Zamora (181 SCRA 702)
"Where from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy, morals,
etc."

Labayog v. M.Y. Brents, Inc. (494 SCRA 486)
Two criteria validate a contract of employment with a fixed period: (1) the
fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress or improper pressure being brought to
bear on the employee and without any circumstances vitiating consent or,
(2) it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former on the latter. Against these criteria, petitioners'
contracts of employment with a fixed period were valid.

Cielo v. NLRC (193 SCRA 410)
The Court looks with stern disapproval at the contract entered into by the
private respondent with the petitioner (and who knows with how many other
drivers). The agreement was a clear attempt to exploit the unwitting
employee and deprive him of the protection of the Labor Code by making it
appear that the stipulations of the parties were governed by the Civil Code
as in ordinary private transactions. They were not, to be sure. The
agreement was in reality a contract of employment into which were read the
provisions of the Labor Code and the social justice policy mandated by the
Constitution. It was a deceitful agreement cloaked in the habiliments of
legality to conceal the selfish desire of the employer to reap undeserved
profits at the expense of its employees. The fact that the drivers are on the
whole practically unlettered only makes the imposition more censurable and
the avarice more execrable.

Caparoso v. CA (516 SCRA 30)
The Court thus laid down the criteria under which fixed-term employment
could not be said to be in circumvention of the law on security of tenure,
thus:

1. The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or

2. It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
Fabela v. San Miguel Corporation (515 SCRA 288)
Project employment is distinct from casual employment referred to in the
second paragraph of Article 280 for, as clarified in Mercado, Sr. v. NLRC, the
proviso that "any employee who has rendered at least one year of service . .
. shall be considered a regular employee" does not apply to project
employees, but only to casual employees.

Although Article 280 does not expressly recognize employment for a fixed
period, which is distinct from employment which has been fixed for a
specific project or undertaking, Brent School, Inc. v. Zamora has clarified
that employment for a fixed period is not in itself illegal, viz:
There can of course be no quarrel with the proposition that where
from the circumstances it is apparent that periods have been
imposed to preclude acquisition of tenurial security by the

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employee, they should be struck down or disregarded as
contrary to public policy, morals, etc. But where no such
intent to circumvent the law is shown, or stated otherwise,
where the reason for the law does not exist, e.g., where it is
indeed the employee himself who insists upon a period or
where the nature of the engagement is such that, without
being seasonal or for a specific project, a definite date of
termination is a sine qua non, would an agreement fixing a
period essentially evil or illicit, therefore anathema? Would
such an agreement come within the scope of Article 280 which
admittedly was enacted "to prevent the circumvention of the right of
the employee to be secured in x x (his) employment?"
x x x x
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code
clearly appears to have been,. as already observed, to prevent
circumvention of the employees 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 or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the
latter. x x x (Emphasis and underscoring supplied)1awphi1.net

It must be stressed that a contract that misuses a purported fixed-term
employment to block the acquisition of tenure by employees deserves to be
struck down for being contrary to law, morals, good customs, public order
and public policy.

Seasonal Employees
Cases
Magcalas v. NLRC (269 SCRA 453)
Regular employees cannot at the same time be project employees. Article
280 of the Labor Code states that regular employees are those whose work
is necessary or desirable to the usual business of the employer. The two
exceptions following the general description of regular employees refer to
either project or seasonal employees. It has been ruled in the case of ALU-
TUCP vs. National Labor Relations Commission that:
In the realm of business and industry, we note that "project" could
refer to one or the other of at least two (2) distinguishable types of
activities. Firstly, a project could refer to particular job or
undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project
is a particular construction job or project of a construction company.
A construction company ordinarily carries out two or more discrete
(should be distinct) identifiable construction projects: e.g., a
twenty-five-storey hotel in Makati; a residential condominium
building in Baguio City; and a domestic air terminal in Iloilo City.
Employees who are hired for the carrying out of one of these
separate projects, the scope and duration of which has been
determined and made known to the employees at the time of
employment, are properly treated as "project employees," and their
services may be lawfully terminated at completion of the project."
(Emphasis supplied).

The employment of seasonal employees, on the other hand, legally ends
upon completion of the project or the season, thus:
Clearly, therefore, petitioners being project employees, or to use the
correct term, seasonal employees, their employment legally ends
upon completion of the project or the season. The termination of
their employment cannot and should not constitute an illegal
dismissal.

Phil. Tobacco etc. v. NLRC (300 SCRA 37)
Petitioner relies upon our ruling in Mercado v. NLRC that the employment
[of seasonal employees] legally ends upon completion of the x x x season,
a statement which was subsequently reiterated in Magcalas v. NLRC.[12]
Thus, petitioner argues that it was not obliged to rehire the members of the
Lubat group for the 1994 season, because their employment had been
terminated at the end of the 1993 season. Since they were not employed
for the 1994 season when the Balintawak plant was closed, it follows that
petitioner has no obligation to award them separation pay due to the said
closure.

We are not persuaded. From the facts, we are convinced that petitioner
illegally dismissed the members of the Lubat group when it refused to allow
them to work during the 1994 season.

San Miguel Corporation v. NLRC (297 SCRA 277)
Thus, under Article 280 of the Labor Code, 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 even if
the parties enter into an agreement stating otherwise. But considered not

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regular under said Article are (1) the so-called project employment the
termination of which is more or less determinable at the time of
employment, such as those connected with a particular construction project;
and (2) seasonal employment, which by its nature is only for one season of
the year and the employment is limited for the duration of that season, such
as the Christmas holiday season. Nevertheless, an exception to this
exception is made: any employee who has rendered at least one (1) year of
service, whether continuous or intermittent, with respect to the activity he
performed and while such activity actually exists, must be deemed regular.
Following Article 280, whether one is employed as a project employee or not
would depend on whether he was hired to carry out a specific project or
undertaking, the duration and scope of which were specified at the time his
services were engaged for that particular project. Another factor that may
be considered is the reasonable connection between the particular activity
undertaken by the employee in relation to the usual trade or business of the
employer; if without specifying the duration and scope, the work to be
undertaken is usually necessary or desirable in the usual business or trade
of the employer, then it is regular employment and not just project much
less casual employment.
Thus, the nature of ones employment does not depend on the will or word
of the employer. Nor on the procedure of hiring and the manner of
designating the employee, but on the nature of the activities to be
performed by the employee, considering the employers nature of business
and the duration and scope of the work to be done.

Manila Hotel v. CIR (9 SCRA 184)
Moreover, it appears that the questioned employees were never separated
from the service. Their status is that of regular seasonal employees who are
called to work from time to time, mostly during summer season. The nature
of their relationship with the hotel is such that during off season they are
temporarily laid off but during summer 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. Their employment
relationship is never severed but only suspended. As such, these employees
can be considered as in the regular employment of the hotel.
Industrial etc. v. CIR (165 SCRA 562): wrong citation

Hacienda Bino v. Cuenca (456 SCRA 300)
The primary standard for determining regular employment is the reasonable
connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. There is no doubt
that the respondents were performing work necessary and desirable in the
usual trade or business of an employer. Hence, they can properly be
classified as regular employees.
For respondents to be excluded from those classified as regular employees,
it is not enough that they perform work or services that are seasonal in
nature. They must have been employed only for the duration of one
season. While the records sufficiently show that the respondents work in
the hacienda was seasonal in nature, there was, however, no proof that
they were hired for the duration of one season only. In fact, the payrolls,
submitted in evidence by the petitioners, show that they availed the
services of the respondents since 1991. Absent any proof to the contrary,
the general rule of regular employment should, therefore, stand. It bears
stressing that the employer has the burden of proving the lawfulness of his
employees dismissal.

Poseidon Fishing v. NLRC (482 SCRA 717)
Brent cited some familiar examples of employment contracts which may
neither be for seasonal work nor for specific projects, but to which a fixed
term is an essential and natural appurtenance, i.e., overseas employment
contracts, appointments to the positions of dean, assistant dean, college
secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty
members, and where fixed terms are a necessity without which no
reasonable rotation would be possible. Thus, in Brent, the acid test in
considering fixed-term contracts as valid is: if from the circumstances it is
apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be disregarded for being contrary to
public policy.

SECTION 8. PROBATIONARY EMPLOYEE

ART. 281, Labor Code: Probationary Employment. Probationary
employment shall not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been
engaged on a probationary basis as may be terminated for a just cause or
time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.

ART. 61, 2
nd
Sentence, Labor Code: The period of apprenticeship shall
not exceed six (6) months.

SEC. 6, RULE 1, BOOKI VI, Omnibus Rules: Probationary employment.
(a) Where the work for which an employee has been engaged is learnable
or apprenticeable in accordance with the standards prescribed by the
Department of Labor, the probationary employment period of the employee
shall be limited to the authorized learnership or apprenticeship period,
whichever is applicable.

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(b) Where the work is neither learnable nor apprenticeable, the probationary
employment period shall not exceed six (6) months reckoned from the date
the employee actually started working.

(c) The services of an employee who has been engaged on probationary
basis may be terminated only for a just cause or when authorized by
existing laws, or when he fails to qualify as a regular employee in
accordance with reasonable standards prescribed by the employer.

(d) In all cases involving employees engaged on probationary basis, 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.

8.01 Probationary Employees

Definition
Cases
International Catholic Migration Commission v. NLRC (169 SCRA
508)
A probationary employee, as understood under Article 282 (now Article 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 appointment 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.

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 in determining the correlative rights of both in
dealing with each other during said period. While the employer, as stated
earlier, 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.

It is well settled that 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. The
equality of right that exists between the employer and the employee as to
the nature of the probationary employment was aptly emphasized by this
Court in Grand Motor Parts Corporation v. Minister of Labor, et al., 130
SCRA 436 (1984), citing the 1939 case of Pampanga Bus. Co., Inc. v.
Pambusco Employees Union, Inc. 68 Phil. 541, thus:
The right of a laborer to sell his labor to such persons as he may
choose is, in its essence, the same as the right of an employer to
purchase labor from any person whom it chooses. The employer and
the employee have thus an equality of right guaranteed by the
Constitution. If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can
compel the employer to give him work against the employer's will,
this is oppression.

As the law now stands, Article 281 of the Labor Code gives ample authority
to the employer to terminate a probationary employee for a just cause or
time of his engagement. There is nothing under Article 281 of the Labor
Code that would preclude the employer from extending a regular or a
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, Article 281 of the
Labor Code does not likewise preclude the employer from terminating the
probationary employment on justifiable causes as in the instant case.

Phil. Federation of Credit Cooperatives, Inc. v. NLRC (300 SCRA 72)
It is an elementary rule in the law on labor relations that a probationary
employee who is engaged to work beyond the probationary period of six
months, as provided under Art. 281 of the Labor Code, as amended, or for
any length of time set forth by the employer, shall be considered a regular
employee.

Art. 281 of the Labor Code, as amended, allows the employer to secure the
services of an employee on a probationary basis which allows him to
terminate the latter for just cause or upon failure to qualify in accordance
with reasonable standards set forth by the employer at the time of his
engagement.

Probationary employees, notwithstanding their limited tenure, are also
entitled to security of tenure. Thus, except for just cause as provided by
law, or under the employment contract, a probationary employee cannot be
terminated.

Purpose
Cases
Espina v. CA (519 SCRA 327)
As probationary employees, they enjoyed only temporary employment
status. In general terms, this meant that they were terminable anytime,
permanent employment not having been attained in the meantime. The

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employer could well decide if he no longer needed the probationarys service
or his performance fell short of expectations, as a probationary employee is
one who, for a given period of time, is under observation and evaluation to
determine whether or not he is qualified for permanent employment. During
the probationary period, the employer is given the opportunity to observe
the skill, competence and attitude of the employee to determine if he has
the qualification to meet the reasonable standards for permanent
employment. The length of time is immaterial in determining the correlative
rights of both the employer and the employee in dealing with each other
during said period. Thus, as long as the termination was made before the
expiration of the six-month probationary period, the employer was well
within his rights to sever the employer-employee relationship. A contrary
interpretation would defeat the clear meaning of the term "probationary."

Philemploy Services and Resources, Inc. v. Rodriguez (486 SCRA
302)
Indeed, an employer, in the exercise of its management prerogative, may
hire an employee on a probationary basis in order to determine his fitness to
perform his work. The employees services may be terminated for a just
cause or for his failure to qualify as a regular employee based on reasonable
standards made known to him at the time of his engagement.

Grand Motors Corp. v. MOLE (130 SCRA 436)
Indeed, the employer has the right or is at liberty to choose as to who will
be hired and who will be declined. It is within the exercise of this right to
select his employees that the employer may set or fix probationary period
within which the latter may test and observed the conduct of the former
before hiring him permanently. "The right of the laborer to sell his labor to
such persons as he may choose is, in its essence, the same as the right of
an employer to purchased labor from any person whom it chooses. The
employer and the employee have thus an equality of rights guaranteed by
the Constitution. 'If the employer can compel the employer the employee to
work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is
oppression'''

508)
It is well settled that 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. The
equality of right that exists between the employer and the employee as to
the nature of the probationary employment was aptly emphasized by this
Court in Grand Motor Parts Corporation v. Minister of Labor, et al., 130
SCRA 436 (1984), citing the 1939 case of Pampanga Bus. Co., Inc. v.
Pambusco Employees Union, Inc. 68 Phil. 541, thus:

The right of a laborer to sell his labor to such persons as he may
choose is, in its essence, the same as the right of an employer to
purchase labor from any person whom it chooses. The employer and
the employee have thus an equality of right guaranteed by the
Constitution. If the employer can compel the employee to work
against the latter's will, this is servitude. If the employee can
compel the employer to give him work against the employer's will,
this is oppression.

Escorpizo v. University of Baguio (306 SCRA 497)
A probationary employee is one who, for a given period of time, is being
observed and evaluated to determine whether or not he is qualified for
permanent employment. A probationary appointment affords the employer
an opportunity to observe the skill, competence and attitude of a
probationer. The word "probationary", as used to describe the period of
employment, implies the purpose of the term or period. While the employer
observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the
same time, seeks to prove to the employer that be has the qualifications to
meet the reasonable standards for permanent employment.

Employer Right Set Period/Obligation
Cases
Grand Motors Corp. v. MOLE (130 SCRA 436)
Indeed, the employer has the right or is at liberty to choose as to who will
be hired and who will be declined. It is within the exercise of this right to
select his employees that the employer may set or fix probationary period
within which the latter may test and observed the conduct of the former
before hiring him permanently. "The right of the laborer to sell his labor to
such persons as he may choose is, in its essence, the same as the right of
an employer to purchased labor from any person whom it chooses. The
employer and the employee have thus an equality of rights guaranteed by
the Constitution. 'If the employer can compel the employer the employee to
work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is
oppression'''

Orient Express Placement Philippines, Inc. v. NLRC (273 SCRA 256)
As aforesaid, no standard whatsoever by which such probationary period
could be hurdled was specified and made known to him. Due process
dictates that an employee be apprised beforehand of the condition of his
employment and of the terms of advancement therein. Precisely, implicit in
Art. 281 of the Code is the requirement that reasonable standards be
previously made known by the employer to the probationary employee at
the time of his engagement.

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Mitsubishi Motors Corp. v. Chrysler Phil. Labor Union (433 SCRA
206)
Indeed, an employer, in the exercise of its management prerogative, may
hire an employee on a probationary basis in order to determine his fitness to
perform work. Under Article 281 of the Labor Code, the employer must
inform the employee of the standards for which his employment may be
considered for regularization. Such probationary period, unless covered by
an apprenticeship agreement, shall not exceed six (6) months from the date
the employee started working. The employees services may be terminated
for just cause or for his failure to qualify as a regular employee based on
reasonable standards made known to him.

Alcira v. NLRC (431 SCRA 508)
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.

Conversely, an employer is deemed to substantially comply with the rule on
notification of standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date after his hiring.
We agree with the labor arbiter when he ruled that:
In the instant case, petitioner cannot successfully say that he was
never informed by private respondent of the standards that he must
satisfy in order to be converted into regular status. This rans (sic)
counter to the agreement between the parties that after five months
of service the petitioners performance would be evaluated. It is only
but natural that the evaluation should be made vis--vis the
performance standards for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her affidavit referring to the
fact that petitioner did not perform well in his assigned work and his
attitude was below par compared to the companys standard
required of him.

Duration/Exception
Cases
Buiser v. Leogardo (131 SCRA 151)
Generally, the probationary period of employment is limited to six (6)
months. The exception to this general rule is When the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature
of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a longer
period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980
to October, 1981 inclusive, especially where the employee must learn a
particular kind of work such as selling, or when the job requires certain
qualifications, skills, experience or training.

Policy Instruction No. 11 of the Minister of Labor and Employment has
clarified any and all doubts on the period of probationary employment. It
states as follows:
Probationary Employment has been the subject of misunderstanding
in some quarter. Some people believe six (6) months is the
probationary period in all cases. On the other hand employs who
have already served the probationary period are sometimes required
to serve again on probation.

Under the Labor Code, six (6) months is the general probationary
period ' but the probationary period is actually the period needed to
determine fitness for the job. This period, for lack of a better
measurement is deemed to be the period needed to learn the job.

The purpose of this policy is to protect the worker at the same time
enable the employer to make a meaningful employee selection. This
purpose should be kept in mind in enforcing this provision of the
Code. This issuance shall take effect immediately.

508)
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 in determining the correlative rights of both in
dealing with each other during said period. While the employer, as stated
earlier, 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.
Holiday Inn Manila v. NLRC (226 SCRA 417)
Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. In the case
at bar, the period was for three weeks, during Honasan's on-the-job
training. When her services were continued after this training, the
petitioners in effect recognized that she had passed probation and was
qualified to be a regular employee.

Honasan was certainly under observation during her three-week on-the-job
training. If her services proved unsatisfactory then, she could have been
dropped as early as during that period. But she was not. On the contrary,
her services were continued, presumably because they were acceptable,
although she was formally placed this time on probation.

NIKKI HIPOLITO
49
Even if it be supposed that the probation did not end with the three-week
period of on-the-job training, there is still no reason why that period should
not be included in the stipulated six-month period of probation. Honasan
was accepted for on-the-job training on April 15, 1991. Assuming that her
probation could be extended beyond that date, it nevertheless could
continue only up to October 15, 1991, after the end of six months from the
earlier date. Under this more lenient approach, she had become a regular
employee of Holiday Inn and acquired full security of tenure as of October
15, 1991.

The consequence is that she could no longer be summarily separated on the
ground invoked by the petitioners. As a regular employee, she had acquired
the protection of Article 279 of the Labor Code stating as follows:
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 other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

Bernardo v. NLRC (310 SCRA 186)
As held by the Court, "Articles 280 and 281 of the Labor Code put an end to
the pernicious practice of making permanent casuals of our lowly employees
by the simple expedient of extending to them probationary appointments,
ad infinitum." The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees' fitness for
the job. When the bank renewed the contract after the lapse of the six-
month probationary period, the employees thereby became regular
employees. No employer is allowed to determine indefinitely the fitness of
its employees.

Mitsubishi Motors Corp. v. Chrysler Phil. Labor Union (433 SCRA
206)
Applying Article 13 of the Civil Code, the probationary period of six (6)
months consists of one hundred eighty (180) days. This is in conformity
with paragraph one, Article 13 of the Civil Code, which provides that the
months which are not designated by their names shall be understood as
consisting of thirty (30) days each. The number of months in the
probationary period, six (6), should then be multiplied by the number of
days within a month, thirty (30); hence, the period of one hundred eighty
(180) days.

As clearly provided for in the last paragraph of Article 13, in computing a
period, the first day shall be excluded and the last day included.

Criteria Regularization
Cases
Alcira v. NLRC (431 SCRA 508)
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.

Conversely, an employer is deemed to substantially comply with the rule on
notification of standards if he apprises the employee that he will be
subjected to a performance evaluation on a particular date after his hiring.
We agree with the labor arbiter when he ruled that:
In the instant case, petitioner cannot successfully say that he was
never informed by private respondent of the standards that he must
satisfy in order to be converted into regular status. This rans (sic)
counter to the agreement between the parties that after five months
of service the petitioners performance would be evaluated. It is only
but natural that the evaluation should be made vis--vis the
performance standards for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her affidavit referring to the
fact that petitioner did not perform well in his assigned work and his
attitude was below par compared to the companys standard
required of him.

Extension of Contract
Cases
Mariwasa Manufacturing Inc. v. Leogardo (169 SCRA 465)
By voluntarily agreeing to an extension of the probationary period, Dequila
in effect waived any benefit attaching to the completion of said period if he
still failed to make the grade during the period of extension. The Court finds
nothing in the law which by any fair interpretation prohibits such a waiver.
And no public policy protecting the employee and the security of his tenure
is served by prescribing voluntary agreements which, by reasonably
extending the period of probation, actually improve and further a
probationary employee's prospects of demonstrating his fitness for regular
employment.
Absorbed Employees
Cases
Cebu Stevedoring Co. Inc. v. Regional Director (168 SCRA 315)
It is to be noted that the complainants were employed by the Cebu Customs
Arrastre Service long time ago whose functions were carried over when they
were absorbed by the herein respondent. In other words, there is no need
to employ them as probationary considering that they are already well
trained in their respective functions. They were not absorbed for a definite
period but instead for an indefinite period.

NIKKI HIPOLITO
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A probationary period of employment means that an employee is hired for
training for a certain period in order to determine whether they qualify (sic)
for the position or not. In this case, the complainants cannot be mistakenly
considered as probationary viewed on the theory that they have been
holding the same positions for a quite a long time at the Cebu Customs
Arrastre Service before they were absorbed by the Cebu Stevedoring Co.
Inc. with the same positions.

Double Probation
Cases
A Prime Security Services Inc. v. NLRC (322 SCRA 283)
There is no basis for subjecting private respondent to a new probationary or
temporary employment on January 30, 1988, considering that he was
already a regular employee when he was absorbed by A' Prime from
Sugarland, its sister company.

Termination and Salary
Cases
508)
As the law now stands, Article 281 of the Labor Code gives ample authority
to the employer to terminate a probationary employee for a just cause or
time of his engagement. There is nothing under Article 281 of the Labor
Code that would preclude the employer from extending a regular or a
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, Article 281 of the
Labor Code does not likewise preclude the employer from terminating the
probationary employment on justifiable causes as in the instant case.
Orient Express Placement Philippines, Inc. v. NLRC (273 SCRA 256)
Under Art. 281 of the Labor Code, the services of an employee hired on a
probationary basis may be terminated when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. However, the
Court cannot sustain his dismissal on this ground because petitioner failed
to specify the reasonable standards by which private respondent's alleged
poor performance was evaluated, much less to prove that such standards
were made known to him at the time of his recruitment in Manila.

Dela Cruz v. NLRC (418 SCRA 226)
There is no dispute that petitioner, as a probationary employee, enjoyed
only temporary employment status. In general terms, this meant that he
was terminable anytime, permanent employment not having been attained
in the meantime. The employer could well decide he no longer needed the
probationary employee's services or his performance fell short of
expectations, etc. As long as the termination was made before the
expiration of the six-month probationary period, the employer was well
within his rights to sever the employer-employee relationship. A contrary
interpretation would defect the clear meaning of the term "probationary." In
this case, respondent Shemberg had good reason to terminate petitioner's
employment and that was his dishonesty.

Rule Private School Teachers
Cases
Chiang Kai Shek College v. CA (437 SCRA 171)
Under the Manual of Regulations for Private Schools, for a private school
teacher to acquire a permanent status of employment and, therefore, be
entitled to a security of tenure, the following requisites must concur:
(a) the teacher is a full-time teacher;
(b) the teacher must have rendered three consecutive years of
service; and
(c) such service must have been satisfactory.

La Consolacion College v. NLRC (366 SCRA 226)
In the case at bar, there is a written contract defining the period of
employment of respondent de la Pea.

Clearly, the employment was not permanent but for a specified duration of
one school year.

In resolving the issue of whether or not respondent de la Pea was
permanent employee of petitioner, it is the Manual of Regulations for Private
Schools, not the Labor Code, which is applicable. This was settled in
University of Sto. Tomas v. NLRC, where we ruled that for a private school
teacher to acquire permanent status in employment the following requisites
must concur: (1) the teacher is a full-time teacher; (2) the teacher must
have rendered three (3) consecutive years of service; and (3) such service
must have been satisfactory.


NIKKI HIPOLITO
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PART II: LABOR STANDARDS LAW
PURPOSE
Case
Mariveles Shipyard Corp. v. CA (415 SCRA 573)
Labor standards are enacted by the legislature to alleviate the plight of
workers whose wages barely meet the spiraling costs of their basic needs.

SECTION 1. EMPLOYMENT POLICY

1.01 Pre-Employment PolicyStatement of Objectives
ART. 12, Labor Code: Statement of Objective.It is the policy of the
State:
a. To promote and maintain a state of full employment through
improved manpower training, allocation and utilization;
b. To protect every citizen desiring to work locally or overseas by
securing for him the best possible terms and conditions of
employment;
c. To facilitate a free choice of available employment by persons
seeking work in conformity with the national interest;
d. To facilitate and regulate the movement of workers in conformity
with the national interest;
e. To regulate the employment of aliens, including the establishment of
a registration and/or work permit system;
f. To strengthen the network of public employment offices and
rationalize the participation of the private sector in the recruitment
and placement of workers, locally and overseas, to serve national
development objectives;
g. To insure careful selection of Filipino workers for overseas
employment in order to protect the good name of the Philippines
abroad.

SECTION 2. RECRUITMENT AND PLACEMENT OF WORKERS

ART. 13-29, Labor Code
Rules III-VIII, Omnibus Rules
RA No. 8042 (Migrant Workers and Overseas Filipinos Act of
1995), as amended by RA 9422 (2007) and RA 10022 (2010)
RA No. 8759 (2000)Public Employment Service Office Act of
1999
Sec. 2: Declaration of Policy. - It is a declared policy of the State to
promote full employment and equality of employment opportunities
for all, and for this purpose, to strengthen and expand the existing
employment facilitation service machinery of the government
particularly at the local levels.

Section 3. Establishment of the Public Employment Service Office.

To carry out the above-declared policy, there shall be established in
all capital towns of provinces, key cities and other strategic areas a
Public Employment Service Office, hereinafter referred to as "PESO,"
which shall be community-based and maintained largely by local
government units (LGUs) and a number of nongovernmental
organizations (NGOs) or community-based organizations (CBOs) and
state universities and colleges (SUCs). The PESOs shall be linked to
the regional offices of the Department of Labor and Employment
(DOLE) for coordination and technical supervision, and to the DOLE
central office, to constitute the national employment service
network.

EO No. 857 (1984)Governing the Remittance to the
Philippines of Foreign Exchange Earnings of Filipino Workers
Abroad and for Other Purposes

2.01 Recruitment and Placement of WorkersDefinition
SEC. 13 (A), Labor Code: Worker means any member of the labor force,
whether employed or unemployed.

SEC. 13 (B), Labor Code: Recruitment and placement refers to any act
of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or
promises for a fee, employment to two or more persons shall be deemed
engaged in recruitment and placement.

DefinitionLaw Structure
Cases
People v. Panis (142 SCRA 664)
As we see it, the proviso was intended neither to impose a condition on the
basic rule nor to provide an exception thereto but merely to create a
presumption. The presumption is that the individual or entity is engaged in
recruitment and placement whenever he or it is dealing with two or more
persons to whom, in consideration of a fee, an offer or promise of
employment is made in the course of the canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers.

"Any of the acts mentioned in the basic rule in Article 13 (b) will constitute
recruitment and placement even if only one prospective worker is involved.


NIKKI HIPOLITO
52
People v. Saulo (344 SCRA 605)
Under Art. 13 (b) of the Labor Code, recruitment and placement refers to
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not;
Provided, That any person or entity which, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed
engaged in recruitment and placement.
After a careful and circumspect review of the records, the Court finds that
the trial court was justified in holding that accused-appellant was engaged
in unlawful recruitment and placement activities. The prosecution clearly
established that accused-appellant promised the three complainants - Benny
Maligaya, Angeles Javier and Leodigario Maullon employment in Taiwan as
factory workers and that he asked them for money in order to process their
papers and procure their passports. Relying completely upon such
representations, complainants entrusted their hard-earned money to
accused-appellant in exchange for what they would later discover to be a
vain hope of obtaining employment abroad. It is not disputed that accused-
appellant is not authorized nor licensed by the Department of Labor and
Employment to engage in recruitment and placement activities. The
absence of the necessary license or authority renders all of accused-
appellants recruitment activities criminal.

2.02 Employment Agency
SEC. 13 (C), Labor Code: "Private fee-charging employment agency"
means any person or entity engaged in recruitment and placement of
workers for a fee, which is charged, directly or indirectly, from the workers
or employers or both.

SEC. 13 (D), Labor Code: "License" means a document issued by the
Department of Labor authorizing a person or entity to operate a private
employment agency.

SEC. 13 (E), Labor Code: "Private recruitment entity" means any person
or association engaged in the recruitment and placement of workers, locally
or overseas, without charging, directly or indirectly, any fee from the
workers or employers.

SEC. 13 (F), Labor Code: "Authority" means a document issued by the
Department of Labor authorizing a person or association to engage in
recruitment and placement activities as a private recruitment entity.

2.03 Allowed Entities
A. General Rule
SEC. 16, Labor Code: Private recruitment. - Except as provided in
Chapter II of this Title, no person or entity other than the public
employment offices, shall engage in the recruitment and placement
of workers.

SEC. 18, Labor Code: Ban on direct-hiring. - No employer may hire
a Filipino worker for overseas employment except through the
Boards and entities authorized by the Secretary of Labor. Direct-
hiring by members of the diplomatic corps, international
organizations and such other employers as may be allowed by the
Secretary of Labor is exempted from this provision.

SEC. 25, Labor Code: Private sector participation in the
recruitment and placement of workers. - Pursuant to national
development objectives and in order to harness and maximize the
use of private sector resources and initiative in the development and
implementation of a comprehensive employment program, the
private employment sector shall participate in the recruitment and
placement of workers, locally and overseas, under such guidelines,
rules and regulations as may be issued by the Secretary of Labor.

SEC. 12 (F), Labor Code: To strengthen the network of public
employment offices and rationalize the participation of the private
sector in the recruitment and placement of workers, locally and
overseas, to serve national development objectives.

B. Allowed Entities
SEC. 13 (C), Labor Code: "Private fee-charging employment
agency" means any person or entity engaged in recruitment and
placement of workers for a fee, which is charged, directly or
indirectly, from the workers or employers or both.

SEC. 13 (E), Labor Code: "Private recruitment entity" means any
person or association engaged in the recruitment and placement of
workers, locally or overseas, without charging, directly or indirectly,
any fee from the workers or employers.

Private
SEC. 13 (C), Labor Code: "Private fee-charging employment
agency" means any person or entity engaged in recruitment and
placement of workers for a fee, which is charged, directly or
indirectly, from the workers or employers or both.

SEC. 13 (E), Labor Code: "Private recruitment entity" means
any person or association engaged in the recruitment and
placement of workers, locally or overseas, without charging,
directly or indirectly, any fee from the workers or employers.


NIKKI HIPOLITO
53
Public
SEC. 12 (F), Labor Code: To strengthen the network of public
employment offices and rationalize the participation of the
private sector in the recruitment and placement of workers,
locally and overseas, to serve national development objectives.

SEC. 14 (G), Labor Code: no such thing
2.04 Deployment Migrant Workers

2.05 Prohibited Entity
SEC. 16, Labor Code: Private recruitment. - Except as provided in Chapter
II of this Title, no person or entity other than the public employment offices,
shall engage in the recruitment and placement of workers.

SEC. 18, Labor Code: Ban on direct-hiring. - No employer may hire a
Filipino worker for overseas employment except through the Boards and
entities authorized by the Secretary of Labor. Direct-hiring by members of
the diplomatic corps, international organizations and such other employers
as may be allowed by the Secretary of Labor is exempted from this
provision.

SEC. 26, Labor Code: Travel agencies prohibited to recruit. - Travel
agencies and sales agencies of airline companies are prohibited from
engaging in the business of recruitment and placement of workers for
overseas employment whether for profit or not.

2.06 Techniques of Regulation
ART. 25, Labor Code. Private sector participation in the recruitment and
placement of workers. - Pursuant to national development objectives and in
order to harness and maximize the use of private sector resources and
initiative in the development and implementation of a comprehensive
employment program, the private employment sector shall participate in the
recruitment and placement of workers, locally and overseas, under such
guidelines, rules and regulations as may be issued by the Secretary of
Labor.

ART. 26, Labor Code. Travel agencies prohibited to recruit. - Travel
agencies and sales agencies of airline companies are prohibited from
engaging in the business of recruitment and placement of workers for
overseas employment whether for profit or not.

ART. 27, Labor Code. Citizenship requirement. - Only Filipino citizens or
corporations, partnerships or entities at least seventy-five percent (75%) of
the authorized and voting capital stock of which is owned and controlled by
Filipino citizens shall be permitted to participate in the recruitment and
placement of workers, locally or overseas.

ART. 28, Labor Code. Capitalization. - All applicants for authority to hire or
renewal of license to recruit are required to have such substantial
capitalization as determined by the Secretary of Labor.

ART. 29, Labor Code. Non-transferability of license or authority. - No
license or authority shall be used directly or indirectly by any person other
than the one in whose favor it was issued or at any place other than that
stated in the license or authority be transferred, conveyed or assigned to
any other person or entity. Any transfer of business address, appointment
or designation of any agent or representative including the establishment of
additional offices anywhere shall be subject to the prior approval of the
Department of Labor.

ART. 30, Labor Code. Registration fees. - The Secretary of Labor shall
promulgate a schedule of fees for the registration of all applicants for license
or authority.

ART. 31, Labor Code. Bonds. - All applicants for license or authority shall
post such cash and surety bonds as determined by the Secretary of Labor to
guarantee compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as may be
appropriate.

ART. 32, Labor Code. Fees to be paid by workers. - Any person applying
with a private fee-charging employment agency for employment assistance
shall not be charged any fee until he has obtained employment through its
efforts or has actually commenced employment. Such fee shall be always
covered with the appropriate receipt clearly showing the amount paid. The
Secretary of Labor shall promulgate a schedule of allowable fees.

ART. 33, Labor Code. Reports on employment status. - Whenever the
public interest requires, the Secretary of Labor may direct all persons or
entities within the coverage of this Title to submit a report on the status of
employment, including job vacancies, details of job requisitions, separation
from jobs, wages, other terms and conditions and other employment data.

ART. 34, Labor Code. Prohibited practices. - It shall be unlawful for any
individual, entity, licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any amount greater
than that specified in the schedule of allowable fees prescribed by
the Secretary of Labor, or to make a worker pay any amount
greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document
in relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority under this Code.

NIKKI HIPOLITO
54
(d) To induce or attempt to induce a worker already employed to
quit his employment in order to offer him to another unless the
transfer is designed to liberate the worker from oppressive terms
and conditions of employment;
(e) To influence or to attempt to influence any person or entity not
to employ any worker who has not applied for employment through
his agency;
(f) To engage in the recruitment or placement of workers in jobs
harmful to public health or morality or to the dignity of the Republic
of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of
Labor or by his duly authorized representatives;
(h) To fail to file reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from
jobs, departures and such other matters or information as may be
required by the Secretary of Labor.
(i) To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual signing
thereof by the parties up to and including the periods of expiration
of the same without the approval of the Secretary of Labor;
(j) To become an officer or member of the Board of any corporation
engaged in travel agency or to be engaged directly or indirectly in
the management of a travel agency; and
(k) To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations other than
those authorized under this Code and its implementing rules and
regulations.

ART. 35, Labor Code. Suspension and/or cancellation of license or
authority. - The Minister of Labor shall have the power to suspend or cancel
any license or authority to recruit employees for overseas employment for
violation of rules and regulations issued by the Ministry of Labor, the
Overseas Employment Development Board, or for violation of the provisions
of this and other applicable laws, General Orders and Letters of Instructions.

ART. 36, Labor Code. Regulatory power. - The Secretary of Labor shall
have the power to restrict and regulate the recruitment and placement
activities of all agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and regulations to carry out
the objectives and implement the provisions of this Title.

ART. 37, Labor Code. Visitorial Power. - The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the premises, books of
accounts and records of any person or entity covered by this Title, require it
to submit reports regularly on prescribed forms, and act on violation of any
provisions of this Title.

ART. 38, Labor Code. Illegal recruitment. - (a) Any recruitment activities,
including the prohibited practices enumerated under Article 34 of this Code,
to be undertaken by non-licensees or non-holders of authority, shall be
deemed illegal and punishable under Article 39 of this Code. The
Department of Labor and Employment or any law enforcement officer may
initiate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shall
be considered an offense involving economic sabotage and shall be
penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring and/or confederating with
one another in carrying out any unlawful or illegal transaction, enterprise or
scheme defined under the first paragraph hereof. Illegal recruitment is
deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
(c) The Secretary of Labor and Employment or his duly authorized
representatives shall have the power to cause the arrest and detention of
such non-licensee or non-holder of authority if after investigation it is
determined that his activities constitute a danger to national security and
public order or will lead to further exploitation of job-seekers. The Secretary
shall order the search of the office or premises and seizure of documents,
paraphernalia, properties and other implements used in illegal recruitment
activities and the closure of companies, establishments and entities found to
be engaged in the recruitment of workers for overseas employment, without
having been licensed or authorized to do so.

ART. 39, Labor Code. Penalties. - (a) The penalty of life imprisonment and
a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if
illegal recruitment constitutes economic sabotage as defined herein;
(b) Any licensee or holder of authority found violating or causing another to
violate any provision of this Title or its implementing rules and regulations
shall, upon conviction thereof, suffer the penalty of imprisonment of not less
than two years nor more than five years or a fine of not less than P10,000
nor more than P50,000, or both such imprisonment and fine, at the
discretion of the court;
(c) Any person who is neither a licensee nor a holder of authority under this
Title found violating any provision thereof or its implementing rules and
regulations shall, upon conviction thereof, suffer the penalty of
imprisonment of not less than four years nor more than eight years or a fine
of not less than P20,000 nor more than P100,000 or both such
imprisonment and fine, at the discretion of the court;
(d) If the offender is a corporation, partnership, association or entity, the
penalty shall be imposed upon the officer or officers of the corporation,
partnership, association or entity responsible for violation; and if such
officer is an alien, he shall, in addition to the penalties herein prescribed, be
deported without further proceedings;

NIKKI HIPOLITO
55
(e) In every case, conviction shall cause and carry the automatic revocation
of the license or authority and all the permits and privileges granted to such
person or entity under this Title, and the forfeiture of the cash and surety
bonds in favor of the Overseas Employment Development Board or the
National Seamen Board, as the case may be, both of which are authorized
to use the same exclusively to promote their objectives.

License
Cases
People v. Buli-e (404 SCRA 105)
License territorial: could only undertake recruitment and placement
activities in the region where the license was granted

2.07 Illegal Recruitment
SEC. 38, Labor Code: Illegal recruitment. - (a) Any recruitment activities,




SEC. 34, Labor Code: Prohibited practices. - It shall be unlawful for any
individual, entity, licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any amount greater
than that specified in the schedule of allowable fees prescribed by
the Secretary of Labor, or to make a worker pay any amount
greater than that actually received by him as a loan or advance;


license or authority under this Code.

(d) To induce or attempt to induce a worker already employed to
quit his employment in order to offer him to another unless the
transfer is designed to liberate the worker from oppressive terms
and conditions of employment;

(e) To influence or to attempt to influence any person or entity not
to employ any worker who has not applied for employment through
his agency;

harmful to public health or morality or to the dignity of the Republic
of the Philippines;

Labor or by his duly authorized representatives;

(h) To fail to file reports on the status of employment, placement
required by the Secretary of Labor.

(i) To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual signing
thereof by the parties up to and including the periods of expiration
of the same without the approval of the Secretary of Labor;

(j) To become an officer or member of the Board of any corporation
engaged in travel agency or to be engaged directly or indirectly in
the management of a travel agency; and

(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations other than those
authorized under this Code and its implementing rules and regulations.

SEC. 6, RA No. 8042 (1995): Definition. For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers and includes referring,

NIKKI HIPOLITO
56
contract services, promising or advertising for employment abroad, whether
for profit or not, when undertaken by a non-licensee or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No. 442,
as amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-licensee, non-holder,
licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than
that specified in the schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to make a worker pay any
amount greater than that actually received by him as a loan or
advance;


license or authority under the Labor Code;

(d) To induce or attempt to induce a worker already employed to quit
his employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and conditions of
employment;

(e) To influence or attempt to influence any person or entity not to
employ any worker who has not applied for employment through his
agency;

harmful to public health or morality or to the dignity of the Republic of
the Philippines;

Labor and Employment or by his duly authorized representative;

(h) To fail to submit reports on the status of employment, placement
required by the Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up
to and including the period of the expiration of the same without the
approval of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation engaged
in travel agency or to be engaged directly or indirectly in the
management of a travel agency;

(k) To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations other than
those authorized under the Labor Code and its implementing rules and
regulations;

(l) Failure to actually deploy without valid reason as determined by
the Department of Labor and Employment ; and

(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take
place without the workers fault. Illegal recruitment when committed
by a syndicate or in large scale shall be considered an offense
involving economic sabotage.

group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three
(3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.

SEC. 2, RA No. 10022: "Overseas Filipino worker" refers to a person who
is to be engaged, is engaged or has been engaged in a remunerated activity
in a state of which he or she is not a citizen or on board a vessel navigating
the foreign seas other than a government ship used for miliatry or non-
commercial purposes or on an installation located offshore or on the high
seas; to be used interchangeably with migrant worker."

SEC. 5, RA No. 10022: Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers and includes referring,
contract services, promising or advertising for employment abroad, whether
for profit or not, when undertaken by non-licensee or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No. 442,
as amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or more persons

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shall be deemed so engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-licensee, non-holder,
licensee or holder of authority:

"(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of
Labor and Employment, or to make a worker pay or acknowledge any
amount greater than that actually received by him as a loan or advance;

"(b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;

"(c) To give any false notice, testimony, information or document or commit
any act of misrepresentation for the purpose of securing a license or
authority under the Labor Code, or for the purpose of documenting hired
workers with the POEA, which include the act of reprocessing workers
through a job order that pertains to nonexistent work, work different from
the actual overseas work, or work with a different employer whether
registered or not with the POEA;

"(d) To include or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;

"(e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency or who
has formed, joined or supported, or has contacted or is supported by any
union or workers' organization;

"(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines;

"(h) To fail to submit reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by the
Secretary of Labor and Employment;

"(i) To substitute or alter to the prejudice of the worker, employment
Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of
the Department of Labor and Employment;

"(j) For an officer or agent of a recruitment or placement agency to become
an officer or member of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the management of travel
agency;
departure for monetary or financial considerations, or for any other reasons,
other than those authorized under the Labor Code and its implementing
rules and regulations;

"(l) Failure to actually deploy a contracted worker without valid reason as
determined by the Department of Labor and Employment;

"(m) Failure to reimburse expenses incurred by the worker in connection
with his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the worker's
fault. Illegal recruitment when committed by a syndicate or in large scale
shall be considered an offense involving economic sabotage; and

"(n) To allow a non-Filipino citizen to head or manage a licensed
recruitment/manning agency.

"Illegal recruitment is deemed committed by a syndicate if carried out by a

"In addition to the acts enumerated above, it shall also be unlawful for any
person or entity to commit the following prohibited acts:
"(1) Grant a loan to an overseas Filipino worker with interest exceeding
eight percent (8%) per annum, which will be used for payment of legal and
allowable placement fees and make the migrant worker issue, either
personally or through a guarantor or accommodation party, postdated
checks in relation to the said loan;

"(2) Impose a compulsory and exclusive arrangement whereby an overseas
Filipino worker is required to avail of a loan only from specifically designated
institutions, entities or persons;

"(3) Refuse to condone or renegotiate a loan incurred by an overseas
Filipino worker after the latter's employment contract has been prematurely
terminated through no fault of his or her own;

Filipino worker is required to undergo health examinations only from
specifically designated medical clinics, institutions, entities or persons,
except in the case of a seafarer whose medical examination cost is
shouldered by the principal/shipowner;

Filipino worker is required to undergo training, seminar, instruction or
schooling of any kind only from specifically designated institutions, entities

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or persons, except fpr recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of such trainings;

"(6) For a suspended recruitment/manning agency to engage in any kind of
recruitment activity including the processing of pending workers'
applications; and
"(7) For a recruitment/manning agency or a foreign principal/employer to
pass on the overseas Filipino worker or deduct from his or her salary the
payment of the cost of insurance fees, premium or other insurance related
charges, as provided under the compulsory worker's insurance coverage.

"The persons criminally liable for the above offenses are the principals,
ownership, control, management or direction of their business who are
responsible for the commission of the offense and the responsible
employees/agents thereof shall be liable.

"In the filing of cases for illegal recruitment or any of the prohibited acts
under this section, the Secretary of Labor and Employment, the POEA
Administrator or their duly authorized representatives, or any aggrieved
person may initiate the corresponding criminal action with the appropriate
office. For this purpose, the affidavits and testimonies of operatives or
personnel from the Department of Labor and Employment, POEA and other
law enforcement agencies who witnessed the acts constituting the offense
shall be sufficient to prosecute the accused.

"In the prosecution of offenses punishable under this section, the public
prosecutors of the Department of Justice shall collaborate with the anti-
illegal recruitment branch of the POEA and, in certain cases, allow the POEA
lawyers to take the lead in the prosecution. The POEA lawyers who act as
prosecutors in such cases shall be entitled to receive additional allowances
as may be determined by the POEA Administrator.

"The filing of an offense punishable under this Act shall be without prejudice
to the filing of cases punishable under other existing laws, rules or
regulations.

Elements of Crime
Cases
People v. Sagayaga (423 SCRA 468)
Under Section 6 (m) of Rep. Act No. 8042, illegal recruitment may be
committed by any person, whether a non-licensee, non-holder of authority,
licensee or holder of authority, thus:
(m) Failure to reimburse expenses incurred by the worker in
connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take
place without the worker's fault...
Under the last paragraph of the said section, those criminally liable are the
principals, accomplices and accessories. In case of a juridical person, the
officers having control, management or direction of the business shall be
criminally liable.

x x x

Section 6 of Rep. Act No. 8042 provides that illegal recruitment shall be
considered an offense involving economic sabotage if committed in large
scale, viz, committed against three (3) or more persons individually or as a
group, the imposable penalty for which is life imprisonment and a fine of not
less than P500,000.00 nor more than P1,000,000.00. In this case, there are
three private complainants, namely, Elmer Janer, Eric Farol and Elmer
Ramos. The trial court, thus, correctly convicted the appellant of large scale
illegal recruitment and sentenced her to suffer life imprisonment.

People v. Baytic (398 SCRA 18)
Illegal recruitment is committed when two (2) elements concur. First, the
offender has no valid license or authority required by law to enable one to
engage lawfully in recruitment and placement of workers. Second, he or she
undertakes either any activity within the meaning of "recruitment and
placement" defined under Art. 13, par. (b), or any prohibited practices
enumerated under Art. 34 of the Labor Code.1awphi1.nt In case of illegal
recruitment in large scale, a third element is added: that the accused
commits the acts against three or more persons, individually or as a group.

C.F. Sharp Crew Management Inc. v. Espanol (533 SCRA 424)
Article 13(b) of the Labor Code defines recruitment and placement as:
any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad
whether for profit or not: Provided, That any person or entity which
in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and
placement.

On the basis of this definition and contrary to what C.F. Sharp wants to
portray - the conduct of preparatory interviews is a recruitment activity.

The fact that C.F. Sharp did not receive any payment during the interviews
is of no moment. From the language of Article 13(b), the act of recruitment
may be "for profit or not." Notably, it is the lack of the necessary license or
authority, not the fact of payment that renders the recruitment activity of
LCL unlawful.


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Large Scale
Cases
People v. Buli-e (404 SCRA 105): case cannot be located

People v. Dujua (422 SCRA 169)
The essential elements of the crime of illegal recruitment in large scale are:
(1) the accused engages in acts of recruitment and placement of workers
defined under Article 13(b) or in any prohibited activities under Art. 34 of
the Labor Code;

(2) the accused has not complied with the guidelines issued by the
Secretary of Labor and Employment, particularly with respect to the
securing of a license or an authority to recruit and deploy workers, either
locally or overseas; and

(3) the accused commits the unlawful acts against three or more persons,
individually or as a group.

People v. Reyes (242 SCRA 264)
In any event the testimonies of the two complainants could not be the basis
for a finding of illegal recruitment on a large scale and for imposing the
penalty of life imprisonment on her. The Labor Code prescribes the penalty
of life imprisonment for illegal recruitment when committed on a "large
scale." Art. 38 (b) of the Code provides:
(b) Illegal recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage
and shall be penalized in accordance with Article 39 hereof.

And Art. 39 (a) provides:
Art. 39. Penalties. (a) The penalty of life imprisonment and a fine
of One Hundred Thousand Pesos (P100,000) shall be imposed if
illegal recruitment constitutes economic sabotage as defined herein.

Referrals
Cases
People v. Meris (329 SCRA 33)
Although accused-appellant was not an employee of the alleged illegal
recruiter Julie Micua, the evidence show that she was the one who
approached complainants and prodded them to seek employment abroad. It
was through her that they met Julia Micua. This is clearly an act of referral.
Worse, accused-appellant declared that she was capable of placing them in
jobs overseas. Suffice it to say that complainants' recruitment would not
have been consummated were it not for the direct participation of accused-
appellant in the recruitment process.

People v. Fortuna (395 SCRA 354)
The crime of illegal recruitment is committed when, among other things, a
person who, without being duly authorized according to law, represents or
gives the distinct impression that he or she has the power or the ability to
provide work abroad convincing those to whom the representation is made
or to whom the impression is given to thereupon part with their money in
order to be assured of that employment.

Employees
Cases
People v. Corpuz (412 SCRA 479)
An employee of a company or corporation engaged in illegal recruitment
may be held liable as principal, together with his employer, if it is shown
that he actively and consciously participated in illegal recruitment. Settled is
the rule that the existence of the corporate entity does not shield from
prosecution the corporate agent who knowingly and intentionally causes the
corporation to commit a crime. The corporation obviously acts, and can act,
only by and through its human agents, and it is their conduct which the law
must deter. The employee or agent of a corporation engaged in unlawful
business naturally aids and abets in the carrying on of such business and
will be prosecuted as principal if, with knowledge of the business, its
purpose and effect, he consciously contributes his efforts to its conduct and
promotion, however slight his contribution may be. The law of agency, as
applied in civil cases, has no application in criminal cases, and no man can
escape punishment when he participates in the commission of a crime upon
the ground that he simply acted as an agent of any party. The culpability of
the employee therefore hinges on his knowledge of the offense and his
active participation in its commission. Where it is shown that the employee
was merely acting under the direction of his superiors and was unaware that
his acts constituted a crime, he may not be held criminally liable for an act
done for and in behalf of his employer.

People v. Sagayaga (423 SCRA 468)
At any rate, the accused has expressly admitted in the course of her
testimony that she was at the time the Treasurer of their recruitment
agency. As such she was in charge of the management and control of the
financial affairs and resources of the corporation. She was in charge of
collecting all its receivables, safely keeping them, and disbursing them. She
testified that it was part of her duties to receive and collect the monies paid
by applicants (TSN, Mar. 13, 2000, p. 5). Her disbursing authority has been
clearly demonstrated by her co-signing the checks Exhibits D-2 and G.

The appellant is guilty of illegal recruitment as a principal by direct
participation, having dealt directly with the private complainants. In fact,
she received their placement fees and even signed, in her capacity as the
Assistant General Manager of the APSC, the promissory note on May 6,
1998 in favor of private complainant Elmer Janer, obliging the APSC to pay
to him the amount of P75,000.00.


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People v. Gutierrez (422 SCRA 32)
Section 11, Rule II, Book II of the Rules and Regulations Governing
Overseas Employment requires the prior approval of the POEA of the
appointment of representatives or agents:

Section 11. Appointment of Representatives. Every appointment of
representatives or agents of licensed agency shall be subject to prior
approval or authority of the Administration.

The approval may be issued upon submission of or compliance with the
following requirements:
a. Proposed appointment or Special Power of Attorney;
b. Clearances of the proposed representative or agent from NBI;
c. A sworn or verified statement by the designating or appointing person or
company assuming full responsibility for all the acts of the agent or
representative done in connection with the recruitment and placement of
workers.

Approval by the Administration of the appointment or designation does not
authorize the agent or representative to establish a branch or extension
office of the licensed agency represented.

Any revocation or amendment in the appointment should be communicated
to the administration. Otherwise, the designation or appointment shall be
deemed as not revoked or amended.

Section 1, Rule X of the same Book, in turn, provides that "recruitment and
placement activities of agents or representatives appointed by a licensee,
whose appointments were not authorized by the Administration shall
likewise constitute illegal recruitment."

2.08 Enforcement and Sanctions
ART. 36, Labor Code. Regulatory power. - The Secretary of Labor shall
have the power to restrict and regulate the recruitment and placement
activities of all agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and regulations to carry out
the objectives and implement the provisions of this Title.

ART. 37, Labor Code. Visitorial Power. - The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the premises, books of
accounts and records of any person or entity covered by this Title, require it
to submit reports regularly on prescribed forms, and act on violation of any
provisions of this Title.

ART. 38, Labor Code. Illegal recruitment. - (a) Any recruitment activities,

ART. 39, Labor Code. Penalties. - (a) The penalty of life imprisonment and
a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if
illegal recruitment constitutes economic sabotage as defined herein;
(b) Any licensee or holder of authority found violating or causing another to
violate any provision of this Title or its implementing rules and regulations
shall, upon conviction thereof, suffer the penalty of imprisonment of not less
than two years nor more than five years or a fine of not less than P10,000
nor more than P50,000, or both such imprisonment and fine, at the
discretion of the court;
(c) Any person who is neither a licensee nor a holder of authority under this
Title found violating any provision thereof or its implementing rules and
regulations shall, upon conviction thereof, suffer the penalty of
imprisonment of not less than four years nor more than eight years or a fine
of not less than P20,000 nor more than P100,000 or both such
imprisonment and fine, at the discretion of the court;
(d) If the offender is a corporation, partnership, association or entity, the
penalty shall be imposed upon the officer or officers of the corporation,
partnership, association or entity responsible for violation; and if such
officer is an alien, he shall, in addition to the penalties herein prescribed, be
deported without further proceedings;
(e) In every case, conviction shall cause and carry the automatic revocation
of the license or authority and all the permits and privileges granted to such
person or entity under this Title, and the forfeiture of the cash and surety
bonds in favor of the Overseas Employment Development Board or the

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National Seamen Board, as the case may be, both of which are authorized
to use the same exclusively to promote their objectives.

SEC. 7, RA No. 10022: "SEC. 10. Money Claims. - Notwithstanding any
provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and
other forms of damage. Consistent with this mandate, the NLRC shall
endeavor to update and keep abreast with the developments in the global
services industry.

"The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several.
This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
de filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

"Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.

"Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within thirty
(30) days from approval of the settlement by the appropriate authority.

"In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker's salary, the worker shall be entitled to
the full reimbursement if his placement fee and the deductions made with
interest at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

"In case of a final and executory judgement against a foreign
employer/principal, it shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it
fully satisfies the judgement award.
"Noncompliance with the mandatory periods for resolutions of case provided
under this section shall subject the responsible officials to any or all of the
following penalties:

"(a) The salary of any such official who fails to render his decision or
resolution within the prescribed period shall be, or caused to be, withheld
until the said official complies therewith;

"(b) Suspension for not more than ninety (90) days; or

"(c) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.

"Provided, however, That the penalties herein provided shall be without
prejudice to any liability which any such official may have incured under
other existing laws or rules and regulations as a consequence of violating
the provisions of this paragraph."

Cases
Executive Secretary v. CA, 429 SCRA 81
To be entitled to a preliminary injunction to enjoin the enforcement of a law
assailed to be unconstitutional, the party must establish that it will suffer
irreparable harm in the absence of injunctive relief and must demonstrate
that it is likely to succeed on the merits, or that there are sufficiently serious
questions going to the merits and the balance of hardships tips decidedly in
its favor. The higher standard reflects judicial deference toward "legislation
or regulations developed through presumptively reasoned democratic
processes." Moreover, an injunction will alter, rather than maintain, the
status quo, or will provide the movant with substantially all the relief sought
and that relief cannot be undone even if the defendant prevails at a trial on
the merits. Considering that injunction is an exercise of equitable relief and
authority, in assessing whether to issue a preliminary injunction, the courts
must sensitively assess all the equities of the situation, including the public
interest. In litigations between governmental and private parties, courts go
much further both to give and withhold relief in furtherance of public
interest than they are accustomed to go when only private interests are
involved. Before the plaintiff may be entitled to injunction against future
enforcement, he is burdened to show some substantial hardship.

2.09 Liability of Agency
Cases
G&M (Phil.) Inc. v. Batomalaque (461 SCRA 111)
Petitioner, as the recruiter and agent of Abdul Aziz, is thus solidarily liable
with the latter for the unpaid wages of respondent. This Court, through
Justice Irene Cortes, in Royal Crown Internationale v. NLRC explains the
basis thereof:

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Petitioner conveniently overlooks the fact that it had voluntarily assumed
solidary liability under the various contractual undertakings it submitted to
the Bureau of Employment Services. In applying for its license to operate a
private employment agency for overseas recruitment and placement,
petitioner was required to submit, among others, a document or verified
undertaking whereby it assumed all responsibilities for the proper use of its
license and the implementation of the contracts of employment with the
workers it recruited and deployed for overseas employment [Section 2(e),
Rule V, Book I, Rules to Implement the Labor Code (1976)]. It was also
required to file with the Bureau a formal appointment or agency contract
executed by the foreign-based employer in its favor to recruit and hire
personnel for the former, which contained a provision empowering it to sue
and be sued jointly and solidarily with the foreign principal for any of the
violations of the recruitment agreement and the contracts of employment
[Section 10 (a) (2), Rule V, Book I of the Rules to Implement the Labor
Code (1976)]. Petitioner was required as well to post such cash and surety
bonds as determined by the Secretary of Labor to guarantee compliance
with prescribed recruitment procedures, rules and regulations, and terms
and conditions of employment as appropriate [Section 1 of Pres. Dec. 1412
(1978) amending Article 31 of the Labor Code].
These contractual undertakings constitute the legal basis for holding
petitioner, and other private employment or recruitment agencies,
liable jointly and severally with its principal, the foreign-based
employer, for all claims filed by recruited workers which may arise in
connection with the implementation of the service agreements or
employment contracts

2.10 Migrant Workers Act (RA No. 8042)
SEC. 2: DECLARATION OF POLICIES--
(a) In the pursuit of an independent foreign policy and while considering
national sovereignty, territorial integrity, national interest and the right to
self-determination paramount in its relations with other states, the State
shall, at all times, uphold the dignity of its citizens whether in country or
overseas, in general, and Filipino migrant workers, in particular.

(b) The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. Towards this end, the State shall provide
adequate and timely social, economic and legal services to Filipino migrant
workers.

(c) While recognizing the significant contribution of Filipino migrant workers
to the national economy through their foreign exchange remittances, the
State does not promote overseas employment as a means to sustain
economic growth and achieve national development. The existence of the
overseas employment program rests solely on the assurance that the
dignity and fundamental human rights and freedoms of the Filipino citizens
shall not, at any time, be compromised or violated. The State, therefore,
shall continuously create local employment opportunities and promote the
equitable distribution of wealth and the benefits of development.

(d) The State affirms the fundamental equality before the law of women and
men and the significant role of women in nation-building. Recognizing the
contribution of overseas migrant women workers and their particular
vulnerabilities, the State shall apply gender sensitive criteria in the
formulation and implementation of policies and programs affecting migrant
workers and the composition of bodies tasked for the welfare of migrant
workers.

(e) Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any persons by reason of poverty. In this
regard, it is imperative that an effective mechanism be instituted to ensure
that the rights and interest of distressed overseas Filipinos, in general, and
Filipino migrant workers, in particular, documented or undocumented, are
adequately protected and safeguarded.

(f) The right of Filipino migrant workers and all overseas Filipinos to
participate in the democratic decision-making processes of the State and to
be represented in institutions relevant to overseas employment is
recognized and guaranteed.

(g) The State recognizes that the ultimate protection to all migrant workers
is the possession of skills. Pursuant to this and as soon as practicable, the
government shall deploy and/or allow the deployment only to skilled Filipino
workers.

(h) Non-governmental organizations, duly recognized as legitimate, are
partners of the State in the protection of Filipino migrant workers and in the
promotion of their welfare, the State shall cooperate with them in a spirit of
trust and mutual respect.

(I) Government fees and other administrative costs of recruitment,
introduction, placement and assistance to migrant workers shall be rendered
free without prejudice to the provision of Section 36 hereof.

Nonetheless, the deployment of Filipino overseas workers, whether land-
based or sea-based by local service contractors and manning agencies
employing them shall be encouraged. Appropriate incentives may be
extended to them.

SEC. 4: Deployment of Migrant Workers - The State shall deploy overseas
Filipino workers only in countries where the rights of Filipino migrant
workers are protected. The government recognizes any of the following as

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guarantee on the part of the receiving country for the protection and the
rights of overseas Filipino workers:

(a) It has existing labor and social laws protecting the rights of migrant
workers;

(b) It is a signatory to multilateral conventions, declaration or resolutions
relating to the protection of migrant workers;

(c) It has concluded a bilateral agreement or arrangement with the
government protecting the rights of overseas Filipino workers; and

(d) It is taking positive, concrete measures to protect the rights of migrant
workers.

SEC. 6: DEFINITIONS. - For purposes of this Act, illegal recruitment shall
mean any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, procuring workers and includes referring, contact services, promising
or advertising for employment abroad, whether for profit or not, when
undertaken by a non-license or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known
as the Labor Code of the Philippines. Provided, that such non-license or non-
holder, who, in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so engaged. It shall
likewise include the following acts, whether committed by any persons,
whether a non-licensee, non-holder, licensee or holder of authority.

(a) To charge or accept directly or indirectly any amount greater than the
specified in the schedule of allowable fees prescribed by the Secretary of
Labor and Employment, or to make a worker pay any amount greater than
that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or commit
any act of misrepresentation for the purpose of securing a license or
authority under the Labor Code;

(d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;

(e) To influence or attempt to influence any persons or entity not to employ
any worker who has not applied for employment through his agency;

(f) To engage in the recruitment of placement of workers in jobs harmful to
public health or morality or to dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor
and Employment or by his duly authorized representative;

(h) To fail to submit reports on the status of employment, placement
vacancies, remittances of foreign exchange earnings, separations from jobs,
departures and such other matters or information as may be required by the
Secretary of Labor and Employment;

(i) To substitute or alter to the prejudice of the worker, employment
Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of
the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to become
an officer or member of the Board of any corporation engaged in travel
agency or to be engaged directly on indirectly in the management of a
travel agency;

departure for monetary or financial considerations other than those
authorized under the Labor Code and its implementing rules and
regulations;

(l) Failure to actually deploy without valid reasons as determined by the
Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the workers in connection
with his documentation and processing for purposes of deployment, in cases
where the deployment does not actually take place without the worker's
fault. Illegal recruitment when committed by a syndicate or in large scale
shall be considered as offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a

The persons criminally liable for the above offenses are the principals,
control, management or direction of their business shall be liable.

SEC. 10: MONEY CLAIMS. - Botwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the priginal and exclusive jurisdiction to hear and decide,

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within ninety (90) calendar days after filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several. This
provisions shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to
be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership
for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said
contract.

Any compromise/amicable settlement or voluntary agreement on money
claims inclusive of damages under this section shall be paid within four (4)
months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled
to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the
unexpired term, whichever is less.

Non-compliance with the mandatory periods for resolutions of cases
provided under this section shall subject the responsible officials to any or
all of the following penalties:

(a) The salary of any such official who fails to render his decision or
resolutions within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualifications to hold any
appointive public office for five (5) years.

Provided, however, that the penalties herein provided shall be without
prejudice to any liability which any such official may have incurred under
other existing laws or rules and regulations as a consequence of violating
the provisions of this paragraph.

Cases
Flourish Maritime Shipping v. Almanzor (548 SCRA 713)
The Labor Arbiter concluded that petitioners, who had the burden of proof,
failed to adduce any convincing evidence to establish and substantiate its
claim that respondent voluntarily resigned from employment. Likewise, the
NLRC held that petitioners failed to show that respondent was not physically
fit to perform work due to his old age. Moreover, the labor tribunal said that
petitioners failed to prove that the employment contract indeed provided a
grievance machinery.

Clearly, both labor tribunals correctly concluded, as
affirmed by the Court of Appeals, that respondent was not redeployed for
work, in violation of their employment contract. Perforce, the termination of
respondents services is without just or valid cause.

On the amount of the award due respondent, Section 10 of R.A. 8042
provides:
SECTION 10. Money Claims. x x x
x x x x
authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest
at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.
x x x x.

The correct interpretation of this provision was settled in Marsaman Manning
Agency Inc. v. National Labor Relations Commission
,
where this Court held
that the choice of which amount to award an illegally dismissed overseas
contract worker, i.e., whether his salaries for the unexpired portion of his
employment contract, or three (3) months salary for every year of the
unexpired term, whichever is less, comes into play only when the
employment contract concerned has a term of at least one (1) year or more.

Phil. Employ Services, etc. v. Paranio (427 SCRA 732)
Under Section 10, paragraph 5 of Rep. Act No. 8042, respondents
Sarmiento, Bautista, Curameng and Guillermo are entitled to the full
reimbursement of their placement fees. Since each of the respondents
remitted only P19,000 to the petitioner, each of them is entitled to P19,000,
plus 12% interest per annum.

According to Section 10, paragraph 2 of Rep. Act No. 8042, the agency
which deployed the employees whose employment contract were adjudged
illegally terminated, shall be jointly and solidarily liable with the principal for
the money claims awarded to the aforesaid employees. Consequently, the

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petitioner, as the agency of the respondents, is solidarily liable with its
principal Kuan Yuan for the payment of the salaries due to the respondents
corresponding to the unexpired portion of their contract, as well as the
reimbursement of their placement fees.

Under Section 15 of the same Act, the repatriation of the worker and the
transport of his personal belongings shall be the primary responsibility of
the agency, which recruited or deployed the overseas contract worker. All
the costs attendant thereto shall be borne by the agency concerned and/or
its principal. Consequently, the petitioner is obliged to refund P4,300 to
each of the respondents, representing their airfare.

Placewell International Services Corp. v. Camote (492 SCRA 761)
R.A. No. 8042 explicitly prohibits the substitution or alteration to the
prejudice of the worker, of employment contracts already approved and
verified by the Department of Labor and Employment (DOLE) from the time
of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE. Thus, we held in
Chavez v. Bonto-Perez that the subsequently executed side agreement of an
overseas contract worker with her foreign employer which reduced her
salary below the amount approved by the POEA is void because it is against
our existing laws, morals and public policy. The said side agreement cannot
supersede her standard employment contract approved by the POEA.

Applying the same rule in the case at bar, the unauthorized alteration in the
employment contract of respondent, particularly the diminution in his salary
from US$370.00 to SR 800.00 per month, is void for violating the POEA-
approved contract which set the minimum standards, terms, and conditions
of his employment.

Moreover, we find that there was no proper dismissal of respondent by
SAAD; the "termination" of respondent was clearly a ploy to pressure him to
agree to a lower wage rate for continued employment. Thus, the original
POEA-approved employment contract of respondent subsists despite the so-
called new agreement with SAAD. Consequently, the solidary liability of
petitioner with SAAD for respondents money claims continues in accordance
with Section 10 of R.A. 8042.

2.11 Pre-Termination
Cases
Flourish Maritime Shipping v. Almanzor (548 SCRA 713)
The employment contract involved in the instant case covers a two-year
period but the overseas contract worker actually worked for only 26 days
prior to his illegal dismissal. Thus, the three months salary rule applies.
There is a similar factual milieu between the case at bench and Olarte v.
Nayona.
[
The only difference lies in the length of the subject employment
contract: Olarte involved a one-year contract; while the employment in this
case covers a two-year period. However, they both fall under the three
months salary rule since the term of the contract is at least one year or
more. In Olarte, as well as in JSS Indochina Corporation v. Ferrer,

we
ordered the employer of an illegally dismissed overseas contract worker to
pay an amount equivalent to three (3) months salary.

SECTION 3. ALIEN EMPLOYMENT

REQUISITES:
1. Employment Permit (Art. 40)
a. Non-Resident Aliensneed employment permit from DOLE
b. Resident Aliensno need for employment permit
2. Secretary of Labor and Employment determines:
a. Non-availability of a person in the Philippines who is able,
competent and willing at the time of the application to
perform the services for which the alien is desired (Art. 40)
b. Other factors like economic and national interest
considerations
3. Only Secretary of Labor and Employment is authorized to issue
employment permit.
4. No transfer of employment from one employer to another because
the employee was granted only for that particular job (Art. 41).
5. There must be an understudy program to assure technology transfer
(IRR).

3.01 Coverage
Non-Resident Alien
Cases
Almodiel v NLRC (223 SCRA 341)
Likewise destitute of merit is petitioner's imputation of unlawful
discrimination when Raytheon caused corollary functions appertaining to
cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien
without a working permit. Article 40 of the Labor Code which requires
employment permit refers to non-resident aliens. The employment permit is
required for entry into the country for employment purposes and is issued
after determination of the non-availability of a person in the Philippines who
is competent, able and willing at the time of application to perform the
services for which the alien is desired. Since Ang Tan Chai is a resident
alien, he does not fall within the ambit of the provision.
3.02 Technique RegulationEmployment Permit
ART. 40: Employment Permit of Non-Resident Aliens.Any alien seeking
admission to the Philippines for employment purposes and any domestic or
foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of
Labor.

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The employment permit may be issued to anon-resident alien or to the
applicant employer after a determination of the non-availability of a person
in the Philippines who is competent, able and willing at the time of
application to perform the services for which the alien is desired.

For an enterprise registered in preferred areas of investments, said
employment permit may be issued upon recommendation of the
government agency charged with the supervision of said registered
enterprise.

ART. 41: Prohibition Against Transfer of Employment.(a) After the
issuance of an employment permit, the alien shall not transfer to another
job or change his employer without prior approval of the Secretary of Labor.

(b) Any non-resident alien who shall take up employment in violation of the
provision of this Title and its implementing rules and regulations shall be
punished in accordance with the provisions of Articles 289 and 290 of the
Labor Code.

In addition, the alien worker shall be subject to deportation after service of
his sentence.

ART. 42: Submission of List.Any employer employing non-resident foreign
nationals on the effective date of this Code shall submit a list of such
nationals to the Secretary of Labor within thirty (30) days after such date
indicating their names, citizenship, foreign and local addresses, nature of
employment and status of stay in the country. The Secretary of Labor shall
then determine if they are entitled to an employment permit.

ART. XII, SEC. 12, Constitution: The State shall promote the preferential
use of Filipino labor, domestic materials and locally produced goods, and
adopt measures that help make them competitive.

RA 7916, The Special Economic Zone Act of 1995
SEC. 2(B): Declaration of Policy. It is the declared policy of the
government to translate into practical realities the following State policies
and mandates in the 1987 Constitution, namely:

(b) "The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods and adopt measures that help make
them competitive." (Sec. 12, Art XII)

SEC. 3(C): Purposes, Intents and Objectives. It is the purpose, intent
and objective of this Act:

(c) To promote the flow of investors, both foreign and local, into special
economic zones which would generate employment opportunities and
establish backward and forward linkages among industries in and around
the economic zones;

SEC. 4: Definition of Terms. For purposes of this Act, the following
definitions shall apply to the following terms:
(a) "Special Economic Zones (SEZ)" hereinafter referred to as the
ECOZONES, are selected areas with highly developed or which have the
potential to be developed into agro-industrial, Industrial tourist/recreational,
commercial, banking, investment and financial centers. An ECOZONE may
contain any or all of the following: Industrial Estates (IEs), Export
Processing Zones (EPZs), Free Trade Zones, and Tourist/Recreational
Centers.

(b) "Industrial Estate (IE)" refers to a tract of land subdivided and
developed according to a comprehensive plan under a unified continuous
management and with provisions for basic infrastructure and utilities, with
or without pre-built standard factory buildings and community facilities for
the use of the community of industries.

(c) "Export Processing Zone (EPZ)" a specialized industrial estate located
physically and/or administratively outside customs territory, predominantly
oriented to export production. Enterprises located in export processing
zones are allowed to import capital equipment and raw materials free from
duties, taxes and other import restrictions.

(d)"Free Trade Zone" - an isolated policed area adjacent to a port of entry
(as a seaport) and/or airport where imported goods may be unloaded for
immediate transshipment or stored, repacked, sorted, mixed, or otherwise
manipulated without being subject to import duties. However, movement of
these imported goods from the free-trade area to a non-free-trade area in
the country shall be subject to import duties.

Enterprises within the zone are granted preferential tax treatment and
immigration laws are more lenient.

SEC. 10: Immigration. Any investor within the ECOZONE whose initial
investment shall not be less than One Hundred Fifty Thousand Dollars
($150,000.00), his/her spouse and dependent children under twenty-one
(21) years of age shall be granted permanent resident status within the
ECOZONE. They shall have freedom of ingress and egress to and from the
ECOZONE without any need of special authorization from the Bureau of
Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign
executives and other aliens, processing highly-technical skills which no
Filipino within the ECOZONE possesses, as certified by the Department of
Labor and Employment. The names of aliens granted permanent resident

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status and working visas by the PEZA shall be reported to the Bureau of
Immigration within thirty (30) days after issuance thereof.

SEC. 40: Percentage of Foreign Nationals. - Employment of foreign
nationals hired by ECOZONE enterprises in a supervisory, technical or
advisory capacity shall not exceed five percent (5%) of Its workforce
without the express authorization of the Secretary of Labor and
Employment.
RA7918, Amending Omnibus Investments Code of 1987
SEC. 39(G): Incentives to Registered Enterprises. All registered
enterprises shall be granted the following incentives to the extent engaged
in a preferred area of investment:

"(g) Employment of Foreign Nationals. Subject to the provisions of
Section 29 of Commonwealth Act No. 613, as amended, a registered
enterprise may employ foreign nationals in supervisory, technical or
advisory positions for a period not exceeding five (5) years from its
registration, extendible for limited periods at the discretion of the Board:
Provided, however, That when the majority of the capital stock of a
registered enterprise is owned by foreign investors, the positions of
president, treasurer, and general manager or their equivalents may be
retained by foreign nationals beyond the period set forth within.

"Foreign nationals under employment contract within the purview of this
incentive, their spouses and unmarried children under twenty-one (21)
years of age, who are not excluded by Section 29 of Commonwealth Act No.
613, as amended, shall be permitted to enter and reside in the Philippines
during the period of employment of such foreign nationals.

"A registered enterprise shall train Filipinos as understudies of foreign
nationals in administrative, supervisory and technical skills and shall submit
annual reports on such training to the Board.

Authority Employment PermitIssuance
Cases
General Milling Corp. v Torres (196 SCRA 215)
Petitioners will not find solace in the equal protection clause of the
Constitution. As pointed out by the Solicitor-General, no comparison can be
made between petitioner Cone and Mr. Norman Black as the latter is "a long
time resident of the country," and thus, not subject to the provisions of
Article 40 of the Labor Code which apply only to "non-resident aliens." In
any case, the term "non-resident alien" and its obverse "resident alien,"
here must be given their technical connotation under our law on
immigration.

Neither can petitioners validly claim that implementation of respondent
Secretary's decision would amount to an impairment of the obligations of
contracts. The provisions of the Labor Code and its Implementing Rules and
Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly
settled that provisions of applicable laws, especially provisions relating to
matters affected with public policy, are deemed written into contracts.
Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.

Petitioners' contention that respondent Secretary of Labor should have
deferred to the findings of Commission on Immigration and Deportation as
to the necessity of employing petitioner Cone, is, again, bereft of legal
basis. The Labor Code itself specifically empowers respondent Secretary to
make a determination as to the availability of the services of a "person in
the Philippines who is competent, able and willing at the time of application
to perform the services for which an alien is desired." In short, the
Department of Labor is the agency vested with jurisdiction to determine the
question of availability of local workers. The constitutional validity of legal
provisions granting such jurisdiction and authority and requiring proof of
non-availability of local nationals able to carry out the duties of the position
involved, cannot be seriously questioned.

SECTION 4. EMPLOYMENT OF APPRENTICES, LEARNERS, AND
HANDICAPPED WORKERS

4.01 Policy Objectives
SEC. 2, RA 7796: Declaration of Policy. It is hereby declared the policy
of the State to provide relevant, accessible, high quality and efficient
technical education and skills development in support of the development of
high quality Filipino middle-level manpower responsive to and in accordance
with Philippine development goals and priorities.

The State shall encourage active participation of various concerned sectors,
particularly private enterprises, being direct participants in and immediate
beneficiaries of a trained and skilled work force, in providing technical
education and skills development opportunities.

SEC. 3, RA 7796: Statement of Goals and Objectives. It is the goal and
objective of this Act to:

a) Promote and strengthen the quality of technical education and skills
development programs to attain international competitiveness.

b)Focus technical education and skills development on meeting the changing
demands for quality middle-level manpower;

c) Encourage critical and creative thinking by disseminating the scientific
and technical knowledge base of middle-level manpower development

NIKKI HIPOLITO
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programs;

d) Recognize and encourage the complementary roles of public and private
institutions in technical education and skills development and training
systems; and

e) Inculcate desirable values through the development of moral character
with emphasis on work ethic, self-discipline, self- reliance and nationalism.

Cases
Century Canning v CA (530 SCRA 501)
Article 57 of the Labor Code provides that the State aims to establish a
national apprenticeship program through the participation of employers,
workers and government and non-government agencies and to establish
apprenticeship standards for the protection of apprentices. To translate
such objectives into existence, prior approval of the DOLE to any
apprenticeship program has to be secured as a condition sine qua non
before any such apprenticeship agreement can be fully enforced. The role of
the DOLE in apprenticeship programs and agreements cannot be debased.

A. APPRENTICE
4.02 Apprentice
A. Defined
SEC. 4(J), RA 7796: Definition of Terms. As used in this Act:

j) Apprenticeship training within employment with compulsory
related theoretical instructions involving a contract between an
apprentice and an employer on an approved apprenticeable
occupation;

Within employment
Within compulsory related theoretical instructions/
apprenticeship program (approved by DOLE before
apprenticeship agreement entered into)
Involves a contract between an apprentice and an employer
Highly skilled trade or skill

B. Apprenticeable Occupation
SEC. 4(M), RA 7796: Apprenticeable Occupation is an occupation
officially endorsed by a tripartite body and approved for
apprenticeship by the Authority;

C. Qualification

When a child works directly under sole responsibility of
parents/legal guardian
o Only members of employers family employed
o Provided: No danger and provide with education
Public and entertainment/info (cinema, theater, radio, TV)
o DOLE permit needed
o Concluded by parents
o Express agreement by child
o Prevent child exploitation and discrimintation
o Continuing program for training and skills acquisition

SEC. 12, RA 7610, as amended by RA 7658: Employment of
Children. Children below fifteen (15) years of age may be
employed except:

(1) When a child works directly under the sole responsibility of his
parents or legal guardian and where only members of the
employer's family are employed: Provided, however, That his
employment neither endangers his life, safety and health and
morals, nor impairs his normal development: Provided, further, That
the parent or legal guardian shall provide the said minor child with
the prescribed primary and/or secondary education; or

(2) When a child's employment or participation in public &
entertainment or information through cinema, theater, radio or
television is essential: Provided, The employment contract
concluded by the child's parent or guardian, with the express
agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: Provided, That the
following requirements in all instances are strictly complied with:
(a) The employer shall ensure the protection, health, safety
and morals of the child;

(b) the employer shall institute measures to prevent the
child's exploitation or discrimination taking into account the
system and level of remuneration, and the duration and
arrangement of working time; and;

(c) The employer shall formulate and implement, subject to
the approval and supervision of competent authorities, a
continuing program for training and skill acquisition of the
child.

In the above exceptional cases where any such child may be
employed, the employer shall first secure, before engaging such
child, a work permit from the Department of Labor and Employment
which shall ensure observance of the above requirement.


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The Department of Labor Employment shall promulgate rules and
regulations necessary for the effective implementation of this
Section.

D. Allowed Employment
Requirement Program Approval
Cases
Nitto Enterprises v NLRC (248 SCRA 654)
Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is, therefore, a condition sine quo non before an
apprenticeship agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department
of Labor and Employment is a preliminary step towards its final approval
and does not instantaneously give rise to an employer-apprentice
relationship.

Article 57 of the Labor Code provides that the State aims to "establish a
national apprenticeship program through the participation of employers,
workers and government and non-government agencies" and "to establish
apprenticeship standards for the protection of apprentices." To translate
such objectives into existence, prior approval of the DOLE to any
apprenticeship program has to be secured as a condition sine qua non
before any such apprenticeship agreement can be fully enforced. The role of
the DOLE in apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private
respondent has no force and effect in the absence of a valid apprenticeship
program duly approved by the DOLE, private respondent's assertion that he
was hired not as an apprentice but as a delivery boy ("kargador" or
"pahinante") deserves credence. He should rightly be considered as a
regular employee of petitioner as defined by Article 280 of the Labor Code

E. Terms and Conditions of Employment

Maximum term of 6 months
Minimum 75% below minimum wage
Apprenticeship program approved by DOLE

SEC. 61: Contents of Apprenticeship Agreements.Apprenticeship
agreements, including the wage rates of apprentices, shall conform
to the rules issued by the Secretary of Labor and Employment. The
period of apprenticeship shall not exceed six (6) months.
Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the
applicable minimum wage, may be entered into only in accordance
with apprenticeship programs duly approved by the Secretary of
Labor and Employment. The Department shall develop standard
model programs of apprenticeship. (As amended by Sec. 1, EO 111,
Dec. 12, 1986)

SEC. 72: Apprentices Without Compensation.The Secretary of
Labor and Employment may authorize the hiring of apprentices
without compensation whose training on the job is required by the
school or training program curriculum or as requisite for graduation
or board examination.

F. Costs

Employer may deduct # costs of training expenses from taxable
income, provided:
o Apprenticeship program is recognized by DOLE
o Deduction shall not exceed 10% of direct labor wage
o Pay apprentice minimum wage (not 75% of the
minimum wage)

SEC. 71: Deductibility of Training Costs.An additional deduction
from taxable income of one-half (1/2) of the value of labor training
expenses incurred for developing the productivity and efficiency of
apprentices shall be granted to the person or enterprise organizing
an apprenticeship program: Provided, That such program is duly
recognized by DOLE: Provided, further, That such deduction shall
not exceed ten (10%) percent of direct labor wage: and Provided,
finally, That the person or enterprise who wishes to avail himself or
itself of this incentive should pay his apprentices the minimum
wage.

G. Enforcement
SEC. 65: Investigation of Violation of Apprenticeship Agreement.
Upon complaint of any interested person or upon its own initiative,
the appropriate agency of the DOLE or its authorized representative
shall investigate any violation of an apprenticeship agreement
pursuant to such rules and regulations as may be prescribed by the
Secretary of Labor and Employment.

SEC. 66: Appeal to the Secretary of Labor and Employment.The
decision of the authorized agency of the DOLE may be appealed by
any aggrieved person to the Secretary of Labor and Employment
within five (5) days from receipt of the decision. The decision of the
Secretary of Labor and Employment shall be final and executory.

SEC. 67: Exhaustion of Administrative Remedies.No person shall
institute any action for the enforcement of any apprenticeship

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agreement or damages for breach of any such agreement, unless he
has exhausted all available administrative remedies.

B. LEARNERS

Trainees in
o Semi-skilled
o Other industrial occupation (non-apprenticeable)
Learnership program approved by authority
Can only be hired when
o No experience worker available
o Employment necessary to prevent curtailment of
employment opportunities
o Employment does not create unfair competition in terms
of labor costs/impair/lower working standards
The contract should include
o Names and addresses
o Duration (not to exceed 3 months)
o Wages: minimum 75% of applicable minimum wage
o Commitment of employer to hire learners as regulars
Would be deemed as regulars if worked first 2 months,
terminated before end of stipulated period, no fault of learner

4.03 Learners
A. Defined
SEC. 4, RA 7796: Learners refer to persons hired as trainees in
semi-skilled and other industrial occupations which are non-
apprenticeable. Learnership programs must be approved by the
Authority.

B. Allowed Employment
SEC. 74(B): When Learners May Be Hired.Learners may be
employed when no experienced workers are available, the
employment of learners is necessary to prevent curtailment of
employment opportunities, and the employment does not create
unfair competition in terms of labor costs or impair or lower working
standards.

C. Terms and Conditions of Employment
SEC. 75: Learnership Agreement.Any employer desiring to employ
learners shall enter into a learnership agreement with them, which
agreement shall include:
(a) The names and addresses of the learners;
(b) The duration of the learnership period, which shall not exceed
three (3) months;
(c) The wages or salary rates of the learners which shall begin at
not less than seventy-five percent (75%) of the applicable
minimum wage; and
(d) A commitment to employ the learners if they so desire, as
regular employees upon completion of the learnership. All
learners who have been allowed or suffered to work during the
first two (2) months shall be deemed regular employees if
training is terminated by the employer before the end of the
stipulated period through no fault of the learners.

The learnership agreement shall be subject to inspection by the
Secretary of Labor and Employment or his duly authorized
representative.

SEC. 76: Learners in Piecework.Learners employed in piece or
incentive-rate jobs during the training period shall be paid in full for
the work done.

DISTINCTION BETWEEN APPRENTICESHIP AND LEARNERSHIP
SIMILARITY: Both involve training periods for jobs requiring skills that can
be acquired through actual work experience. Since both learners and
apprentices are not as fully productive as regular workers, learners and
apprentices may be paid wages 25% lower than the applicable legal
minimum wage.

DIFFERENCE: A learner trains in a semi-skilled job or in industrial
occupations that require training for less than 3 months. Training period is
shorter than apprenticeship because the job is more easily learned. The job
is nonapprenticeable because its practical skills can be learned in 3
months. A learner is NOT an apprentice, but an apprentice is, conceptually,
also a learner.

An apprentice trains in a skilled or highly-skilled job or in a job found only in
a highly technical industry. Since it is a skilled job, the training period
exceeds 3 months.

Since the job is more easily learnable in learnership, the employer is
committed to hire the learner-trainee as an employee after the training
period. No such commitment exists in apprenticeship.

C. HANDICAPPED WORKERS

If qualified, handicapped workers may be considered apprentices
or for apprenticeship
Should be given the same terms and conditions of a qualified
able-bodied person, should be paid full compensation, like a
regular employee

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No disabled person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject to the same
terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified
able-bodied person.

4.04 Handicapped Worker
A. Defined
SEC. 4(A), RA 7277: Disabled persons are those suffering from
restriction or different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in the manner or within
the range considered normal for a human being;

SEC. 4(B). RA 7277: (b) Impairment is any loss, diminution or
aberration of psychological, physiological, or anatomical structure or
function;

SEC. 4(C), RA 7277: (c) Disability shall mean 1) a physical or
mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual
or activities of such individual; 2) a record of such an impairment;
or 3) being regarded as having such an impairment;

SEC. 4(D), RA 7277: (d) Handicap refers to a disadvantage for a
given individual, resulting from an impairment or a disability, that
limits or prevents the function or activity, that is considered normal
given the age and sex of the individual;

Section 1. Title. This Act shall be known and cited as the "Magna
Carta for Disabled Persons."

Sec. 2. Declaration of Policy The grant of the rights and privileges
for disabled persons shall be guided by the following principles:

(a) Disabled persons are part of Philippine society, thus the State
shall give full support to the improvement of the total well-being of
disabled persons and their integration into the mainstream of
society. Toward this end, the State shall adopt policies ensuring the
rehabilitation, self-development and self-reliance of disabled
persons. It shall develop their skills and potentials to enable them to
compete favorably for available opportunities.

(b) Disabled persons have the same rights as other people to take
their proper place in society. They should be able to live freely and
as independently as possible. This must be the concern of everyone
the family, community and all government and nongovernment
organizations. Disabled persons' rights must never be perceived as
welfare services by the Government.

(c) The rehabilitation of the disabled persons shall be the concern of
the Government in order to foster their capacity to attain a more
meaningful, productive and satisfying life. To reach out to a greater
number of disabled persons, the rehabilitation services and benefits
shall be expanded beyond the traditional urban-based centers to
community based programs, that will ensure full participation of
different sectors as supported by national and local government
agencies.
(d) The State also recognizes the role of the private sector in
promoting the welfare of disabled persons and shall encourage
partnership in programs that address their needs and concerns.
(e) To facilitate integration of disabled persons into the mainstream
of society, the State shall advocate for and encourage respect for
disabled persons. The State shall exert all efforts to remove all
social, cultural, economic, environmental and attitudinal barriers
that are prejudicial to disabled persons.
Sec. 3. Coverage. This Act shall cover all disabled persons and,
to the extent herein provided, departments, offices and agencies of
the National Government or nongovernment organizations involved
in the attainment of the objectives of this Act.

Sec. 4. Definition of Terms. For purposes of this Act, these terms
are defined as follows:

(a) Disabled persons are those suffering from restriction or different
abilities, as a result of a mental, physical or sensory impairment, to
perform an activity in the manner or within the range considered
normal for a human being;

(b) Impairment is any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function;

(c) Disability shall mean 1) a physical or mental impairment that
substantially limits one or more psychological, physiological or
anatomical function of an individual or activities of such individual;
2) a record of such an impairment; or 3) being regarded as having
such an impairment;
(d) Handicap refers to a disadvantage for a given individual,
resulting from an impairment or a disability, that limits or prevents

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the function or activity, that is considered normal given the age and
sex of the individual;
(e) Rehabilitation is an integrated approach to physical, social,
cultural, spiritual, educational and vocational measures that create
conditions for the individual to attain the highest possible level of
functional ability;
(f) Social Barriers refer to the characteristics of institutions, whether
legal, economic, cultural, recreational or other, any human group,
community, or society which limit the fullest possible participation of
disabled persons in the life of the group. Social barriers include
negative attitudes which tend to single out and exclude disabled
persons and which distort roles and inter-personal relationships;
(g) Auxiliary Aids and Services include:
(1) qualified interpreters or other effective methods of
delivering materials to individuals with hearing impairments;

(2) qualified readers, taped tests, or other effective methods
of delivering materials to individuals with visual
impairments;

(3) acquisition or modification of equipment or devices; and

(4) other similar services and actions or all types of aids and
services that facilitate the learning process of people with
mental disability.

(h) Reasonable Accommodation include 1) improvement of existing
facilities used by employees in order to render these readily
accessible to and usable by disabled persons; and 2) modification of
work schedules, reassignment to a vacant position, acquisition or
modification of equipment or devices, appropriate adjustments or
modifications of examinations, training materials or company
policies, rules and regulations, the provision of auxiliary aids and
services, and other similar accommodations for disabled persons;

(i) Sheltered Employment refers to the provision of productive work
for disabled persons through workshops providing special facilities,
income-producing projects or homework schemes with a view to
giving them the opportunity to earn a living thus enabling them to
acquire a working capacity required in open industry;

(j) Auxiliary Social Services are the supportive activities in the
delivery of social services to the marginalized sectors of society;

(k) Marginalized Disabled Persons refer to disabled persons who lack
access to rehabilitative services and opportunities to be able to
participate fully in socioeconomic activities and who have no means
of livelihood and whose incomes fall below the poverty threshold;

(l) Qualified Individual with a Disability shall mean an individual with
a disability who, with or without reasonable accommodations, can
perform the essential functions of the employment position that
such individual holds or desires. However, consideration shall be
given to the employer's judgment as to what functions of a job are
essential, and if an employer has prepared a written description
before advertising or interviewing applicants for the job, this
description shall be considered evidence of the essential functions of
the job;

(m) Readily Achievable means a goal can be easily attained and
carried out without much difficulty or expense. In determining
whether an action is readily achievable, factors to be considered
include
(1) the nature and cost of the action;

(2) the overall financial resources of the facility or facilities
involved in the action; the number of persons employed at
such facility; the effect on expenses and resources, or the
impact otherwise of such action upon the operation of the
facility;

(3) the overall financial resources of the covered entity with
respect to the number of its employees; the number, type
and location of its facilities; and

(4) the type of operation or operations of the covered entity,
including the composition, structure and functions of the
work force of such entity; the geographic separateness,
administrative or fiscal relationship of the facility or facilities
in question to the covered entity.

(n) Public Transportation means transportation by air, land and sea
that provides the public with general or special service on a regular
and continuing basis;
(o) Covered Entity means an employer, employment agency, labor
organization or joint-labor management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic,

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commerce, transportation, or communication among the provinces
or between any foreign country or any territory or possession and
any province.

TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS
CHAPTER I EMPLOYMENT
Sec. 5. Equal Opportunity for Employment. No disable person
shall be denied access to opportunities for suitable employment. A
qualified disabled employee shall be subject to the same terms and
conditions of employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as a qualified able
bodied person.

Five percent (5%) of all casual emergency and contractual positions
in the Departments of Social Welfare and Development; Health;
Education, Culture and Sports; and other government agencies,
offices or corporations engaged in social development shall be
reserved for disabled persons.

Sec. 6. Sheltered Employment If suitable employment for
disabled persons cannot be found through open employment as
provided in the immediately preceding Section, the State shall
endeavor to provide it by means of sheltered employment. In the
placement of disabled persons in sheltered employment, it shall
accord due regard to the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere and efficient
production.

Sec. 7. Apprenticeship. Subject to the provisions of the Labor
Code as amended, disabled persons shall be eligible as apprentices
or learners: Provided, That their handicap is not as much as to
effectively impede the performance of job operations in the
particular occupation for which they are hired; Provided, further,
That after the lapse of the period of apprenticeship, if found
satisfactory in the job performance, they shall be eligible for
employment.

Sec. 8. Incentives for Employers. (a) To encourage the active
participation of the private sector in promoting the welfare of
disabled persons and to ensure gainful employment for qualified
disabled persons, adequate incentives shall be provided to private
entities which employ disabled persons.

(b) Private entities that employ disabled persons who meet the
required skills or qualifications, either as regular employee,
apprentice or learner, shall be entitled to an additional deduction,
from their gross income, equivalent to twenty-five percent (25%) of
the total amount paid as salaries and wages to disabled persons:
Provided, however, That such entities present proof as certified by
the Department of Labor and Employment that disabled persons are
under their employ: Provided, further, That the disabled employee is
accredited with the Department of Labor and Employment and the
Department of Health as to his disability, skills and qualifications.

(c) Private entities that improve or modify their physical facilities in
order to provide reasonable accommodation for disabled persons
shall also be entitled to an additional deduction from their net
taxable income, equivalent to fifty percent (50%) of the direct costs
of the improvements or modifications. This Section, however, does
not apply to improvements or modifications of facilities required
under Batas Pambansa Bilang 344.

B. Allowed Employment
SEC. 5, RA 7277: Equal Opportunity for Employment. No disable
person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be subject to the
same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions
in the Departments of Social Welfare and Development; Health;
Education, Culture and Sports; and other government agencies,
offices or corporations engaged in social development shall be
reserved for disabled persons.

Regular Worker
Cases
Bernardo v NLRC (310 SCRA 186)
The Magna Carta for Disabled Persons mandates that qualified disabled
persons be granted the same terms and conditions of employment as
qualified able-bodied employees. Once they have attained the status of
regular workers, they should be accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the contrary. This treatments
is rooted not merely on charity or accommodation, but on justice for all.

At the outset, let it be known that this Court appreciates the nobility of
private respondent's effort to provide employment to physically impaired
individuals and to make them more productive members of society.
However, we cannot allow it to elude the legal consequences of that effort,
simply because it now deems their employment irrelevant. The facts, viewed
in light of the Labor Code and the Magna Carta for Disabled Persons,

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indubitably show that the petitioners, except sixteen of them, should be
deemed regular employees. As such, they have acquired legal rights that
this Court is duty-bound to protect and uphold, not as a matter of
compassion but as a consequence of law and justice.

The uniform employment contracts of the petitioners stipulated that they
shall be trained for a period of one month, after which the employer shall
determine whether or not they should be allowed to finish the 6-month term
of the contract. Furthermore, the employer may terminate the contract at
any time for a just and reasonable cause. Unless renewed in writing by the
employer, the contract shall automatically expire at the end of the term.

SEC. 5. CONDITIONS OF EMPLOYMENTHOURS OF WORK

Working Conditions and Rest Periodsterms and conditions affecting
the employment of an employee including policies, programs and
regulations governing his employment status, work and work relationships.

5.01 Hours Regulation
Rationale and Enforcement
Cases
Manila Terminal Co. Inc. v. CIR, 91 Phil. 625 (1952)
It is high time that all employers were warned that the public is interested in
the strict enforcement of the Eight-Hour Labor Law. This was designed not
only to safeguard the health and welfare of the laborer or employee, but in
a way to minimize unemployment by forcing employers, in cases where
more than 8-hour operation is necessary, to utilize different shifts of
laborers or employees working only for eight hours each.

5.02 Coverage
ART. 82: Coverage. - The provisions of this Title shall apply to employees in
all establishments and undertakings whether for profit or not, but not to
government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate
regulations.

As used herein, "managerial employees" refer to those whose primary duty
consists of the management of the establishment in which they are
employed or of a department or subdivision thereof, and to other officers or
members of the managerial staff.

"Field personnel" shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
COVERED: Employees in all establishments and undertakings, whether for
profit or notall employees in private sector.

ExemptionManagerial Employees
Government Employees
Managerial Employees
Field Personnel
Members of the Employers Family Dependent upon for Support
Domestic Helpers
Persons in Personal Service of Another
Piece Worker
Note: If piece worker earns less than minimum wage, then he is paid the
minimum wage.
Managerial Employeeprimary duty consists of management of
establishment, includes members of managerial staff
Field Personnelnon-agricultural employee who regularly performs
duties away from principal place of business and whose actual hours
of work in the field cannot be determined with reasonable certainty.

Cases
Penaranda v. Bananga Plywood Corp., 489 SCRA 94 (2006)
coverage of labor standards. Labor standards provide the working conditions
of employees, including entitlement to overtime pay and premium pay for
working on rest days. Under this provision, managerial employees are
"those whose primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision."

The Implementing Rules of the Labor Code state that managerial employees
are those who meet the following conditions:
1. Their primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision thereof;
2. They customarily and regularly direct the work of two or more
employees therein;
3. They have the authority to hire or fire other employees of lower rank;
or their suggestions and recommendations as to the hiring and firing
and as to the promotion or any other change of status of other
employees are given particular weight.

Asia Pacific Chartering, Inc. v. Farolan, 393 SCRA 454 (2004)
"Managerial employees are ranked as Top Managers, Middle Managers and
First Line Managers. The mere fact that an employee is designated
"manager" does not ipso facto make him one-designation should be
reconciled with the actual job description of the employee for it is the job
description that determines the nature of employment."


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Before one may be properly considered a managerial employee, all the
following conditions must be met:
(1) Their primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more
employees therein;
(3) They have the authority to hire or fire other employees of lower rank;
or their suggestions and recommendations as to the hiring and firing
and as to the promotion or any other change of status of other
employees are given particular weight.

National Waterworks and Sewerage Authority v. NAWASA
Consolidated Union, 11 SCRA 766 (1965)
One of the distinguishing characteristics managerial employee may be
known as expressed in the explanatory note of Republic Act No. 2377 is that
he is not subject to the rigid observance of regular office hours. The true
worth of his service does not depend so much on the time he spends in
office but more on the results he accomplishes. In fact, he is free to go out
of office anytime.

The philosophy behind the exemption of managerial employees from the 8-
Hour Labor Law is that such workers are not usually employed for every
hour of work but their compensation is determined considering their special
training, experience or knowledge which requires the exercise of discretion
and independent judgment, or perform work related to management policies
or general business operations along specialized or technical lines. For these
workers it is not feasible to provide a fixed hourly rate of pay or maximum
hours of labor.

TestsField Personnel
1. Not under the effective control and supervision of the employer
(Merdicar Fishing Corp. v. NLRC)
2. Number of hours spent working cannot be reasonably ascertained
(Union of Filipro Employees v. Vivar)

Cases
Auto Bus Transport Systems, Inc. v. Bautista, 458 SCRA 578 (2005)
A careful perusal of said provisions of law will result in the conclusion that
the grant of service incentive leave has been delimited by the Implementing
Rules and Regulations of the Labor Code to apply only to those employees
not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a
separate classification of employees to which service incentive leave shall
not be granted. Rather, it serves as an amplification of the interpretation of
the definition of field personnel under the Labor Code as those "whose
actual hours of work in the field cannot be determined with reasonable
certainty."

The same is true with respect to the phrase "those who are engaged on task
or contract basis, purely commission basis." Said phrase should be related
with "field personnel," applying the rule on ejusdem generis that general
and unlimited terms are restrained and limited by the particular terms that
they follow.
9
Hence, employees engaged on task or contract basis or paid on
purely commission basis are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of field
personnel.
It is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs
his duties but also with the fact that the employees performance is
unsupervised by the employer. As discussed above, field personnel are
those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. Thus, in order to conclude whether
an employee is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with reasonable certainty by
the employer. In so doing, an inquiry must be made as to whether or not
the employees time and performance are constantly supervised by the
employer.

Far-East Agricultural Supply, Inc. v. Lebatique, 515 SCRA 491
(2007)
As correctly found by the Court of Appeals, Lebatique is not a field personnel
as defined above for the following reasons: (1) company drivers, including
Lebatique, are directed to deliver the goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact
prospective clients; and (3) Far East issued a directive that company drivers
should stay at the clients premises during truck-ban hours which is from
5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. Even petitioners admit that the
drivers can report early in the morning, to make their deliveries, or in the
afternoon, depending on the production of animal feeds. Drivers, like
Lebatique, are under the control and supervision of management officers.
Lebatique, therefore, is a regular employee whose tasks are usually
necessary and desirable to the usual trade and business of the company.
Thus, he is entitled to the benefits accorded to regular employees of Far
East, including overtime pay and service incentive leave pay.

Union of Filipro Employees v. Vivar, 205 SCRA 200 (1992)
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause "whose time and performance is
unsupervised by the employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the field cannot be

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determined with reasonable certainty." The former clause is still within the
scope and purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an employee's actual working hours in the field can
be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly
supervised by the employer.

Salazar v. NLRC, 256 SCRA 273 (1996)
From the foregoing, it is apparent that [petitioner] discharge[s] duties and
responsibilities which ineluctably qualify [him] as officer or member of the
managerial staff, as defined in Section 2, Rule I, Book III of the aforestated
Rules to Implement the Labor Code, viz.: (1) their primary duty consists of
the performance of work directly related to management policies of their
employer; (2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist the managerial
employee whose primary duty consists of the management of a department
of the establishment in which they are employed; (4) they execute, under
general supervision, work along specialized or technical lines requiring
special training, experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do not devote
more than 20% of their hours worked in a work-week to activities which are
not directly and clearly related to the performance of their work
hereinbefore described.

Merdicar Fishing Corp. v. NLRC, 297 SCRA 440 (1998)
During the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they
perform non-agricultural work away from petitioner's business offices, the
fact remains that throughout the duration of their work they are under the
effective control and supervision of petitioner through the vessel's patron or
master as the NLRC correctly held.

Rationale ExemptionPiece Worker
Piece workers pay is dependent on unit of product finished or work
completed and not on the time spent in working. Piece-rate method is
preferred where the work process is repetitive and the output is
standardized and easily countable. In the task or pakyaw method, the
payment is calculated to match the difficulty and time requirement of the
job, as in plowing a given area of land or painting a building.

Cases
Red V Coconut Products, Ltd. v. CIR, 17 SCRA 553 (1966)
The philosophy underlying the exclusion of piece workers from the Eight-
Hour Labor Law is that said workers are paid depending upon the work they
do "irrespective of the amount of time employed" in doing said work. Such
freedom as to hours of work does not obtain in the case of the laborers
herein involved, since they are assigned by the employer to work in two
shifts for 12 hours each shift. Thus it cannot be said that for all purposes
these workers fall outside the law requiring payment of compensation for
work done in excess of eight hours. At least for the purpose of recovering
the full differential pay stipulated in the bargaining agreement as due to
laborers who perform 12 hours of work under the night shift, said laborers
should be deemed pro tanto or to that extent within the scope of the afore-
stated law.

5.03 Normal Hours of Work
ART. 83: Normal hours of work. The normal hours of work of any
employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one
million (1,000,000) or in hospitals and clinics with a bed capacity of at least
one hundred (100) shall hold regular office hours for eight (8) hours a day,
for five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days
or forty-eight (48) hours, in which case, they shall be entitled to an
additional compensation of at least thirty percent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, health
personnel shall include resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or
clinic personnel.

EIGHT-HOUR LABOR LAW: enacted not only to safeguard the health and
welfare of the employee or laborer, but in a way to minimize unemployment
by forcing employers, in cases where more than 8-hour operation is
necessary, to utilize different shifts of laborers or employees working only
for 8 hours each.

Part-Time Work: NOT prohibited
o It is not prohibited to have normal hours of work of less than 8
hours a day.
o What is regulated is work hours exceeding eight.
o It prescribes a maximum, NOT a minimum.
o Proportionate wage for part-time work is recognized in the eight
paragraph of Art. 124, as amended by RA 6727.

Work Hours of Health Personnel
o Customary practice of requiring 24-hour a day of work for resident
physicians is not permissible and violates the limitations under Art.
83.
o 40-Hour workweekNOT applicable if there is a training agreement
between the resident physician and the hospital and the training
program is duly accredited or approved by the appropriate
government agency.

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o RA 7305specifies the work hours, night shift differential pay and
other employment benefits for health personnel in government
service.

12-Hour Workshift with Overtime
o Validated by consent and its four-hour overtime work with overtime
pay becomes a contractual commitment.

Compressed Work Week: Requisites
1. Employee voluntarily agrees to it
2. No diminution in their weekly or monthly take home pay or fringe
benefits
3. Benefits are more than or at least commensurate or equal to what is
due the employees without the compressed work week
4. Overtime pay will be due and demandable when they are required to
work on those days which should have ceased to be working days
because of the compressed work week schedule
5. No strenuous physical exertion or that they are given adequate rest
periods
6. It must be for a temporary duration as determined by DOLE.

5.04 Hours Worked
ART. 84: Hours worked. Hours worked shall include (a) all time during
which an employee is required to be on duty or to be at a prescribed
workplace; and (b) all time during which an employee is suffered or
permitted to work.

Rest periods of short duration during working hours shall be counted as
hours worked.

Note: For hours worked to be compensable:
a. Employee is required to be on duty
b. Employee is suffered or permitted to work
c. Rest periods* of short duration during working hours
d. Travel time, when beneficial to employer (Rada v NLRC)
a. Travel from home to workif on call and required to travel
b. All in the days worktraveling is the principal activity,
regardless of contract, custom, practice
c. Travel away from homecut across employees workday
Not counted when: (Luzon Stevedoring v. Luzon Marine)
i. Employee ceases to work
ii. Employee may rest completely
iii. Employee may leave at his will the spot where he actually
stays while working to go somewhere else
iv. When work is broken/not continuous (NDC v CIR)
v. Assembly time, routinary practice of employees, proceedings
not infected with complexities so as to deprive employees
time to attend to their personal pursuits (Arica v NLRC)
vi. Meal time (60 mins), unless predominantly spent for
employers benefit

Note: Preliminary activities (before work) and postliminary activities (after
work) are deemed performed during work hours, where such activities are
controlled or required by the employer and are pursued necessarily and
primarily for the employers benefit.

Idle Time
Cases
National Development Co. v. CIR, 6 SCRA 763 (1962)
Under the law, the idle time that an employee may spend for resting and
during which he may leave the spot or place of work though not the
premises

of his employer, is not counted as working time only where the
work is broken or is not continuous.

Luzon Stevedoring Co. v. Luzon Marine Department Union, 101 Phil.
257 (1957)
For the purposes of this case, We do not need to set for seamen a criterion
different from that applied to laborers on land, for under the provisions of
the above quoted section, the only thing to be done is to determine the
meaning and scope of the term "working place" used therein. As We
understand this term, a laborer need not leave the premises of the factory,
shop or boat in order that his period of rest shall not be counted, it being
enough that he "cease to work", may rest completely and leave or may
leave at his will the spot where he actually stays while working, to go
somewhere else, whether within or outside the premises of said factory,
shop or boat. If these requisites are complied with, the period of such rest
shall not be counted.

Continuous Work
Cases
States Marine Corporation v. Cebu Seamens Association, 7 SCRA
294 (1963)
And considering the established fact that the work of Severino Pepito was
continuous, and during the time he was not working, he could not leave and
could not completely rest, because of the place and nature of his work, the
provisions of sec. 1, of Comm. Act No. 444, which states "When the work is
not continuous, the time during which the laborer is not working and can
leave his working place and can rest completely shall not be counted", find
no application in his case.


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Waiting Time
Controlling factor: Whether waiting time spend in idleness is so spent
predominantly for the employers benefit or for the employees

Waiting time spent by an employee shall be considered as working time if
waiting is considered an integral part of his work or his employee is required
or engaged by an employer to wait.

Cases
Arica v. NLRC, 170 SCRA 776 (1989)
The said case involved a claim for "waiting time", as the complainants
purportedly were required to assemble at a designated area at least 30
minutes prior to the start of their scheduled working hours "to ascertain the
work force available for the day by means of a roll call, for the purpose of
assignment or reassignment of employees to such areas in the plantation
where they are most needed."

The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and
institutionalized by mutual consent of the parties under Article IV,
Section 3, of the Collective Bargaining Agreement cannot be
considered as waiting time within the purview of Section 5, Rule I,
Book III of the Rules and Regulations Implementing the Labor Code.
...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted,
routinary practice of the employees, and the proceedings attendant
thereto are not infected with complexities as to deprive the workers
the time to attend to other personal pursuits. They are not new
employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are
situated right on the area where the farm are located, such that
after the roll call, which does not necessarily require the personal
presence, they can go back to their houses to attend to some
chores. In short, they are not subject to the absolute control of the
company during this period, otherwise, their failure to report in the
assembly time would justify the company to impose disciplinary
measures. The CBA does not contain any provision to this effect; the
record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute
assembly time was not primarily intended for the interests of the
employer, but ultimately for the employees to indicate their
availability or non-availability for work during every working day.

DISSENTING OPINION: Sarmiento
The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC
Case No. 26-LS-XI-76) relied upon by the respondents as basis for claims of
res judicata, is not, to my mind, a controlling precedent. In that case, it was
held that the thirty-minute "waiting time" complained of was a mere
"assembly time" and not a waiting time as the term is known in law, and
hence, a compensable hour of work.

The petitioners have vehemently maintained that in view thereof, the
instant case should be distinguished from the first case. And I do not believe
that the respondents have successfully rebutted these allegations. The
Solicitor General relies solely on the decision of then Minister Ople, the
decision the petitioners precisely reject in view of the changes in the
conditions of the parties. The private respondent on the other hand insists
that these practices were the same practices taken into account in ALU v.
STANFILCO. If this were so, the Ople decision was silent thereon.
It is evident that the Ople decision was predicated on the absence of any
insinuation of obligatoriness in the course or after the assembly activities on
the part of the employees.(" . . [T]hey are not subject to the absolute
control of the company during this period, otherwise, their failure to report
in the assembly time would justify the company to impose disciplinary
measures;" supra, 6.) As indicated, however, by the petitioners, things had
since changed, and remarkably so, and the latter had since been placed
under a number of restrictions. My considered opinion is that the thirty-
minute assembly time had become, in truth and fact, a "waiting time" as
contemplated by the Labor Code.

Travel Time
1. Travel from home to work: NOT WORKTIME; engaged in ordinary
home-to-work travel which is a normal incident of employmenttrue
whether he works at a fixed location or at different jobsites.

EXCEPT: When an employee receives an emergency call outside of his
regular working hours and is required to travel to his regular place of
business or some other work site, all of the time spent in such travel is
work time.

2. Travel that is all in the days work: WORKTIME; time spent by an
employee in travel as part of his principal activity.

3. Travel away from home: WORKTIME; travel that keeps an employee
away from home overnight; includes not only hours worked on regular
working days during normal working hours but also during the
corresponding hours on nonworking days.

Cases
Rada v. NLRC, 205 SCRA 69 (1992)
The fact that he picks up employees of Philnor at certain specified points
along EDSA in going to the project site and drops them off at the same
points on his way back from the field office going home to Marikina, Metro
Manila is not merely incidental to petitioner's job as a driver. On the

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contrary, said transportation arrangement had been adopted, not so much
for the convenience of the employees, but primarily for the benefit of the
employer, herein private respondent. This fact is inevitably deducible from
the Memorandum of respondent company.

Entry Time Cards
Cases
Aklan Electric Coop., Inc. v. NLRC, 323 SCRA 258 (2000)
Finally, we hold that public respondent erred in merely relying on the
computations of compensable services submitted by private respondents.
There must be competent proof such as time cards or office records to show
that they actually rendered compensable service during the stated period to
entitle them to wages. It has been established that the petitioner's business
office was .transferred to Kalibo and all its equipments, records and facilities
were transferred thereat and that it conducted its official business in Kalibo
during the period in question. It was incumbent upon private respondents to
prove that they indeed rendered services for petitioner, which they failed to
do. It is a basic rule in evidence that each party must prove his affirmative
allegation. Since the burden of evidence lies with the party who asserts the
affirmative allegation, the plaintiff or complainant has to prove his
affirmative allegations in the complaint and the defendant or the respondent
has to prove the affirmative allegation in his affirmative defenses and
counterclaim.

Prangan v. NLRC, 289 SCRA 142 (1998)
In the instant petition, the NLRC, in declaring that petitioner only worked for
four hours, relied solely on the supposed daily time records of the petitioner
submitted by the private respondent. We, however, are of the opinion that
these documents cannot be considered substantial evidence as to conclude
that petitioner only worked for four hours. It is worth mentioning that
petitioner, in his Sur-Rejoinder to Respondents' Rejoinder,

unequivocally
stated that:

Complainant (petitioner herein) never made nor submitted any daily
time record with respondent company considering the fact that he
was assigned to a single post and that the daily time records he
allegedly submitted with respondent company are all falsified and
his signature appearing therein forged.

Private respondent hardly bothered to controvert petitioner's assertion,
much less bolster its own contention. As petitioner's employer, private
respondent has unlimited access to all relevant documents and records on
the hours of work of the petitioner. Yet, even as it insists that petitioner only
worked for four hours and not twelve, no employment contract, payroll,
notice of assignment or posting, cash voucher or any other convincing
evidence which may attest to the actual hours of work of the petitioner was
even presented. Instead, what the private respondent offered as evidence
was only petitioner's daily time record, which the latter categorically denied
ever accomplishing, much less signing.

All told, private respondent has not adequately proved that petitioner's
actual hours of work is only four hours. Its unexplained silence contravening
the personnel data sheet and the attendance sheets of Cat House Bar and
Restaurant presented by the petitioner showing he worked for twelve hours,
has assumed the character of an admission. No reason was proffered for
this silence despite private respondent, being the employer, could have
easily done so.

Nicario v. NLRC, 295 SCRA 619 (1998)
This Court, in previously evaluating the evidentiary value of daily time
records, especially those which show uniform entries with regard to the
hours of work rendered by an employee, has ruled that "such unvarying
recording of a daily time record is improbable and contrary to human
experience. It is impossible for an employee to arrive at the workplace and
leave at exactly the same time, day in day out. The uniformity and
regularity of the entries are 'badges of untruthfulness and as such indices of
dubiety.' The observations made by the Solicitor General regarding the
unreliability of the daily time records would therefore seem more
convincing. On the other hand, respondent company failed to present
substantial evidence, other than the disputed DTRs, to prove that petitioner
indeed worked for only eight hours a day.

It is a well-settled doctrine, that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter. It is a time-honored rule that in controversies
between a laborer and his master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and writing should be
resolved in the former's favor. The policy is to extend the doctrine to a
greater number of employees who can avail of the benefits under the law,
which is in consonance with the avowed policy of the State to give
maximum aid and protection of labor. This rule should be applied in the case
at bar, especially since the evidence presented by private respondent
company is not convincing. Accordingly, we uphold the finding that
petitioner rendered overtime work, entitling her to overtime pay.

5.05 Meal Period
ART. 85: Meal periods. Subject to such regulations as the Secretary of
Labor may prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their regular meals.

Meal TimeFree Time
General Rule: Meal Time is NOT compensable.
Except: In cases where the lunch period or meal time is predominantly
spent for the employers benefit or where it is less than 60 minutes.

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When Meal Time is Worked: Continuous Shifts
Meal time breaks should be counted as working time for purposes of
overtime compensation.

Meal Time of Less Than 60 Minutes
Sec. 7 of Rule I, Book III Implementing Rules allows meal time to be
less than 60 minutes but not shorter than 20 minutes. But such
shortened meal time should be with full pay, and the time when the
employee cannot eat because he is still working, shall also be paid.

If meal time is less than 20 minutes, it is considered a rest period and
considered as working time.

Shortened Meal Break Upon Employees Request
Shortened meal period is NOT compensable. The DOLE, in allowing such
agreements, imposes certain conditions:
1. Employees voluntarily agree in writing to a shortened meal period of
30 minutes and are willing to waive the overtime pay for such
shortened meal period;
2. There will be no diminution of whatsoever in the salary and other
fringe benefits of the employees existing before the effectivity of the
shortened meal period;
3. The work of the employees does not involve strenuous physical
exertion and they are provided with adequate coffee breaks in the
morning and afternoon;
4. The value of the benefits derived by the employees from the
proposed work arrangement is equal to or commensurate with the
compensation due them for the shortened meal period as well as the
overtime pay for 30 minutes as determined by the employees
concerned;
5. The overtime pay of the employees will become due and
demandable if ever they are permitted or made to work beyond
4:30PM; and
6. The effectivity of the proposed working time arrangement shall be of
temporary duration as determined by the DOLE Secretary.

Cases
Phil. Airlines, Inc. v. NLRC, 302 SCRA 582 (1999)
Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code
further states:
Sec. 7. Meal and Rest Periods. Every employer shall give his
employees, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal period of
not less than twenty (20) minutes may be given by the employer
provided that such shorter meal period is credited as compensable
hours worked of the employee;

(a) Where the work is non-manual work in nature or does not
involve strenuous physical exertion;

(b) Where the establishment regularly operates not less than
sixteen hours a day;

(c) In cases of actual or impending emergencies or there is urgent
work to be performed on machineries, equipment or installations to
avoid serious loss which the employer would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of
perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20)
minutes shall be considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere
in the law may it be inferred that employees must take their meals within
the company premises. Employees are not prohibited from going out of the
premises as long as they return to their posts on time. Private respondent's
act, therefore, of going home to take his dinner does not constitute
abandonment.

Pan-American Airways v. Pan-American Employees Association, 1
SCRA 527 (1961)
The Industrial Court's order for permanent adoption of a straight 8-hour
shift including the meal period was but a consequence of its finding that the
meal hour was not one of complete rest, but was actually a work hour, since
for its duration, the laborers had to be on ready call. Of course, if the
Company practices in this regard should be modified to afford the mechanics
a real rest during that hour (f. ex., by installing an entirely different
emergency crew, or any similar arrangement), then the modification of this
part of the decision may be sought from the Court below. As things now
stand, we see no warrant for altering the decision.

5.06 Overtime Work and Offsetting Prohibition
ART. 87: Overtime work. Work may be performed beyond eight (8) hours
a day provided that the employee is paid for the overtime work, an
additional compensation equivalent to his regular wage plus at least twenty-
five percent (25%) thereof. Work performed beyond eight hours on a
holiday or rest day shall be paid an additional compensation equivalent to
the rate of the first eight hours on a holiday or rest day plus at least thirty
percent (30%) thereof.

ART. 88: Undertime not offset by overtime. Undertime work on any
particular day shall not be offset by overtime work on any other day.
Permission given to the employee to go on leave on some other day of the

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week shall not exempt the employer from paying the additional
compensation required in this Chapter.

ART. 89: Emergency overtime work. Any employee may be required by
the employer to perform overtime work in any of the following cases:
(a) When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the Chief
Executive;
(b) When it is necessary to prevent loss of life or property or in case of
imminent danger to public safety due to an actual or impending
emergency in the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other disaster or calamity;
(c) When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss or damage
to the employer or some other cause of similar nature;
(d) When the work is necessary to prevent loss or damage to
perishable goods; and
(e) Where the completion or continuation of the work started before the
eighth hour is necessary to prevent serious obstruction or prejudice
to the business or operations of the employer.

Any employee required to render overtime work under this Article shall be
paid the additional compensation required in this Chapter.

ART. 90: Computation of additional compensation. For purposes of
computing overtime and other additional remuneration as required by this
Chapter, the regular wage of an employee shall include the cash wage
only, without deduction on account of facilities provided by the employer.

Notes:
If beyond 8 hours, regular working day:
Regular Wage
+ 25% of the Regular Wage
Overtime Pay

If on holiday/rest day:
Rate of 1
st
8 hours on a holiday/rest day
+ 30% of holiday/rest day pay
Overtime Pay

If contract requires for more than 8 hours of work/day, it is void if it does
not provide:
a. Fixed hourly rate OR
b. Daily wages include OT (Manila Terminal v. CIR)
c. If built-in OT, it could provide higher pay, whether excess time is
worked or unworked (Engineering Equipment v. MOLE)

Undertime cannot offset overtime

Definition and RationaleOvertime Pay
Definition: Overtime Compensation is additional pay for service or work
rendered or performed in excess of 8 hours a day by employees or laborers
in employment covered by the Eight-Hour Labor Law, and not exempt form
its requirements. It is computed by multiplying the overtime hourly rate by
the number of hours worked in excess of eight hours.

Rationale: Because the employee is made to work longer than what is
commensurate with his agreed compensation for the statutorily fixed or
voluntarily agreed hours of labor he is supposed to doopportunity cost for
him.

Cases
Letran, etc. v. NLRC, 543 SCRA 26 (2008)
3. The normal hours of work of teaching or academic personnel shall be
based on their normal or regular teaching loads. Such normal or regular
teaching loads shall be in accordance with the policies, rules and standards
prescribed by the Department of Education, Culture and Sports, the
Commission on Higher Education and the Technical Education and Skills
Development Authority. Any teaching load in excess of the normal or
regular teaching load shall be considered as overload. Overload
partakes of the nature of temporary extra assignment and compensation
therefore shall be considered as an overload honorarium if performed within
the 8-hour work period and does not form part of the regular or basic
pay. Overload performed beyond the eight-hour daily work is overtime
work.

In the present case, while the DOLE Order may not be applicable, the Court
finds that overload pay should be excluded from the computation of the
13th-month pay of petitioner's members.

In resolving the issue of the inclusion or exclusion of overload pay in the
computation of a teacher's 13th-month pay, it is decisive to determine what
"basic salary" includes and excludes.

In the same manner that payment for overtime work and work performed
during special holidays is considered as additional compensation apart and
distinct from an employee's regular wage or basic salary, an overload pay,
owing to its very nature and definition, may not be considered as part of a
teacher's regular or basic salary, because it is being paid for additional work
performed in excess of the regular teaching load.


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Caltex Regular Employees, etc. v. Caltex (Phils.) Inc., 247 SCRA 398
(1995)
Overtime work consists of hours worked on a given day in excess of the
applicable work period, which here is eight (8) hours. It is not enough that
the hours worked fall on disagreeable or inconvenient hours. In order that
work may be considered as overtime work, the hours worked must be in
excess of and in addition to the eight (8) hours worked during the
prescribed daily work period, or the forty (40) hours worked during the
regular work week Monday thru Friday.

PNB v. PNB Employees Association, 115 SCRA 507 (1982)
Why is a laborer or employee who works beyond the regular hours of work
entitled to extra compensation called in this enlightened time, overtime
pay? Verily, there can be no other reason than that he is made to work
longer than what is commensurate with his agreed compensation for the
statutorily fixed or voluntarily agreed hours of labor he is supposed to do.
When he thus spends additional time to his work, the effect upon him is
multi-faceted: he puts in more effort, physical and/or mental; he is delayed
in going home to his family to enjoy the comforts thereof; he might have no
time for relaxation, amusement or sports; he might miss important pre-
arranged engagements; etc., etc. It is thus the additional work, labor or
service employed and the adverse effects just mentioned of his longer stay
in his place of work that justify and is the real reason for the extra
compensation that he called overtime pay.

Overtime work is actually the lengthening of hours developed to the
interests of the employer and the requirements of his enterprise. It follows
that the wage or salary to be received must likewise be increased, and more
than that, a special additional amount must be added to serve either as
encouragement or inducement or to make up fop the things he loses which
We have already referred to. And on this score, it must always be borne in
mind that wage is indisputably intended as payment for work done or
services rendered.

Manila Terminal Co., Inc. v. CIR, 91 Phil. 625 (1952)
Sections 3 and 5 of Commonwealth Act 444 expressly provides for the
payment of extra compensation in cases where overtime services are
required, with the result that the employees or laborers are entitled to
collect such extra compensation for past overtime work. To hold otherwise
would be to allow an employer to violate the law by simply, as in this case,
failing to provide for and pay overtime compensation.

It is high time that all employers were warned that the public is interested in
the strict enforcement of the Eight-Hour Labor Law. This was designed not
only to safeguard the health and welfare of the laborer or employee, but in
a way to minimize unemployment by forcing employers, in cases where
more than 8-hour operation is necessary, to utilize different shifts of
laborers or employees working only for eight hours each.

No Computation Formula Basic Contract
Cases
Manila Terminal Co., Inc. v. CIR, 91 Phil. 625 (1952)
The Eight-Hour Law, in providing that "any agreement or contract between
the employer and the laborer or employee contrary to the provisions of this
Act shall be null avoid ab initio," (Commonwealth Act No. 444, sec. 6),
obviously intended said provision for the benefit of the laborers or
employees. The employer cannot, therefore, invoke any violation of the act
to exempt him from liability for extra compensation. This conclusion is
further supported by the fact that the law makes only the employer
criminally liable for any violation. It cannot be pretended that, for the
employer to commit any violation of the Eight-Hour Labor Law, the
participation or acquiescence of the employee or laborer is indispensable,
because the latter in view of his need and desire to live, cannot be
considered as being on the same level with the employer when it comes to
the question of applying for and accepting an employment.

Built-In Compensation
Built-In Compensation is NOT per se illegal. This arrangment is not unusual
for executives or managers, who are not entitled to overtime pay and other
benefits from Art. 82 to 96.

Built-In Overtime Pay in Government-Approved Contract
Nonpayment of the employer of the overtime pay to the employee was
valid, as said overtime pay was already provided in the written contract with
a built-in overtime pay and signed by the Director of Bureau of Employment
Services and enforced by the employer (Engineering Equipment v. MOLE).

Cases
Engineering Equipment Inc. v. MOLE, 138 SCRA 616 (1985)
It also asserts that Aspera was one of several employees who signed written
contracts with a "built-in" overtime pay in the ten-hour working day and
that their basic monthly pay was adjusted to reflect the higher amount
covering the guaranteed two-hour extra time whether worked or unworked.

We hold that under the particular circumstances of this case the Acting
Minister of Labor and Director De la Cruz committed a grave abuse of
discretion amounting to lack of jurisdiction in awarding overtime pay and in
disregarding a contract that De la Cruz himself, who is supposed to know
the Eight-Hour Labor Law, had previously sealed with his imprimatur.
Because of that approval, the petitioner acted in good faith in enforcing the
contract.


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Proof of Work
Cases
Lagatic v. NLRC, 285 SCRA 251 (1998)
Petitioner 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, petitioner submitted in evidence minutes of meetings wherein
he was assigned to work on weekends and holidays at Cityland's housing
projects. Suffice it to say that said minutes do not prove that petitioner
actually worked on said dates. It is a basic rule in evidence that each party
must prove his affirmative allegations. This petitioner failed to do. He
explains his failure to submit more concrete evidence as being due to the
decision rendered by the labor arbiter without resolving his motion for the
production and inspection of documents in the control of Cityland. Petitioner
conveniently forgets that on January 27, 1994, he agreed to submit the case
for decision based on the records available to the labor arbiter. This
amounted to an abandonment of above-said motion, which was then
pending resolution.
SSS v. CA, 348 SCRA 1 (2000)
No particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to
prove the relationship may be admitted. For, if only documentary evidence
would be required to show that relationship, no scheming employer would
ever be brought before the bar of justice, as no employer would wish to
come out with any trace of the illegality he has authored considering that it
should take much weightier proof to invalidate a written instrument. Thus,
as in this case where the employer-employee relationship between
petitioners and Esita was sufficiently proved by testimonial evidence, the
absence of time sheet, time record or payroll has become inconsequential.

Dacut v. CA, 550 SCRA 260 (2008)
Apropos the monetary claims, there is insufficient evidence to prove
petitioners' entitlement thereto. As crew members, petitioners were required
to stay on board the vessel by the very nature of their duties, and it is for
this reason that, in addition to their regular compensation, they are given
free living quarters and subsistence allowances when required to be on
board. It could not have been the purpose of our law to require their
employers to give them overtime pay or night shift differential, even when
they are not actually working. Thus, the correct criterion in determining
whether they are entitled to overtime pay or night shift differential is not
whether they were on board and cannot leave ship beyond the regular eight
working hours a day, but whether they actually rendered service in excess
of said number of hours. In this case, petitioners failed to submit sufficient
proof that overtime and night shift work were actually performed to entitle
them to the corresponding pay.

Villar v. NLRC, 331 SCRA 686 (2000)
Abandonment is a matter of intention and cannot lightly be presumed from
certain equivocal acts. To constitute abandonment, there must be clear
proof of deliberate and unjustified intent to sever the employer-employee
relationship. Mere absence of the employee is not sufficient. The burden of
proof to show a deliberate and unjustified refusal of an employee to resume
his employment without any intention of returning rests on the employer.

Employer Obligation
Cases
SSS v. CA, 348 SCRA 1 (2000)
As the employer, the latter is duty-bound to keep faithful and complete
records of her business affairs, not the least of which would be the salaries
of the workers.

Computation
For purposes of computing overtime and additional remuneration as
required, the regular wage of an employee shall include the cash wage only,
without deduction on account of facilities provided by the employer.

Cases
PCL Shipping Phils. Inc. v. NLRC, 511 SCRA 44 (2007)
The Court finds no basis in the NLRCs act of including private respondents
living allowance as part of the three months salary to which he is entitled
under Section 10 of Republic Act (RA) No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995. The pertinent
provisions of the said Act provides:

Sec. 10. Money Claims
x x x x

authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest
at twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.

x x x x

It is clear from the above-quoted provision that what is included in the
computation of the amount due to the overseas worker are only his salaries.
Allowances are excluded. In the present case, since private respondent

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received a basic monthly salary of US$400.00, he is, therefore, entitled to
receive a sum of US$1200.00, representing three months of said salary.

5.07 Night Work
ART. 86: Night shift differential. Every employee shall be paid a night
shift differential of not less than ten percent (10%) of his regular wage for
each hour of work performed between ten oclock in the evening and six
oclock in the morning.

Notes:
If work is between 10PM-6AM, employee is entitled to night shift
differentials.
Night Shift Differential Pay = 10% of Regular Wage for each hour of work
performed

From DOLE
Where night shift (10PM-6AM) work is Regular Work:
1. On an ordinary dayplus 10% of the basic hourly rate or a total of
110% of the basic hourly rate
2. On a rest day, special day or regular holidayplus 10% of the
regular hourly rate on a rest day, special day or regular holiday or a
total of 110% of the regular hourly rate.

Where night shift (10PM-6AM) work is Overtime Work:
1. On an ordinary dayplus 10% of the overtime hourly rate on an
ordinary day or a total or 110% of the overtime hourly rate on an
ordinary day.
2. On a rest day, special day or regular holidayplus 10% of the
overtime hourly rate on a rest day, special day or regular holiday.
3. For overtime work in night shift:
a. On an ordinary dayplus 10% of 125% of basic hourly rate
or a total of 110% of 125% of basic hourly rate.
b. On a rest day, special day or regular holidayplus 10% of
130% of the regular hourly rate on said days or a total of
110% of 130% of the applicable regular hourly rate.

Rationale Prohibition
Rationale: Night work cannot be regarded as desirable, either from the
point of view of the employer or the employee. It is uneconomical unless
overhead costs are unusually heavy. Frequently, the scale of wages is
higher as an inducement to employment on the night shift, and the rate of
production is generally lower.

Adverse effects include
1. Anemia, tubercolosis and other ills due to lack of sunlight
2. Eyestrain and accident
3. Serious moral dangers from traveling alone at night
4. Unprofitable
Cases
Shell Oil Co. of the Phil., Ltd. v. National Labor Union, 81 Phil. 315
(1948)EL CASO ES EN ESPANOL
Then, it must be remembered that it is distinctly unphysiological to turn the
night into day and deprive the body of the beneficial effects of sunshine. The
human organism revolts against this procedure. Added to artificial lighting
are reversed and unnatural times of eating, resting, and sleeping. Much of
the inferiority of nightwork can doubtless be traced to the failure of the
workers to secure proper rest and sleep, by day. Because of inability or the
lack of opportunity to sleep, nightworkers often spend their days in
performing domestic duties, joining the family in the midday meal, 'tinkering
about the place', watching the baseball game, attending the theater or
taking a ride in the car. It is not strange that nightworkers tend to be less
efficient than dayworkers and lose more time. . .

Nightwork has almost invariably been looked upon with disfavor by students
of the problem because of the excessive strain involved, especially for
women and young persons, the large amount of lost time consequent upon
exhaustion of the workers, the additional strain and responsibility upon the
executive staff, the tendency of excessively fatigued workers to "keep
going" on artificial stimulants, the general curtailment of time for rest,
leisure, and cultural improvement, and the fact that night workers, although
precluded to an extent from the activities of day life, do attempt to enter
into these activities, with resultant impairment of physical well-being. It is
not contended, of course, that nightwork could be abolished in the
continuous-process industries, but it is possible to put such industries upon
a three- or four-shifts basis, and to prohibit nightwork for women and
children.

The case against nightwork, then, may be said to rest upon several
grounds. In the first place, there are the remotely injurious effects of
permanent nightwork manifested in the later years of the worker's life. Of
more immediate importance to the average worker is the disarrangement of
his social life, including the recreational activities of his leisure hours and
the ordinary associations of normal family relations. From an economic point
of view, nightwork is to be discouraged because of its adverse effect upon
efficiency and output. A moral argument against nightwork in the case of
women is that the night shift forces the workers to go to and from the
factory in darkness. Recent experiences of industrial nations have added
much to the evidence against the continuation of nightwork, except in
extraordinary circumstances and unavoidable emergencies. The immediate
prohibition of nightwork for all laborers is hardly practicable; its
discontinuance in the case of women employees is unquestionably desirable.
'The night was made for rest and sleep and not for work' is a common
saying among wage-earning people, and many of them dream of an
industrial order in which there will be no night shift.

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Dacut v. CA, 550 SCRA 260 (2008)
As crew members, petitioners were required to stay on board the vessel by
the very nature of their duties, and it is for this reason that, in addition to
their regular compensation, they are given free living quarters and
subsistence allowances when required to be on board. It could not have
been the purpose of our law to require their employers to give them
overtime pay or night shift differential, even when they are not actually
working. Thus, the correct criterion in determining whether they are entitled
to overtime pay or night shift differential is not whether they were on board
and cannot leave ship beyond the regular eight working hours a day, but
whether they actually rendered service in excess of said number of hours. In
this case, petitioners failed to submit sufficient proof that overtime and
night shift work were actually performed to entitle them to the
corresponding pay.

SEC. 6. CONDITIONS OF EMPLOYMENTWEEKLY REST
PERIODS

6.01 Rationale

Rationale
Cases
Manila Electric Co. v. Public Utilities Employees Association, 79 Phil.
409 (1947)
The division is not arbitrary, and the basis thereof is reasonable. Public
utilities exempted from the prohibition set forth in the enactment clause of
section 4, Commonwealth Act No. 444, are required to perform a continuous
service including Sundays and legal holidays to the public, since the public
good so demands, and are not allowed to collect an extra charge for
services performed on those days; while the others are not required to do
so and are free to operate or not their shops, business, or industries on
Sundays and legal holidays. If they operate and compel their laborers to
work on those days it is but just and natural that they should pay an extra
compensation to them, because it is to be presumed that they can make
money or business by operating on those days even if they have to pay such
extra remuneration. It would be unfair for the law to compel public utilities
like the appellant to pay an additional or extra compensation to laborers
whom they have to compel to work duringSundays and legal holidays, in
order to perform a continuous service to the public. To require public
utilities performingservice to do so, would be tantamount to penalize them
for performing public service during said days in compliance with the
requirement of the law and public interest.

6.02 Coverage
SEC. 82: Coverage. - The provisions of this Title shall apply to employees in
all establishments and undertakings whether for profit or not, but not to
government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate
regulations.

members of the managerial staff.

"Field personnel" shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.

SEC. 91 (A): Right to weekly rest day. - (a) It shall be the duty of every
employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours
after every six (6) consecutive normal work days.

6.03 Scheduling of Rest Day
SEC. 91 (B): (b) The employer shall determine and schedule the weekly
rest day of his employees subject to collective bargaining agreement and to
such rules and regulations as the Secretary of Labor and Employment may
provide. However, the employer shall respect the preference of employees
as to their weekly rest day when such preference is based on religious
grounds.

6.04 Compulsory Work and Compensation
SEC. 92: When employer may require work on a rest day. - The employer
may require his employees to work on any day:
(a) In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other
disaster or calamity to prevent loss of life and property, or imminent
danger to public safety;

(b) In cases of urgent work to be performed on the machinery,
equipment, or installation, to avoid serious loss which the employer
would otherwise suffer;

(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected to
resort to other measures;
(d) To prevent loss or damage to perishable goods;


NIKKI HIPOLITO
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(e) Where the nature of the work requires continuous operations
and the stoppage of work may result in irreparable injury or loss to
the employer; and

(f) Under other circumstances analogous or similar to the foregoing
as determined by the Secretary of Labor and Employment.

SEC. 7. CONDITIONS OF EMPLOYMENTHOLIDAYS

7.01 Coverage
SEC. 94 (A): Right to holiday pay. - (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

During holidays
a. Employees are paid regular daily wage (no work) except: in retail
and service establishments + less than 10 workers employed
b. Employer may require employee to work during the holiday BUT pay
2x the regular rate

Coverage and Purpose
Purpose: To prevent diminution of the monthly income of the workers on
account of work interruptions declared by state.

Cases
Mantrade/FMC Division Employees and Workers Union v. Bacungan,
144 SCRA 510 (1986)
The provision is mandatory, regardless of whether an employee is paid on a
monthly or daily basis.

San Miguel Corporation v. CA, 375 SCRA 311 (2002)
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides
that (t)he provisions of this Code shall be applicable only to Muslims x x x.
However, there should be no distinction between Muslims and non-Muslims
as regards payment of benefits for Muslim holidays. The Court of Appeals
did not err in sustaining Undersecretary Espaol who stated:
Assuming arguendo that the respondents position is correct, then
by the same token, Muslims throughout the Philippines are also not
entitled to holiday pays on Christian holidays declared by law as
regular holidays. We must remind the respondent-appellant that
wages and other emoluments granted by law to the working man
are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that
x x x nothing herein shall be construed to operate to the prejudice of a
non-Muslim.
In addition, the 1999 Handbook on Workers Statutory Benefits, approved
by then DOLE Secretary Bienvenido E. Laguesma on 14 December 1999
categorically stated:
Considering that all private corporations, offices, agencies, and
entities or establishments operating within the designated Muslim
provinces and cities are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim areas may
not report for work on the days designated by law as Muslim
holidays.

Asian Transmission Corp. v. CA, 425 SCRA 478 (2004)
Holiday pay is a legislated benefit enacted as part of the Constitutional
imperative that the State shall afford protection to labor. (Section 3, Art.
XIII, 1987 Constitution). Its purpose is not merely to prevent diminution of
the monthly income of the workers on account of work interruptions. In
other words, although the worker is forced to take a rest, he earns what he
should earn, that is, his holiday pay. (Jose Rizal College vs. NLRC and
NATOW, G.R. No. 65482, December 1, 1987). It is also intended to enable
the worker to participate in the national celebrations held during the days
identified as with great historical and cultural significance.

Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes
Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day
(December 30) were declared national holidays to afford Filipinos with a
recurring opportunity to commemorate the heroism of the Filipino people,
promote national identity, and deepenthe spirit of patriotism. Labor Day
(May 1) is a day traditionally reserved to celebrate the contributions of the
working class to the development of the nation, while the religious holidays
designated in Executive Order No. 203 allow the worker to celebrate his
faith with his family.

7.02 Holidays
EO 203, JUNE 30, 1984: Regular Holidays
New Years Day January 1
Maundy Thursday Movable Date
Good Friday Movable Date
Araw ng Kagitingan April 9
Labor Day May 1
Independence Day June 12
National Heroes Day Last Sunday of August
Bonifacio Day November 30
Christmas Day December 25
Rizal Day December 30
Eidul Fitr (RA 9177) Movable Date
Eidul Adha Movable Date in ARMM

* Special Holidays

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Ninoy Aquino Day August 21
All Souls Day November 1
New Years Eve December 31

ART. 169, PD 1083 (1977): Official Muslim holidays. - The following are
hereby recognized as legal Muslim holidays:
(a) Amun Jad!d (New Year), which falls on the first day of the
first lunar month of Muharram;
(b) Maulid-un-Nab! (Birthday of the Prophet Muhammad), which
falls on the twelfth day of the third lunar month of Rabi-ul-
Awwal;
(c) Lailatul Isr" Wal Mir"j (Nocturnal Journey and Ascension of
the Prophet Muhammad), which falls on the twenty-seventh
day of the seventh lunar month of Rajab;
(d) #d-ul-Fitr (Hari Raya Puasa), which falls on the first day of
the tenth lunar month of Shawwal, commemorating the end
of the fasting season; and
(e) #d-$l-Adh" (Hari Raya Haji),which falls on the tenth day of
the twelfth lunar month of Dh$l-Hijja.
7.03 Holiday Pay
SEC. 94: Right to holiday pay. - (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate;
and

(c) As used in this Article, "holiday" includes: New Years Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and
thirtieth of December and the day designated by law for holding a general
election.

Holiday Pay is a one-day pay given by law to an employee even if he does
not work on a regular holiday. This is limited to each of the 11 regular
(legal) holidays. It is not demandable for any other kind of nonworking day.

Faculty Private School
Private school teachers, who are paid per lecture hour, are NOT entitled to
unworked holiday pay for regular holidays, BUT entitled to holiday pay for
special public holidays and when classes are called off or shortened on
account of typhoons, floods, rallies and the like, EXCEPT regular holidays
during Christmas vacation.

Cases
Jose Rizal College v. NLRC, 156 SCRA 27 (1987)
In the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. (a) Private school
teachers, including faculty members of colleges and universities,
may not be paid for the regular holidays during semestral vacations.
They shall, however, be paid for the regular holidays during
Christmas vacations. ...

Under the foregoing provisions, apparently, the petitioner, although a non-
profit institution is under obligation to give pay even on unworked regular
holidays to hourly paid faculty members subject to the terms and conditions
provided for therein.

We believe that the aforementioned implementing rule is not justified by the
provisions of the law which after all is silent with respect to faculty members
paid by the hour who because of their teaching contracts are obliged to
work and consent to be paid only for work actually done (except when an
emergency or a fortuitous event or a national need calls for the declaration
of special holidays). Regular holidays specified as such by law are known to
both school and faculty members as no class days;" certainly the latter do
not expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts.

On the other hand, both the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public Holidays.

Divisor as Factor
Whenever monthly-paid employees work on a holiday, they are given an
additional 100% base pay on top of a premium pay of 50%. If the
employees monthly pay already includes their salaries for holidays, they
should be paid only minimum premium pay but not both base pay and
premium pay.

If all non-working days are paid, the divisor of monthly salary to obtain daily
rate should be 365 and not 251.

Cases
Trans-Asia Phils. Employer Association v. NLRC, 320 SCRA 547
(1999)
Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly
established by its consistent use of the divisor of "286" days in the
computation of its employees' benefits and deductions. The use by Trans-

NIKKI HIPOLITO
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Asia of the "286" days divisor was never disputed by petitioners. A simple
application of mathematics would reveal that the ten (10) legal holidays in a
year are already accounted for with the use of the said divisor. As explained
by Trans-Asia, if one is to deduct the unworked 52 Sundays and 26
Saturdays (derived by dividing 52 Saturdays in half since petitioners are
required to work half-day on Saturdays) from the 365 calendar days in a
year, the resulting divisor would be 286 days (should actually be 287 days).
Since the ten (10) legal holidays were never included in subtracting the
unworked and unpaid days in a calendar year, the only logical conclusion
would be that the payment for holiday pay is already incorporated into the
said divisor. Thus, when viewed against this very convincing piece of
evidence, the arguments put forward by petitioners to support their claim of
non-payment of holiday pay, i.e., the pre-condition stated in the Employees'
Manual for entitlement to holiday pay, the absence of a stipulation in the
employees' appointment papers for the inclusion of holiday pay in their
monthly salary, the stipulation in the CBA recognizing the entitlement of the
petitioners to holiday pay with a concomitant provision for the granting of
an "allegedly" very generous holiday pay rate, would appear to be merely
inferences and suppositions which, in the apropos words of the labor arbiter,
"paled in the face of the prevailing company practices and circumstances
abovestated."

The proper divisor that should be used for a situation wherein the
employees do not work and are not considered paid on Saturdays and
Sundays or rest days is 262 days. In the present case, since the employees
of Trans-Asia are required to work half-day on Saturdays, 26 days should be
added to the divisor of 262 days, thus, resulting to 288 days. However, due
to the fact that the rest days of petitioners fall on a Sunday, the number of
unworked but paid legal holidays should be reduced to nine (9), instead of
ten (10), since one legal holiday under E.O. No. 203 always falls on the last
Sunday of August, National Heroes Day. Thus, the divisor that should be
used in the present case should be 287 days.

The Court rules that the adjusted divisor of 287 days should only be
used by Trans-Asia for computations which would be advantageous
to petitioners, i.e., deductions for absences, and not for
computations which would diminish the existing benefits of the
employees, i.e., overtime pay, holiday pay and leave conversions.

Union of Filipro Employees v. Vivar, 205 SCRA 200 (1992)
The divisor assumes an important role in determining whether or not holiday
pay is already included in the monthly paid employee's salary and in the
computation of his daily rate. This is the thrust of our pronouncement in
Chartered Bank Employees Association v. Ople (supra). In that case, We
held:
It is argued that even without the presumption found in the rules
and in the policy instruction, the company practice indicates that the
monthly salaries of the employees are so computed as to include the
holiday pay provided by law. The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact
that the Chartered Bank, in computing overtime compensation for
its employees, employs a "divisor" of 251 days. The 251 working
days divisor is the result of subtracting all Saturdays, Sundays and
the ten (10) legal holidays from the total number of calendar days in
a year. If the employees are already paid for all non-working days,
the divisor should be 365 and not 251.

Following the criterion laid down in the Chartered Bank case, the use of 251
days' divisor by respondent Filipro indicates that holiday pay is not yet
included in the employee's salary, otherwise the divisor should have been
261.

Computation
If 2 Regular Holidays fall in a single day
a. If unworked: employee receives 200% of regular wage (100%) for
each regular holiday)
b. If worked: employee receives 400% of the regular wage (2x 100%
for each regular holiday)

Cases
Agga v. NLRC, 298 SCRA 285 (1998)
The cited provisions of PD 442 simply declare that night shift differential and
additional remuneration for overtime, rest day, Sunday and holiday work
shall be computed on the basis of the employee's regular wage. In like
fashion, the 1991 POEA Rules merely require employers to guarantee
payment of wages and overtime pay.

Sunday
If the holiday falls on a Sunday, employer is only obligated to give holiday
pay.

Cases
Wellington Investment Inc. v. Trajano, 245 SCRA 561 (1995)
There is no provision of law requiring any employer to make such
adjustments in the monthly salary rate set by him to take account of legal
holidays falling on Sundays in a given year, or, contrary to the legal
provisions bearing on the point, otherwise to reckon a year at more than
365 days. As earlier mentioned, what the law requires of employers opting
to pay by the month is to assure that "the monthly minimum wage shall not
be less than the statutory minimum wage multiplied by 365 days divided by
twelve," and to pay that salary "for all days in the month whether worked or
not," and "irrespective of the number of working days therein." That salary
is due and payable regardless of the declaration of any special holiday in the

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entire country or a particular place therein, or any fortuitous cause
precluding work on any particular day or days (such as transportation
strikes, riots, or typhoons or other natural calamities), or cause not
imputable to the worker. And as also earlier pointed out, the legal provisions
governing monthly compensation are evidently intended precisely to avoid
re-computations and alterations in salary on account of the contingencies
just mentioned, which, by the way, are routinely made between employer
and employees when the wages are paid on daily basis.
Proof of Payment
Cases
Building Care Corp. v. NLRC, 268 SCRA 666 (1997)
Indeed if petitioner wanted to prove its payment of holiday pays and salary
differentials, it could have easily presented proofs of such monetary
benefits. But it did not. It had failed to comply with the mandate of the law.
As public respondent ruled, the burden of proof in this regard belongs to the
employer not to the employee.

SEC. 8. CONDITIONS OF EMPLOYMENTLEAVES

A. SERVICE INCENTIVE LEAVE

8.01 Coverage
SEC. 95 (A): Right to service incentive leave. - (a) Every employee who
has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.

SEC. 95 (B): (b) This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation leave with pay
of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from
granting this benefit by the Secretary of Labor and Employment after
considering the viability or financial condition of such establishment.

Coverage
At least one year of serviceservice within 12 months, whether
continuous or broken, reckoned from the date the employee started
working, including authorized absences and paid regular holidays, unless the
number of working days in the establishment as a matter of practice or
policy, or provided in the employment contract, is less than 12 months, in
which case, said period shall be considered as 1 year for the purpose of
determining entitlement to the SIL.
Entitled to SIL:
Part-Time Workers
On Contract Workers like private school teachers

Not entitled to SIL:
Piece-Rate Workers
Establishments Regularly Employing Less than 10 Workers
o Burden is on the EMPLOYER, not on the EMPLOYEE, to prove
that there are less than 10 employees in the company

Cases
Makati Haberdashery Inc. v. NLRC, 179 SCRA 449 (1989)
While private respondents are entitled to Minimum Wage, COLA and 13th
Month Pay, they are not entitled to service incentive leave pay because as
piece-rate workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof, they fall under
one of the exceptions stated in Section 1(d), Rule V, Implementing
Regulations, Book III, Labor Code.

8.02 Entitlement and Arbitration
SEC. 95 (A): Right to service incentive leave. - (a) Every employee who
has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.

SEC. 95 (C): (c) The grant of benefit in excess of that provided herein shall
not be made a subject of arbitration or any court or administrative action.

8.03 Computation (Commutation?) and Liability
The SIL shall be commutable to its money equivalent if not used or
exhausted at the end of the year.

The basis of conversion shall be the salary rate at the date of the
commutation. The availment and commutation of the SIL benefit may be on
a pro-rata basis.

Cases
Auto Bus Transport Systems, Inc. v. Bautista, 458 SCRA 578 (2005)
A careful perusal of said provisions of law will result in the conclusion that
the grant of service incentive leave has been delimited by the Implementing
Rules and Regulations of the Labor Code to apply only to those employees
not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a
separate classification of employees to which service incentive leave shall
not be granted. Rather, it serves as an amplification of the interpretation of
the definition of field personnel under the Labor Code as those "whose
actual hours of work in the field cannot be determined with reasonable
certainty.


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The same is true with respect to the phrase "those who are engaged on task
or contract basis, purely commission basis." Said phrase should be related
with "field personnel," applying the rule on ejusdem generis that general
and unlimited terms are restrained and limited by the particular terms that
they follow. Hence, employees engaged on task or contract basis or paid on
purely commission basis are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of field
personnel.

Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year prescriptive
period commences, not at the end of the year when the employee becomes
entitled to the commutation of his service incentive leave, but from the time
when the employer refuses to pay its monetary equivalent after demand of
commutation or upon termination of the employees services, as the case
may be.

Sentinel Security Agency Inc. v. NLRC, 295 SCRA 123 (1998)
Under these cited provisions of the Labor Code should the contractor fail to
pay the wages of its employees in accordance with law, the indirect
employer (the petitioner in this case), is jointly and severally liable with the
contractor, but such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to the employees directly employed by him. This
liability of petitioner covers the payment of the workers' performance of any
work, task, job or project. So long as the work, task, job or project has
been performed for petitioner's benefit or on its behalf, the liability accrues
for such period even if, later on, the employees are eventually transferred or
reassigned elsewhere.
B. PATERNITY LEAVE
Paternity Leave Act of 1996 (RA 8187 and IRR)

Notes:
7 days with full pay to all married male employees in the private and
public sectors
Available only for the first 4 deliveries of the legitimate spouse with
whom the husband is cohabitinghusband and wife must be living
together
Delivery includes childbirth, miscarriage, abortion.
Purpose: To enable the husband to lend support to his wife during
the period of recovery and/or in the nursing of the newly born child.

Conditions to Entitlement of Paternity Leave Benefits:
1. He is an employee at the time of delivery of his child.
2. He is cohabiting with his spouse at the time she gives birth or
suffers a miscarriage.
3. He has applied for paternity leave.
4. His wife has given birth or suffered miscarriage.

Application for Leave:
1. Within a reasonable time form the expected date of delivery by the
pregnant spouse, OR
2. Within such period as may be provided by company rules and
regulations or by CBA
3. Prior application for leave shall NOT be required for miscarriages.

Availment: AFTER the delivery by his wife, without prejudice to an
employer allowing an amployee to avail of the benefit before or during
deliverytotal number of days shall not exceed 7 days for each delivery.

Benefits: Full payBasic Salary for 7 days during which he is allowed not
to report for workNot less than the mandated minimum wage.
Note: 7 days is NOT 7 working days.
Unavailed paternity leave is NOT commutable.

C. MATERNITY LEAVE
SEC. 14-A, RA 8282
Maternity Leave Benefit. - A female member who has paid at least three (3)
monthly contributions in the twelve-month period immediately preceding
the semester of her childbirth or miscarriage shall be paid a daily maternity
benefit equivalent to one hundred percent (100%) of her average daily
salary credit for sixty (60) days or seventy-eight (78) days in case of
caesarian delivery, subject to the following conditions:

"(a) That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth, which notice shall
be transmitted to the SSS in accordance with the rules and
regulations it may provide;

"(b) The full payment shall be advanced by the employer within
thirty (30) days from the filing of the maternity leave application;

"(c) That payment of daily maternity benefits shall be a bar to the
recovery of sickness benefits provided by this Act for the same
period for which daily maternity benefits have been received;

"(d) That the maternity benefits provided under this section shall be
paid only for the first four (4) deliveries or miscarriages;

"(e) That the SSS shall immediately reimburse the employer of one
hundred percent (100%) of the amount of maternity benefits
advanced to the employee by the employer upon receipt of
satisfactory proof of such payment and legality thereof; and

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"(f) That if an employee member should give birth or suffer
miscarriage without the required contributions having been remitted
for her by her employer to the SSS, or without the latter having
been previously notified by the employer of the time of the
pregnancy, the employer shall pay to the SSS damages equivalent
to the benefits which said employee member would otherwise have
been entitled to.

Notes:
Female Employee
Regardless if married or unmarried
Paid at least 3 monthly contributions in the 12-month period
immediately preceding the semester of her childbirth/miscarriage
Paid daily maternity benefit = 100% of average salary credit for
o 60 days: Normal Delivery
o 78 days: Caesarian Delivery

Conditions:
Notified employer of pregnancy and probable date of childbirth
transmitted to SSS
Full payment advanced by employer within 30 days from filing of
maternity leave application
Payment of daily maternity benefits = bar to recovery of sickness
benefits during the same period
Maternity benefits = 1
st
4 deliveries
SSS immediately reimburse employer upon receipt of satisfactory
proof of such payment, if:
o Without required contributions having been remitted for her
by her employer to SSS
o Without SSS having previously notified by employer of time
of pregnancy
o employer will pay damages to SSS equivalent to benefits
which the employee member would otherwise have been
entitled to.

D. VACATION AND SICK LEAVE

Notes:
Vacation and sick leaves are VOLUNTARY
Only government employees are entitled to vacation and sick
leaves.
For private sector, it should be negotiated by the employees to the
employer.
The payment of vacation and sick leaves is governed by the
employers policy or agreement between it and the employee.
Intended to be replacements for regular income, which would
otherwise not be earned because an employee is not working during
the period of said leaves
Non-contributory in nature, in the sense that the employees
contribute nothing to the operation of the benefits
Purpose: To afford a laborer a chance to get a much needed rest to
replenish his worn out energies and acquire a new vitality to enable
him to efficiently perform his duties and not merely to give him
additional salary or bounty
Must be demanded in its opportune time (waived if employee allows
years to go by in silence)
Employer may impose certain conditions in the administration of the
leave privileges of employees
o Examples: Maximum of 6 monthsaccumulation
Sick leave is not commutable or payable in
cash

Commutation of Sick Leave:
May be had if under the circumstances, this has ripened into
company practice or policy, which cannot be peremptorily withdrawn
Rationale: To encourage workers to work continuously and with
dedication for the company; to lure employees to stay in the
company.
Basis for computation: on the last prevailing salary received by the
employee

Cases
McLeod v. NLRC, 512 SCRA 222 (2007)
McLeod is not entitled to payment of vacation leave and sick leave as well as
to holiday pay. Article 82, Title I, Book Three of the Labor Code, on Working
Conditions and Rest Periods, provides:

Coverage. $ The provisions of this title shall apply to employees in
all establishments and undertakings whether for profit or not, but
not to government employees, managerial employees, field
personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.

members of the managerial staff. (Emphasis supplied)

As Vice President/Plant Manager, McLeod is a managerial employee who is
excluded from the coverage of Title I, Book Three of the Labor Code.

NIKKI HIPOLITO
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McLeod is entitled to payment of vacation leave and sick leave only if he and
PMI had agreed on it. The payment of vacation leave and sick leave depends
on the policy of the employer or the agreement between the employer and
employee. In the present case, there is no showing that McLeod and PMI
had an agreement concerning payment of these benefits.

E. PARENTAL (SOLO PARENT) LEAVE

RA 8972Act Providing for BenefitsTo Solo Parents
SEC. 2: Declaration of Policy. - It is the policy of the State to promote the
family as the foundation of the nation, strengthen its solidarity and ensure
its total development. Towards this end, it shall develop a comprehensive
program of services for solo parents and their children to be carried out by
the Department of Social Welfare and Development (DSWD), the
Department of Health (DOH), the Department of Education, Culture and
Sports (DECS), the Department of the Interior and Local Government
(DILG), the Commission on Higher Education (CHED), the Technical
Education and Skills Development Authority (TESDA), the National Housing
Authority (NHA), the Department of Labor and Employment (DOLE) and
other related government and nongovernment agencies.

SEC. 6: Flexible Work Schedule. - The employer shall provide for a flexible
working schedule for solo parents: Provided, That the same shall not affect
individual and company productivity: Provided, further, That any employer
may request exemption from the above requirements from the DOLE on
certain meritorious grounds.

SEC. 8: Parental Leave. - In addition to leave privileges under existing laws,
parental leave of not more than seven (7) working days every year shall be
granted to any solo parent employee who has rendered service of at least
one (1) year.

Notes:
Not more than 7 days every year (1 day leave is legal compliance)
Non-cumulative
In addition to the legally mandated leavesSIL, SSS sick leave, SSS
maternity leave and paternity leave under RA 8187

Conditions:
Rendered at least 1 year of service
Notified employer within reasonable period
Presented Solo Parent ID Card

Other Benefits:
Educational benefits
Flexi-work schedule
Housing benefits
SECTION 9. WAGES

A. WAGESIN GENERAL
Wages (wagen): applies to compensation for manual labor, skilled or
unskilled, paid at stated times, and measured by the day, week, month
or season
- Indicates inconsiderable pay for a lower and less responsible
character of employment
- Ordinarily restricted to sums paid as hire or reward to domestic or
menial servants and to sums paid to artisans, mechanics, laborers
and other employees of like class

Salary (solarium): denotes a higher degree of employment or a
superior grade of services and implies a position or office
- Suggestive of a larger and more permanent or fixed compensation
for more important service

SC: Wages and Salaries are SYNONYMOUS
- A reward or recompense for services performed
- Pay is synonymous with wages and salaries

* Wages includes:
o Sales Commissions
o Facilities or Commoditiesfood and housing, etc
* Wages excludes:
o Allowances

9.01 Coverage
SEC. 97 (B): Employer includes any person acting directly or
indirectly in the interest of an employer in relation to an employee and
shall include the Government and all its branches, subdivision and
instrumentalities, all GOCCs and institutions, as well as non-profit
private institutions or organizations.

SEC. 97 (C): Employee includes any individual employed by an
employee.

SEC. 97 (E): Employ includes to suffer or permit to work.

SEC. 98: This Title shall NOT apply to farm tenancy or leasehold,
domestic service and persons working in their respective homes in
needle work or in any cottage industry duly registered in accordance
with law.

EXCEPTIONS to Minimum Wage Rule:
o Household or domestic helpers (including family drivers and
persons in the personal service of another)

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o Homeworkers engaged in the needle-work
o Workers employed in any establishment duly registered with
National Cottage Industries and Development Authority in
accordance with RA 3470 provided that such workers
perform the work in their respective homes
o Workers in any duly registered cooperative
o Barangay Micro Business Enterprises (BMBEs)

Government Agency
Cases
Philippine Fisheries Development Authority v NLRC, 213 SCRA
621 (1992)
Notwithstanding that the petitioner is a government agency, its
liabilities, which are joint and solidary with that of the contractor, are
provided in Articles 106, 107 and 109 of the Labor Code. This places the
petitioner's liabilities under the scope of the NLRC. Moreover, Book
Three, Title II on Wages specifically provides that the term "employer"
includes any person acting directly or indirectly in the interest of an
employer in relation to an employee and shall include the Government
and all its branches, subdivisions and instrumentalities, all government-
owned or controlled corporation and institutions as well as non-profit
private institutions, or organizations (Art. 97 [b], Labor Code; Eagle
Security Agency, Inc. v. NLRC, 173 SCRA 479 [1989]; Rabago v. NLRC,
200 SCRA 158 [1991]). The NLRC, therefore, did not commit grave
abuse of discretion in assuming jurisdiction to set aside the Order of
dismissal by the Labor Arbiter.

9.02 Wage
SEC. 97 (F): Wage paid to any employee shall mean the
remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time,
task, piece or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written
or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the employer to the employee.
Fair and reasonable value shall not include any profit to the employer
or to any person affiliated with the employer.
ART. XIII, Constitution
Section 3. The State shall afford full protection to labor, local and

It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living
wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.


recognizing the right of labor to its just share in the fruits of
production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.

Defined
Cases
Chavez v NLRC, 448 SCRA 478 (2005)
Wages are defined as remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other method
of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work
done or to be done, or for service rendered or to be rendered. That the
petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the
existence or absence of employer-employee relationship. One may be
paid on the basis of results or time expended on the work, and may or
may not acquire an employment status, depending on whether the
elements of an employer-employee relationship are present or not. In
this case, it cannot be gainsaid that the petitioner received
compensation from the respondent company for the services that he
rendered to the latter.

Mayon Hotel and Restaurants v Adana, 458 SCRA 609 (2005)
The cost of meals and snacks purportedly provided to respondents
cannot be deducted as part of respondents' minimum wage. As stated in
the Labor Arbiter's decision:
While [petitioners] submitted Facility Evaluation Orders (pp. 468,
469; vol. II, rollo) issued by the DOLE Regional Office whereby the
cost of meals given by [petitioners] to [respondents] were specified
for purposes of considering the same as part of their wages, We
cannot consider the cost of meals in the Orders as applicable to
[respondents]. [Respondents] were not interviewed by the DOLE as
to the quality and quantity of food appearing in the applications of
[petitioners] for facility evaluation prior to its approval to determine
whether or not [respondents] were indeed given such kind and
quantity of food. Also, there was no evidence that the quality and

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quantity of food in the Orders were voluntarily accepted by
[respondents]. On the contrary; while some [of the respondents]
admitted that they were given meals and merienda, the quality of
food serve[d] to them were not what were provided for in the
Orders and that it was only when they filed these cases that they
came to know about said Facility Evaluation Orders (pp. 100; 379[,]
vol. II, rollo; p. 40, tsn[,] June 19, 1998). [Petitioner] Josefa
herself, who applied for evaluation of the facility (food) given to
[respondents], testified that she did not inform [respondents]
concerning said Facility Evaluation Orders (p. 34, tsn[,] August 13,
1998).

Even granting that meals and snacks were provided and indeed
constituted facilities, such facilities could not be deducted without
compliance with certain legal requirements. As stated in Mabeza v.
NLRC, the employer simply cannot deduct the value from the
employee's wages without satisfying the following: (a) proof that such
facilities are customarily furnished by the trade; (b) the provision of
deductible facilities is voluntarily accepted in writing by the employee;
and (c) the facilities are charged at fair and reasonable value. The
records are clear that petitioners failed to comply with these
requirements. There was no proof of respondents' written authorization.
Indeed, the Labor Arbiter found that while the respondents admitted
that they were given meals and merienda, the quality of food served to
them was not what was provided for in the Facility Evaluation Orders
and it was only when they filed the cases that they came to know of this
supposed Facility Evaluation Orders. Petitioner Josefa Po Lam herself
admitted that she did not inform the respondents of the facilities she
had applied for.

Considering the failure to comply with the above-mentioned legal
requirements, the Labor Arbiter therefore erred when he ruled that the
cost of the meals actually provided to respondents should be deducted
as part of their salaries, on the ground that respondents have availed
themselves of the food given by petitioners. The law is clear that mere
availment is not sufficient to allow deductions from employees' wages.

Fair Day Pay
Employee performs no work ! NO WAGE OR PAY
UNLESS, laborer is able, willing and ready to work but was
prevented by management or was illegally locked out, suspended or
dismissed

Cases
Aklan Electric Cooperative, Inc. v NLRC, 323 SCRA 258 (2000)
The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining employees' wages. If there is
no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but
was illegally locked out, suspended or dismissed, or otherwise illegally
prevented from working, a situation which we find is not present in the
instant case. It would neither be fair nor just to allow private
respondents to recover something they have not earned and could not
have earned because they did not render services at the Kalibo office
during the stated period.

Discrimination
EQUAL PAY FOR EQUAL WORK ! Employees working in the
Philippines, performing similar functions and responsibilities under
similar working conditions, should be paid under this principle.

Cases
International School Alliance of Educators v Quisumbing, 333
SCRA 13 (2000)
The International Covenant on Economic, Social, and Cultural Rights,
supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of
work, which ensure, in particular:
a.....Remuneration which provides all workers, as a minimum, with:
1. Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed
by men, with equal pay for equal work;

The foregoing provisions impregnably institutionalize in this jurisdiction
the long honored legal truism of "equal pay for equal work." Persons
who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar salaries.
This rule applies to the School, its "international character"
notwithstanding.

Philex Gold Phils. Inc v Philex Bulawan Supervisors Union, 468
SCRA 111 (2005)
The long honored legal truism of equal pay for equal work, meaning,
persons who work with substantially equal qualification, skill, effort and
responsibility, under similar conditions, should be paid similar salaries,
has been institutionalized in our jurisdiction. Such that if an employer
accords employees the same position and rank, the presumption is that
these employees perform equal work as borne by logic and human
experience. The ramification is that (i)f the employer pays one
employee less than the rest, it is not for that employee to explain why
he receives less or why the others receive more. That would be adding

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insult to injury. The employer has discriminated against that employee;
it is for the employer to explain why the employee is treated unfairly.

Bankard Employers Union v NLRC, 423 SCRA 148 (2004)
Wage distortion is a factual and economic condition that may be brought
about by different causes. In Metro Transit, the reduction or elimination
of the normal differential between the wage rates of rank-and-file and
those of supervisory employees was due to the granting to the former of
wage increase which was, however, denied to the latter group of
employees.

The mere factual existence of wage distortion does not, however, ipso
facto result to an obligation to rectify it, absent a law or other source of
obligation which requires its rectification.

Unlike in Metro Transit then where there existed a "company practice,"
no such management practice is herein alleged to obligate Bankard to
provide an across-the-board increase to all its regular employees.

Bankards right to increase its hiring rate, to establish minimum salaries
for specific jobs, and to adjust the rates of employees affected thereby
is embodied under Section 2, Article V (Salary and Cost of Living
Allowance) of the parties Collective Bargaining Agreement (CBA), to
wit:

Section 2. Any salary increase granted under this Article shall be
without prejudice to the right of the Company to establish such
minimum salaries as it may hereafter find appropriate for specific
jobs, and to adjust the rates of the employees thereby affected to
such minimum salaries thus established.

This CBA provision, which is based on legitimate business-judgment
prerogatives of the employer, is a valid and legally enforceable
source of rights between the parties.

In fine, absent any indication that the voluntary increase of salary rates
by an employer was done arbitrarily and illegally for the purpose of
circumventing the laws or was devoid of any legitimate purpose other
than to discriminate against the regular employees, this Court will not
step in to interfere with this management prerogative. Employees are of
course not precluded from negotiating with its employer and lobby for
wage increases through appropriate channels, such as through a CBA.

This Court, time and again, has shown concern and compassion to the
plight of workers in adherence to the Constitutional provisions on social
justice and has always upheld the right of workers to press for better
terms and conditions of employment. It does not mean, however, that
every dispute should be decided in favor of labor, for employers
correspondingly have rights under the law which need to be respected.

Facilities and Supplements
Facilities: include articles or services for the benefit of the employee or
his family but shall NOT include tools of the trade or articles or service
primarily for the benefit of the employer or necessary to the conduct of
the employers business
- Wage-deductible

Supplements: benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or ordinary
earning or wage
- NOT wage-deductible

Distinction between the two lies not so much on the kind, but on
the PURPOSE.

DOLE Order No. 4 (1988)Valuation of Meals and Other Facilities
"Supplements" constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their
ordinary earnings or wages.

"Facilities" are items of expense necessary for the laborer's and his
family's existence and subsistence so that by express provision of law
(Sec. 2[g]), they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not so furnished,
the laborer would spend and pay for them just the same.

3 Requirements before value of facility may be deducted
1. Proof must be shown that such facilities are customarily furnished
by the trade.
2. Provision of deductible facilities must be voluntarily accepted in
writing by the employee.
3. Facilities must be charged at fair and reasonable value.

Cases
States Marine Corporation v. Cebu Seamens Association, Inc., 7
SCRA 294 (1963)
In short, the benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or ordinary
earning or wage, is supplement; and when said benefit or privilege is
part of the laborers' basic wages, it is a facility. The criterion is not so
much with the kind of the benefit or item (food, lodging, bonus or sick
leave) given, but its purpose. Considering, therefore, as definitely found
by the respondent court that the meals were freely given to crew
members prior to August 4, 1951, while they were on the high seas "not

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as part of their wages but as a necessary matter in the maintenance of
the health and efficiency of the crew personnel during the voyage", the
deductions therein made for the meals given after August 4, 1951,
should be returned to them, and the operator of the coastwise vessels
affected should continue giving the same benefit..

Millares v. NLRC, 305 SCRA 500 (1999)
When an employer customarily furnishes his employee board, lodging or
other facilities, the fair and reasonable value thereof, as determined by
the Secretary of Labor and Employment, is included in "wage." In order
to ascertain whether the subject allowances form part of petitioner's
"wages," we divide the discussion on the following "customarily
furnished;" "board, lodging or other facilities;" and, "fair reasonable
value as determined by the Secretary of Labor."

"Customary" is founded on long-established and constant practice
connoting regularity. 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. We agree
with the observation of the Office of the Solicitor General that the
subject allowances were temporarily, not regularly, received by
petitioners because
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 . . . .

On the other hand, the transportation allowance is in the form of
advances for actual transportation expenses subject to liquidation . .
. given only to employees who have personal cars.

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.

We add that in the availment of the transportation allowance,
respondent PICOP set another requirement that the personal cars be
used by the employees in the performance of their duties. When the
conditions for availment ceased to exist, the allowance reached the
cutoff point. The finding of the NLRC along the same line likewise merits
concurrence, i.e., petitioners' continuous enjoyment of the disputed
allowances was based on contingencies the occurrence of which wrote
finis to such enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is not
so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules
Implementing the Labor Code gives meaning to the term as including
articles or services for the benefit of the employee or his family but
excluding tools of the trade or articles or service primarily for the benefit
of the employer or necessary to the conduct of the employer's business.
The Staff/Manager's allowance may fall under "lodging" but the
transportation and Bislig allowances are not embraced in "facilities" on
the main consideration that they are granted as well as the
Staff/Manager's allowance for respondent PICOP's benefit and
convenience, i.e., to insure that petitioners render quality performance.
In determining whether a privilege is a facility, the criterion is not so
much its kind but its purpose.
17
That the assailed allowances were for
the benefit and convenience of respondent company was supported by
the circumstance that they were not subjected to withholding tax.

Tips
Where a restaurant or similar establishment does not collect service
charges but has a practice or policy of monitoring and pooling tips given
voluntarily by its customers to its employees, the pooled tips should be
monitored, accounted for and distributed in the same manner as the
service charges.

Cases
Ace Navigation Co. Inc. v. CA, 338 SCRA 70 (2000)
The word [tip] has several meanings, with origins more or less
obscure, connected with "tap" and with "top." In the sense of a sum of
money given for good service, other languages are more specific, e.g.,
Fr. pourboire, for drink. It is suggested that [the word] is formed from
the practice, in early 18th c. London coffeehouses, of having a box in
which persons in a hurry would drop a small coin, to gain immediate
attention. The box was labelled To Insure Promptness; then just with the
initials T.I.P.
It is more frequently used to indicate additional compensation, and in
this sense "tip" is defined as meaning a gratuity; a gift; a present; a fee;
money given, as to a servant to secure better or more prompt service. A
tip may range from pure gift out of benevolence or friendship, to a
compensation for a service measured by its supposed value but not fixed
by an agreement, although usually the word is applied to what is paid to
a servant in addition to the regular compensation for his service in order
to secure better service or in recognition of it. It has been said that a tip
denotes a voluntary act, but it also has been said that from the very
beginning of the practice of tipping it was evident that, whether
considered from the standpoint of the giver or the recipient, a tip lacked
the essential element of a gift, namely, the free bestowing of a gratuity
without a consideration, and that, despite its apparent voluntariness,
there is an element of compulsion in tipping.
Tipping is done to get the attention and secure the immediate services
of a waiter, porter or others for their services. Since a tip is considered a

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pure gift out of benevolence or friendship, it cannot be demanded from
the customer. Whether or not tips will be given is dependent on the will
and generosity of the giver. Although a customer may give a tip as a
consideration for services rendered, its value still depends on the giver.
They are given in addition to the compensation by the employer. A
gratuity given by an employer in order to inspire the employee to exert
more effort in his work is more appropriately called a bonus.

The actuations of Orlando during his employment also show that he was
aware his monthly salary is only US$450.00, no more no less. He did
not raise any complaint about the non-payment of his tips during the
entire duration of his employment. After the expiration of his contract,
he demanded payment only of his vacation leave pay. He did not
immediately seek the payment of tips. He only asked for the payment of
tips when he filed this case before the labor arbiter. This shows that the
alleged non-payment of tips was a mere afterthought to bloat up his
claim. The records of the case do not show that Orlando was deprived of
any monthly salary. It will now be unjust to impose a burden on the
employer who performed the contract in good faith.

Cash Wage/Commissions
Cases
Iran v. NLRC, 289 SCRA 433 (1998)
Art. 97(f) "Wage" paid to any employee shall mean the remuneration
or earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee.

This definition explicitly includes commissions as part of wages. While
commissions are, indeed, incentives or forms of encouragement to
inspire employees to put a little more industry on the jobs particularly
assigned to them, still these commissions are direct remunerations for
services rendered. In fact, commissions have been defined as the
recompense, compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated
as a percentage on the amount of his transactions or on the profit to the
principal. The nature of the work of a salesman and the reason for such
type of remuneration for services rendered demonstrate clearly that
commissions are part of a salesman's wage or salary.

Songco v. NLRC, 183 SCRA 610 (1990)
Article 97(f) by itself is explicit that commission is included in the
definition of the term "wage". It has been repeatedly declared by the
courts that where the law speaks in clear and categorical language,
there is no room for interpretation or construction; there is only room
for application.

Wages and Salary
Cases
Equitable Banking Corp. v. Sadac, 490 SCRA 380 (2006)
Broadly, the word "salary" means a recompense or consideration made
to a person for his pains or industry in another mans business. Whether
it be derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of
compensation for services rendered. Indeed, there is eminent authority
for holding that the words "wages" and "salary" are in essence
synonymous.

"Salary," the etymology of which is the Latin word "salarium," is often
used interchangeably with "wage", the etymology of which is the Middle
English word "wagen". Both words generally refer to one and the same
meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary"

Gaa v. CA, 140 SCRA 304 (1985)
Article 1708 used the word "wages" and not "salary" in relation to
"laborer" when it declared what are to be exempted from attachment
and execution. The term "wages" as distinguished from "salary", applies
to the compensation for manual labor, skilled or unskilled, paid at stated
times, and measured by the day, week, month, or season, while
"salary" denotes a higher degree of employment, or a superior grade of
services, and implies a position of office: by contrast, the term wages "
indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important
service (35 Am. Jur. 496).

The distinction between wages and salary was adverted to in Bell vs.
Indian Livestock Co. (Tex. Sup.), 11 S.W. 344, wherein it was said:
"'Wages' are the compensation given to a hired person for service, and
the same is true of 'salary'. The words seem to be synonymous,
convertible terms, though we believe that use and general acceptation
have given to the word 'salary' a significance somewhat different from
the word 'wages' in this: that the former is understood to relate to
position of office, to be the compensation given for official or other
service, as distinguished from 'wages', the compensation for labor."
Annotation 102 Am. St. Rep. 81, 95.


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We do not think that the legislature intended the exemption in Article
1708 of the New Civil Code to operate in favor of any but those who are
laboring men or women in the sense that their work is manual. Persons
belonging to this class usually look to the reward of a day's labor for
immediate or present support, and such persons are more in need of the
exemption than any others. Petitioner Rosario A. Gaa is definitely not
within that class.

Gratuity and Wages
Gratuity: something given freely, or without recompense; a gift;
something voluntarily given in return for a favor or services; a bounty; a
tip; that which is paid to the beneficiary for past services rendered
purely out of the generosity of the giver or grantor.
- NOT intended to pay a worker for actual services rendered
- Money benefit given to the workers whose purpose is to reward
employees or laborers who have rendered satisfactory and efficient
service to the company
- NOT mandatory

Cases
Plastic Town Center Corp. v. NLRC, 172 SCRA 580 (1989)
Looking into the definition of gratuity, we find the following in Moreno's
Philippine Law Dictionary, to wit:
Something given freely, or without recompense; a gift; something
voluntarily given in return for a favor or services; a bounty; a tip. -
Pirovano v. De la Rama Steamship Co., 96 Phil. 357.

That paid to the beneficiary for past services rendered purely out of
the generosity of the giver or grantor.-Peralta v. Auditor General,
100 Phil. 1054.

Salary or compensation. The very term 'gratuity' differs from the
words 'salary' or 'compensation' in leaving the amount thereof,
within the limits of reason, to the arvitrament of the giver.-Herranz
& Garriz v. Barbudo, 12 Phil. 9.

From the foregoing, gratuity pay is therefore, not intended to pay a
worker for actual services rendered. It is a money benefit given to the
workers whose purpose is "to reward employees or laborers, who have
rendered satisfactory and efficient service to the company." (Sec. 2,
CBA) While it may be enforced once it forms part of a contractual
undertaking, the grant of such benefit is not mandatory so as to be
considered a part of labor standard law unlike the salary, cost of living
allowances, holiday pay, leave benefits, etc., which are covered by the
Labor Code.

13
th
Month Pay
Cases
Agabon v. NLRC, 442 SCRA 573 (2004)
The evident intention of Presidential Decree No. 851 is to grant an
additional income in the form of the 13th month pay to employees not
already receiving the same so as "to further protect the level of real
wages from the ravages of world-wide inflation." Clearly, as additional
income, the 13th month pay is included in the definition of wage under
Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms
of money whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the
employer to the employee"

from which an employer is prohibited under Article 113 of the same
Code from making any deductions without the employee's knowledge
and consent. In the instant case, private respondent failed to show that
the deduction of the SSS loan and the value of the shoes from petitioner
Virgilio Agabon's 13th month pay was authorized by the latter. The lack
of authority to deduct is further bolstered by the fact that petitioner
Virgilio Agabon included the same as one of his money claims against
private respondent.

B. PAYMENT OF WAGES

9.03 Form

Proof of Wage Payment ! Burden to prove payment is on the
employer, when the employee alleges non-payment of wages
IRR requires that every employer to keep a PAYROLL ! showing the
length of time to be paid, the pay rate, the amount actually paid
etc; employee should sign the payroll.

SEC. 102: No employer shall pay the wages of an employee by means
of promissory notes, vouchers, coupons, tokens, tickets, chits or any
object other than legal tender, even when expressly requested by the
employee.

Payment of wages by check or money order shall be allowed when such
manner of payment is customary on the date of the effectivity of this
Code, or is necessary because of special circumstances as specified in

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appropriate regulations to be issued by the Secretary of Labor or as
stipulated in a collective bargaining agreement.

Full Payment
Cases
Lopez Sugar Corp v Franco, 458 SCRA 515 (2005)
In Asian Alcohol Corporation v. National Labor Relations Commission,
the Court ruled that 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. The Court proceeded to expound, as
follows:
A redundant position is one rendered superfluous by any number of
factors, such as over-hiring of workers, decreased volume of
business, dropping of a 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.

Contrary to the petitioners claim, the employer must comply with the
following requisites to ensure the validity of the implementation of a
redundancy program: (1) a written notice served on both the employees
and the Department of Labor and Employment at least one month prior
to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one 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.

G&M (Phil.) Inc. v Batomalaque, 461 SCRA 111 (2005)
Well-settled is the rule that in cases of non-payment and underpayment
of salaries and wages, the employer has the burden of proof to show
that the worker/employee has been paid all his salaries and wages since
it has in its possession the proof of payment such as payrolls and/or
vouchers (Sambalonay vs. Jose Cuevas, NLRC No. RB IV 186447,
February 13, 1980) and in the absence of proof to the contrary, it is
deemed that no payment has been made.

On repeated occasions, this Court ruled that the debtor has the burden
of showing with legal certainty that the obligation has been discharged
by payment. To discharge means to extinguish an obligation, and in
contract law discharge occurs either when the parties have performed
their obligations in the contract, or when an event the conduct of the
parties, or the operation of law releases the parties from performing.
Thus, a party who alleges that an obligation has been extinguished must
prove facts or acts giving rise to the extinction.
The fact of underpayment does not shift the burden of evidence to the
plaintiff-herein respondent because partial payment does not extinguish
the obligation. Only when the debtor introduces evidence that the
obligation has been extinguished does the burden of evidence shift to
the creditor who is then under a duty of producing evidence to show
why payment does not extinguish the obligation.

P.I. Manufacturing v P.I. Manufacturing etc., 545 SCRA 613
(2008)
Contrary to petitioners stance, the increase resulting from any wage
distortion caused by the implementation of Republic Act 6640 is not
waivable. As held in the case of Pure Foods Corporation vs. National
Labor Relations Commission, et al.:

"Generally, quitclaims by laborers are frowned upon as contrary to
public policy and are held to be ineffective to bar recovery for the
full measure of the workers rights. The reason for the rule is that
the employer and the employee do not stand on the same footing."

Moreover, Section 8 of the Rules Implementing RA 6640 states:
No wage increase shall be credited as compliance with the increase
prescribed herein unless expressly provided under valid individual
written/collective agreements; and provided further that such wage
increase was granted in anticipation of the legislated wage increase
under the act. But such increases shall not include anniversary wage
increases provided in collective bargaining agreements.

Likewise, Article 1419 of the Civil Code mandates that:
When the law sets, or authorizes the setting of a minimum wage for
laborers, and a contract is agreed upon by which a laborer accepts a
lower wage, he shall be entitled to recover the deficiency.

Thus, notwithstanding the stipulation provided under Section 2 of the
Company and Supervisors and Foremen Contract, we find the members
of private respondent union entitled to the increase of their basic pay
due to wage distortion by reason of the implementation of RA 6640.

Payroll Payment
Cases
Phil. Global Communications Inc. v De Vera, 459 SCRA 260
(2005)
Deeply embedded in our jurisprudence is the rule that courts may not
construe a statute that is free from doubt. Where the law is clear and
unambiguous, it must be taken to mean exactly what it says, and courts
have no choice but to see to it that the mandate is obeyed. As it is,
Article 157 of the Labor Code clearly and unequivocally allows
employers in non-hazardous establishments to engage on retained

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basis the service of a dentist or physician. Nowhere does the law
provide that the physician or dentist so engaged thereby becomes a
regular employee. The very phrase that they may be engaged on
retained basis, revolts against the idea that this engagement gives rise
to an employer-employee relationship.

Moreover, under the Rules Implementing the Labor Code, every
employer is required to pay his employees by means of payroll. The
payroll should show, among other things, the employees rate of pay,
deductions made, and the amount actually paid to the employee.
Interestingly, the respondents did not present the payroll to support
their claim that the petitioner was not their employee, raising
speculations whether this omission proves that its presentation would be
adverse to their case.

Cash Wage
Cases
Congson v NLRC, 243 SCRA 260 (1995)
Undoubtedly, petitioner's practice of paying the private respondents the
minimum wage by means of legal tender combined with tuna liver and
intestines runs counter to the above-cited provision of the Labor Code.
The fact that said method of paying the minimum wage was not only
agreed upon by both parties in the employment agreement, but even
expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by
means of legal tender. The only instance when an employer is permitted
to pay wages informs other than legal tender, that is, by checks or
money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.

Payroll Entries
Cases
Kar Asia Inc v Corono, 437 SCRA 184 (2004)
Moreover, the affidavits of Ermina Daray and Cristita Arana, whose
verity we find no reason to suspect, confirmed the truthfulness of the
entries in the payrolls and affirmed the receipt by the respondents of
their full compensation. Entries in the payroll, being entries in the
course of business, enjoy the presumption of regularity under Rule 130,
Section 43 of the Rules of Court. It is therefore incumbent upon the
respondents to adduce clear and convincing evidence in support of their
claim. Unfortunately, respondents naked assertions without proof in
corroboration will not suffice to overcome the disputable presumption.

9.04 Time Payment

SEC. 103: Wages shall be paid at least once every two (2) weeks or
twice a month at intervals not exceeding sixteen (16) days. If on
account of force majeure or circumstances beyond the employers
control, payment of wages on or within the time herein provided cannot
be made, the employer shall pay the wages immediately after such force
majeure or circumstances have ceased. No employer shall make
payment with less frequency than once a month.

The payment of wages of employees engaged to perform a task which
cannot be completed in two (2) weeks shall be subject to the following
conditions, in the absence of a collective bargaining agreement or
arbitration award:
(1) That payments are made at intervals not exceeding sixteen (16)
days, in proportion to the amount of work completed;
(2) That final settlement is made upon completion of the work.

9.05 Place Payment

General Rule: At or near the place of undertaking
Exceptions:
o When payment cannot be effected at or near the place of
work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies
caused by fire, flood, epidemic, or other calamity rendering
payment thereat impossible;
o When the employer provides free transportation to the
employees back and forth; and
o Under any analogous circumstances, provided that the time
spent by the employees in collecting their wages shall be
considered as compensable hours worked.
Prohibited Places:
o Bar, night or day club, drinking establishment
o Massage clinic
o Dance hall
o Other similar places or in places where games are played
with stakes of money or things representing money
o EXCEPT: in case of persons employed in said places

SEC. 104: Payment of wages shall be made at or near the place of
undertaking, except as otherwise provided by such regulations as the
Secretary of Labor and Employment may prescribe under conditions to
ensure greater protection of wages.

Labor Advisory Payment of Salary Thru ATM (DOLE 1996)
Payment thru ATM is allowed provided the following conditions are met:

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1. ATM system of payment is with written consent of the employees
concerned.
2. Employees are given reasonable time to withdraw their wages from
the bank facility, which time, if done during working hours, shall be
considered as compensable hours worked.
3. System shall allow workers to receive their wages within the period
or frequency and in the amount prescribed under the Labor Code.
4. Bank or ATM facility is within a radius of 1 km to the place of work.
5. Upon request of the concerned employee/s, employer shall issue a
record of payment of wages, benefits and deductions for particular
period.
6. There shall be no additional expenses and no diminution of benefits
and privileges as a result of the ATM system of payment.
7. Employer shall assume responsibility in case the wage protection
provisions of law and regulations are not complied with under the
arrangement.

9.06 Direct Payment
SEC. 105: Wages shall be paid directly to the workers to whom they are
due, except:

(a) In cases of force majeure rendering such payment impossible or
under other special circumstances to be determined by the Secretary of
Labor and Employment in appropriate regulations, in which case, the
worker may be paid through another person under written authority
given by the worker for the purpose; or

(b) Where the worker has died, in which case, the employer may pay
the wages of the deceased worker to the heirs of the latter without the
necessity of intestate proceedings. The claimants, if they are all of age,
shall execute an affidavit attesting to their relationship to the deceased
and the fact that they are his heirs, to the exclusion of all other persons.
If any of the heirs is a minor, the affidavit shall be executed on his
behalf by his natural guardian or next-of-kin. The affidavit shall be
presented to the employer who shall make payment through the
Secretary of Labor and Employment or his representative. The
representative of the Secretary of Labor and Employment shall act as
referee in dividing the amount paid among the heirs. The payment of
wages under this Article shall absolve the employer of any further
liability with respect to the amount paid.

9.07 ContractorSub Contractor

When a contractor fails to pay wages of his employees, the
employer who contracted out the job becomes JOINTLY and
SEVERALLY LIABLE with the contractor to the extent of the worked
performed under the contract, as if such employer were the
employer of the contractors employees.
Indirect employer cannot escape liability even if it had paid the
workers wage rates in accordance with the stipulations in the
contract with the contractor or agency. The employees are not privy
to the contract.
Sec. 106-109 were enacted to alleviate the plight of workers whose
wages barely meet the spiraling costs of their basic needs.
Legislated wage increases are deemed amendments to the contract.
Employers cannot hide behind their contracts in order to evade their
or their contractors or subcontractors liability for noncompliance
with the statutory minimum wage.

SEC. 106: Whenever an employer enters into a contract with another
person for the performance of the formers work, the employees of the
contractor and of the latter subcontractor, if any, shall be paid in
accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages
of his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly
employed by him.

The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to protect
the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these
types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code.

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, machineries, work premises, among others, and
the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly
employed by him.

SEC. 107: The provisions of the immediately preceding article shall
likewise apply to any person, partnership, association or corporation

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which, not being an employer, contracts with an independent contractor
for the performance of any work, task, job or project.

SEC. 108: An employer or indirect employer may require the contractor
or subcontractor to furnish a bond equal to the cost of labor under
contract, on condition that the bond will answer for the wages due the
employees should the contractor or subcontractor, as the case may be,
fail to pay the same.

SEC. 109: The provisions of existing laws to the contrary
provision of this Code. For purposes of determining the extent of their
civil liability under this Chapter, they shall be considered as direct
employers.

C. PROHIBITION REGARDING WAGES

Civil Code Provisions
o Wages to be paid in legal tender (Art. 1705)
o No withholding of wages, except for a debt due (Art. 1706)
o Wages to be lien on the goods manufactured or the work
done (Art. 1707)
o Wages not subject to execution or attachment, except for
debts incurred for food, shelter, clothing and medical
attendance (Art. 1708)
o Laborers tools and other articles not to be seized by the
employer (Art. 1709)

9.08 Non-InterferenceDisposal Wages
SEC. 112: No employer shall limit or otherwise interfere with the
freedom of any employee to dispose of his wages. He shall not in any
manner force, compel, or oblige his employees to purchase
merchandise, commodities or other property from any other person, or
otherwise make use of any store or services of such employer or any
other person.

9.09 Wage Deduction
Allowed Deductions
o For value of meals and other facilities
o Premiums on insurance paid by employer, for the benefit of
and with consent of the employee
o When right of employees or union to check-off has been
recognized by the employer or authorized in writing by the
individual employee concerned
o When employee is indebted to employer, such indebtedness
is due and demandable
o In court awards ! execution or attachment is allowed only
for debts incurred for food, shelter, clothing or medical
attendance
o Withholding taxes
o Salary deductions of a member of a legally established
cooperative
o SSS, Medicare and Pag-Ibig Contributions
Payment to Third Persons ! Deductible if it is authorized in writing
by the employee; employer may agree to the deduction, but not
obliged to do so
Written Authorization as a pre-requisite to deductions ! to protect
the employee against unwarranted practices that would diminish his
compensation without his knowledge and consent

SEC. 113: No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment.

SEC. 117: It shall be unlawful to make any deduction from the wages of
any employee for the benefit of the employer or his representative or
intermediary as consideration of a promise of employment or retention
in employment.

Wage Deduction
Cases
Radio Communications of the Philippines, Inc. v Secretary of
Labor, 169 SCRA 38 (1989)
Service fee collected by the Union does not run counter to the express
mandate of the law since the same are not unwarranted. Also, the
deductions for the union service fee are authorized by law and do not
require individual check-off authorizations.

Apodaca v NLRC, 172 SCRA 442 (1989)
What the records show is that the respondent corporation deducted the
amount due to petitioner from the amount receivable from him for the
unpaid subscriptions. No doubt such set-off was without lawful basis, if
not premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the wages and

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other benefits due petitioner. Article 113 of the Labor Code allows such
a deduction from the wages of the employees by the employer, only in
three instances, to wit:

ART. 113. Wage Deduction. No employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of
his employees, except:
(a) In cases where the worker is insured with his consent by
the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned;
and
(c) In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor.

Check-Off
SEC. 113 (B): For union dues, in cases where the right of the worker or
his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned;
Cases
Manila Trading and Supply Co. v Manila Trading Labor
Association, 93 Phil. 288 (1953)
When in case of strikes, and according to the CIR even if the strike is
legal, strikers may not collect their wages during the days they did not
go to work, for the same reasons if not more, laborers who voluntarily
absent themselves from work to attend the hearing of a case in which
they seek to prove and establish their demands against the company,
the legality and propriety of which demands is not yet known, should
lose their pay during the period of such absence from work. The age-old
rule governing the relation between labor and capital or management
and employee is that of a "fair day's wage for a fair day's labor." If there
is no work performed by the employee there can be no wage or pay,
unless of course, the laborer was able, willing and ready to work but
was illegally locked out, dismissed or suspended. it is hardly fair or just
for an employee or laborer to fight or litigate against his employer on
the employer's time.

In a case where a laborer absents himself from work because of a strike
or to attend a conference or hearing in a case or incident between him
and his employer, he might seek reimbursement of his wages from his
union, which had declared the strike or filed the case in the industrial
court. Or, in the present case, he might have his absence from his work
charged against his vacation leave. Three of the Justices who sign the
present decision believe that the deductions made from the wage of
Armando Ocampo and Protacio Ty might possibly be charge as damages
in the case in the event that the said case in CIR prosecuted in behalf of
their union is finally decided in their favor and against the company.

9.10 Deposit

4 Conditions for Payments for Lost or Damages Equipment may be
Deductible from Employees Salary:
o Employee is clearly shown to be responsible for the loss or
damage
o Employee is given ample opportunity to show cause why
deduction should not be made
o Amount of the deduction is fair and reasonable and shall not
exceed the actual loss or damage
o Deduction from the employees wage does not exceed 20%
of the employees wages in a week
Deductions for unpaid absences are allowed

SEC. 114: No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades, occupations or
business where the practice of making deductions or requiring deposits
is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor and Employment in appropriate rules and
regulations.

SEC. 115: No deduction from the deposits of an employee for the actual
amount of the loss or damage shall be made unless the employee has
been heard thereon, and his responsibility has been clearly shown.

Cases
Five J Taxi v NLRC, 235 SCRA 556 (1994)
Respondent NLRC held that the P15.00 daily deposits made by
respondents to defray any shortage in their "boundary" is covered by
the general prohibition in Article 114 of the Labor Code against requiring
employees to make deposits, and that there is no showing that the
Secretary of Labor has recognized the same as a "practice" in the taxi
industry. Consequently, the deposits made were illegal and the
respondents must be refunded therefor.

Article 114 of the Labor Code provides as follows:
Art. 114. Deposits for loss or damage. No employer shall require
his worker to make deposits from which deductions shall be made
for the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is

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engaged in such trades, occupations or business where the practice
of making deposits is a recognized one, or is necessary or desirable
as determined by the Secretary of Labor in appropriate rules and
regulations.

It can be deduced therefrom that the said article provides the rule on
deposits for loss or damage to tools, materials or equipments supplied
by the employer. Clearly, the same does not apply to or permit deposits
to defray any deficiency which the taxi driver may incur in the
remittance of his "boundary." Also, when private respondents stopped
working for petitioners, the alleged purpose for which petitioners
required such unauthorized deposits no longer existed. In other case,
any balance due to private respondents after proper accounting must be
returned to them with legal interest.

Consequently, private respondents are not entitled to the refund of the
P20.00 car wash payments they made. It will be noted that there was
nothing to prevent private respondents from cleaning the taxi units
themselves, if they wanted to save their P20.00. Also, as the Solicitor
General correctly noted, car washing after a tour of duty is a practice in
the taxi industry, and is, in fact, dictated by fair play.

Dentech Manufacturing Corp. v NLRC, 172 SCRA 588 (1989)
The refund of the cash bond filed by the private respondents is in order.
Article 114 of the Labor Code prohibits an employer from requiting his
employees to file a cash bond or to make deposits, subject to certain
exceptions, to wit-
Art. 114. Deposits for loss or damage.- No employer shall require
his worker to make deposits from which deductions shall be made
for the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is
engaged in such trades, occupations or business where the practice
of making deductions or requiring deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor in
appropriate rules and regulations.

The petitioners have not satisfactorily disputed the applicability of this
provision of the Labor Code to the case at bar. Considering further that
the petitioners failed to show that the company is authorized by law to
require the private respondents to file the cash bond in question, the
refund thereof is in order.

The allegation of the petitioners to the effect that the proceeds of the
cash bond had already been given to a certain carinderia to pay for the
accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no
evidence or receipt has been shown to prove such payment.
9.11 Withholding of Wages; Record Keeping
SEC. 116: It shall be unlawful for any person, directly or indirectly, to
withhold any amount from the wages of a worker or induce him to give
up any part of his wages by force, stealth, intimidation, threat or by any
other means whatsoever without the workers consent.

SEC. 119: It shall be unlawful for any person to make any statement,
report, or record filed or kept pursuant to the provisions of this Code
knowing such statement, report or record to be false in any material
respect.

Garnishment/Attachment
Cases
Special Steel Corp. v Villareal, 434 SCRA 19 (2004)
Indeed, petitioner has no legal authority to withhold respondents 13
th

month pay and other benefits. What an employee has worked for, his
employer must pay. Thus, an employer cannot simply refuse to pay the
wages or benefits of its employee because he has either defaulted in
paying a loan guaranteed by his employer; or violated their
memorandum of agreement; or failed to render an accounting of his
employers property.

Pacific Customs Brokerage Inc v Inter-Island Dockmen and
Labor Union, 89 Phil. 722 (1951)
"Laborers' wages shall not to execution or attachment, except for debts
incurred for food, shelter, clothing and medical attendance". Petitioner
does not dispute that the money garnished is intended to pay the wages
of the members of the labor union. There is nothing to show that such
money was garnished or attached for debts incurred for food, shelter,
clothing and medical attendance. The writ of garnishment issued by the
court, while it purports to include all moneys and properties belonging to
the employing company, cannot, in any manner, touch or affect what
said company has in its possession to pay the wages of its laborers
pursuant to its contract with them or their labor union without
contravening the letter and spirit of said article 1708. When, therefore,
the Court of First Instance of Manila issued the oft-mentioned writ of
garnishment to be levied upon all moneys and properties of the
employing company, its scope and effect could not have been extended
to include the money intended to pay the wages of the members of the
respondent labor union. It is our considered opinion that the respondent
court correctly interpreted the law on the matter.

Gaa v CA, 140 SCRA 304 (1985)
It is beyond dispute that petitioner is not an ordinary or rank and file
laborer but "a responsibly place employee," of El Grande Hotel,
"responsible for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure

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the cleanliness, maintenance and orderliness of all guest rooms,
function rooms, public areas, and the surroundings of the hotel.
Considering the importance of petitioner's function in El Grande Hotel, it
is undeniable that petitioner is occupying a position equivalent to that of
a managerial or supervisory position.

In its broadest sense, the word "laborer" includes everyone who
performs any kind of mental or physical labor, but as commonly and
customarily used and understood, it only applies to one engaged in
some form of manual or physical labor. That is the sense in which the
courts generally apply the term as applied in exemption acts, since
persons of that class usually look to the reward of a day's labor for
immediate or present support and so are more in need of the exemption
than are other.

We do not think that the legislature intended the exemption in Article
1708 of the New Civil Code to operate in favor of any but those who are
laboring men or women in the sense that their work is manual. Persons
belonging to this class usually look to the reward of a day's labor for
immediate or present support, and such persons are more in need of the
exemption than any others. Petitioner Rosario A. Gaa is definitely not
within that class.

Record Keeping
Cases
South Motorist Enterprises v Tosoc, 181 SCRA 386 (1990)
It failed to present employment records giving as an excuse that they
were sent to the main office in Manila, in violation of Section 11 of Rule
X, Book II of the Omnibus Rules Implementing the Labor Code providing
that:
All employment records of the employees of the employer shall be
kept and maintained in or about the premises of the workplace. The
premises of a workplace shall be understood to mean the main or
branch office or establishment, if any, depending upon where the
employees are regularly assigned. The keeping of the employee's
records in another place is prohibited.

D. OTHER FORMS OF RENUMERATION
9.12 Service Charges
SEC. 96: All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent
(85%) for all covered employees and fifteen percent (15%) for
management. The share of the employees shall be equally distributed
among them. In case the service charge is abolished, the share of the
covered employees shall be considered integrated in their wages.

85% = all covered employees (equally distributed among EEs)
15% = management

BOOK III, RULE VI, OMNIBUS RULES
SECTION 1. Coverage. This rule shall apply only to establishments
collecting service charges such as hotels, restaurants, lodging houses,
night clubs, cocktail lounge, massage clinics, bars, casinos and gambling
houses, and similar enterprises, including those entities operating
primarily as private subsidiaries of the Government.

SECTION 2. Employees covered. This rule shall apply to all employees
of covered employers, regardless of their positions, designations or
employment status, and irrespective of the method by which their
wages are paid except to managerial employees.

As used herein, a "managerial employee" shall mean one who is vested
with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign, or discipline employees or to effectively recommend such
managerial actions. All employees not falling within this definition shall
be considered rank-and-file employees.

SECTION 3. Distribution of service charges. All service charges
collected by covered employers shall be distributed at the rate of 85%
for the employees and 15% for the management. The 85% shall be
distributed equally among the covered employees. The 15% shall be for
the disposition by management to answer for losses and breakages and
distribution to managerial employees at the discretion of the
management in the latter case.

SECTION 4. Frequency of distribution. The shares referred to herein
shall be distributed and paid to the employees not less than once every
two (2) weeks or twice a month at intervals not exceeding sixteen (16)
days.

SECTION 5. Integration of service charges. In case the service
charges is abolished the share of covered employees shall be considered
integrated in their wages. The basis of the amount to be integrated shall
be the average monthly share of each employee for the past twelve (12)
months immediately preceding the abolition of withdrawal of such
charges.

SECTION 6. Relation to agreements. Nothing in this Rule shall
prevent the employer and his employees from entering into any
agreement with terms more favorable to the employees than those
provided herein, or be used to diminish any benefit granted to the
employees under existing laws, agreement and voluntary employer
practice.

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SECTION 7. This rule shall be without prejudice to existing, future
collective bargaining agreements.

Nothing in this rule shall be construed to justify the reduction or
diminution of any benefit being enjoyed by any employee at the time of
effectivity of this rule.

Service Charges
Cases
Maranaw Hotels etc. v NLRC, 303 SCRA 540 (1999)
Service charges collected during the period of his preventive suspension
forms part of his earnings; the employee is entitled not only to full
backwages but also to other benefits, including his just share in the
service charges, to be computed from the start of his preventive
suspension until his reinstatement.

Tips
Cases
Ace Navigation Co., Inc. v CA, 338 SCRA 70 (2000)
Tips denote a voluntary act, however, it has been said that a tip lacked
the essential element of a giftthe free bestowing of a gratuity without
consideration, and that despite its apparent voluntariness, there is an
element of compulsion in tipping.

Value depends on the giver, and it is given in addition to the
compensation given by the employerit cannot be demanded.

9.13 Thirteenth Month Pay (PD 851)
Section 1. Payment of 13-month Pay All employers covered by
Presidential Decree No. 851, hereinafter referred to as the "Decree",
shall pay to all their employees receiving a basic salary of not more than
P1,000 a month a thirteenth-month pay not later than December 24 of
every year.
Section 2. Definition of certain terms As used in this issuance.
(a) "Thirteenth-moth pay" shall mean one twelfth (1/12) of the basic
salary of an employee within a calendar year;

(b) "Basic salary" shall include all remunerations or earnings paid by an
employer to an employee for services rendered but may not include
cost-of-living allowances granted pursuant to Presidential Decree No.
525 or Letter of Instructions No. 174, profit-sharing payments, and all
allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary of the employee at the
time of the promulgation of the Decree on December 16, 1975.

Section 3. Employers covered The Decree shall apply to all employers
except to:
(a) Distressed employers, such as (1) those which are currently
incurring substantial losses or (2) in the case of non-profit institutions
and organizations, where their income, whether from donations,
contributions, grants and other earnings from any source, has
consistently declined by more than forty (40%) percent of their normal
income for the last two (2) years, subject to the provision of Section 7
of this issuance;

(b) The Government and any of its political subdivisions, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
Government;

(c) Employers already paying their employees 13-month pay or more in
a calendar year of its equivalent at the time of this issuance;

(d) Employers of household helpers and persons in the personal service
of another in relation to such workers; and

(e) Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which
case the employer shall be covered by this issuance insofar as such
workers are concerned.

As used herein, workers paid on piece-rate basis shall refer to 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.

The term "its equivalent" as used in paragraph c) hereof shall include
Christmas bonus, mid-year bonus, profit-sharing payments and other
cash bonuses amounting to not less than 1/12th of the basic salary but
shall not include cash and stock dividends, cost of living allowances and
all other allowances regularly enjoyed by the employee, as well as non-
monetary benefits. Where an employer pays less than 1/12th of the
employees basic salary, the employer shall pay the difference.

Section 4. Employees covered Except as provided in Section 3 of this
issuance, all employees of covered employers shall be entitled to benefit
provided under the Decree who are receiving not more than P1,000 a
month, regardless of their position, designation or employment status,
and irrespective of the method by which their wages are paid, provided
that they have worked for at least one month during the calendar year.

Section 5. Option of covered employers A covered employer may pay

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one-half of the 13th-month pay required by the Decree before the
opening of the regular school year and the other half on or before the
24th day of December of every year.

In any establishment where a union has been recognized or certified as
the collective bargaining agent of the employees therein, the periodicity
or frequency of payment of the 13th month pay may be the subject of
agreement.

Nothing herein shall prevent employers from giving the benefits
provided in the Decree to their employees who are receiving more than
One Thousand (P1,000) Pesos a month or benefits higher than those
provided by the Decree.

Section 6. Special feature of benefit The benefits granted under this
issuance shall not be credited as part of the regular wage of the
employees for purposes of determining overtime and premium pay,
fringe benefits, as well as premium contributions to the State Insurance
Fund, social security, medicare and private welfare and retirement
plans.

Section 7. Exemption of Distressed employers Distressed employers
shall qualify for exemption from the requirement of the Decree upon
prior authorization by the Secretary of Labor. Petitions for exemptions
may be filed within the nearest regional office having jurisdiction over
the employer not later than January 15, 1976. The regional offices shall
transmit the petitions to the Secretary of Labor within 24 hours from
receipt thereof.

Section 8. Report of compliance Every covered employer shall make a
report of his compliance with the Decree to the nearest regional labor
office not later than January 15 of each year.

Coverage
GENERAL RULE: All employers are required to pay all their rank and
file employees a 13
th
month pay not later than December 24 of every
year, provided that they have worked for at least 1 month during the
calendar year.

EXEMPTED EMPLOYERS:
1. Government and any of its political subdivisions, including GOCCs,
except those corporations operating essentially as private
subsidiaries of the Government
2. Employers already paying their employees 13
th
month pay or more
in a calendar year or its equivalent at the time of this issuance
3. Employers of household helpers and persons in the personal service
of another relation to such workers
4. Employers who are paid on purely commission, boundary or task
basis and those who are paid a fixed amount for performing specific
work, except where the workers are paid on piece-rate basis in
which case the employer shall grant the required 13
th
month pay to
such workers

Minimum Amount = NOT less than 1/12 of the total basic salary earned
by an employee within a calendar year for the year 1987

Computation of the 13
th
month pay shall include the cost of living
allowance (COLA) integrated into the basic salary of a covered employee
pursuant to EO 178.

Cases
Petroleum Shipping Ltd. v NLRC, 491 SCRA 35 (2006)
PD 851 contemplates the situation of land-based workers, and not of
seafarers who generally earn more than domestic land-based workers.

Tanchicos employment is governed by his Contract of Enlistment
("Contract"). The Contract has been approved by the POEA in
accordance with Title I, Book One of the Labor Code and the POEA Rules
Governing Employment.

The coverage of the Contract includes
Compensation, Overtime, Sundays and Holidays, Vacations, Living
Allowance, Sickness, Injury and Death, Transportation and Travel
Expense, Subsistence and Living Quarters. It does not provide for the
payment of 13th month pay. The Contract of Employment, which is the
standard employment contract of the POEA, likewise does not provide
for the payment of 13th month pay.

In Coyoca v. NLRC which involves a claim for separation pay, this
Court held:
Furthermore, petitioners contract did not provide for separation
benefits. In this connection, it is important to note that neither does
POEA standard employment contract for Filipino seamen provide for
such benefits.

As a Filipino seaman, petitioner is governed by the Rules and
Regulations Governing Overseas Employment and the said Rules do not
provide for separation or termination pay. x x x

Hence, in the absence of any provision in his Contract governing the
payment of 13th month pay, Tanchico is not entitled to the benefit.

King of Kings Transport Inc v Mamac, 526 SCRA 116 (2007)
It was erroneous for the CA to apply the case of Philippine Agricultural
Commercial and Industrial Workers Union. Notably in the said case, it
was established that the drivers and conductors praying for 13th- month

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pay were not paid purely on commission. Instead, they were receiving
a commission in addition to a fixed or guaranteed wage or salary.
Thus, the Court held that bus drivers and conductors who are paid a
fixed or guaranteed minimum wage in case their commission be less
than the statutory minimum, and commissions only in case where they
are over and above the statutory minimum, are entitled to a 13th-
month pay equivalent to one-twelfth of their total earnings during the
calendar year.

On the other hand, in his Complaint, respondent admitted that he was
paid on commission only. Moreover, this fact is supported by his pay
slips, which indicated the varying amount of commissions he was
receiving each trip. Thus, he was excluded from receiving the 13th-
month pay benefit.

Ultra Villa Food Haus v Geniston, 309 SCRA 17 (1999)
Employing the same line of analysis, it would seem that private
respondent is not entitled to13 month pay. The Revised Guidelines on
the Implementation of the 13th Month Pay Law also excludes employers
of household helpers from the coverage of Presidential Decree No. 851,
thus:
2. Exempted Employers: The following employers are still not
covered by P.D. No. 851:
a. x x x;
b. Employers of household helpers x x x;
c. x x x,
d. x x x.

Nevertheless, we deem it just to award private respondent 13th month
pay in view of petitioners practice of according private respondent such
benefit. Indeed, petitioner admitted that she gave private respondent
13th month pay every December.

Manner of Wage Payment
Paid NOT later than December 24 of each year
EXCEPT: Employer may give # of the required 13
th
month pay
before the opening of the regular school year and the other half on
or before the 24
th
of December every year
The frequency of the payment of this monetary benefit may be the
subject of agreement between the employer and the recognized CBA
of the employees

Cases
Jackson Building etc v NLRC, 246 SCRA 329 (1995)
Employees are entitled to the 13
th
month pay regardless of their
designation and irrespective of the method by which their wages are
paid.
Wage Difference
Cases
JPL Marketing Promotions v CA, 463 SCRA 136 (2005)
Difference between minimum wage and the actually salary received by
the employee cannot be deemed as his 13
th
month pay as such
difference is NOT equivalent to or of the same import as the said benefit
contemplated by law.

Househelpers
Cases
Ultra Villa Food House v Geniston, 309 SCRA 17 (1999)
The Revised Guidelines on the Implementation of the 13
th
Month Pay
Law also excludes employers of household helpers from the coverage of
PD851. Nevertheless, it would be just to award private respondent 13
th

month pay in view of the petitioners practice of according private
respondent such benefit. Indeed, petitioner admitted that she gave
private respondent 13
th
month pay every December.

Government Employees
Cases
Alliance of Government Workers v NLRC, 124 SCRA 1 (1995)
An analysis of the whereases of PD851 shows that the President had in
mind only workers in private employment when he issued the decree.
There was no intention to cover persons working in the government
service.

Terminated Employees
Cases
Achilles Manufacturing Corp v NLRC, 244 SCRA 750 (1995)
The payment of the 13
th
month pay may be demanded by the employee
upon the cessation of the employer-employee relationship. This is
consistent with the principle of equity that as the employer can require
the employee to clear himself of all liabilities and property
accountability, so can the employee demand the payment of all benefits
due him upon the termination of the relationship.

RATIONALEPD 851WHEREAS CLAUSES AND LIMITATIONS
It is necessary to further protect the level of real wages from the
ravage of the world-wide inflation
There has been no increase in the legal minimum wage rate since
1970
The Christmas season is an opportune time for society to show its
concern for the plight of the working masses so they may properly
celebrate Christmas and New Year.


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Basic Wage/Commissions
Includes all remunerations or earnings paid by the employer for the
services rendered
Does NOT include allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary, such
as the cash equivalent of:
o Unused vacation and sick leave credits
o Overtime
o Premium
o Night Differential
o Holiday Pay
o COLA
Salary-related benefits included IF by individual or collective
agreement, company practice or policy, the same are treated as
part of the basic salary of the employees

Cases
Honda Phil. Inc v Samahan ng Malayang Manggagawa sa Honda,
460 SCRA 186 (2005)
# of standard monthly wage x length of service = basic salary
Iran v NLRC, 289 SCRA 433 (1998)
Commissions are considered part of wages. While commissions are,
indeed, incentives or forms of encouragement to inspire employees to
put a little more industry on the jobs particularly assigned to them, still
these commissions are direct remunerations for services rendered.

Phil. Duplicators Inc. v NLRC, 241 SCRA 380 (1995)
The sales commissions received for every duplicating machine sold is
constituted part of the basic compensation or remuneration of the
salesmen of Phil. Duplicators for doing their job. The portion of the
salary structure representing commissions simply comprised an
automatic increment to the monetary value initially assigned to each
unit of work rendered by a salesman.
The sales commissions were an integral part of the basic salary
structure of Phil. Duplicators employees salesmen. These commissions
are not overtime payments, nor profit-sharing payments nor any other
fringe benefit. Thus, the salesmens commissions, comprising a pre-
determined percent of the selling price of the goods sold by each
salesman, were properly included in the term basic salary for purposes
of computing their 13
th
month pay.

Boie Takeda v Dela Serna, 228 SCRA 329 (1993)
In remunerative schemes consisting of a fixed or guaranteed wage plus
commission, the fixed or guaranteed wage is patently the basic salary
for this is what the employee receives for a standard work period.
Commissions are given for extra efforts exerted in consummating sales
or other related transactions. They are, as such, additional pay which
this Court has made clear do not form part of the basic salary.

Substitute Payment
Cases
Framanlis Farms, Inc v MOLE, 171 SCRA 87 (1989)
Under Sec. 3 of PD 851, such benefits in the form of food or free
electricity, assuming they were given, were NOT a proper substitute for
the 13
th
month pay required by law. Neither may year-end reward of
loyalty and service be considered in lieu of 13
th
month pay.

14
th
Month Pay
Cases
Kamaya Port Hotel v NLRC, 177 SCRA 160 (1989)
There is no law that mandates the payment of 14
th
month pay. This is
emphasized in the grant of exemptions under PD851, which states that
Employers already paying their employees a 13
th
month pay or its
equivalent are not covered by this Decree. Necessarily then, only 13
th

month pay is mandated.

Diminution
Cases
Davao Fruits Corp. v Associated Labor Unions, 225 SCRA 562
(1993)
A company practice favorable to the employees had indeed been
established and the payments made pursuant thereto, ripened into
benefits enjoyed by them. And any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued
or eliminated by the employer, by virtue of Section 10 of the Rules and
Regulations Implementing P.D. No. 851, and Article 100 of the labor of
the Philippines, which prohibit the diminution or elimination by the
employer of the employees' existing benefits (Tiangco v. Leogardo, Jr.,
122 SCRA 267, [1983]).

9.14 Bonus
Management Function
Cases
Business Information Systems and Services Inc v NLRC, 221
SCRA 9 (1993)
The grant of a bonus is a prerogative, NOT an obligation, of the
employer. The matter of giving a bonus over and above the workers
lawful salaries and allowances is entirely dependent on the financial
capability of the employer to give it.

Asian Transmission Corp v CA, 425 SCRA 478 (2004)
As reflected above, Art. 94 of the Labor Code, as amended, affords a
worker the enjoyment of ten paid regular holidays. The provision is

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mandatory, regardless of whether an employee is paid on a monthly or
daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law. Since a
worker is entitled to the enjoyment of ten paid regular holidays, the fact
that two holidays fall on the same date should not operate to reduce to
nine the ten holiday pay benefits a worker is entitled to receive.

NatureBonusWhen Demandable
When part of the salary or wage
When there is a contractual agreement promising to pay such
When it is established company practice

Cases
American Wire and Cable Daily Rated Employees Union v
American Wire and Cable Co., Inc, 457 SCRA 684 (2005)
For a bonus to be enforceable, it must have been promised by the
employer and expressly agreed upon by the parties, or it must have had
a fixed amount and had been a long and regular practice on the part of
the employer.

Luzon Stevedoring Corp v CIR, 15 SCRA 660 (1965)
Bonus becomes demandable so when it is made a part of the wage or
salary or compensation. In such a case, the latter would be a fixed
amount and the former would be a contingent one dependent upon the
realization of profits. If there be none, there would be no bonus.

Liberators Steamship Co Inc v CIR, 23 SCRA 1105 (1968)
While normally discretionary, the grant of a gratuity or bonus, by reason
of its long and regular concession, may become regarded as part of
regular compensation (Philippine Education Co., Inc. vs. C.I.R., 92 Phil.
382, 385, and cases cited therein).

Marcos v NLRC, 248 SCRA 146 (1995)
If one enters into a contract of employment under an agreement that he
shall be paid a certain salary by the week or some other stated period
and, in addition, a bonus, in case he serves for a specified length of
time, there is no reason for refusing to enforce the promise to pay the
bonus, if the employee has served during the stipulated time, on the
ground that it was a promise of a mere gratuity.

Phil. National Construction Corp v NLRC, 307 SCRA 218 (1999)
Likewise, private respondents are not entitled to the mid-year bonus
they are claiming. We do 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.

Producers Bank of the Phils v NLRC, 355 SCRA 489 (2001)
A bonus is an amount granted and paid to an employee for his industry
and loyalty which contributed to the success of the employer's business
and made possible the realization of profits. It is an act of generosity
granted by an enlightened employer to spur the employee to greater
efforts for the success of the business and realization of bigger profits.

The granting of a bonus is a management prerogative, something given
in addition to what is ordinarily received by or strictly due the recipient.
Thus, a bonus is not a demandable and enforceable obligation,

except
when it is made part of the wage, salary or compensation of the
employee.

However, an employer cannot be forced to distribute bonuses which it
can no longer afford to pay. To hold otherwise would be to penalize the
employer for his past generosity.

Philippine Duplicators Inc v NLRC, 241 SCRA 380 (1995)
If an employer cannot be compelled to pay a productivity bonus to his
employees, it should follow that such productivity bonus, when given,
should not be deemed to fall within the "basic salary" of employees
when the time comes to compute their 13th month pay.

We recognize that both productivity bonuses and sales commissions
may have an incentive effect. But there is reason to distinguish one
from the other here. Productivity bonuses are generally tied to the
productivity or profit generation of the employer corporation.
Productivity bonuses are not directly dependent on the extent an
individual employee exerts himself. A productivity bonus is something
extra for which no specific additional services are rendered by any
particular employee and hence not legally demandable, absent a
contractual undertaking to pay it. Sales commissions, on the other
hand, such as those paid in Duplicators, are intimately related to or
directly proportional to the extent or energy of an employee's
endeavors. Commissions are paid upon the specific results achieved by
a salesman-employee. It is a percentage of the sales closed by a
salesman and operates as an integral part of such salesman's basic pay.

Manila Electric Co. v Quisumbing, 302 SCRA 173 (1999)
A bonus may be considered demandable based on equitable
considerations as when the giving of such bonus has been the
companys long and regular practice. To be considered a regular
practice, the giving of the bonus should have been done over a long
period of time, and must be shown to have been consistent and
deliberate.

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Phil. Appliance Corp v CA, 430 SCRA 525 (2004)
Furthermore, we have consistently ruled that a bonus is not a
demandable and enforceable obligation. True, it may nevertheless be
granted on equitable considerations as when the giving of such bonus
has been the companys long and regular practice. To be considered a
"regular practice," however, the giving of the bonus should have been
done over a long period of time, and must be shown to have been
consistent and deliberate. The test or rationale of this rule on long
practice requires an indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that said employees are
not covered by the law requiring payment thereof. Respondent does not
contest the fact that petitioner initially offered a signing bonus only
during the previous CBA negotiation. Previous to that, there is no
evidence on record that petitioner ever offered the same or that the
parties included a signing bonus among the items to be resolved in the
CBA negotiation. Hence, the giving of such bonus cannot be deemed as
an established practice considering that the same was given only once,
that is, during the 1997 CBA negotiation.

9.15 Productivity Incentives Act of 1990 (RA 6971)
Section 2. Declaration of Policy. - It is the declared policy of the
State to encourage higher levels of productivity, maintain industrial
peace and harmony and promote the principle of shared responsibility in
the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of
business enterprises to reasonable returns on investments and to
expansion and growth, and accordingly to provide corresponding
incentives to both labor and capital for undertaking voluntary programs
to ensure greater sharing by the workers in the fruits of their labor.

Section 3. Coverage. - This Act shall apply to all business enterprises
with or without existing and duly recognized or certified labor
organizations, including government-owned and controlled corporations
performing proprietary functions. It shall cover all employees and
workers including casual, regular, supervisory and managerial
employees.

Section 4. Definition of Terms. - As used in this Act:
a) "Business Enterprise" refers to industrial, agricultural, or agro-
industrial establishments engaged in the production manufacturing,
processing, repacking, or assembly of goods, including service-oriented
enterprises, duly certified as such by appropriate government agencies.

b) "Labor-Management Committee" refers to a negotiating body in a
business enterprise composed of the representatives of labor and
management created to establish a productivity incentives program, and
to settle disputes arising therefrom in accordance with Section 9 hereof.
c) "Productivity Incentives Program" refers to a formal agreement
established by the labor-management committee containing a process
that will promote gainful employment, improve working conditions and
result in increased productivity, including cost savings, whereby the
employees are granted salary bonuses proportionate to increases in
current productivity over the average for the preceding three (3)
consecutive years. The agreement shall be ratified by at least a majority
of the employees who have rendered at least six (6) months of
continuous service.

Section 5. Labor-Management Committee. - a) A business
enterprise or its employees, through their authorized representatives,
may initiate the formation of a labor-management committee that shall
be composed of an equal number of representatives from the
management and from the rank-and-file employees: Provided, That
both management and labor shall have equal voting rights: Provided,
further, That at the request of any party to the negotiation, the National
Wages and Productivity Commission of the Department of Labor and
Employment shall provide the necessary studies, technical information
and assistance, and expert advice to enable the parties to conclude
productivity agreements.

b) In business enterprises with duly recognized or certified labor
organizations, the representatives of labor shall be those designated by
the collective bargaining agent(s) of the bargaining unit(s).

c) In business enterprises without duly recognized or certified labor
organizations, the representatives of labor shall be elected by at least a
majority of all rank-and-file employees who have rendered at least six
(6) months of continuous service.

Section 6. Productivity Incentives Program. -
a) The productivity incentives program shall contain provisions for the
manner of sharing and the factors in determining productivity bonuses:
Provided, That the productivity bonuses granted to labor under this
program shall not be less than half of the percentage increase in the
productivity of the business enterprise.

b) Productivity agreements reached by the parties as provided in this
Act supplement existing collective bargaining agreements.

c) If, during the existence of the productivity incentives program or
agreement, the employees will join or form a union, such program or
agreement may, in addition to the terms and conditions agreed upon by
labor and management, be integrated in the collective bargaining
agreement that may be entered into between them.


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Section 7. Benefits and Tax Incentives. - (a) Subject to the
provisions of Section 6 hereof, a business enterprise which adopts a
productivity incentives program, duly and mutually agreed upon by
parties to the labor-management committee, shall be granted a special
deduction from gross income equivalent to fifty percent (50%) of the
total productivity bonuses given to employees under the program over
and above the total allowable ordinary and necessary business
deductions for said bonuses under the National Internal Revenue Code,
as amended.

b) Grants for manpower training and special studies given to rank-and-
file employees pursuant to a program prepared by the labor-
management committee for the development of skills identified as
necessary by the appropriate government agencies shall also entitle the
business enterprise to a special deduction from gross income equivalent
to fifty per cent (50%) of the total grants over and above the allowable
ordinary and necessary business deductions for said grants under the
National Internal Revenue Code, as amended.

c) Any strike or lockout arising from any violation of the productivity
incentives program shall suspend the effectivity thereof pending
settlement of such strike or lockout: Provided, That the business
enterprise shall not be deemed to have forfeited any tax incentives
accrued prior to the date of occurrence of such strike or lockout, and the
workers shall not be required to reimburse the productivity bonuses
already granted to them under the productivity incentives program.
Likewise, bonuses which have already accrued before the strike or
lockout shall be paid the workers within six (6) months from their
accrual.

d) Bonuses provided for under the productivity incentives program shall
be given to the employees not later than every six (6) months from the
start of such program over and above existing bonuses granted by the
business enterprise and by law: Provided, That the said bonuses shall
not be deemed as salary increases due the employees and workers.

e) The special deductions from gross income provided for herein shall be
allowed starting the next taxable year after the effectivity of this Act.

Section 8. Notification. - A business enterprise which adopts a
productivity incentives program shall submit copies of the same to the
National Wages and Productivity Commission and to the Bureau of
Internal Revenue for their information and record.

Section 9. Disputes and Grievances. - Whenever disputes,
grievances, or other matters arise from the interpretation or
implementation of the productivity incentives program, the labor-
management committee shall meet to resolve the dispute, and may
seek the assistance of the National Conciliation and Mediation Board of
the Department of Labor and Employment for such purpose. Any dispute
which remains unresolved within twenty (20) days from the time of its
submission to the labor-management committee shall be submitted for
voluntary arbitration in line with the pertinent of the Labor Code, as
amended.

The productivity incentives program shall include the name(s) of the
voluntary arbitrator or panel of voluntary arbitrators previously chosen
and agreed upon by the labor-management committee.

Section 10. Rule Making Power. - The Secretary of Labor and
Employment and the Secretary of Finance, after due notice and hearing,
shall jointly promulgate and issue within six (6) months from the
effectivity of this Act such rules and regulations as are necessary to
carry out the provisions hereof.

Section 11. Penalty. - Any person who shall make any fraudulent
claim under this Act, regardless of whether or not a tax benefit has been
granted, shall upon conviction be punished with imprisonment of not
less than six (6) months but not more than one (1) year or a fine of not
less than two thousand pesos (P2,000.00) but not more than six
thousand pesos (P6,000.00), or both, at the discretion of the Court,
without prejudice to prosecution for any other acts punishable under
existing laws.

In case of partnerships or corporations, the penalty shall be imposed
upon the officer(s) or employee(s) who knowingly approved, authorized
or ratified the filing of the fraudulent claim, and other persons
responsible therefor.

Section 12. Non-Diminution of Benefits. - Nothing in this Act shall
be construed to diminish or reduced any benefits and other privileges
enjoyed by the workers under existing laws, decrees, executive orders,
company policy or practice, or any agreement or contract between the
employer and employees.

E. WAGE RECOVERY, LIABILITIES AND WORKER PREFERENCE

9.16 Liability of Employer and Other Parties
Employer, Independent Contractor and Subcontractor and Labor Only
Contracting
SEC. 106: Whenever an employer enters into a contract with another
person for the performance of the formers work, the employees of the
contractor and of the latter subcontractor, if any, shall be paid in
accordance with the provisions of this Code.

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In the event that the contractor or subcontractor fails to pay the wages
of his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly
employed by him.

The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to protect
the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these
types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code.

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, machineries, work premises, among others, and
the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly
employed by him.

SEC. 107: The provisions of the immediately preceding article shall
likewise apply to any person, partnership, association or corporation
which, not being an employer, contracts with an independent contractor
for the performance of any work, task, job or project.

SEC. 108: An employer or indirect employer may require the contractor
or subcontractor to furnish a bond equal to the cost of labor under
contract, on condition that the bond will answer for the wages due the
employees should the contractor or subcontractor, as the case may be,
fail to pay the same.

SEC. 109: The provisions of existing laws to the contrary
provision of this Code. For purposes of determining the extent of their
civil liability under this Chapter, they shall be considered as direct
employers.

Liabilities
Cases
Lapanday Agricultura Development Corp v CA, 324 SCRA 39
(2000)
The joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance with the provisions
therein including the minimum wage. The contractor is made liable by
virtue of his status as direct employer. The principal, on the other hand,
is made the indirect employer of the contractors employees to secure
payment of their wages should the contractor be unable to pay them.
Even in the absence of an ER-EE relationship, the law itself establishes
one between the principal and the employees of the agency for a limited
purpose (i.e. in order to ensure that the employees are paid the wages
due them). In the above-mentioned cases, the solidary liability of the
principal and the contractor was held to apply to the aforementioned
Wage Orders No. 5 and 6.

Sentinel Security Agency Inc v NLRC, 298 SCRA 562 (1998)
Under these provisions, the indirect employer, who is the Client in the
case at bar, is jointly and severally liable with the contractor for the
workers wages, in the same manner and extent that it is liable to its
direct employees. This liability of the Client covers the payment of the
service incentive leave pay of the complainants during the time they
were posted at the Cebu branch of the Client. As service had been
rendered, the liability accrued, even if the complainants were eventually
transferred or reassigned.

OSM Shipping Phils. Inc v NLRC, 398 SCRA 606 (2003)
Petitioner, as manning agent, is jointly and severally liable with its
principal, PC-SASCO, for private respondent's claim. This conclusion is in
accordance with Section 1 of Rule II of the POEA Rules and Regulations.
Joint and solidary liability is meant to assure aggrieved workers of
immediate and sufficient payment of what is due them. The fact that
petitioner and its principal have already terminated their agency
agreement does not relieve the former of its liability. The reason for this
ruling was given by this Court in Catan v. National Labor Relations
Commission, which we reproduce in part as follows:

"This must be so, because the obligations covenanted in the
[manning] agreement between the local agent and its foreign
principal are not coterminus with the term of such agreement so
that if either or both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted employees
under the agreement do not at all end, but the same extends up to
and until the expiration of the employment contracts of the
employees recruited and employed pursuant to the said recruitment
agreement. Otherwise, this will render nugatory the very purpose

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for which the law governing the employment of workers for foreign
jobs abroad was enacted.

Manila Electric Co. v Benamira, 463 SCRA 331 (2005)
The fact that there is no actual and direct employer-employee
relationship between MERALCO and the individual respondents does not
exonerate MERALCO from liability as to the monetary claims of the
individual respondents. When MERALCO contracted for security services
with ASDAI as the security agency that hired individual respondents to
work as guards for it, MERALCO became an indirect employer of
individual respondents pursuant to Article 107 of the Labor Code, which
reads:
ART. 107. Indirect employer - The provisions of the
immediately preceding Article shall likewise apply to
any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project.

When ASDAI as contractor failed to pay the individual respondents,
MERALCO as principal becomes jointly and severally liable for the
individual respondents wages, under Articles 106 and 109 of the Labor
Code, which provide:

ART. 106. Contractor or subcontractor. - Whenever an
employer enters into a contract with another person for
the performance of the former[s] work, the employees
of the contractor and of the latter[s] subcontractor, if
any, shall be paid in accordance with the provisions of
this Code.

In the event that the contractor or subcontractor fails
to pay the wages of his employees in accordance with
this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such
employees to the extent of the work performed under
the contract, in the same manner and extent that he is
liable to employees directly employed by him. xxx

ART. 109. Solidary liability - The provisions of existing
laws to the contrary notwithstanding, every employer
or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any
provision of this Code. For purpose of determining the
extent of their civil liability under this Chapter, they
shall be considered as direct employers.

ASDAI is held liable by virtue of its status as direct employer, while
MERALCO is deemed the indirect employer of the individual respondents
for the purpose of paying their wages in the event of failure of ASDAI to
pay them. This statutory scheme gives the workers the ample
protection consonant with labor and social justice provisions of the 1987
Constitution.

9.17 Worker PreferenceBankruptcy
ART. 110: In the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards their unpaid
wages and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be paid
in full before the claims of the Government and other creditors may be
paid.

ART. 1707, NCC: The laborer's wages shall be a lien on the goods
manufactured or the work done.

ART. 2241, NCC: With reference to specific movable property of the
debtor, the following claims or liens shall be preferred:
(6) Claims for laborers' wages, on the goods manufactured or the work
done;

ART. 2242, NCC: With reference to specific immovable property and
real rights of the debtor, the following claims, mortgages and liens shall
be preferred, and shall constitute an encumbrance on the immovable or
real right:

(3) Claims of laborers, masons, mechanics and other workmen, as well
as of architects, engineers and contractors, engaged in the construction,
reconstruction or repair of buildings, canals or other works, upon said
buildings, canals or other works;

ART. 2244, NCC: With reference to other property, real and personal,
of the debtor, the following claims or credits shall be preferred in the
order named:

(4) Compensation due the laborers or their dependents under laws
providing for indemnity for damages in cases of labor accident, or illness
resulting from the nature of the employment;

Civil CodeLabor Code
Cases
Phil. Export etc v CA, 251 SCRA 354 (1995)
A final observation. On 21 March 1989, Article 110 of the Labor Code
was amended by Republic Act No. 6715 so as to read:

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Art. 110. Worker preference in case of bankruptcy. In the event
of bankruptcy or liquidation of an employer's business, his workers
shall enjoy first preference as regards their wages and other
monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be
paid in full before claims of the Government and other creditors may
be paid.

Since then, the Court has had a number of occasions to rule on the
effects of the amendment. In Development Bank of the Philippines vs.
National Labor Relations Commission (183 SCRA 328, 336-339), the
Court has said:
The amendment expands worker preference to cover not only
unpaid wages but also other monetary claims to which even claims
of the Government must be deemed subordinate.
xxx xxx xxx
Notably, the terms "declaration" of bankruptcy or "judicial"
liquidation have been eliminated. Does this mean then that
liquidation proceedings have been done away with?

We opine in the negative, upon the following considerations:
1. Because of its impact on the entire system of credit, Article 110 of
the Labor Code cannot be viewed in isolation but must be read in
relation to the Civil Code scheme on classification and preference of
credits.
xxx xxx xxx
2. In the same way that the Civil Code provisions on classification of
credits and the Insolvency Law have been brought into harmony, so also
must the kindred provisions of the Labor Law be made to harmonize
with those laws.
3. In the event of insolvency, a principal objective should be to effect an
equitable distribution of the insolvent's property among his creditors. To
accomplish this there must first be some proceeding where notice to all
of the insolvent's creditors may be given and where the claims of
preferred creditors may be bindingly adjudicated (De Barretto vs.
Villanueva, No. L-14938, December 29, 1962, 6 SCRA 928). The
rationale therefore has been expressed in the recent case of DBP vs.
Secretary of Labor (G.R. No. 79351, 28 November 1989), which we
quote:
xxx xxx xxx
4. A distinction should be made between a preference of credit and a
lien. A preference applies only to claims which do not attach to specific
properties. A lien creates a charge on a particular property. The right of
first preference as regards unpaid wages recognized by Article 110 does
not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in
application. It is a method adopted to determine and specify the order in
which credits should be paid in the final distribution of the proceeds of
the insolvent's assets. It is a right to a first preference in the discharge
of the funds of the judgment debtor.
xxx xxx xxx
6. Even if Article 110 and its implementing Rule, as amended, should be
interpreted to mean "absolute preference," the same should be given
only prospective effect in line with the cardinal rule that laws shall have
no retroactive effect, unless the contrary is provided (Article 4, Civil
Code). Thereby, any infringement on the constitutional guarantee on
non-impairment of the obligation of contracts (Section 10, Article III,
1987 Constitution) is also avoided. In point of fact, DBP's mortgage
credit antedated by several years the amendatory law, RA No. 6715. To
give Article 110 retroactive effect would be to wipe out the mortgage in
DBP's favor and expose it to a risk which it sought to protect itself
against by requiring a collateral in the form of real property.

In fine, the right to preference given to workers under Article 110 of the
Labor Code cannot exist in any effective way prior to the time of its
presentation in distribution proceedings. It will find application when, in
proceedings such as insolvency, such unpaid wages shall be paid in full
before the "claims of the Government and other creditors" may be paid.
But, for an orderly settlement of a debtor's assets, all creditors must be
convened, their claims ascertained and inventoried, and thereafter the
preferences determined in the course of judicial proceedings which have
for their object the subjection of the property of the debtor to the
payment of his debts or other lawful obligations. Thereby, an orderly
determination of preference of creditors' claims is assured (Philippine
Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA
476); the adjudication made will be binding on all parties-in-interest,
since those proceedings are proceedings in rem; and the legal scheme
of classification, concurrence and preference of credits in the Civil Code,
the Insolvency Law, and the Labor Code is preserved in harmony.

Barayoga v Asset Privatization Trust, 473 SCRA 690 (2005)
Thus, the right of employees to be paid benefits due them from the
properties of their employer cannot have any preference over the
latters mortgage credit. In other words, being a mortgage credit, APTs
lien on BISUDECOs mortgaged assets is a special preferred lien that
must be satisfied first before the claims of the workers.

Development Bank of the Philippines v. NLRC explained the rationale of
this ruling as follows:

x x x. A preference applies only to claims
which do not attach to specific properties. A lien
creates a charge on a particular property. The right of
first preference as regards unpaid wages recognized by

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Article 110 does not constitute a lien on the property of
the insolvent debtor in favor of workers. It is but a
preference of credit in their favor, a preference in
application. It is a method adopted to determine and
specify the order in which credits should be paid in the
final distribution of the proceeds of the insolvents
assets. It is a right to a first preference in the
discharge of the funds of the judgment debtor. x x x

Furthermore, workers claims for unpaid wages and monetary benefits
cannot be paid outside of a bankruptcy or judicial liquidation
proceedings against the employer. It is settled that the application of
Article 110 of the Labor Code is contingent upon the institution of those
proceedings, during which all creditors are convened, their claims
ascertained and inventoried, and their preferences determined. Assured
thereby is an orderly determination of the preference given to creditors
claims; and preserved in harmony is the legal scheme of classification,
concurrence and preference of credits in the Civil Code, the Insolvency
Law, and the Labor Code.

Republic v Peralta, 150 SCRA 37 (1987)
We believe and so hold that Article 110 of the Labor Code did not sweep
away the overriding preference accorded under the scheme of the Civil
Code to tax claims of the government or any subdivision thereof which
constitute a lien upon properties of the Insolvent. It is frequently said
that taxes are the very lifeblood of government. The effective collection
of taxes is a task of highest importance for the sovereign. It is critical
indeed for its own survival. It follows that language of a much higher
degree of specificity than that exhibited in Article 110 of the Labor Code
is necessary to set aside the intent and purpose of the legislator that
shines through the precisely crafted provisions of the Civil Code. It
cannot be assumed simpliciter that the legislative authority, by using in
Article 110 the words "first preference" and "any provision of law to the
contrary notwithstanding" intended to disrupt the elaborate and
symmetrical structure set up in the Civil Code. Neither can it be
assumed casually that Article 110 intended to subsume the sovereign
itself within the term "other creditors" in stating that "unpaid wages
shall be paid in full before other creditors may establish any claim to a
share in the assets of employer." Insistent considerations of public
policy prevent us from giving to "other creditors" a linguistically
unlimited scope that would embrace the universe of creditors save only
unpaid employees.
We, however, do not believe that Article 110 has had no impact at all
upon the provisions of the Civil Code. Bearing in mind the overriding
precedence given to taxes, duties and fees by the Civil Code and the
fact that the Labor Code does not impress any lien on the property of an
employer, the use of the phrase "first preference" in Article 110
indicates that what Article 110 intended to modify is the order of
preference found in Article 2244, which order relates, as we have seen,
to property of the Insolvent that is not burdened with the liens or
encumbrances created or recognized by Articles 2241 and 2242. We
have noted that Article 2244, number 2, establishes second priority for
claims for wages for services rendered by employees or laborers of the
Insolvent "for one year preceding the commencement of the
proceedings in insolvency." Article 110 of the Labor Code establishes
"first preference" for services rendered "during the period prior to the
bankruptcy or liquidation, " a period not limited to the year immediately
prior to the bankruptcy or liquidation. Thus, very substantial effect may
be given to the provisions of Article 110 without grievously distorting
the framework established in the Civil Code by holding, as we so hold,
that Article 110 of the Labor Code has modified Article 2244 of the Civil
Code in two respects: (a) firstly, by removing the one year limitation
found in Article 2244, number 2; and (b) secondly, by moving up claims
for unpaid wages of laborers or workers of the Insolvent from second
priority to first priority in the order of preference established I by Article
2244.
Receivership
Cases
Rubberworld (Phil.) Inc v NLRC, 336 SCRA 433 (2000)
The law (PD902-A) is clearupon 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. Allowing labor cases to proceed
clearly defeats the purpose of the automatic stays and severally
encumbers the management committees and resources.

9.18 Wage Recovery and Attorneys Fees
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 employers 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 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

NIKKI HIPOLITO
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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. (As amended by Republic Act No. 7730, June
2, 1994).

An order issued by the duly authorized 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 Republic
Act No. 7730, June 2, 1994).

(c) The Secretary of Labor and Employment 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 and Employment 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.

(f) The Secretary of Labor and Employment 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 does
not exceed Five thousand pesos (P5,000.00). 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 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 Section
2, Republic Act No. 6715, March 21, 1989).

ART. 217: Jurisdiction of Labor Arbiters and the Commission. (a) The
Labor Arbiters shall have the original and exclusive jurisdiction to hear
and decide within thirty (30) working days after submission of the case
by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases
2. Those that workers may file involving wages, hours of work and
other terms and conditions of employment;
3. All money claim of workers, including those based on non-payment

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or underpayment of wages, overtime compensation, separation pay
and other benefits provided by law or appropriate agreement,
except claims for employees' compensation, social security,
medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including
questions involving the legality of strikes and lockouts.

"(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters."

ART. 111: Attorneys fees. - (a) In cases of unlawful withholding of
wages, the culpable party may be assessed attorneys fees equivalent to
ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any
judicial or administrative proceedings for the recovery of wages,
attorneys fees which exceed ten percent of the amount of wages
recovered.

Cases
Placewell International etc v Camote, 492 SCRA 761 (2006)
It is settled that in actions for recovery of wages or where an employee
was forced to litigate and incur expenses to protect his rights and
interests, he is entitled to an award of attorneys fees.

F. MINIMUM WAGES

9.19 Wages and the Constitution
ART. XIII, SEC. 3, Constitution: The State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all.

bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.


recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns to investments, and to
expansion and growth.

Minimum Wages
Cases
Atok Big Wedge Mining Co. Inc v Atok Big Wedge Mutual Benefit
Association, 92 Phil. 755 (1953)
The law guarantees the laborer fair and just wage. The minimum wage
can by no means imply only the actual minimum. Some margin or
leeway must be provided, over and above the minimum, to take care of
contingencies, such as increase of prices of commodities and increase in
wants, and provide means for a desirable improvement in his mode of
living.

Beneficiaries
Cases
People v Gatchalian, 104 Phil. 664 (1959)
The establishment of the maximum wage benefits directly the low-paid
employees, who now receive inadequate wages, on which to support
themselves and their families. It benefits all wage earners indirectly by
settling a floor below which their remuneration cannot fail. It raises the
standards of competition among employers, since it would protect the
fair-minded employer who voluntarily pays a wage that supports the
wage earner from the competition of the employer, who operates at
lower cost by reasons of paying his workers a wage below subsistence.

Effect Inability Pay
Cases
Phil. Apparel Workers Union v NLRC, 106 SCRA 444 (1981)
...The judgment in this case has already become final and executory and
as such the prevailing party as a matter of right is entitled to a writ of
execution. What seems to be the problem in this case is that execution
of the judgment cannot be had at the earliest possible time, since a
computation of the amount due the members of petitioner must first be
undertaken. The Report of the Examiner indicating the amount due
them was submitted only after one and a half years, so that in the
meantime, negotiations on how the judgment may be executed were
made. It is the posture of the Paterno D. Menzon Law Office that the
judgment cannot be negotiated, hence any act to subvert it is
contemptuous.
We agree, The attempts of the BPPAWU and its counsel and respondent
company to render the decision of this Court meaningless by paying the
backwages of the affected employees in a lesser amount clearly
manifest a willful disregard on their part, of the authority of this Court

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as the final arbiter of cases brought to it. The series of acts by the
BPPAWU from the outset, where they caused the 'Kapahintulutan' to be
circulated and signed by workers declaring as invalid any acts of
petitioner union and its counsel to the time they campaigned for the
workers to receive the amount of P300.00 or P500.00 but with the
concomitant obligation to release the company from any further liability
showed disrespect for the administration of justice.
The BPPAWU and its counsel cannot pretend that they are just being
more protective to the employees when they encouraged them to
receive the amount of P300.00 or P500.00. They know too well that said
amount is much less than that to be received by the employees after
computing all the backwages if the decision is executed. It would have
been laudable had not the company pressed the workers to sign the
quitclaims and release of which the BPPAWU cannot pretend to be
unaware, for the payment could be taken as initial compliance with the
judgment with the balance to be paid by the company when the final
computation of the backwages has been finished and submitted by the
Research and Information Division of the National Labor Relations
Commission. Indeed, their questionable acts do not sit well with a desire
to implement the decision of this Court. If the BPPAWU is really after the
welfare of the employees, they will not leave any stone unturned to get
the best for them by giving effect to the decision of this Court.
In our decision, we have ordered the company to pay the negotiated
wage increase of P0.80 daily effective April 1, 1977. As per petitioner's;
computation, as may be gleaned from the urgent motion for issuance of
a restraining order dated March 11, 1982, on backwages alone, not
counting adjustments in overtime pay and other benefits, each
employee is entitled to receive at the very least of Pl,248.00 (P0.80 x 26
working days x 12 months x 5 years from 1977 to 1982) [p. 281, recli If
we shall include the backwages corresponding from January, 1983 to
the present, the same will definitely be higher than Pl,248.00. Clearly,
the offer by the company, supported by the BPPAWU to pay the
employees in the amount of P300.00 or P500.00 as full and final
payment is unjust to them, especially if We shall consider that some
employees did not have the alternative but to accept the payment
because they were in a tight financial condition. Such move cannot he
sanctioned by this Court, for otherwise giving effect to the award of
backwages would be left to the whim of the losing company taking
advantage of the rationale behind the decision in Mercury Drug Co. v.
CIR (L-23357, promulgated April 30, 1974, 56 SCRA 695), the
quitclaims and releases signed by the employees are considered null and
void. The employees are therefore still entitled to the difference
between what is due them and the amount they received. Another
important consideration is that if We countenance such act, the sanctity
of the contract validly entered into by the parties which as in this case
was interpreted by this Court, will be violated. Rollo, pp. 382-384)

9.20 Agencies for Wage Fixing Machinery
A. National Wages and Productivity Commission
ART. 120: Creation of National Wages and Productivity Commission. -
There is hereby created a National Wages and Productivity Commission,
hereinafter referred to as the Commission, which shall be attached to
the Department of Labor and Employment (DOLE) for policy and
program coordination.

ART. 121: Powers and functions of the Commission. - The Commission
shall have the following powers and functions:
(a) To act as the national consultative and advisory body to the
President of the Philippines and Congress on matters relating to wages,
incomes and productivity;

(b) To formulate policies and guidelines on wages, incomes and
productivity improvement at the enterprise, industry and national levels;

(c) To prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional,
provincial, or industry levels;

(d) To review regional wage levels set by the Regional Tripartite Wages
and Productivity Boards to determine if these are in accordance with
prescribed guidelines and national development plans;

(e) To undertake studies, researches and surveys necessary for the
attainment of its functions and objectives, and to collect and compile
data and periodically disseminate information on wages and productivity
and other related information, including, but not limited to,
employment, cost-of-living, labor costs, investments and returns;

(f) To review plans and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are consistent with
national development plans;

(g) To exercise technical and administrative supervision over the
Regional Tripartite Wages and Productivity Boards;

(h) To call, from time to time, a national tripartite conference of
representatives of government, workers and employers for the
consideration of measures to promote wage rationalization and
productivity; and

(i) To exercise such powers and functions as may be necessary to

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implement this Act.

The Commission shall be composed of the Secretary of Labor and
Employment as ex-officio chairman, the Director-General of the National
Economic and Development Authority (NEDA) as ex-officio vice-
chairman, and two (2) members each from workers and employers
sectors who shall be appointed by the President of the Philippines upon
recommendation of the Secretary of Labor and Employment to be made
on the basis of the list of nominees submitted by the workers and
employers sectors, respectively, and who shall serve for a term of five
(5) years. The Executive Director of the Commission shall also be a
member of the Commission.

The Commission shall be assisted by a Secretariat to be headed by an
Executive Director and two (2) Deputy Directors, who shall be appointed
by the President of the Philippines, upon the recommendation of the
Secretary of Labor and Employment.

The Executive Director shall have the same rank, salary, benefits and
other emoluments as that of a Department Assistant Secretary, while
the Deputy Directors shall have the same rank, salary, benefits and
other emoluments as that of a Bureau Director. The members of the
Commission representing labor and management shall have the same
rank, emoluments, allowances and other benefits as those prescribed by
law for labor and management representatives in the Employees
Compensation Commission.

ART. 126: Prohibition against injunction. No preliminary or permanent
injunction or temporary restraining order may be issued by any court,
tribunal or other entity against any proceedings before the Commission
or the Regional Boards.

B. Regional Tripartite Wages and Productivity Board
ART. 122: Creation of Regional Tripartite Wages and Productivity
Boards. - There is hereby created Regional Tripartite Wages and
Productivity Boards, hereinafter referred to as Regional Boards, in all
regions, including autonomous regions as may be established by law.
The Commission shall determine the offices/headquarters of the
respective Regional Boards.

The Regional Boards shall have the following powers and functions in
their respective territorial jurisdictions:
(a) To develop plans, programs and projects relative to wages, incomes
and productivity improvement for their respective regions;

(b) To determine and fix minimum wage rates applicable in their
regions, provinces or industries therein and to issue the corresponding
wage orders, subject to guidelines issued by the Commission;

(c) To undertake studies, researches, and surveys necessary for the
attainment of their functions, objectives and programs, and to collect
and compile data on wages, incomes, productivity and other related
information and periodically disseminate the same;

(d) To coordinate with the other Regional Boards as may be necessary
to attain the policy and intention of this Code;

(e) To receive, process and act on applications for exemption from
prescribed wage rates as may be provided by law or any Wage Order;
and

(f) To exercise such other powers and functions as may be necessary to
carry out their mandate under this Code.

Implementation of the plans, programs, and projects of the Regional
Boards referred to in the second paragraph, letter (a) of this Article,
shall be through the respective regional offices of the Department of
Labor and Employment within their territorial jurisdiction; Provided,
however, That the Regional Boards shall have technical supervision over
the regional office of the Department of Labor and Employment with
respect to the implementation of said plans, programs and projects.

Each Regional Board shall be composed of the Regional Director of the
Department of Labor and Employment as chairman, the Regional
Directors of the National Economic and Development Authority and the
Department of Trade and Industry as vice-chairmen and two (2)
members each from workers and employers sectors who shall be
appointed by the President of the Philippines, upon the recommendation
of the Secretary of Labor and Employment, to be made on the basis of
the list of nominees submitted by the workers and employers sectors,
respectively, and who shall serve for a term of five (5) years.

Each Regional Board to be headed by its chairman shall be assisted by a
Secretariat.

ART. 126: Prohibition against injunction. No preliminary or permanent
injunction or temporary restraining order may be issued by any court,
tribunal or other entity against any proceedings before the Commission
or the Regional Boards.

Functions
Cases
Nasipit Lumber Co. v NLRC, 289 SCRA 339 (2003)
Power to Prescribe Guidelines: Lodged in the NWPC, Not in the RTWPB

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121
The three great branches and the various administrative agencies of the
government can exercise only those powers conferred upon them by the
Constitution and the law.
14
It is through the application of this basic
constitutional principle that the Court resolves the instant case.

RA 6727 (the Wage Rationalization Act), amending the Labor Code,
created both the NWPC and the RTWPB and defined their respective
powers. Article 121 of the Labor Code lists the powers and functions of
the NWPC.

9.21 Area Minimum Wages and Criteria
ART. 124: Standards/Criteria for minimum wage fixing. - The regional
minimum wages to be established by the Regional Board shall be as
nearly adequate as is economically feasible to maintain the minimum
standards of living necessary for the health, efficiency and general well-
being of the employees within the framework of the national economic
and social development program. In the determination of such regional
minimum wages, the Regional Board shall, among other relevant
factors, consider the following:
(a) The demand for living wages;

(b) Wage adjustment vis--vis the consumer price index;

(c) The cost of living and changes or increases therein;

(d) The needs of workers and their families;

(e) The need to induce industries to invest in the countryside;

(f) Improvements in standards of living;

(g) The prevailing wage levels;

(h) Fair return of the capital invested and capacity to pay of
employers;

(i) Effects on employment generation and family income; and

(j) The equitable distribution of income and wealth along the
imperatives of economic and social development.

The wages prescribed in accordance with the provisions of this Title shall
be the standard prevailing minimum wages in every region. These
wages shall include wages varying with industries, provinces or localities
if in the judgment of the Regional Board, conditions make such local
differentiation proper and necessary to effectuate the purpose of this
Title.
Any person, company, corporation, partnership or any other entity
engaged in business shall file and register annually with the appropriate
Regional Board, Commission and the National Statistics Office, an
itemized listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners,
apprentices and disabled/handicapped workers who were hired under
the terms prescribed in the employment contracts, and their
corresponding salaries and wages.

Where the application of any prescribed wage increase by virtue of a law
or wage order issued by any Regional Board results in distortions of the
wage structure within an establishment, the employer and the union
shall negotiate to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under
their collective bargaining agreement and, if it remains unresolved,
through voluntary arbitration. Unless otherwise agreed by the parties in
writing, such dispute shall be decided by the voluntary arbitrators within
ten (10) calendar days from the time said dispute was referred to
voluntary arbitration.

In cases where there are no collective agreements or recognized labor
unions, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred to the
appropriate branch of the National Labor Relations Commission (NLRC).
It shall be mandatory for the NLRC to conduct continuous hearings and
decide the dispute within twenty (20) calendar days from the time said
dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in
any way delay the applicability of any increase in prescribed wage rates
pursuant to the provisions of law or wage order.

As used herein, a wage distortion shall mean a situation where an
increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of
differentiation.

All workers paid by result, including those who are paid on piecework,
takay, pakyaw or task basis, shall receive not less than the prescribed
wage rates per eight (8) hours of work a day, or a proportion thereof for
working less than eight (8) hours.


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All recognized learnership and apprenticeship agreements shall be
considered automatically modified insofar as their wage clauses are
concerned to reflect the prescribed wage rates.

9.22 Wage Order
ART. 123: Wage Order. - Whenever conditions in the region so warrant,
the Regional Board shall investigate and study all pertinent facts; and
based on the standards and criteria herein prescribed, shall proceed to
determine whether a Wage Order should be issued. Any such Wage
Order shall take effect after fifteen (15) days from its complete
publication in at least one (1) newspaper of general circulation in the
region.

In the performance of its wage-determining functions, the Regional
Board shall conduct public hearings/consultations, giving notices to
employees and employers groups, provincial, city and municipal
officials and other interested parties.

Any party aggrieved by the Wage Order issued by the Regional Board
may appeal such order to the Commission within ten (10) calendar days
from the publication of such order. It shall be mandatory for the
Commission to decide such appeal within sixty (60) calendar days from
the filing thereof.

The filing of the appeal does not stay the order unless the person
appealing such order shall file with the Commission, an undertaking with
a surety or sureties satisfactory to the Commission for the payment to
the employees affected by the order of the corresponding increase, in
the event such order is affirmed.

ART. 124: see above

Methods of Fixing
Cases
Employers Confederation of the Phil. v National Wages and
Productivity Commission, 201 SCRA 759 (1991)
The Act is meant to rationalize wages, that is, by having permanent
boards to decide wages rather than leaving wage determination to
Congress year after year and law after law. The Court is not of course
saying that the Act is an effort of Congress to pass the buck, or worse,
to abdicate its duty, but simply, to leave the question of wages to the
expertise of experts.

Agency Authority
Cases
Nasipit Integrated etc v Nasipit etc., 556 SCRA 206 (2008)
R.A. No. 6727 declared it a policy of the State to rationalize the fixing of
minimum wages and to promote productivity improvement and gain-
sharing measures to ensure a decent standard of living for the workers
and their families; to guarantee the rights of labor to its just share in
the fruits of production; to enhance employment generation in the
countryside through industrial dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.

In line with its declared policy, R.A. No. 6727 created the NWPC, vested
with the power to prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and authorized the RTWPB to determine
and fix the minimum wage rates applicable in their respective regions,
provinces, or industries therein and issue the corresponding wage
orders, subject to the guidelines issued by the NWPC. Pursuant to its
wage fixing authority, the RTWPB may issue wage orders which set the
daily minimum wage rates, based on the standards or criteria set by
Article 124 of the Labor Code.

Requirements Validity
Cases
Cagayan Sugar Milling Co. v Secretary, 284 SCRA 150 (1998)
Regional Board shall conduct public hearings and consultations,
giving notices to interested parties.
The Wage Order shall take effect only after publication in a
newspaper of general circulation in the region.

Piece Worker
Cases
Lambo v NLRC, 317 SCRA 420 (1999)
The term wage is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings; capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece or
commission basis.

Pulp etc. v NLRC, 279 SCRA 408 (1997)
In the absence of wage rates based on time and motion studies
determined by the labor secretary or submitted by the employer to the
labor secretary for his approval, wage rates of piece-rate workers must
be based on the applicable daily minimum wage determined by the
Regional Tripartite Wages and Productivity Commission.


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123
Wage Distortion
A situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length
of service, or other logical bases of differentiation.
CAUSE: Implementation of a wage order increase prescribe
minimum wage rate
RESULT:
o Elimination or severe contraction of intentional quantitative
wages/salary rates between or among employees
o Effectively obliterates distinctions on wage structure which
was based on skills, length of service or other logical
differences.
PROCEDURE FOR SETTLEMENT:
o Organized Establishment
" CBA Grievance Procedure
" Voluntary Arbitration
o Unorganized Establishment
" ER and EE, with aid of National Conciliation
Mediation Board (NCMB) settles conciliation
mediation
" NLRCCompulsory Arbitration
Both ER and EE cannot use economic weapons because the law has
provided for a procedure for settling
Cases say that
o Parties are encouraged to settle the dispute voluntarily.
o Neither party can use economic weapons
o Original decree of differential cannot be restored
o NLRC has NO authority to impose directly or indirectly under
guise of rectifying a wage distortion upon the employer a
new scheme of classification
Cases
P.I. Manufacturing Inc v P.I. Manufacturing etc, 543 SCRA 110
(2008)
R.A. No. 6727, otherwise known as the Wage Rationalization Act,
explicitly defines "wage distortion" as:
x x x a situation where an increase in prescribed wage rates results
in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length
of service, or other logical bases of differentiation.

Otherwise stated, wage distortion means the disappearance or virtual
disappearance of pay differentials between lower and higher positions
in an enterprise because of compliance with a wage order.

Bankard Employees Union etc. v NLRC, 423 SCRA 148 (2004)
Wage distortion is a factual and economic condition that may be brought
about by different causes. In Metro Transit, the reduction or elimination
of the normal differential between the wage rates of rank-and-file and
those of supervisory employees was due to the granting to the former of
wage increase, which was, however, denied to the latter group of
employees.
The mere factual existence of wage distortion does not, however, ipso
facto result to an obligation to rectify it, absent a law or other source of
obligation which requires its rectification.

Prubankers Assn. v Prudential Bank and Co., 302 SCRA 74
(1999)
Wage distortion involves four elements:
An existing hierarchy of positions with corresponding salary
rates.
A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one.
The elimination of the distinction between the two levels.
The existence of the distortion in the same region of the country.

National Federation of Labor v NLRC, 234 SCRA 311 (1994)
The concept of wage distortion assumes an existing grouping or
classification of employees, which establishes distinctions among such
employees on some relevant or legitimate basis.

The remedy in Art. 124 of the Labor Code, for a wage distortion
consisted of negotiations between ER and EEs for the rectification of the
distortion by re-adjusting the wage rates of the differing classes of
employees. As a practical matter, this ordinarily meant a wage increase
for one or more of the affected classes of employees so that some gap
or differential would be re-established. There was no legal requirement
that the historical gap which existed before the implementation of the
Wage Orders be restored in precisely the same form or amount.

Associated Labor Union v NLRC, 235 SCRA 395 (1994)
The law recognizes the validity of negotiated wage increases to correct
wage distortions. The legislative intent is to encourage the parties to
seek solution to the problem of wage distortions through voluntary
negotiation or arbitration, rather than strikes, lockouts, or other
concerted activities of the employees or management.


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9.23 Effect on Benefits
ART. 100: Prohibition against elimination or diminution of benefits. -
Nothing in this Book shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this Code.

Cases
Prubankers Assn. v Prudential Bank and Co., 302 SCRA 74
(1999)
Petitioner insists that the Bank has adopted a uniform wage policy,
which has attained the status of an established management practice;
thus, it is estopped from implementing a wage order for a specific region
only. We are not persuaded. Said nationawide uniform wage policy of
the Bank had been adopted prior to the enactment of RA 6727. After the
passage of said law, the Bank was mandated to regionalize its wage
structure. Although the Bank implemented Wage Order Nos. NCR-01
and NCR-02 nationwide instead of regionally even after the effectivity of
RA 6727, the Bank at the time was still uncertain about how to follow
the new law, in any event, that single instance cannot be constitutive of
management practice.

Arco Metal etc v Samahan etc, 554 SCRA 110 (2008)
There is no doubt that in order to be entitled to the full monetization of
sixteen (16) days of vacation and sick leave, one must have rendered at
least one year of service. The clear wording of the provisions does not
allow any other interpretation. Anent the 13
th
month pay and bonus,
we agree with the findings of Mangabat that the CBA provisions did not
give any meaning different from that given by the law, thus it should be
computed at 1/12 of the total compensation which an employee receives
for the whole calendar year. The bonus is also equivalent to the amount
of the 13
th
month pay given, or in proportion to the actual service
rendered by an employee within the year.

Night shift differential on a normal
day (10PM-6AM)
110%
Overtime on a normal day 125%
Work on any regular holiday, not
exceeding 8 hours
200%
Work on any regular holiday which
falls on a scheduled rest day, not
exceeding 8 hours
230%
Overtime on a regular holiday 230%
Overtime on a regular holiday which
falls on the scheduled rest day
260%

SECTION 10. WOMEN WORKERS

10.01 Women and the Constitution

ART. II, SEC. 14
The State recognizes the role of women in nation-building, and shall ensure
the fundamental equality before the law of women and men.

Women Workers
Cases
Phil. Telegraph and Telephone Co. v NLRC, 272 SCRA 596 (1997)
PT&Ts policy of not accepting or considering as qualified from work any
woman worker who contracts marriage runs afoul of the test of, and the
right against discrimination, afforded all women workers by our labor laws
and by no less than the Constitution. Contrary to petitioners assertion that
it dismissed respondent from employment on account of her dishonesty, the
record clearly shows that her ties with the company were dissolved
principally because of the companys policy that married women are not
qualified for employment in PT&T, and not merely of her supposed act of
dishonesty.

The companys policy is not only in derogation of Art. 136 of the Labor Code
on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good
morals and public policy, tending as it does to deprive a woman of the
freedom to choose her status, a privilege that by all accounts inheres in the
individual as an intangible and inalienable right. Carried to its logical
consequences, it may even be said that petitioners policy against legitimate
marital bonds would encourage illicit or common law relations and subvert
the sacrament of marriage.

10.02 Coverage

BOOK III, RULE XIII, SEC. 1, Omnibus Rules
General Rule: Applies to all employees, whether operating for profit or not,
including educational, religious and charitable institutions

Except:
1. Government
2. GOCCs
3. Employers of household helpers and persons in their personal
service insofar as such workers are concerned

10.03 Prohibited Acts

ART. 130: Nightwork prohibition. - No woman, regardless of age, shall be
employed or permitted or suffered to work, with or without compensation:

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(a) In any industrial undertaking or branch thereof between ten oclock
at night and six oclock in the morning of the following day; or
(b) In any commercial or non-industrial undertaking or branch thereof,
other than agricultural, between midnight and six oclock in the
morning of the following day; or
(c) In any agricultural undertaking at nighttime unless she is given a
period of rest of not less than nine (9) consecutive hours.

ART. 131: Exceptions. - The prohibitions prescribed by the preceding Article
shall not apply in any of the following cases:

(a) In cases of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other
disasters or calamity, to prevent loss of life or property, or in cases
of force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment
or installation, to avoid serious loss which the employer would
otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable
goods;
(d) Where the woman employee holds a responsible position of
managerial or technical nature, or where the woman employee has
been engaged to provide health and welfare services;
(e) Where the nature of the work requires the manual skill and dexterity
of women workers and the same cannot be performed with equal
efficiency by male workers;
(f) Where the women employees are immediate members of the family
operating the establishment or undertaking; and
(g) Under other analogous cases exempted by the Secretary of Labor
and Employment in appropriate regulations.
ART. 135: Discrimination prohibited. - It shall be unlawful for any employer
to discriminate against any woman employee with respect to terms and
conditions of employment solely on account of her sex.
The following are acts of discrimination:

(a) Payment of a lesser compensation, including wage, salary or other
form of remuneration and fringe benefits, to a female employees as
against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to
promotion, training opportunities, study and scholarship grants
solely on account of their sexes.

Criminal liability for the willful commission of any unlawful act as provided in
this Article or any violation of the rules and regulations issued pursuant to
Section 2 hereof shall be penalized as provided in Articles 288 and 289 of
this Code: Provided, That the institution of any criminal action under this
provision shall not bar the aggrieved employee from filing an entirely
separate and distinct action for money claims, which may include claims for
damages and other affirmative reliefs. The actions hereby authorized shall
proceed independently of each other. (As amended by Republic Act No.
6725, May 12, 1989).

ART. 136: Stipulation against marriage. - It shall be unlawful for an
employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of
her marriage.

ART. 137: Prohibited acts. - (a) It shall be unlawful for any employer:

(1) To deny any woman employee the benefits provided for in this
Chapter or to discharge any woman employed by him for the
purpose of preventing her from enjoying any of the benefits
provided under this Code.
(2) To discharge such woman on account of her pregnancy, or while on
leave or in confinement due to her pregnancy;
(3) To discharge or refuse the admission of such woman upon returning
to her work for fear that she may again be pregnant.

10.04 Facilities

ART. 132: Facilities for women. - The Secretary of Labor and Employment
shall establish standards that will ensure the safety and health of women
employees. In appropriate cases, he shall, by regulations, require any
employer to:
(a) Provide seats proper for women and permit them to use such seats
when they are free from work and during working hours, provided
they can perform their duties in this position without detriment to
efficiency;
(b) To establish separate toilet rooms and lavatories for men and
women and provide at least a dressing room for women;
(c) To establish a nursery in a workplace for the benefit of the women
employees therein; and
(d) To determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of
flight attendants and the like.

ART. 134: Family planning services; incentives for family planning. - (a)
Establishments which are required by law to maintain a clinic or infirmary
shall provide free family planning services to their employees which shall
include, but not be limited to, the application or use of contraceptive pills
and intrauterine devices.

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(b) In coordination with other agencies of the government engaged in the
promotion of family planning, the Department of Labor and Employment
shall develop and prescribe incentive bonus schemes to encourage family
planning among female workers in any establishment or enterprise.

10.05 Special Classification, Special Women Workers

ART. 138: Classification of certain women workers . - Any woman who is
permitted or suffered to work, with or without compensation, in any night
club, cocktail lounge, massage clinic, bar or similar establishments
under the effective control or supervision of the employer for a
substantial period of time as determined by the Secretary of Labor and
Employment, shall be considered as an employee of such establishment for
purposes of labor and social legislation.

10.06 Maternity Leave and Paternity Leave

MATERNITY LEAVE

A female employee who has paid at least 3 monthly contributions in the 12-
month period immediately preceding the semester of her childbirth, or
miscarriage, shall be paid a daily maternity benefit equivalent to 100% of
her average salary credit for 60 days or 78 days in case of caesarean
delivery subject to the following conditions:

1. That the employee notifies the employer of her pregnancy and
probable date of her childbirth which notice shall be transmitted to
the SSS in accordance with the rules and regulations it may provide
2. That full payment shall be advanced by the employer within 30 days
from the filing of the maternity leave application
3. That payment of daily maternity benefits shall be bar to the
recovery of sickness benefits provided by this Act for the same
period for which daily maternity benefits have been received
4. That maternity benefits provided shall be paid only for the first 4
deliveries or miscarriages
5. That SSS shall reimburse the employer of 100% of the amount of
maternity benefits advanced to the employee by the employer upon
receipt of satisfactory proof of such payment and legality thereof
6. That if the employee should give birth or suffer miscarriage without
the required contributions having been remitted for her by her
employer to the SSS or without the latter having been previously
notified by the employer of the time of the pregnancy, the employer
shall pay to SSS damages equivalent to the benefits which said
employee member would otherwise have been entitled to

PATERNITY LEAVE (RA 8187)

Every MARRIED male employee in the private and public sectors shall be
entitled to a paternity leave of 7 days with full pay for the first 4 deliveries
of the legitimate spouse with whom he is cohabiting

- The male employee applying for paternity leave shall notify his
employer of the pregnancy of his LEGITIMATE spouse and the
expected date of such delivery
- DELIVERY ! includes miscarriages

10.07 Sexual Harassment (RA 7877, 1995)

Policy
SEC. 2: Declaration of Policy. The State shall value the dignity of every
individual, enhance the development of it human resources, guarantee full
respect for human rights, and uphold the dignity of workers, employees,
applicants for employment, students or those undergoing training,
instruction or education. Towards this end, all forms of sexual harassment in
the employment, education or training environment are hereby declared
unlawful.

Work Related Environment
SEC. 3: Work, Education or Training-related Sexual Harassment Defined.
Work, education or training-related sexual harassment is committed by an
employee, manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or
education environment, demands, requests or otherwise requires any sexual
favor from the other, regardless of whether the demand, request or
requirement for submission is accepted by the object of said Act.

SEC. 3(A): In a work-related or employment environment, sexual
harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
employee which in a way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employees rights or privileges
under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive
environment for the employee.

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Education or Training-Related Environment
SEC. 3: Work, Education or Training-related Sexual Harassment Defined.
Work, education or training-related sexual harassment is committed by an
employee, manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or
education environment, demands, requests or otherwise requires any sexual
favor from the other, regardless of whether the demand, request or
requirement for submission is accepted by the object of said Act.

SEC. 3 (B): In an education or training environment, sexual harassment is
committed:

(1) Against one who is under the care, custody or supervision of the
offender;
(2) Against one whose education, training, apprenticeship or tutorship is
entrusted to the offender;
(3) When the sexual favor is made a condition to the giving of a passing
grade, or the granting of honors and scholarships, or the payment of
a stipend, allowance or other benefits, privileges, or considerations;
or
(4) When the sexual advances result in an intimidating, hostile or
offensive environment for the student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual
harassment as herein defined, or who cooperates in the commission thereof
by another without which it would not have been committed, shall also be
held liable under this Act.

Duty Employer (SEC. 4)
1. To prevent or deter the commission of acts of sexual harassment
2. To provide the procedures for the resolution, settlement or
prosecution of acts of sexual harassment.

The employer or head of office shall:
(a) Promulgate appropriate rules and regulations in consultation with
the jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the
procedure for the investigation or sexual harassment cases and the
administrative sanctions therefor.

Administrative sanctions shall not be a bar to prosecution in the
proper courts for unlawful acts of sexual harassment.

The said rules and regulations issued pursuant to this section (a)
shall include, among others, guidelines on proper decorum in the
workplace and educational or training institutions.

(b) Create a committee on decorum and investigation of cases on
sexual harassment. The committee shall conduct meetings, as the
case may be, with other officers and employees, teachers,
instructors, professors, coaches, trainors and students or trainees to
increase understanding and prevent incidents of sexual harassment.
It shall also conduct the investigation of the alleged cases
constituting sexual harassment.
In the case of a work-related environment, the committee shall be
composed of at least one (1) representative each from the
management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training institution, the committee
shall be composed of at least one (1) representative from the
administration, the trainors, teachers, instructors, professors or
coaches and students or trainees, as the case maybe.
"The employer or head of office, educational or training institution
shall disseminate or post a copy of this Act for the information of all
concerned.

Liability Employer (SEC. 5)
The employer or head of office, educational or training institution shall be
SOLIDARILY LIABLE for damages arising from the acts of sexual harassment
committed in the employment, education or training environment if the
employer or head of office, educational or training institution is informed of
such acts by the offended party and no immediate action is taken thereon.

Remedies
SEC. 6: Independent Action for Damages
The victim of work, education or training-related sexual harassment
can institute a separate and independent action for damages and
other affirmative relief

SEC. 7: Penalties
Violations of this Act shall be penalized by imprisonment of not less
than 1 month nor more than 6 months, or a fine of not less than
P10,000 nor more than P20,000 or both such fine and imprisonment
at the discretion of the court
Prescription: 3 YEARS

Cases

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Bacsin v Wahiman, 553 SCRA 137 (2008)
In grave misconduct, the elements of corruption, clear intent to violate the
law, or flagrant disregard of established rule must be manifest.

The act of
petitioner of fondling one of his students is against a law, RA 7877, and is
doubtless inexcusable. The particular act of petitioner cannot in any way be
construed as a case of simple misconduct. Sexually molesting a child is, by
any norm, a revolting act that it cannot but be categorized as a grave
offense. Parents entrust the care and molding of their children to teachers,
and expect them to be their guardians while in school. Petitioner has
violated that trust. The charge of grave misconduct proven against
petitioner demonstrates his unfitness to remain as a teacher and continue to
discharge the functions of his office.

Domingo v Rayala, 546 SCRA 90 (2008)
Basic in the law of public officers is the three-fold liability rule, which states
that the wrongful acts or omissions of a public officer may give rise to civil,
criminal and administrative liability. An action for each can proceed
independently of the others. This rule applies with full force to sexual
harassment.

The law penalizing sexual harassment in our jurisdiction is RA 7877.
Section 3 thereof defines work-related sexual harassment and, in relation to
Section 7 on penalties, defines the criminal aspect of the unlawful act of
sexual harassment. The same section, in relation to Section 6, authorizes
the institution of an independent civil action for damages and other
affirmative relief.

The CA, thus, correctly ruled that Rayalas culpability is not to be
determined solely on the basis of Section 3, RA 7877, because he is charged
with the administrative offense, not the criminal infraction, of sexual
harassment.

Phil. Aelous Automotive United Corp. v NLRC, 331 SCRA 237 (2000)
The gravamen of the offense in sexual harassment is not the violation of the
employees sexuality but the abuse of power by the employer. Any
employee, male or female, may rightfully cry foul provided the claim is
well substantiated. Strictly speaking, there is no time period within which he
or she is expected to complain through the proper channels. The time to do
so may vary depending upon the needs, circumstances and more
importantly, emotional threshold of the employee.

Libres v NLRC, 307 SCRA 675 (1999)
As a managerial employee, petitioner is bound by more exacting work
ethics. He failed to live up to his higher standard of responsibility when he
succumbed to his moral perversity. And when such moral perversity is
perpetuated against his subordinate, he provides a justifiable ground for his
dismissal for lack or trust and confidence. It is the right, nay the duty of
every employer to protect its employees from oversexed superiors.

SECTION 11. MINORS

11.01 Minors and the Constitution

ART. II, SEC. 13
The State recognizes the vital role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual, intellectual, and social
well-being. It shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.

11.02 Law (RA 7610)Child Abuse

POLICY
1. To provide special protection to children from all forms of abuse,
neglect, cruelty, exploitation and discrimination, and other
conditions prejudicial to their development
2. To provide sanctions for their commission and carry out a program
for prevention and deterrence of and crisis intervention in situations
of child abuse, exploitation and discrimination
3. To intervene (the State) on behalf of the child when the parent,
guardian, teacher or person having care or custody of the child fails
or is unable to protect the child against abuse, exploitation and
discrimination or when such acts against the child are committed by
the said parent, guardian, teacher or person having care and
custody of the same
4. To protect and rehabilitate children gravely threatened or
endangered by circumstances, which affect or will affect their
survival and normal development and over which they have no
control
5. The best interests of children shall be the paramount
consideration in all actions concerning them, whether undertaken by
public or private social welfare institutions, courts of law,
administrative authorities, and legislative bodies, consistent with the
principle of First Call for Children as enunciated in the United
Nations Convention of the Rights of the Child. Every effort shall be
exerted to promote the welfare of children and enhance their
opportunities for a useful and happy life


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DEFINITION OF TERMS

CHILDREN
- Below 18 years old
- Those over but are unable to fully take care of themselves or protect
themselves from abuse, neglect, cruelty, exploitation or
discrimination because of a physical or mental disability or condition

CHILD ABUSE
- Maltreatment, whether habitual or not, of the child which includes
any of the following
o Psychological and physical abuse, neglect, cruelty, sexual
abuse and emotional maltreatment
o Any act by deeds or words which debases, degrades or
demeans the intrinsic worth and dignity of a child as a
human being
o Unreasonable deprivation of his basic needs for survival,
such as food and shelter
o Failure to immediately give medical treatment to an injured
child resulting in serious impairment of his growth and
development or in his permanent incapacity or death

CIRCUMSTANCES WHICH GRAVELY THREATEN OR ENDANGER THE
SURVIVAL AND NORMAL DEVELOPMENT OF CHILDREN
- Being in community where there is armed conflict or being affected
by armed conflict-related activities
- Working under conditions hazardous to life, safety and morals which
unduly interfere with their normal development
- Living in or fending for themselves in streets of urban or rural areas
without the care of parents, or a guardian or any adult supervision
needed for their welfare
- Being a member of an indigenous cultural community and/or living
under conditions of extreme poverty or in an area which is
underdeveloped and/or lacks or has inadequate access to basic
services needed for a good quality of life
- Being a victim of man-made or natural disaster or calamity
- Circumstances analogous to those above-stated which endanger the
life, safety or normal development of children

COMPREHENSIVE PROGRAM AGAINST CHILD ABUSE, EXPLOITATION AND
DISCRIMINATION
- Refers to the coordinated program of services and facilities to
protected children against:

(1) Child Prostitution and other sexual abuse;
(2) Child trafficking;
(3) Obscene publications and indecent shows;
(4) Other acts of abuses; and
(5) Circumstances which threaten or endanger the survival and
normal development of children

WORKING CHILDREN
General Rule: Children below 15 years of age shall NOT be employed.

Exceptions
1. Works directly under the sole responsibility of his parents or legal
guardian and where only members of the employers family are
employed, provided:
a. His employment neither endangers his life, safety, health
and morals, nor impairs his normal development
b. Parent or legal guardian shall provide the said minor child
with the prescribed primary and/or secondary education
2. Childs employment or participation in public and entertainment or
information through cinema, theater, radio or TV is essential,
provided:
a. Employment contract is concluded by the childs parents or
guardian, with the express agreement of the child
concerned, if possible
b. Approval of DOLE
c. Requirement to be complied with:
i. Employer shall ensure the protection, health and
safety and morals of the child
ii. Employer shall institute measures to prevent the
childs exploitation or discrimination taking into
account the system and level of remuneration, and
the duration and arrangement of working time
iii. Employer shall formulate and implement, subject to
the approval and supervision of competent
authorities, a continuing program for training and
skills acquisition of the child

Employer shall first secure, before engaging such child, a work permit from
DOLE which shall ensure observance of the above requirements.

NON-FORMAL EDUCATION FOR WORKING CHILDREN
The Department of Education, Culture and Sports shall promulgate a course
design under its non-formal education program aimed at promoting the
intellectual, moral and vocational efficiency of working children who have
not undergone or finished elementary or secondary education. Such course
design shall integrate the learning process deemed most effective under
given circumstances.


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PROHIBITION ON THE EMPLOYMENT OF CHILDREN IN CERTAIN
ADVERTISEMENTS
No employment of child models in all commercial advertisements
promoting:
1. Alcoholic beverages
2. Intoxicating drinks
3. Tobacco and its by-products
4. Violence

DUTY OF EMPLOYER
Every employer shall comply with the duties provided for in Articles 108 and
109 of PD 603.
To submit report
To register children

PENALTIES
Any person who shall violate any provision of this Article shall suffer the
penalty of a fine of not less than One thousand pesos (P1,000) but not more
than Ten thousand pesos (P10,000) or imprisonment of not less than three
(3) months but not more than three (3) years, or both at the discretion of
the court; Provided, That, in case of repeated violations of the provisions of
this Article, the offender's license to operate shall be revoked.

11.03 Discrimination
ART. 140: No employer shall discriminate against any person in respect to
terms and conditions of employment on account of his age.

SECTION 12. HOUSEHELPERS

12.01 Coverage (ART. 141)

Coverage: All persons rendering services in households for compensation.

12.02 Househelpers (ART. 141)

"Domestic or household service" shall mean service in the employers home
which is usually necessary or desirable for the maintenance and enjoyment
thereof and includes ministering to the personal comfort and convenience of
the members of the employers household, including services of family
drivers.

12.03 Non-Household Work Assignment (ART. 145)

No househelper shall be assigned to work in a commercial, industrial or
agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.
Cases
Barcenas v NLRC, 187 SCRA 498 (1990)
The work that petitioner performed in the temple could not be categorized
as mere domestic work. The petitioner attended to the visitors, mostly
Chinese, who came to pray or seek advice before Buddha for personal or
business problems; arranged meetings between these visitors and Su and
supervised the preparation of the food for the temple visitors; acted as
tourist guide of foreign visitors; acted as liaison with some government
offices; and made the payment for the temples Meralco, MWSS and PLDT
bills. Indeed, these tasks may NOT be deemed activities of a household
helper. They were essential and important to the operation and religious
functions of the temple.

Apex Mining Co. v NLRC, 196 SCRA 251 (1991)
The term househelper is synonymous to the term domestic servant and
shall refer to any person, whether male or female, who renders services in
and about the employers home and which services are usually necessary or
desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employers family.

12.04 Conditions Employment

Contract for Domestic Service (ART. 142)
The original contract of domestic service shall not last for more than two (2)
years but it may be renewed for such periods as may be agreed upon by the
parties.

Minimum Wage (ART. 143)
(1) Eight hundred pesos (P800.00) a month for househelpers in Manila,
Quezon, Pasay, and Caloocan cities and municipalities of Makati,
San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Paraaque,
Las Pias, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro
Manila and in highly urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for those in other
chartered cities and first-class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those in other
municipalities.

Provided, That the employers shall review the employment contracts of their
househelpers every three (3) years with the end in view of improving the
terms and conditions thereof.

Provided, further, That those househelpers who are receiving at least One
thousand pesos (P1,000.00) shall be covered by the Social Security System
(SSS) and be entitled to all the benefits provided thereunder.


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Minimum Cash Wage (ART. 144)
The minimum wage rates prescribed under this Chapter shall be the basic
cash wages which shall be paid to the househelpers in addition to lodging,
food and medical attendance.

Assignment to Non-Household Work (ART. 145)
No househelper shall be assigned to work in a commercial, industrial or
agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.

Opportunity for Education (ART. 146)
If the househelper is under the age of eighteen (18) years, the employer
shall give him or her an opportunity for at least elementary education. The
cost of education shall be part of the househelpers compensation, unless
there is a stipulation to the contrary.

Treatment of Household Helpers (ART. 147)
The employer shall treat the househelper in a just and humane manner. In
no case shall physical violence be used upon the househelper.

Board, Lodging and Medical Attendance (ART. 148)
The employer shall furnish the househelper, free of charge, suitable and
sanitary living quarters as well as adequate food and medical attendance.

Indemnity for Unjust Termination of Services (ART. 149)
If the period of household service is fixed, neither the employer nor the
househelper may terminate the contract before the expiration of the term,
except for a just cause. If the househelper is unjustly dismissed, he or she
shall be paid the compensation already earned plus that for fifteen (15)
days by way of indemnity.

If the househelper leaves without justifiable reason, he or she shall forfeit
any unpaid salary due him or her not exceeding fifteen (15) days.

Service of Termination Notice (ART. 150)
If the duration of the household service is not determined either in
stipulation or by the nature of the service, the employer or the househelper
may give notice to put an end to the relationship five (5) days before the
intended termination of the service.
Employment Certification (ART. 151)
Upon the severance of the household service relation, the employer shall
give the househelper a written statement of the nature and duration of the
service and his or her efficiency and conduct as househelper.

Employment Records (ART. 152)
The employer may keep such records as he may deem necessary to reflect
the actual terms and conditions of employment of his househelper, which
the latter shall authenticate by signature or thumbmark upon request of the
employer.

Cases
Ultra Villa Food Haus v Geniston, 309 SCRA 17 (1999)
Domestic or household service shall mean services in the employers home
which is usually necessary or desirable for the maintenance and enjoyment
thereof and includes ministering to the personal comfort and convenience of
the members of the employers household, including services of family
drivers. (Underscoring supplied.)

Chapter III, Title III, Book III, however, is silent on the grant of overtime
pay, holiday pay, premium pay and service incentive leave to those engaged
in the domestic or household service.

Moreover, the specific provisions mandating these benefits are found in
Book III, Title I of the Labor Code, and Article 82, which defines the scope
of the application of these provisions, expressly excludes domestic helpers
from its coverage:

Art. 82. Coverage. - The provision of this title shall apply to
employees in all establishments and undertakings whether for profit
or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.
(Underscoring supplied.)

The limitations set out in the above article are echoed in Book III of the
Omnibus Rules Implementing the Labor Code.

Clearly then, petitioner is not obliged by law to grant private respondent any
of these benefits.

Employing the same line of analysis, it would seem that private respondent
is not entitled to13 month pay. The Revised Guidelines on the
Implementation of the 13th Month Pay Law also excludes employers of
household helpers from the coverage of Presidential Decree No. 851.
Nevertheless, we deem it just to award private respondent 13th month pay
in view of petitioners practice of according private respondent such benefit.
Indeed, petitioner admitted that she gave private respondent 13th month
pay every December.


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SECTION 13. HOMEWORKERS

13.01 Coverage and Regulation

REGULATIONS OF INDUSTRIAL HOMEWORK
The employment of industrial homeworkers and field personnel shall be
regulated by the Government through appropriate regulations issued by the
Secretary of DOLE to ensure the general welfare and protection of
homeworkers and field personnel and the industries employing them.

REGULATIONS OF DOLE SECRETARY
The regulations or orders to be issued pursuant to this Chapter shall be
designed to assure the minimum terms and conditions of employment
applicable to the industrial homeworkers or field personnel involved.

COVERAGE
- Applies to any person who performs industrial homework for an
employer, contractor or subcontractor

Industrial Homework
- A system of production under which work for an employer or
contractor is carried out by a homework at his/her home
- Materials may or may not be furnished by the employer or
contractor

13.02 Employer
- Includes any person, natural or artificial who, for his account or
benefit, or on behalf of any person residing outside the country,
directly or indirectly, or through an employee, agent contractor,
sub-contractor or any other person:
o Delivers, or causes to be delivered, any goods, articles or
materials to be processed or fabricated in or about a home
and thereafter to be returned or to be disposed of or
distributed in accordance with his directions; or
o Sells any goods, articles or materials to be processed or
fabricated in or about a home and then rebuys them after
such processing or fabrication, either by himself or through
some other person.

SECTION 14. TERMINATION OF EMPLOYMENT

A. GENERAL CONCEPTS

14.01 Security of Tenure

General Rule: In case of regular employment, the employer shall NOT
terminate the services of an employee (ART. 279)
Exception:
1. Termination for just cause
2. Termination authorized by this Title

If employee is unjustly dismissed, he is entitled to:
1. Reinstatement: without loss of seniority rights and other
privileges, AND

2. Full Backwages: inclusive of allowances and other benefits or their
monetary equivalent computed from the time compensation was
withheld up to the time of actual reinstatement

The entitlement of workers to SECURITY OF TENURE is recognized in Art.
XIII, Sec. 3 of the Constitution.

A. Nature of Security of Tenure
a. Right guaranteed by the Constitution
b. NOT an absolute right
c. Qualified by the Doctrine of Strained Relations
d. Does NOT give employee an absolute right to his position

Cases
Sonza v ABS-CBN, 431 SCRA 583 (2004)
For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws.

During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent
fees as long as "AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement." Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.

SONZA admits that even after ABS-CBN ceased broadcasting his programs,
ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its
undertaking in the Agreement to continue paying SONZAs talent fees during
the remaining life of the Agreement even if ABS-CBN cancelled SONZAs
programs through no fault of SONZA.

SONZA assails the Labor Arbiters interpretation of his rescission of the
Agreement as an admission that he is not an employee of ABS-CBN. The
Labor Arbiter stated that "if it were true that complainant was really an
employee, he would merely resign, instead." SONZA did actually resign from
ABS-CBN but he also, as president of MJMDC, rescinded the Agreement.

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SONZAs letter clearly bears this out. However, the manner by which SONZA
terminated his relationship with ABS-CBN is immaterial. Whether SONZA
rescinded the Agreement or resigned from work does not determine his
status as employee or independent contractor.

UST Faculty Union v Bitonio, Jr. (G.R. No. 131235. November 16,
1999)
Self-organization is a fundamental right guaranteed by the Constitution and
the Labor Code. Corollary to this right is the prerogative not to join, affiliate
with or assist a labor union. Therefore, to become a union member, an
employee must not only signify the intent to become one, but also take
some positive steps to realize that intent. The procedure for union
membership is usually embodied in the unions CBL. An employee who
becomes a union member acquires the rights and he concomitant
obligations that go with the new status and becomes bound by the unions
rules and regulations.

Quijano v Bartolabac, 480 SCRA 204 (2006)
Our Constitution mandates that no person shall be deprived of life, liberty,
and property without due process of law. It should be borne in mind that
employment is considered a property right and cannot be taken away from
the employee without going through legal proceedings. In the instant case,
respondents wittingly or unwittingly dispossessed complainant of his source
of living by not implementing his reinstatement. In the process, respondents
also run afoul of the public policy enshrined in the Constitution ensuring the
protection of the rights of workers and the promotion of their welfare.

Tolentino v NLRC, 152 SCRA 717 (1987)
Security of tenure is a right of paramount value as recognized and
guaranteed under our new constitution. The state shall afford full protection
to labor, . . . and promote full employment and equality of employment
opportunities for all. It shall guarantee the right of all workers to . . .
security of tenure. . . . (Sec. 3 Art. XIII on Social Justice and Human Rights,
1987 Constitution of the Republic of the Philippines.) Such Constitutional
Right should not be denied on mere speculation of any similar unclear and
nebulous basis.

Philips Semiconductors etc v Fadriquela, 427 SCRA 408 (2004)
Under Section 3, Article XVI of the Constitution, it is the policy of the State
to assure the workers of security of tenure and free them from the bondage
of uncertainty of tenure woven by some employers into their contracts of
employment. The guarantee is an act of social justice. When a person has
no property, his job may possibly be his only possession or means of
livelihood and those of his dependents. When a person loses his job, his
dependents suffer as well. The worker should therefor be protected and
insulated against any arbitrary deprivation of his job.
B. Importance of Employment

Employment
Cases
Gonzales v NLRC, 313 SCRA 169 (1999)
Employment is not merely a contractual relationship; it has assumed the
nature of property right. It may spell the difference whether or not a family
will have food on their table, roof over their heads and education for their
children. It is for this reason that the State has taken up measures to
protect employees from unjustified dismissals. It is also because of this that
the right to security of tenure is not only a statutory right but, more so, a
constitutional right.

C. State RegulationRationale

Rationale
Cases
Euro-Linea Phils. Inc v NLRC, 156 SCRA 78 (1987)
Although a probationary or temporary employee has a limited tenure, he
still enjoys the constitutional protection of security of tenure. During his
tenure of employment or before his contract expires, he cannot be removed
except for cause as provided for by law. Private respondent had been a
shipping expediter for more than one and a half years before he was
absorbed by petitioner. It therefore appears that the dismissal in question is
without sufficient justification.

In the instant case, it is evident that the NLRC correctly applied Article 282
in the light of the foregoing and that its resolution is not tainted with
unfairness or arbitrariness that would amount to grave abuse of discretion
or lack of jurisdiction (Rosario Brothers Inc. v. Ople, 131 SCRA 73 [1984]).

D. Coverage (ART. 278)
- To ALL establishments or undertakings, whether for profit or not

Contract Employee
Cases
Labajo v Alejandro, 165 SCRA 747 (1988)
As probationary and contractual employees, private respondents enjoyed
security of tenure, but only to a limited extent i.e., they remained secure
in their employment during the period of time their respective contracts of
employment remained in effect. That temporary security of tenure,
however, ended the moment their employment contracts expired and
petitioners declined to renew the same for the next succeeding school year.
Consequently, as petitioners were not under obligation to renew those
contracts of employment, the separation of private respondents in this case
cannot be said to have been without justifiable cause, much less illegal.


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Probationary Employee
Cases
Skillworld Management and Marketing Corp v NLRC, 186 SCRA 465
(1990)
While it may be true that Manuel was a probationary employee at the time
of his dismiss he may not be dismissed without cause. This is settled in the
caws of Manila Hotel Corporation v. NLRC and Renato L. G.R. No. 53453,
January 22, 1986 and in the case of Alga Mother International Placement
Services v. Hon. D. Atienza, et .al., G.R. Nos. 74610-11, September 30,
1988 where We held
There is no dispute that as a probationary employee, private
respondent had but a limited tenure. Although on probationary
basis, however, Cruz still enjoys the constitutional protection on
security of tenure. During his tenure of employment therefore, or
before his contract expires, respondent Cruz cannot be removed
except for cause as provided for by law.

Managerial Employee
Cases
Inter-Orient Maritime Enterprises v NLRC, 235 SCRA 268 (1994)
It is well settled in this jurisdiction that confidential and managerial
employees cannot be arbitrarily dismissed at any time, and without cause as
reasonably established in an appropriate investigation.15 Such employees,
too, are entitled to security of tenure, fair standards of employment and the
protection of labor laws.

E. Management Rights and Security of Tenure
Requisites
o Exercised in good faith for the advancement of the
employers interests
o NOT for the purpose of defeating or circumventing the
rights of the employees under special laws or under
valid agreements

Management Rights and Security of Tenure
Cases
Collegio de San Juan de Letran v Assn of Employees, 340 SCRA 587
(2000)
The dismissal must be made pursuant to the tenets of equity and fair play;
wherein the employers right to terminate the services of an employee must
be exercised in good faith; furthermore, it must not amount to interfering
with, restraining or coercing employees in their right to self- organization.
The factual backdrop of the Ambas termination reveals that such was done
in order to strip the union of a leader. Admittedly, management has the
prerogative to discipline its employees for insubordination. But when the
exercise of such management right tends to interfere with the employees
right to self-organization, it amounts to union-busting and is therefore a
prohibited act.

San Miguel Brewery etc v Ople, 170 SCRA 25 (1989)
San Miguels offer to compensate the members of its sales force who will be
adversely affected by the implementation of the CDS, by paying them a so
called back adjustment commission to make up for the commissions they
might lose as a result of the CDS, proves the companys good faith and lack
of intention to bust their union.

So long as a companys prerogatives are exercised in good faith for the
advancement of the employers interest & not for the purpose of defeating
or circumventing the rights of the employees under special laws / under
valid agreements, the Supreme Court will uphold them.

F. Guidelines on Imposition of Penalties
a. Must NOT be exercised wantonly, but must be controlled by
SUBSTANTIVE DUE PROCESS and tempered by the
fundamental policy of protection to labor
b. Penalty must be commensurate with the act, conduct or
omission
c. Policies, rules and regulations on work-related activities
must be FAIR and REASONABLE
d. Employers are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or
those of similar rank performing functions which require the
employers trust and confidence than in ordinary rank-and-
file employees
e. Substantial proof is sufficient as basis for the imposition of
any disciplinary action upon the employee

Cases
Central Pangasinan Electric Corp v NLRC, 528 SCRA 146 (2007)
Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code provides that when the employee is dismissed for any of the just
causes under . If the cause for the termination of employment cannot be
considered as one of mere inefficiency or incompetence but an act that
constitutes an utter disregard for the interest of the employer or a palpable
breach of trust in him, the grant by the Court of separation benefits is
hardly justifiable.

In this case, private respondent was found by the Labor Arbiter and the
NLRC to have been validly dismissed for violations of company rules, and
certain acts tantamount to serious misconduct. Such findings, if supported
by substantial evidence, are accorded respect and even finality by this
Court.


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The fact that private years with no negative record prior to his dismissal, in
our view of this case, does not call for such award of benefits, since his
violation reflects a regrettable lack of loyalty and worse, betrayal of the
company. If an employee's length of service is to be regarded as a
justification for moderating the penalty of dismissal, such gesture will
actually become a prize for disloyalty, distorting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of
undesirables.

Marivel Trading Inc v NLRC, 525 SCRA 208 (2007)
For misconduct or improper behavior to be a just cause or dismissal, (a) it
must be serious, (b) must relate to the performance of the employee's
duties, and (c) must show that the employee has become unfit to continue
working for the employer. In this case, the acts complained of, under the
circumstances they were done, did not in any way pertain to Abella's duties
as chemist/quality controller. Moreover, Abella did not make false and
malicious statements against her superior. Her remarks were neither
insulting nor offensive. Her acts did not constitute serious misconduct as to
justify her dismissal.

Under Article 279 of the Labor Code, an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights
and other privileges, and to the payment of his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. These remedies give life to the workers
constitutional right to security of tenure.As regards backwages, it must be
stressed

Associated Labor Unions-TUCP v NLRC, 302 SCRA 708 (1999)
There is no question that the employer has the inherent right to discipline,
including that of dismissing its employees for just causes. This right is,
however, subject to reasonable regulation by the State in the exercise of its
police power. The finding of the NLRC that an employee violated the
company rules and regulations is subject to scrutiny by the Court to
determine if the dismissal is justified and, if so, whether the penalty
imposed is commensurate to the gravity of his offense.
In this case, we agree with the Labor Arbiter that dismissal would be
proportionate to the gravity of the offense committed by petitioner
considering the value of the articles he pilfered and the fact that he had no
previous derogatory record during his two (2) years of employment in the
company. The Labor Arbiter is certainly mistaken in regarding the articles
taken to be mere scraps and hence without value to the company. They
were of some value but not enough to warrant dismissal.
Moreover, it should also be taken into account that petitioner is not a
managerial or confidential employee in whom greater trust is placed by
management and from whom greater fidelity to duty is correspondingly
expected. It is easy to see why an unfaithful employee who is holding a
position of trust and confidence in a company poses a greater danger to its
security than a mere clerk or machine operator like petitioner.

PLDT v NLRC, 303 SCRA 9 (1999)
Dismissal is the ultimate penalty and should not be imposed if the employee
has been in service for a considerable length of time and has not been the
recipient of any disciplinary actions. Where a penalty less punitive would
suffice, whatever missteps may have been committed by the worker ought
not to be visited with a consequence so severe such as dismissal. This
interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor Code
which states that all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and
regulations shall be resolved in favor of labor.

Gabriel is not entirely faultless. As a supervisor, he is required to act
judiciously and to exercise his authority in harmony with PLDTs policies.
When he jeopardized the status of the rank and file employees whom he
ordered to by-pass the standard operating procedures of the company, to
the detriment of his employer, he was not entirely blameless. The
irregularity attributable to him could not be disregarded. He must not be
rewarded, in fairness to the employers own legitimate concerns such as
company morale and discipline.

Dismissal as Penalty
Cases
Philips Semiconductors etc v Fadriquela, 427 SCRA 408 (2004)
Dismissal is the ultimate penalty that can be meted to an employee. Where
a penalty less punitive would suffice, whatever missteps may have been
committed by the worker ought not to be visited with a consequence so
severe such as dismissal from employment. For, the Constitution guarantees
the right of workers to "security of tenure." The misery and pain attendant
to the loss of jobs then could be avoided if there be acceptance of the view
that under certain circumstances of the case the workers should not be
deprived of their means of livelihood.

Of course, the power to dismiss is a formal prerogative of the employer.
However, this is not without limitations. The employer is bound to exercise
caution in terminating the services of his employees. Dismissals must not be
arbitrary and capricious. Due process must be observed in dismissing an
employee because it affects not only his position but also his means of
livelihood. Employers should respect and protect the rights of their
employees which include the right to labor.


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Central Pangasinan Electric Corp. v Macaraeg, 395 SCRA 720 (2003)
Article 282(c) of the Labor Code allows an employer to dismiss employees
for willful breach of trust or loss of confidence. Proof beyond reasonable
doubt of their misconduct is not required, it being sufficient that there is
some basis for the same or that the employer has reasonable ground to
believe that they are responsible for the misconduct and their participation
therein rendered them unworthy of the trust and confidence demanded of
their position.

The acts of the respondents were clearly inimical to the financial interest of
the petitioner. During the investigation, they admitted accommodating
Evelyn Joy Estrada by encashing her checks from its funds for more than a
year. They did so without petitioners knowledge, much less its permission.

There was willful breach of trust on the respondents part, as they took
advantage of their highly sensitive positions to violate their duties.

The acts of the respondents caused damage to the petitioner. During those
times the checks were illegally encashed, petitioner was not able to fully
utilize the collections, primarily in servicing its debts.

It is not material that they did not misappropriate any amount of money,
nor incur any shortage relative to the funds in their possession. The basic
premise for dismissal on the ground of loss of confidence is that the
employees concerned hold positions of trust. The betrayal of this trust is the
essence of the offence for which an employee is penalized.

The respondents held positions of utmost trust and confidence. As teller and
cashier, respectively, they are expected to possess a high degree of fidelity.

They are entrusted with a considerable amount of cash. Respondent de Vera
accepted payments from petitioners consumers while respondent Macaraeg
received remittances for deposit at petitioners bank. They did not live up to
their duties and obligations.

Golden Thread Knitting Industries Inc v NLRC, 304 SCRA 568 (1999)
Dismissal is the ultimate penalty that can be meted to an employee. It must
therefore be based on a clear and not on an ambiguous or ambivalent
ground.

With regard to the case involving slashing of towels, the employees were
not given procedural due process. There was no notice and hearing, only
outright denial of their entry to the work premises by the security guards.
The charges of serious misconduct were not sufficiently proved.

With regard to the employees dismissed for redundancy, there was also
denial of procedural due process. Hearing and notice were not observed.
Thus, although the characterization of an employees services is a
management function, it must first be proved with evidence, which was not
done in this case. the company cannot merely declare that it was
overmanned.

With regard to the employee dismissed for disrespect, the SC believed the
story version of the company (which essentially said that the personnel
manager was threatened upon mere service of a suspension order to the
employee), but ruled that the dismissal could not be upheld.
The dismissal will not be upheld where it appears that the
employees act of disrespect was provoked by the employer. xxx the
employee hurled incentives at the personnel manager because she
was provoked by the baseless suspension imposed on her. The
penalty of dismissal must be commensurate with the act, conduct,
or omission to the employee.

The dismissal was too harsh a penalty; a suspension of 1 week would have
sufficed.
GTK exercised their authority to dismiss without due regard to the
provisions of the Labor Code. The right to terminate should be
utilized with extreme caution because its immediate effect is to put
an end to an employee's present means of livelihood while its
distant effect, upon a subsequent finding of illegal dismissal, is just
as pernicious to the employer who will most likely be required to
reinstate the subject employee and grant him full back wages and
other benefits.

Cebu Filveneer Corp v NLRC, 286 SCRA 556 (1998)
Due to its far-reaching implications, our Labor Code decrees that an
employee cannot be dismissed, except for the most serious causes. Article
282 enumerates the causes for which the employer may terminate an
employee.

Company says its loss of trust. The SC said that Villaflors omission cannot
be described as willful to justify dismissal. A breach is willful if it is done
intentionally, knowingly and purposely. Petitioners merely proved the
omission of the private respondent but there is no evidence whatsoever that
it was done intentionally.

Company says shes grossly or habitually negligent in the performance of
her duties. The SC said that since she has not been remiss in the
performance of her duties in the past, she cant be charged with habitual
negligence. Neither is her negligence gross in character. Gross negligence
implies a want or absence of or failure to exercise slight care or diligence or
the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. She had not the

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slightest reason to distrust Kun because he was the GM and appears to have
conducted himself well in the performance of his duties in the past. At most,
its error of judgment, not gross negligence.

G. RulesManagerial and Rank and File Employees

Cases
Salvador v Phil. Mining Service Corp., 395 SCRA 729 (2003)
The settled rule in administrative and quasi-judicial proceedings is that proof
beyond reasonable doubt is not required in determining the legality of an
employers dismissal of an employee, and not even a preponderance of
evidence is necessary as substantial evidence is considered sufficient.
Substantial evidence is more than a mere scintilla of evidence or relevant
evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise. Thus, substantial evidence is the least demanding in the
hierarchy of evidence.

The Labor Code provides that an employer may terminate the services of an
employee for just cause and this must be supported by substantial
evidence. In the case at bar, our evaluation of the evidence of both parties
indubitably shows that petitioners dismissal for loss of trust and confidence
was duly supported by substantial evidence.

As a general rule, employers are allowed wider latitude of discretion in
terminating the employment of managerial employees as they perform
functions which require the employers full trust and confidence.

To be sure, length of service is taken into consideration in imposing the
penalty to be meted an erring employee. However, the case at bar involves
dishonesty and pilferage by petitioner which resulted in respondents loss of
confidence in him. Unlike other just causes for dismissal, trust in an
employee, once lost is difficult, if not impossible, to regain. Moreover,
petitioner was not an ordinary rank-and-file employee. He occupied a high
position of responsibility. As foreman and shift boss, he had over-all control
of the care, supervision and operations of respondents entire plant. It
cannot be over-emphasized that there is no substitute for honesty for
sensitive positions which call for utmost trust. Fairness dictates that
respondent should not be allowed to continue with the employment of
petitioner who has breached the confidence reposed on him.

In the case at bar, respondent has every right to dismiss petitioner, a
managerial employee, for breach of trust and loss of confidence as a
measure of self-preservation against acts patently inimical to its interests.
Indeed, in cases of this nature, the fact that petitioner has been employed
with the respondent for a long time, if to be considered at all, should be
taken against him, as his act of pilferage reflects a regrettable lack of loyalty
which he should have strengthened, instead of betrayed.

Caoile v NLRC, 299 SCRA 76 (1998)
It is sufficient that there is some basis for such loss of confidence, such as
when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence
demanded by his position; proof beyond reasonable doubt is NOT required.

Loss of trust and confidence as a ground for valid dismissal requires proof of
involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not suffice.

B. TERMINATION OF EMPLOYMENT BY EMPLOYEE

14.02 Causes
A. Just Causes (ART. 285 [b])
Serious insult by the employer or his representative on the
honor and person of the employee
Inhuman and unbearable treatment accorded the employee by
the employer or his representative
Commission of a crime or offense by the employer or his
representative against the person of the employee or any of the
immediate family members of his family
Other causes analogous to any of the foregoing

NOTE: No written notice to employer required

B. Without Just CauseRequisites
Employer to serve WRITTEN NOTICE on employer at least 1
month in advance
Effect of failure to serve noticeEmployer may hold employee
liable for damages

C. Resignation

Definition
Cases
Habana v NLRC, 298 SCRA 537 (1998)
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 he has no other choice but to dissociate himself from his
employment.


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BMG Records v Aparecio, 532 SCRA 300 (2007)
Resignation is the voluntary act of an employee who is in a situation where
one believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate
oneself from employment. It is a formal pronouncement or relinquishment
of an office, with the intention of relinquishing the office accompanied by the
act of relinquishment. As the intent to relinquish must concur with the overt
act of relinquishment, the acts of the employee before and after the alleged
resignation must be considered in determining whether in fact, he or she
intended to sever from his or her employment.

Requisites
1. Unconditional
2. Intention to relinquish a portion of the term of office accompanied
by an act of relinquishment
- No valid resignation where it was made without proper
discernment
3. Voluntary
4. Acceptance of employernecessary to make resignation effective
- Resignations, once accepted and being the sole act of the
employee, may not be withdrawn without the consent of the
employer

Cases
Azcor Manufacturing v NLRC, 303 SCRA 26 (1999)
To constitute a resignation, it must be UNCONDITIONAL and with the
INTENT TO OPERATE AS SUCH. There must be an intention to relinquish a
portion of the term of office accompanied by an act of relinquishment.

Metro Transit Organization v NLRC, 284 SCRA 308 (1998)
An examination of the circumstances surrounding the submission of the
letter indicates that the resignation was made without proper discernment
so that it could not have been intelligently and voluntarily done.

Voluntary Resignation
Cases
Globe Telecom v Crisologo, 329 SCRA 811 (2007)
Resignation is the voluntary act of an employee who finds herself in a
situation where she believes that personal reasons cannot be sacrificed in
favor of the exigency of the service and that she has no other choice but to
disassociate herself from employment.

Employees resign for various reasons. A big salary is certainly no hindrance
to a voluntary cessation of employment. Human resource studies reveal that
various factors (in and out of the workplace) affect an employees
employment decision. In this instance, respondent would have suffered a
miscarriage had she continued to work. She obviously resigned for the sake
of her child's well-being, motherhood clearly taking precedence over her
job.

Coercion exists when there is a reasonable or well-grounded fear of an
imminent evil upon a person or his property or upon the person or property
of his spouse, descendants or ascendants. No such situation existed in this
case.

As a matter of fact, respondents resignation letter and May 2, 2002 letter
both contained expressions of gratitude. In her May 2, 2002 letter, she told
petitioner Gonzales:
I wish to express my appreciation for the training you readily gave
me while I was under your supervision.

In St. Michael Academy v. NLRC, we held that expressions of gratitude
cannot possibly come from an employee who is just forced to resign as they
belie allegations of coercion.

Moreover, the May 2, 2002 letter was sent after
respondents April 30, 2002 conversation with petitioner Gonzales. Indeed, if
something untoward really took place in the course of that conversation,
experience dictates that respondent would not have bothered to thank
petitioner Gonzales. Therefore, respondents assertion that she was forced
to resign was simply not true.

Vicente v CA, 531 SCRA 244 (2007)
From the totality of evidence on record, it was clearly demonstrated that
respondent Cinderella has sufficiently discharged its burden to prove that
petitioners resignation was voluntary. In voluntary resignation, the
employee is compelled by personal reason(s) to disassociate himself from
employment. It is done with the intention of relinquishing an office,
accompanied by the act of abandonment. To determine whether the
employee indeed intended to relinquish such employment, the act of the
employee before and after the alleged resignation must be considered.

Petitioner relinquished her position when she submitted the letters of
resignation. The resignation letter submitted on February 15, 2000
confirmed the earlier resignation letter she submitted on February 7, 2000.
The resignation letter contained words of gratitude, which can hardly come
from an employee forced to resign.

Phil. Wireless Inc v NLRC, 310 SCRA 653 (1999)
Constructive dismissal is an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or unlikely;
when there is a demotion in rank and/or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable
to the employee.

In this case, the Court ruled that Lucila voluntarily resigned and was not

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pressured into doing so.

Voluntary resignation is defined as the act of en 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 he has no other choice but to
disassociate himself from his employment.

Lucilas basis for his demotion is inadequate as the Court ruled that there
is no demotion where there is no reduction in position rank or salary as a
result of such transfer.

Pascua v NLRC, 287 SCRA 554 (1998)
Basic is the doctrine that resignation must be voluntary and made with the
intention of relinquishing the office, accompanied with anact of
relinquishment. Based on the evidence on record, we are more than
convinced that Petitioners Lilia Pascua, Mimi Macanlalay, Susan C. De Castro
and Violeta Soriano did not voluntarily quit their jobs. Rather, they were
forced to resign or were summarily dismissed without just cause. Petitioners
-- except Victoria L. Santos -- forthwith took steps to protest their layoff and
thus cannot, by any logic, be said to have abandoned their work.

In labor cases, the employer has the burden of proving that the dismissal
was for a just cause; failure to show this, as in the instant case, would
necessarily mean that the dismissal was unjustified and, therefore, illegal.
To allow an employer to dismiss an employee based on mere allegations and
generalities would place the employee at the mercy of his employer; and
the right to security of tenure, which this Court is bound to protect, would
be unduly emasculated. Considering the antecedents in the summary
dismissals effected against Petitioners Pascua, Macanlalay, De Castro and
Soriano, the causes asserted by private respondent are, at best, tenuous or
conjectural; at worst, they are mere afterthoughts.

Under the Labor Code, as amended, the dismissal of an employee which the
employer must validate has a twofold requirement: one is substantive, the
other procedural. Not only must the dismissal be for a just or an authorized
cause as provided by law (Articles 282, 283 and 284 of the Labor Code, as
amended); the rudimentary requirements of due process -- the opportunity
to be heard and to defend oneself -- must be observed as well.

Petitioners Pascua and Macanlalays acceptance of separation pay did not
necessarily amount to estoppel; nor did it connote a waiver of their right to
press for reinstatement, considering that such acceptance -- particularly by
Petitioner Pascua who had to feed her four children -- was due to dire
financial necessity.

To constitute a resignation, it must be unconditional and with the intent to
operate as such. There must be an intention to relinquish a portion of the
term of office accompanied by an act of relinquishment. In the instant case,
the fact that Capulso signified his desire to resume his work when he went
back to petitioner AZCOR after recuperating from his illness, and actively
pursued his case for illegal dismissal before the labor courts when he was
refused admission by his employer, negated any intention on his part to
relinquish his job at AZCOR.

Moreover, a closer look at the subject resignation letters readily reveals the
following: (a) the resignation letter allegedly tendered by Capulso to
Filipinas Paso was identically worded with that supposedly addressed by him
to AZCOR; (b) both were pre-drafted with blank spaces filled up with the
purported dates of effectivity of his resignation; and, (c) it was written in
English, a language which Capulso was not conversant with considering his
low level of education. No other plausible explanation can be drawn from
these circumstances than that the subject letters of resignation were
prepared by a person or persons other than Capulso. And the fact that he
categorically disowned the signatures therein and denied having executed
them clearly indicates that the resignation letters were drafted without his
consent and participation.

Even assuming for the sake of argument that the signatures were genuine,
we still cannot give credence to those letters in the absence of any showing
that Capulso was aware that what he was signing then were in fact
resignation letters or that he fully understood the contents thereof. Having
introduced those resignation letters in evidence, it was incumbent upon
petitioners to prove clearly and convincingly their genuineness and due
execution, especially considering the serious doubts on their authenticity.

Valdez v NLRC, 286 SCRA 87 (1998)
The reason for the stoppage of operation of the bus assigned to petitioner
was the breakdown of the airconditioning unit, which is a valid reason for
the suspension of its operation. However, such suspension regarding that
particular bus should likewise last only for a reasonable period of time. The
period of six months was more than enough for it to cause the repair
thereof. Beyond that period, the stoppage of its operation was already
legally unreasonable and economically prejudicial to herein petitioner who
was not given a substitute vehicle to drive.

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 six months, he may be considered to have been illegally
dismissed from the 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 a
specific component thereof.


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It was not denied by private respondent that it tried to force private
respondent to sign an undated company-prepared resignation letter and a
blank undated affidavit of quitclaim and release which the latter validly
refused to sign. Furthermore, the bus which petitioner used to drive was
already plying a transportation route as an ordinary bus and was being
driven by another person, without petitioner having been priorly offered the
same alternative arrangement.

The other allegation of private respondent that petitioner voluntarily
resigned from work obviously does not deserve any consideration. It would
have been illogical for herein petitioner to resign and then file a complaint
for illegal dismissal. Resignation is inconsistent with the filing of the said
complaint. - 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 relinquishing the office accompanied by an act of
relinquishment.

The cardinal rule in termination cases is that the employer bears the burden
of proof to show that the dismissal is for just cause, failing in which it would
mean that the dismissal is not justified. This rule applies adversely against
herein respondent company since it has utterly failed to discharge that onus
by the requisite quantum of evidence.

Under Article 279 of the Labor Code, as amended, an employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full back wages, inclusive
of allowances, and to other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his
actual reinstatement.

Effectivity
Cases
BMG Records v Aparecio, 532 SCRA 300 (2007)
Upon such acceptance, it may not be unilaterally withdrawn without the
consent of petitioners. When the employee later signified the intention of
continuing his or her work, it was already up to the employer to accept the
withdrawal of his or her resignation. The mere fact that the withdrawal was
not accepted does not constitute illegal dismissal, the acceptance of the
withdrawal of the resignation being the employer's sole prerogative. As held
in Intertrod Maritime, Inc. v. NLRC:

Once an employee resigns and his resignation is accepted, he no
longer has any right to the job. If the employee later changes his
mind, he must ask for approval of the withdrawal of his resignation
from his employer, as if he were re-applying for the job. It will then
be up to the employer to determine whether or not his service would
be continued. If the employer accepts said withdrawal, the
employee retains his job. If the employer does not x x x the
employee cannot claim illegal dismissal for the employer has the
right to determine who his employees will be. To say that an
employee who has resigned is illegally dismissed, is to encroach
upon the right of employers to hire persons who will be of service to
them.

Validity of Policy
Cases
Manila Broadcasting v NLRC, 294 SCRA 486 (1998)
Although 11(b) of R.A. No. 6646 does not require mass-media
commentators and announcers such as private respondent to resign from
their radio or TV stations but only to go on leave for the duration of the
campaign period, we think that the company may nevertheless validly
require them to resign as a matter of policy.

The policy is justified on the following grounds:
1) Working for the government and the company at the same time is
clearly disadvantageous and prejudicial to the rights and interest not
only of the company but the public as well. In the event an employee
wins in an election, he cannot fully serve, as he is expected to do, the
interest of his employer. The employee has to serve two (2)
employers, obviously detrimental to the interest of both the
government and the private employer.

2) In the event the employee loses in the election, the impartiality and
cold neutrality of an employee as broadcast personality is suspect,
thus readily eroding and adversely affecting the confidence and trust
of the listening public to employers station.

These are valid reasons for petitioner. No law has been cited by private
respondent prohibiting a rule such as that in question.

14.03 No TerminationPerformance of Military or Civic Duty

Circumstances that shall NOT terminate employment (ART. 286)
Bona fide suspension of the operation of a business or
undertaking NOT exceeding 6 months
Fulfillment by the employee of a military or civic duty

Employer shall reinstate the employee of his former position without
loss of seniority rights if employee indicates his desire to resume to
work not later than 1 month from the resumption of operations of his
employer or from relief from the military or civic duty (ART. 286)

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Employer-employee relationship is deemed SUSPENDED in case of
suspension of operation, unless suspension is for the purpose of
defeating the rights of the employees, or mandatory fulfillment of
military or civic duty (Bk VI, Rule I, Sec. 12, Omnibus Rules)
Payment of Wages and grant of other benefits and privileges while
employee is on military or civic duty shall be subject to:
o Special laws or decrees
o Individual or CBAs
o Voluntary employer practice or policy

When bona fide suspension of the operation of a business or
undertaking exceeds six months, then the employment of the employee
shall be deemed terminated.

C. TERMINATION OF EMPLOYMENT BY EMPLOYER

PRELIMINARY MATTERS
14.04 Basis of Right and Requirements

Basis
Cases
PLDT v Balbastro, 519 SCRA 233 (2007)
While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects
one's source or means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to
the employer. The law in protecting the rights of the employees authorizes
neither oppression nor self-destruction of the employer. It should be made
clear that when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but
never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (Justice is to be denied to none).

Gutierrez v Singer Sewing Machine Co, 411 SCRA 512 (2003)
The penalty imposed on the erring employee ought to be proportionate to
the offense, taking into account its nature and surrounding circumstances.
In the application of labor laws, the courts and other agencies of the
government are guided by the social justice mandate in our fundamental
law.

To be lawful, the cause for termination must be a serious and grave
malfeasance to justify the deprivation of a means of livelihood. This is
merely in keeping with the spirit of our Constitution and laws which lean
over backwards in favor of the working class, and mandate that every doubt
must be resolved in their favor.

Manila Trading and Supply Co v Zulueta, 69 Phil. 485 (1940)
The right of an employer to freely select or discharge his employees is
subject to regulation by the State basically in the exercise of its paramount
police power. But an employer cannot legally be compelled to continue with
the employment of a person who admittedly was guilty of misfeasance or
malfeasance towards his employer, and whose continuance in the service of
the latter is patently inimical to his interests. The law, in protecting the
rights of the laborer, authorizes neither oppression nor self-destruction of
the employer.

Agabon v NLRC, 442 SCRA 573 (2004)
To dismiss an employee, the law requires not only the existence of a just
and valid cause but also enjoins the employer to give the employee the
opportunity to be heard and to defend himself.

Article 282 of the Labor Code
enumerates the just causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of
his employer or the latter's representative in connection with the employee's
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 his 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.

PLDT v Tolentino, 438 SCRA 555 (2004)
This Court is cognizant of managements right to select the people who will
manage its business as well as its right to dismiss them. However, this right
cannot be abused. Its exercise must always be tempered with compassion
and understanding. As former Chief Justice Enrique Fernando eloquently put
it:
Where a penalty less severe would suffice, whatever missteps may
be committed by labor ought not to be visited with consequence so
severe. It is not only because of the laws concern for the
workingmen. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner. The misery and pain attendant on
the loss of jobs then could be avoided if there be acceptance of the
view that under all the circumstances of a case, the workers should
not be deprived of their means of livelihood. Nor is this to condone
what has been done by them.

To reinstate respondent is not to condone his "misstep" since his
participation in the "internal arrangement" was not sufficiently established
to warrant his dismissal from PLDT which he served faithfully for 23 years.

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Perez v Medical City General Hospital, 484 SCRA 138 (2006)
The power to dismiss an employee is a recognized prerogative that is
inherent in the employers right to freely manage and regulate his business.
An employer cannot be expected to retain an employee whose lack of
morals, respect and loyalty to his employer or regard for his employers
rules and appreciation of the dignity and responsibility of his office has so
plainly and completely been bared. An employer may not be compelled to
continue to employ a person whose continuance in service will patently be
inimical to his interest. The dismissal of an employee, in a way, is a
measure of self-protection. Nevertheless, whatever acknowledged right the
employer has to discipline his employee, it is still subject to reasonable
regulation by the State in the exercise of its police power.

Thus, it is within
the power of this Court not only to scrutinize the basis for dismissal but also
to determine if the penalty is commensurate to the offense, notwithstanding
the company rules.
Penalties
Cases
Steel Pipe Corp v Bardaje, 522 SCRA 155 (2007)
We agree with the Labor Arbiters conclusion that respondents misconduct
on August 19, 1999 does not warrant the imposition of the ultimate sanction
of dismissal. Undeniably, the altercation between respondent and Barrios
was nipped in the bud by the timely intervention of other employees. The
momentary work stoppage did not pose a threat to the safety or peace of
mind of the workers. Neither did such disorderly behavior cause substantial
prejudice to the business of respondent SSPC.

Time and again, we have held that it is cruel and unjust to impose the
drastic penalty of dismissal if not commensurate to the gravity of the
misdeed. The reason, as this Court first enunciated in Almira v. B.F.
Goodrich Philippines, Inc., is not too difficult to understand
xxx [W]here a penalty less punitive would suffice, whatever
missteps may be committed by labor ought not to be visited with a
consequence so severe. It is not only because of the laws concern
for the workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner. The misery and pain attendant on
the loss of jobs then could be avoided if there be acceptance of the
view that under all circumstances of this case, petitioners should not
be deprived of their means of livelihood. Nor is this to condone what
had been done by them For all this while, since private respondent
considered them separated from the service, they had not been
paid. From the strictly juridical standpoint, it cannot be too strongly
stressed, to follow Davis in his masterly work, Discretionary Justice,
that where a decision may be made to rest [on] informed judgment
rather than rigid rules, all the equities of the case must be accorded
their due weight. Finally, labor law determinations, to quote from
Bultmann, should be not only secundum rationem but also
secundum caritatem.

Requirements
ART. 282: Termination by employer. An employer may terminate an
employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with
his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
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
Ministry 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 worker affected thereby shall be entitled
to a separation pay equivalent to at least his 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 to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered
as one (1) whole year.

ART. 277 (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

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Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a
statement of the causes 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 the 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.

Substantive and Procedural Due Process
Cases
Fujitsu Computer Products v CA, 454 SCRA 737 (2005)
It is settled that to constitute a valid dismissal from employment, two
requisites must concur: (a) the dismissal must be for any of the causes
provided for in Article 282 of the Labor Code; and (b) the employee must be
afforded an opportunity to be heard and defend himself. This means that an
employer can terminate the services of an employee for just and valid
causes, which must be supported by clear and convincing evidence. It also
means that, procedurally, the employee must be given notice, with
adequate opportunity to be heard, before he is notified of his actual
dismissal for cause.

Ariola v Philex Mining Corp, 446 SCRA 152 (2005)
Thus, the requirements for retrenchment are: (1) it is undertaken to
prevent losses, which are not merely de minimis, but substantial, serious,
actual, and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) the employer serves
written notice both to the employees and the DOLE at least one month prior
to the intended date of retrenchment; and (3) the employer pays the
retrenched employees separation pay equivalent to one month pay or at
least # month pay for every year of service, whichever is higher. The Court
later added the requirements that the employer must use fair and
reasonable criteria in ascertaining who would be dismissed and who would
be retained among the employees and that the retrenchment must be
undertaken in good faith. Except for the written notice to the affected
employees and the DOLE, non-compliance with any of these requirements
renders the retrenchment illegal.

PNB v Cabansag, 460 SCRA 514 (2005)
As a regular employee, respondent was entitled to all rights, benefits and
privileges provided under our labor laws. One of her fundamental rights is
that she may not be dismissed without due process of law. The twin
requirements of notice and hearing constitute the essential elements of
procedural due process, and neither of these elements can be eliminated
without running afoul of the constitutional guarantee.

In dismissing employees, the employer must furnish them two written
notices: 1) one to apprise them of the particular acts or omissions for which
their dismissal is sought; and 2) the other to inform them of the decision to
dismiss them. As to the requirement of a hearing, its essence lies simply in
the opportunity to be heard.

The evidence in this case is crystal-clear. Respondent was not notified of
the specific act or omission for which her dismissal was being sought.
Neither was she given any chance to be heard, as required by law. At any
rate, even if she were given the opportunity to be heard, she could not have
defended herself effectively, for she knew no cause to answer to.
All that petitioner tendered to respondent was a notice of her employment
termination effective the very same day, together with the equivalent of a
one-month pay. This Court has already held that nothing in the law gives
an employer the option to substitute the required prior notice and
opportunity to be heard with the mere payment of 30 days salary.

Well-settled is the rule that the employer shall be sanctioned for
noncompliance with the requirements of, or for failure to observe, due
process that must be observed in dismissing an employee.

Genuino Ice Co v Magpantay, 493 SCRA 195 (2006)
For termination of employment based on just causes as defined in Article
282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or
grounds of 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 given 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.

Simply stated, the employer must furnish the employee a written notice
containing a statement of the cause for termination and to afford said
employee ample opportunity to be heard and defend himself with the
assistance of his representative, if he so desires, and the employee must be

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notified in writing of the decision dismissing him, stating clearly the reasons
therefor.

Suico v NLRC, 513 SCRA 325 (2007)
Art. 277 (b) in relation to Art. 264 (a) and (e) recognizes the right to due
process of all workers, without distinction as to the cause of their
termination. Where no distinction is given, none is construed. Hence, the
foregoing standards of due process apply to the termination of employment
of Suico, et al. even if the cause therefor was their supposed involvement in
strike-related violence prohibited under Art. 264 (a) and (e).

Moreover, the procedure for termination prescribed under Art. 277(b) and
Rule XXII of the Implementing Rules of Book V is supplemented by existing
company policy. Art. 277(b) provides that the procedure for termination
prescribed therein is without prejudice to the adoption by the employer of
company policy on the matter, provided this conforms with the guidelines
set by the DOLE such as Rule XXII of the Implementing Rules of Book V.
This is consistent with the established principle that employers are allowed,
under the broad concept of management prerogative, to adopt company
policies that regulate all aspects of personnel administration including the
dismissal and recall of workers.

14.05 Just CausesSubstantive Due ProcessGrounds for
Termination

Grounds for Termination
Serious misconduct or willful disobedience
Gross or habitual neglect of duties
Fraud or willful breach of trust
Commission of a crime or offense against the person of the
employer or any immediate member of his family or duly
authorized representative
Analogous causes
Installation of labor saving devices
Redundancy
Retrenchment to prevent losses
Closing or cessation of operation
Disease

A. Serious Misconduct
Serious
Related to the performance of the employees outlets AND
Shows that the employee has become unfit to continue working for
the employer

Definition and Acts
Cases
PLDT v Bolso, 530 SCRA 550 (2007)
The Labor Code provides that an employer may terminate the services of an
employee for a just cause. Among the just causes in the Labor Code is
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 Labor Code 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 employees work to
constitute just cause for his separation.

Supreme Steel Pipe Corp v Bardaje, 522 SCRA 155 (2007)
In this jurisdiction, we have consistently defined misconduct as an improper
or wrong conduct, a transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, implies
wrongful intent and not mere error of judgment. To be a just cause for
termination under Article 282 of the Labor Code of the Philippines, the
misconduct must be serious, that is, it must be of such grave and
aggravated character and not merely trivial or unimportant. However
serious, such misconduct must nevertheless be in connection with the
employees work; the act complained of must be related to the performance
of the employees duties showing him to be unfit to continue working for the
employer.

Thus, for misconduct or improper behavior to be a just cause for
dismissal, (a) it must be serious; (b) it must relate to the performance of
the employees duties; and, (c) it must show that the employee has become
unfit to continue working for the employer.

Sulapas v Basco, 521 SCRA 457 (2007)
Grave misconduct manifests a clear intent to violate the law or a flagrant
disregard of established rule.

Unfortunately, the complainant failed to
substantiate her allegation of bad faith and improper motive on the part of
respondent. Nonetheless, respondent should be held accountable for
neglecting to perform his duty under Section 9, Rule 141 of the Rules of
Court. His non-feasance was the cause of the complainants failure to pay
the legal fees and consequently, the delay in the execution of the July 13,
2001 court order.

Rodriguez v Eugenio, 512 SCRA 489 (2007)
Respondents act of demanding and receiving money from the uncle of a
party litigant constitutes grave misconduct in office. It is this kind of gross
and flaunting misconduct, no matter how nominal the amount involved on
the part of those who are charged with the responsibility of administering
the law and rendering justice quickly, which erodes the respect for law and

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the courts.

Pursuant to Section 23, Rule XIV of the Omnibus Rules Implementing Book
V of Executive Order 292, Grave Misconduct, being in the nature of grave
offenses, carries the extreme penalty of dismissal from the service with
forfeiture of retirement benefits except accrued leave credits, and perpetual
disqualification from re-employment in government service.

Punzal v ETST Technologies, 518 SCRA 66 (2007)
Given the reasonableness of Geiserts decision that provoked petitioner to
send the second e-mail message, the observations of the Court of Appeals
that "the message x x x resounds of subversion and undermines the
authority and credibility of management" and that petitioner "displayed a
tendency to act without managements approval, and even against
managements will" are well taken.

Moreover, in circulating the second e-mail message, petitioner violated
Articles III (8) and IV (5) of ETSIs Code of Conduct on "making false or
malicious statements concerning the Company, its officers and employees or
its products and services" and "improper conduct or acts of discourtesy or
disrespect to fellow employees, visitors, guests, clients, at any time."

Petitioners reliance on Samson is misplaced. First, in that case, this Court
found that the misconduct committed was not related with the employees
work as the offensive remarks were verbally made during an informal
Christmas gathering of the employees, an occasion "where tongues are
more often than not loosened by liquor or other alcoholic beverages" and "it
is to be expected x x x that employees freely express their grievances and
gripes against their employers."

In petitioners case, her assailed conduct was related to her work. It reflects
an unwillingness to comply with reasonable management directives.

While in Samson, Samson was held to be merely expressing his
dissatisfaction over a management decision, in this case, as earlier shown,
petitioners offensive remarks were directed against Geisert.

Additionally, in Samson, this Court found that unlike in Autobus Workers
Union (AWU) v. NLRC

where dismissal was held to be an appropriate penalty
for uttering insulting remarks to the supervisor, Samson uttered the
insulting words against EDT in the latters absence. In the case at bar, while
petitioner did not address her e-mail message to Geisert, she circulated it
knowing or at least, with reason to know that it would reach him. As
ETSI notes, "[t]hat [petitioner] circulated this e-mail message with the
knowledge that it would reach the eyes of management may be reasonably
concluded given that the first e-mail message reached her immediate
supervisors attention.
Finally, in Samson, this Court found that the "lack of urgency on the part of
the respondent company in taking any disciplinary action against [the
employee] negates its charge that the latters misbehavior constituted
serious misconduct." In the case at bar, the management acted 14 days
after petitioner circulated the quoted e-mail message.

Petitioner asks that her 12 years of service to ETSI during which, so she
claims, she committed no other offense be taken as a mitigating
circumstance. This Court has held, however, that "the longer an employee
stays in the service of the company, the greater is his responsibility for
knowledge and compliance with the norms of conduct and the code of
discipline in the company."

Cansino v Prudential Shipping, 516 SCRA (2007)
In the earlier case of Seahorse Maritime Corporation v. National Labor
Relations Commission, which likewise involved a seaman who was prone to
intoxication and creating trouble aboard ship when drunk, we held that
serious misconduct in the form of drunkenness and disorderly and
violent behavior, habitual neglect of duty, and insubordination or
willful disobedience to the lawful orders of his superior officer, are
just causes for dismissal of an employee under Article 282 of the Labor
Code, and that where the dismissal is for cause, the erring seaman is
neither entitled to separation pay or to the salaries for the unexpired portion
of his contract.
Echeverria v Venutek, 516 SCRA 72 (2007)
Misconduct has been defined as an improper or wrong conduct; a
transgression of some established and definite rule of action; a forbidden
act; a dereliction of duty. It implies wrongful intent and not mere error of
judgment. To be categorized as serious, it must be of such grave and
aggravated character and not merely trivial and unimportant. And to
constitute just cause for an employees separation, it must be in connection
with his work.

To justify the termination of an employees services, loss of trust and
confidence as basis thereof must be based on a willful breach of the trust
reposed in him by his employer. Ordinary breach will not suffice.

A breach of trust is willful if it is done intentionally, knowingly and purposely
without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.

Torreda v Toshiba, 515 SCRA 133 (2007)
Misconduct has been defined as 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 of judgment. The misconduct to be serious must be of
such grave and aggravated character and not merely trivial and

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unimportant. Such misconduct, however, serious, must nevertheless be in
connection with the employees work to constitute just cause for his
separation. Thus, for misconduct or improper behavior to be a just cause for
dismissal, (a) it must be serious; (b) must relate to the performance of the
employees duties; and (c) must show that the employee has become unfit
to continue working for the employer. Indeed, an employer may not be
compelled to continue to employ such person whose continuance in the
service would be patently inimical to his employers interest.

Valiao v CA, 435 SCRA 543 (2004)
Serious misconduct and habitual neglect of duties are among the just causes
for terminating an employee under the Labor Code of the Philippines. Gross
negligence connotes want of care in the performance of ones duties.
Habitual neglect implies repeated failure to perform ones duties for a period
of time, depending upon the circumstances. The Labor Arbiters findings that
petitioners habitual absenteeism and tardiness constitute gross and habitual
neglect of duties that justified his termination of employment are sufficiently
supported by evidence on record. Petitioners repeated acts of absences
without leave and his frequent tardiness reflect his indifferent attitude to
and lack of motivation in his work. More importantly, his repeated and
habitual infractions, committed despite several warnings, constitute gross
misconduct unexpected from an employee of petitioners stature. This Court
has held that habitual absenteeism without leave constitute gross
negligence and is sufficient to justify termination of an employee.

Villamor Golf Club v Pehid, 472 SCRA 36 (2005)
Serious misconduct as a valid cause for the dismissal of an employee is
defined as improper or wrong conduct; 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. To be serious within the meaning and intendment of the law, the
misconduct must be of such grave and aggravated character and not merely
trivial or unimportant. However serious such misconduct, it must,
nevertheless, be in connection with the employees work to constitute just
cause for his separation. The act complained of must be related to the
performance of the employees duties such as would show him to be unfit to
continue working for the employer.

Lakpue Drug v Belga, 473 SCRA 617 (2005)
We have defined misconduct as a 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 employees work to constitute
just cause for his separation.

Belgas failure to formally inform Tropical of her pregnancy can not be
considered as grave misconduct directly connected to her work as to
constitute just cause for her separation.

Coca-Cola Bottlers v Kapisanan ng Malayang Manggagawa sa Coca-
Cola, 452 SCRA 480 (2005)
In cases when an employer may dismiss an employee on the ground of
willful disobedience, there must be concurrence of at least two requisites:
(1) the employees assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude; and
(2) 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.

In the present case, the respondent was dismissed for dishonesty, more
specifically for violation of the company policy, and, more particularly,
Sections 10 and 12 of Company Rules and Regulation No. 005-85, Fictitious
sales transactions; Falsification of company
records/data/documents/reports; Conspiring or conniving with, or directing
others to commit fictitious transactions; and inefficiency in the performance
of duties, negligence and blatant disregard of or deviation from established
control and other policies and procedures.

However, the petitioner failed to adduce clear and convincing evidence that
the respondent had fictitious sales transactions, or that he falsified company
records/documents/reports, or that he connived with customers of the
petitioner to persuade them to commit fictitious transactions. It is
undisputed that the respondent entered into the sales transactions subject
of the complaint of the petitioner for and in behalf of the petitioner. While it
is true that the respondent failed to indicate the return of the empty bottles
made by a customer either in the petitioner companys copy of the sales
invoice or in his reports on his sales transactions; and overcharged a
customer in one transaction, there is no clear and convincing evidence that
the respondent did so intentionally, for a wrong or criminal purpose. There
is also no showing that the respondent intentionally defied the lawful orders
or regulations of the petitioner. Indeed, as declared by the CA in its assailed
resolution, the petitioner did not suffer any material loss by the
respondents actuations.

Genuino Ice v Magpantay, 493 SCRA 195 (2006)
In Coca-Cola Bottlers, Phils. Inc v. Kapisanan ng Malayang Manngagawa sa
Coca-Cola-FFW, it was held that an employer enjoys a wide latitude of
discretion in the promulgation of policies, rules and regulations on work-
related activities of the employees so long as they are exercised in good
faith for the advancement of the employers interest and not for the purpose
of defeating or circumventing the rights of the employees under special laws
or under valid agreements. Company policies and regulations are generally

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valid and binding on the parties and must be complied with until finally
revised or amended, unilaterally or preferably through negotiation, by
competent authority. For misconduct or improper behavior to be a just
cause for dismissal, the same must be related to the performance of the
employees duties and must show that he has become unfit to continue
working for the employer.

Premiere Dev. Bank v Mantal, 485 SCRA 234 (2006)
Misconduct is improper or wrongful 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. Under Article 282 of the Labor Code, the misconduct, to be a
just cause for termination, must be of such grave and aggravated character,
not merely of a trivial or unimportant nature. For serious misconduct to
warrant the dismissal of an employee, it (1) must be serious; (2) must
relate to the performance of the employees duty; and (3) must show that
the employee has become unfit to continue working for the employer.

Molina v Pacific Plans, 484 SCRA 498 (2006)
Misconduct has been defined as improper or wrong conduct; the
transgression of some established and definite rule of action; a forbidden
act, a dereliction of duty, unlawful in character and implies wrongful intent
and not mere error of 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 employees work to constitute just cause for his
separation.
The loss of trust and confidence, in turn, must be based on the willful
breach of the trust reposed in the employee by his employer. Ordinary
breach will not suffice. A breach of trust is willful if it is done intentionally,
knowingly and purposely without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently.

The Court has laid down the guidelines for the application of the doctrine for
loss of confidence, thus:
1. The loss of confidence must not be simulated;
2. It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
3. It may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary;
4. It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith; and
5. The employee involved holds a position of trust and confidence.

Willful Disobedience
Employees assailed conduct must have been WILLFUL
characterized by a wrongful and perverse attitude
The order violated must have been
o Reasonable
o Lawful
o Made known to the employee
o Pertain to the duties which had been engaged to discharge

Cases
Micro Sales Operation Network v NLRC, 472 SCRA 328 (2005)
For willful disobedience to be a valid cause for dismissal, the following twin
elements must concur: (1) the employee's assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2)
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.

Bascon v CA, 422 SCRA 122 (2004)
However, willful disobedience of the employers lawful orders, as a just
cause for dismissal of an employee, envisages the concurrence of at least
two requisites: (1) the employee's assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) 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.

In this case, we find lacking the element of willfulness characterized by a
perverse mental attitude on the part of petitioners in disobeying their
employers order as to warrant the ultimate penalty of dismissal. Wearing
armbands and putting up placards to express ones views without violating
the rights of third parties, are legal per se and even constitutionally
protected. Thus, MCCH could have done well to respect petitioners right to
freedom of speech instead of threatening them with disciplinary action and
eventually terminating them.

Neither are we convinced that petitioners exercise of the right to freedom of
speech should be taken in conjunction with the illegal acts committed by
other union members in the course of the series of mass actions. It bears
stressing that said illegal acts were committed by other union members
after petitioners were already terminated, not during the time that the latter
wore armbands and put up placards.

Finally, even if willful disobedience may be properly appreciated, still, the
penalty of dismissal is too harsh. Not every case of willful disobedience by
an employee of a lawful work-connected order of the employer may be
penalized with dismissal. There must be reasonable proportionality between,
on the one hand, the willful disobedience by the employee and, on the other
hand, the penalty imposed therefor. In this case, evidence is wanting on the
depravity of conduct and willfulness of the disobedience on the part of
petitioners, as contemplated by law. Wearing armbands to signify union

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membership and putting up placards to express their views cannot be of
such great dimension as to warrant the extreme penalty of dismissal,
especially considering the long years of service rendered by petitioners and
the fact that they have not heretofore been subject of any disciplinary action
in the course of their employment with MCCH.

R Transport Corp v Ejaneira, 428 SCRA 725 (2004)
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. Of the two, the
second element is the more determinative factor and should be manifested
by some overt acts. Mere absence is not sufficient. It is the employer who
has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning.

B. Gross and Habitual Neglect of Duties
- Gross Negligence is characterized by want of even slight care, acting
or omitting to act in a situation where there is a duty to act, not
inadvertently, but willfully and intentionally with a conscious
difference to consequences insofar as other persons may be
affected.
- Gross Negligence connotes want of care in the performance of ones
duties.
- Habitual Negligence implies repeated failure to perform ones duties
for a period of time, depending upon the circumstances.
- Neglect of duty MUST be BOTH gross and habitual.
- Simple negligence is NOT a ground for dismissal of an employee.

Requisites
Cases
Judy Philippines v NLRC, 289 SCRA 755 (1998)
Petitioner anchors its right to terminate the employment of Virginia Antiola
on the ground of "gross neglect of duties," under Article 282 (b) of the
Labor Code. Gross negligence implies a want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them.

We affirm the finding of the NLRC that "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." As aptly pronounced by the NLRC, "the
penalty of dismissal is quite severe here" noting that the labor arbiter
himself admits that she committed the infraction for the first time.

Neither can the respondents claim that the petitioner was guilty of gross
negligence in the proper maintenance of the truck constitute a valid and just
cause for his dismissal. Gross negligence implies a want or absence of or
failure to exercise slight care or diligence, or the entire absence of care. It
evinces a thoughtless disregard of consequences without exerting any effort
to avoid them. The negligence, to warrant removal from service, should not
merely be gross but also habitual. The single and isolated act of the
petitioners negligence in the proper maintenance of the truck alleged by the
respondents does not amount to "gross and habitual neglect" warranting his
dismissal.

Challenge Socks Corp v CA, 474 SCRA 356
of time. Buguats repeated acts of absences without leave and her frequent
tardiness reflect her indifferent attitude to and lack of motivation in her
work. Her repeated and habitual infractions, committed despite several
warnings, constitute gross misconduct. Habitual absenteeism without leave
constitute gross negligence and is sufficient to justify termination of an
employee.

Gross and Habitual Negligence Defined
Cases
Gross negligence connotes want of care in the performance of ones duties.
of time, depending upon the circumstances. The Labor Arbiters findings that
petitioners habitual absenteeism and tardiness constitute gross and habitual
neglect of duties that justified his termination of employment are sufficiently
supported by evidence on record. Petitioners repeated acts of absences
without leave and his frequent tardiness reflect his indifferent attitude to
and lack of motivation in his work. More importantly, his repeated and
habitual infractions, committed despite several warnings, constitute gross
misconduct unexpected from an employee of petitioners stature. This Court
has held that habitual absenteeism without leave constitute gross
negligence and is sufficient to justify termination of an employee.

Tres Reyes v Maxims Tea House, 398 SCRA 288 (2003)
Under the Labor Code, gross negligence is a valid ground for an employer to
terminate an employee. Gross negligence is negligence characterized by
want of even slight care, acting or omitting to act in a situation where there
is a duty to act, not inadvertently but willfully and intentionally with a
conscious indifference to consequences insofar as other persons may be
affected. In this case, however, there is no substantial basis to support a
finding that petitioner committed gross negligence.


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Phil Aeolus Automotive United Corp v NLRC, 331 SCRA 237 (2000)
Gross negligence implies a want or absence of or failure to exercise slight
care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. The
negligence, to warrant removal from service, should not merely be gross but
also habitual. Likewise, the ground "willful breach by the employee of the
trust reposed in him by his employer" must be founded on facts established
by the employer who must clearly and convincingly prove by substantial
evidence the facts and incidents upon which loss of confidence in the
employee may fairly be made to rest. All these requirements prescribed by
law and jurisprudence are wanting in the case at bar.

Cebu Filveneer Corp v NLRC, 286 SCRA 556 (1998)
Nor are we prepared to agree with petitioners that the private respondent
was grossly or habitually negligent in the performance of her duties. The
records reveal that the private respondent has not been remiss in the past
in the performance of her duties, hence, she cannot be charged with
habitual negligence. We cannot also characterize private respondent's
negligence as gross in character. Gross negligence implies a want or
absence of or failure to exercise slight care or diligence or the entire
absence of care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them.

In the case at bar, the evidence does not
show that the private respondent has any reason to distrust Mr. Kun. Mr.
Kun was petitioner's general manager and appears to have conducted
himself well in the performance of his duties in the past. There was not the
slightest reason to suspect that Mr. Kun would commit any illegal act. At the
most, the trust misplaced by the private respondent constitutes error of
judgment but not gross negligence.

Citibank NA v Gatchalian, 240 SCRA 212 (1995)
Gross negligence implies a want or absence of or failure to exercise slight
care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them.

Chua v NLRC, 453 SCRA 244 (2005)
Gross negligence under Article 282 of the Labor Code, as amended,
connotes want of care in the performance of ones duties, while habitual
neglect implies repeated failure to perform ones duties for a period of time,
depending upon the circumstances. Clearly, the petitioners repeated failure
to submit the DCRs on time, as well as the failure to submit the doctors call
cards constitute habitual neglect of duties. Needless to state, the foregoing
clearly indicate that the employer had a just cause in terminating the
petitioners employment.

Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. Gross negligence connotes want of care in the performance of
ones duties. Habitual neglect implies repeated failure to perform ones
duties for a period of time, depending upon the circumstances. On the other
hand, fraud and willful neglect of duties imply bad faith on the part of the
employee in failing to perform his job to the detriment of the employer and
the latters business. Thus, the single or isolated act of negligence does not
constitute a just cause for the dismissal of the employee.

Thus, the Court agrees with the CA that respondents four-day absence is
not tantamount to a gross and habitual neglect of duty. As aptly stated by
the CA, "(W)hile he may be found by the labor courts to be grossly negligent
of his duties, he has never been proven to be habitually absent in a span of
seven (7) years as GICIs employee. The factual circumstances and
evidence do not clearly demonstrate that petitioners [respondent] absences
contributed to the detriment of GICIs operations and caused irreparable
damage to the company."

Premiere Dev. Bank v Mantal, 485 SCRA 234 (2006)
Gross negligence means an absence of that diligence that a reasonably
prudent man would use in his own affairs. To constitute a just cause for
termination of employment, the neglect of duties must not only be gross but
habitual as well. The single or isolated act of negligence does not constitute
a just cause for the dismissal of the employee.

NLRC v Salgarino, 497 SCRA 361 (2006)
To our mind, the acts of the respondent in increasing the marks and
indicating passing grades on the white sheets of her students while she was
on maternity leave; of not having sought permission from petitioners before
conducting the make-up tests in her house,

contrary to the policy of the
petitioners that permission should first be granted before conducting make-
up tests that must be conducted in the school premises; of making the
increases in the grades of the students during her maternity leave which is
not allowed since the substitute teachers were the ones authorized to
compute and give the grades for the concerned students; and of invoking
humanitarian consideration in doing so which is not a basis in the Manual of
Regulations for Private Schools for grading a student, are all acts of
transgression of school rules, regulations and policies.

Truly, then, respondent had committed a misconduct. However, such
misconduct is not serious enough to warrant her dismissal from employment
under paragraph (a) of Article 282 of the Labor Code.

Misconduct is defined as 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 of 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

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nevertheless be in connection with the work of the employee to constitute
just cause from his separation.

In order to constitute serious misconduct which will warrant the dismissal of
an employee under paragraph (a) of Article 282 of the Labor Code, it is not
sufficient that the act or conduct complained of has violated some
established rules or policies. It is equally important and required that the act
or conduct must have been performed with wrongful intent.

There is no evidence to show that there was ulterior motive on the part of
the respondent when she decided to pass her students. Also, it was not
shown that respondent received immoral consideration when she did the
same. From the Labor Arbiter up to this Court, respondent has maintained
her stand that her decision to pass the concerned students was done out of
humanitarian consideration.

New Sunrise Metal Construction v Pia, 527 SCRA 259 (2007)
cralawAt all events, unsatisfactory performance cannot be considered a just
cause for dismissal under the Labor Code if it does not amount to gross and
habitual neglect of duties. On this score, petitioners failed to prove that the
alleged inefficiency of the 12 respondents amounted to gross and habitual
neglect of duties.

Simple Negligence
Cases
Paguio Transport v NLRC, 294 SCRA 657 (1998)
Mere involvement in an accident, absent any showing of fault or
recklessness on the part of the employee, is NOT a valid ground for
dismissal.

C. FraudWillful Breach of Trust
Cases
Santos v San Miguel Corp, 399 SCRA 172 (2003)
Article 282(c) of the same Code provides that "willful breach by the
employee of the trust reposed in him by his employer" is a cause for the
termination of employment by an employer. This ground should be duly
established. Substantial evidence is sufficient as long as such loss of
confidence is well-founded or if the employer has reasonable ground to
believe that the employee concerned is responsible for the misconduct and
her act rendered her unworthy of the trust and confidence demanded of her
position. It must be shown, though, that the employee concerned holds a
position of trust. The betrayal of this trust is the essence of the offense for
which an employee is penalized.

Time and again, we have recognized the right of employers to dismiss
employees by reason of loss of trust and confidence. However, we
emphasize that such ground is premised on the fact that the employee
concerned holds a position of responsibility or trust and confidence. In
order to constitute a just cause for dismissal, the act complained of must be
work-related such as would show the employee concerned to be unfit to
continue working for the employer. More importantly, the loss of trust and
confidence must be based on the willful breach of the trust reposed in the
employee by his employer. A breach of trust is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.

Loss of Confidence = Requisites
Employee concerned holds a position of trust and confidence
o Person is entrusted with confidence on delicate matters,
such as care and protection, handling or custody of the
employers property.
Act complained of must be work-related
o Act would show the employee concerned to be unfit to
continue working for the employer
Basis for such loss of confidence
o Proof beyond reasonable doubt is NOT necessary
o Sufficient that employer has reasonable ground to believe
that the employee concerned is responsible for the
purported misconduct, and the nature of his participation
therein renders him unworthy of the trust and confidence
demanded of his position.

Cases
Jardine Davies v NLRC, 311 SCRA 289 (1999)
It is settled that loss of confidence as a just cause for terminating
employment must be premised on the fact that an employee concerned
holds a position of trust and confidence. This situation obtains where a
person is entrusted with confidence on delicate matters, such as care and
protection, handling or custody of the employer's property, as in this case.
But, in order to constitute a just cause for dismissal, the act complained of
must be "work-related" such as would show the employee concerned to be
unfit to continue working for the employer. Likewise, it must be noted that
proof beyond reasonable doubt is not required to dismiss an employee on
the ground of loss of confidence. It is sufficient that there is some basis for
such loss of confidence, such as when the employer has reasonable ground
to believe that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded of his position.

This Court, however, has repeatedly stressed that the right of an employer
to dismiss employees on account of loss of trust and confidence must not be
exercised arbitrarily and without showing just cause, so as not to render the

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employee's constitutional right to security of tenure nugatory. Thus,
although the dropping of a criminal charge for an employee's alleged
misconduct does not bar his dismissal, and proof beyond reasonable doubt
is not necessary to justify the same, still the basis thereof must be clearly
and convincingly established. Besides, for loss of confidence to be a valid
ground for dismissal, such loss of confidence must arise from particular
proven facts. In other words, this ground must be founded on facts
established by the employer who must clearly and convincingly prove by
substantial evidence the facts and incidents upon which loss of confidence in
the employee may be fairly made to rest; otherwise the dismissal will be
rendered illegal.

PLDT v Tolentino, 438 SCRA 555 (2004)
There is no dispute over the fact that respondent was a managerial
employee and therefore loss of trust and confidence was a ground for his
valid dismissal. The mere existence of a basis for the loss of trust and
confidence justifies the dismissal of the employee because:
[w]hen an employee accepts a promotion to a managerial position
or to an office requiring full trust and confidence, she gives up some
of the rigid guaranties available to ordinary workers. Infractions
which if committed by others would be overlooked or condoned or
penalties mitigated may be visited with more severe disciplinary
action. A companys resort to acts of self-defense would be more
easily justified.

Proof beyond reasonable doubt is not required provided there is a valid
reason for the loss of trust and confidence, such as when the employer has
a reasonable ground to believe that the managerial employee concerned is
responsible for the purported misconduct and the nature of his participation
renders him unworthy of the trust and confidence demanded by his position.
However, the right of the management to dismiss must be balanced against
the managerial employees right to security of tenure which is not one of the
guaranties he gives up. This Court has consistently ruled that managerial
employees enjoy security of tenure and, although the standards for their
dismissal are less stringent, the loss of trust and confidence must be
substantial and founded on clearly established facts sufficient to warrant the
managerial employees separation from the company. Substantial evidence
is of critical importance and the burden rests on the employer to prove it.
Due to its subjective nature, it can easily be concocted by an abusive
employer and used as a subterfuge for causes which are improper, illegal or
unjustified.

Dela Cruz v NLRC, 418 SCRA 226 (2003)
Petitioner was holding a managerial position in which he was tasked to
perform key functions in accordance with an exacting work ethic. His
position required the full trust and confidence of his employer. While
petitioner could exercise some discretion, this obviously did not cover acts
for his own personal benefit. As found by the court a quo, he committed a
transgression that betrayed the trust and confidence of his employer %
reimbursing his familys personal travel expenses out of company funds.
Petitioner failed to present any persuasive evidence or argument to prove
otherwise. His act amounted to fraud or deceit which led to the loss of trust
and confidence of his employer.

Phil. National Construction Corp v Matias, 458 SCRA 148 (2005)
To constitute a valid cause to terminate employment, loss of trust and
confidence must be proven clearly and convincingly by substantial evidence.
To be a just cause for terminating employment, loss of confidence must be
directly related to the duties of the employee to show that he or she is
woefully unfit to continue working for the employer.

Cruz v CA, 494 SCRA 643 (2006)
In addition, the language of Article 282(c) of the Labor Code states that the
loss of trust and confidence must be based on willful breach of the trust
reposed in the employee by his employer. Such breach is willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. Moreover, it must be based on substantial evidence and not
on the employers whims or caprices or suspicions otherwise, the employee
would eternally remain at the mercy of the employer. Loss of confidence
must not be indiscriminately used as a shield by the employer against a
claim that the dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained of must be work-
related and shows that the employee concerned is unfit to continue working
for the employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence with respect to delicate
matters, such as the handling or care and protection of the property and
assets of the employer. The betrayal of this trust is the essence of the
offense for which an employee is penalized.

Breach of TrustLoss of Confidence
Cases
Central Pangasinan Elec Corp v Macaraeg, 395 SCRA 720 (2003)
their position.


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To be sure, the acts of the respondents were clearly inimical to the financial
interest of the petitioner. During the investigation, they admitted
accommodating Evelyn Joy Estrada by encashing her checks from its funds.
They did so without petitioners knowledge, much less its permission. These
inimical acts lasted for more than a year, and probably would have
continued had it not been discovered in time. All along, they were aware
that these acts were prohibited by the Coop Checks Policy. Clearly, there
was willful breach of trust on the respondents part, as they took advantage
of their highly sensitive positions to violate their duties.

LBC Domestic Franchise Co v Florido, 530 SCRA 607 (2007)
In this case, we find no such reasonable basis to conclude that private
respondent has breached the trust reposed in him by petitioner whose claim
that he had purposely or knowingly concealed his identity as the real
supplier of the hams was not supported by substantial evidence. Evidence
submitted by private respondent clearly showed [that] it was really TOBS
Meat Supply owned by Jumuad who supplied the Purefoods Fiesta hams
since if not for the latters contact as a meat dealer, private respondent
could not have procured those hams at the price fixed by the management
committee who agreed to his suggestion/proposal to make the purchase in
behalf of the company. Hence, We cannot give credence to petitioners
contention at this stage that the dismissal of private respondent was
justified since petitioner-employer had reasonable basis for the loss of trust
and confidence in said managerial employee. Besides, for the allegedly
suspicious act of affixing a false signature on the questioned receipts
covering an otherwise regular and fair sales transaction on behalf of the
company, the extreme penalty of dismissal from service is rather too harsh.
It has been held that where a penalty less punitive would suffice, whatever
missteps that may have been committed by the worker ought not to be
visited with a consequence so severe such as a dismissal from employment.

Position Trust and Confidence
Cases
Santos v San Miguel Corp, 399 SCRA 172 (2003)
Article 282(c) of the same Code provides that "willful breach by the
employee of the trust reposed in him by his employer" is a cause for the
termination of employment by an employer. This ground should be duly
established. Substantial evidence is sufficient as long as such loss of
confidence is well-founded or if the employer has reasonable ground to
believe that the employee concerned is responsible for the misconduct and
her act rendered her unworthy of the trust and confidence demanded of her
position. It must be shown, though, that the employee concerned holds a
position of trust. The betrayal of this trust is the essence of the offense for
which an employee is penalized.

Petitioner argues that her position as Finance Director of respondent's Beer
Division is not one of trust but one that is merely functional and advisory in
nature. She possesses no administrative control over the plants and region
finance officers, including cashiers. She reports to two superiors.

Petitioner's argument is misplaced. As Finance Director, she is in charge of
the custody, handling, care and protection of respondent's funds. The
encashment of her personal checks and her private use of such funds, albeit
for short periods of time, are contrary to the fiduciary nature of her duties.

Panday v NLRC, 209 SCRA 122 (1992)
From the facts of the case, we regret that we cannot order reinstatement.
We agree with the Deputy Minister that "complainant as branch accountant
occupied a position involving trust and confidence and in the light of the
estranged (sic) relation between the complainant and the respondent that
may not permit the full restoration of an employment relationship based on
trust and confidence, we have to allow termination of the employer-
employee relationship but upon the payment of separation pay equivalent to
one-half (1/2) month for every year of service rendered." (p. 5, Order)

The case of Lepanto Consolidated Mining Co. v. Court of Appeals, 1 SCRA
1251 [I961], provides us with a definition of a "position of trust and
confidence". It is one where a person is "entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection of the
employer's property . . ."

Cruz v Coca-Cola Bottlers, 460 SCRA 340 (2005)
Termination of employment by reason of loss of confidence is governed by
Article 282(c) of the Labor Code, which provides that an employer can
terminate the employment of the employee concerned for fraud or willful
breach by an employee of the trust reposed in him by his employer or duly
authorized representative. Loss of confidence, as a just cause for
termination of employment, is premised on the fact that the employee
concerned holds a position of responsibility, trust and confidence. He must
be invested with confidence on delicate matters such as the custody,
handling, care and protection of the employers property and/or funds.
Bago v NLRC, 520 SCRA 644 (2007)
As a general rule, employers are allowed a wide latitude of discretion in
terminating the employment of managerial personnel or those who, while
not of similar rank, perform functions which by their nature require the
employers full trust and confidence. Proof beyond reasonable doubt is not
required. It is sufficient that there is some basis for loss of confidence, such
as when the employer has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence
demanded by his position. This must be distinguished from the case of
ordinary rank-and-file employees, whose termination on the basis of these
same grounds requires a higher proof of involvement in the events in

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question; mere uncorroborated assertions and accusations by the employer
will not suffice.

Guidelines
1. Loss of confidence should NOT be simulated.
2. It should NOT be used as a subterfuge for causes which are
improper, illegal or unjustified.
3. It should NOT be arbitrarily asserted in the face of overwhelming
evidence to the contrary.
4. It must be genuine, NOT a mere afterthought to justify earlier action
taken in bad faith.
5. The employee involved holds a position of trust and confidence.

Cases
Vitarich v NLRC, 307 SCRA 509 (1999)
(a) Loss of confidence which should not be simulated;
(b) It should not be used as a subterfuge for causes which are
improper, illegal or unjustified;
(c) It should not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and,
(d) It must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.

Coca-Cola Bottlers v Kapisanan ng Malayang Manggagawa sa Coca-
Cola, 452 SCRA 480 (2005)
1. The loss of confidence must not be simulated;
2. It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
3. It may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary;
4. It must be genuine, not a mere afterthought, to justify earlier
action taken in bad faith; and
5. The employee involved holds a position of trust and confidence

Willful Breach
- Breach done intentionally, knowingly, purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently
- There must be actual breach of duty which must be established by
substantial evidence.

Cases
Atlas Consolidated Mining and Development Corp v NLRC, 290 SCRA
479 (1998)
Settled is the rule that under Article 283 (c) of the Labor Code, the breach
of trust must be willful. A breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse, 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; otherwise, the employee would eternally remain at
the mercy of the employer. It should be genuine and not 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. It
has never been intended to afford an occasion for abuse because of its
subjective nature. Private respondent explained that he failed to inspect the
logbook for about two (2) months before its disappearance because he was
preoccupied with some emergency works brought about by a storm. With
the foregoing explanation, it cannot be said that private respondent's
failure was willful.

Coverage
Cases
Fujitsu Computer Products Corp v CA, 454 SCRA 737 (2005)
The term trust and confidence is restricted to managerial employees. In
this case, it is undisputed that respondent De Guzman, as the Facilities
Section Manager, occupied a position of responsibility, a position imbued
with trust and confidence. Among others, it was his responsibility to see to
it that the garbage and scrap materials of petitioner FCPP were adequately
managed and disposed of. Thus, respondent De Guzman was entrusted
with the duty of handling or taking care of the property of his employer, i.e.,
the steel purlins, which the petitioners allege the respondent prematurely
declared as scrap materials.
Proof
Cases
Rematek Phils v delos Reyes, 474 SCRA 129 (2005)
Loss of confidence as a ground for dismissal does not require proof beyond
reasonable doubt. The law requires only that there be at least some basis
to justify it. Thus, there must be some evidence to substantiate the claim
and form a legal basis for loss of confidence. The employer cannot exercise
arbitrarily and without just cause the right to dismiss an employee for loss
of trust and confidence.

Lack of Damage
Cases
Cadiz v CA, 474 SCRA 232 (2005)
Lack of material or pecuniary damages would not in any way mitigate a
persons liability nor obliterate the loss of trust and confidence. In the case
of Etcuban v. Sulpicio Lines, this Court definitively ruled that:

Whether or not the respondent bank was financially prejudiced is
immaterial. Also, what matters is not the amount involved, be it
paltry or gargantuan; rather the fraudulent scheme in which the

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petitioner was involved, which constitutes a clear betrayal of trust
and confidence

D. Commission of Crime
ART. 282 (D): Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family or his
duly authorized representatives; and

E. Analogous Causes

Quarrelsome Bossy
Cases
Cathedral School of Technology v NLRC, 214 SCRA 551 (1992)
The reason for which private respondents services were terminated,
namely, her unreasonable behavior and unpleasant department in dealing
with the people she closely works within the course of her employment, is
analogous to the other just causes enumerated under the Labor Code, as
amended.

Petitioners averments on private respondents disagreeable character
quarrelsome, bossy, unreasonable and very difficult to deal withare
supported by various testimonies of several co-employees and students of
the school. The conduct she exhibited on that occasion smacks of sheer
disrespect and defiance of authority and assumes the proportion of serious
misconduct or insubordination, any of which constitutes just cause for
dismissal from employment.

Heavylift Manila v CA, 473 SCRA 541
An employee who cannot get along with his co-employees is detrimental to
the company for he can upset and strain the working environment. Without
the necessary teamwork and synergy, the organization cannot function
well. Thus, management has the prerogative to take the necessary action
to correct the situation and protect its organization. When personal
differences between employees and management affect the work
environment, the peace of the company is affected. Thus, an employees
attitude problem is a valid ground for his termination. It is a situation
analogous to loss of trust and confidence that must be duly proved by the
employer. Similarly, compliance with the twin requirement of notice and
hearing must also be proven by the employer.

However, we are not convinced that in the present case, petitioners have
shown sufficiently clear and convincing evidence to justify Galays
termination. Though they are correct in saying that in this case, proof
beyond reasonable doubt is not required, still there must be substantial
evidence to support the termination on the ground of attitude. The mere
mention of negative feedback from her team members, and the letter dated
February 23, 1999, are not proof of her attitude problem. Likewise, her
failure to refute petitioners allegations of her negative attitude does not
amount to admission. Technical rules of procedure are not binding in labor
cases. Besides, the burden of proof is not on the employee but on the
employer who must affirmatively show adequate evidence that the dismissal
was for justifiable cause.

Probable Cause
Cases
Standard Electric Manufacturing Corp v Standard Electric Employer
Union, 468 SCRA 316 (2005)
While it may be true that after the preliminary investigation of the
complaint, probable cause for rape was found and respondent Javier had to
be detained, these cannot be made as legal bases for the immediate
termination of his employment.

ConvictionMoral Turpiture
Cases
International Rice Research Institute v NLRC, 221 SCRA 760 (1993)
Article 282 of the Labor Code enumerates the just causes wherein an
employer may terminate an employment. Verily, conviction of a crime
involving moral turpitude is not one of these justifiable causes. Neither may
said ground be justified under Article 282 (c) nor under 282 (d) by analogy.
Fraud or willful breach by the employees of the trust reposed in him by his
employer or duly authorized representative under Article 282 (c) refers to
any fault or culpability on the part of the employee in the discharge of his
duty rendering him absolutely unworthy of the trust and confidence
demanded by his position. It cannot be gainsaid that the breach of trust
must be related to the performance of the employee's function. On the other
hand, the commission of a crime by the employee under Article 282 (d)
refer to an offense against the person of his employer or any immediate
member of his family or his duly authorized representative. Analogous
causes must have an element similar to those found in the specific just
cause enumerated under Article 282. Clearly lacking in the ground invoked
by petitioner is its relation to his work or to his employer.

Moral turpitude has been defined in Can v. Galing citing In Re Basa and Tak
Ng v. Republic as everything which is done contrary to justice, modesty, or
good morals; an act of baseness, vileness or depravity in the private and
social duties which a man owes his fellowmen, or to society in general,
contrary to justice, honesty, modesty or good morals.

As to what crime involves moral turpitude, is for the Supreme Court to
determine. Thus, the precipitate conclusion of IRRI that conviction of the
crime of homicide involves moral turpitude is unwarranted considering that
the said crime which resulted from an act of incomplete self-defense from

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an unlawful aggression by the victim has not been so classified as involving
moral turpitude.

Oania v NLRC, 244 SCRA 668 (1995)
Violation of a company rule prohibiting the infliction of harm or physical
injury against any person under the particular circumstances provided for in
the same rule may be deemed analogous to "serious misconduct" stated in
Art. 282 (a) above. To repeat, however, there is no substantial evidence
definitely pointing to petitioners as the perpetrators of the mauling of
Malong. What is an established fact is that, after investigation, private
respondent dismissed them and, thereafter, a criminal complaint was filed
against petitioners. Likewise, it is of record that Malong desisted from suing
the perpetrators before the regular courts. Therein, Malong stated that he
was bothered by his conscience in implicating Santiago Biay, Ver Oania and
Aurelio Caluza as the persons who mauled him, the truth being that they
were not the real perpetrators of the said mauling but other persons whom
he could not identify. In criminal cases, an affidavit of desistance may
create serious doubts as to the liability of the accused. At the very least,
such affidavit calls for a second hard look at the records of the case and the
basis for the judgment of conviction. Thus, jurisprudence on the effect of
desistance notwithstanding, the affidavit should not be peremptorily
dismissed as a useless scrap of paper.

In labor cases where technical rules of procedure are not to be strictly
applied if the result would be detrimental to the working man, an affidavit of
desistance gains added importance in the absence of any evidence on record
explicitly showing that the dismissed employees committed the act which
caused their dismissal. The inevitable conclusion, therefore, is that
petitioners' mauling of Malong was not proved by substantial evidence and
is, therefore, open to question.

Lim v NLRC, 259 SCRA 485 (1996)
We cannot but agree with PEPSI that "gross inefficiency" falls within the
purview of "other causes analogous to the foregoing," the constitutes,
therefore, just cause to terminate an employee under Article 282 of the
Labor Code. One is analogous to another if it is susceptible of comparison
with the latter either in general or in some specific detail; or has a close
relationship with the latter. "Gross inefficiency" is closely related to "gross
neglect," for both involve specific acts of omission on the part of the
employee resulting in damage to the employer or to his business. In Buiser
vs. Leogardo, this Court ruled that failure to observed prescribed standards
to inefficiency may constitute just cause for dismissal.

F. OthersJust Causes Claimed by Employer
1. Abandonment
Defined
The deliberate and unjustified refusal of the employee to resume
his employmentform of neglect of duty.
A deliberate, unjustified refusal of an employee to resume his
work, coupled with a clear absence of any intention of returning
to his work.

Cases
Forever Security & General Services v Flores, 532 SCRA 454 (2007)
resume his employment. It is a form of neglect of duty; hence, a just cause
employer.

Two factors must be present in order to constitute an
abandonment: (a) the failure to report for work or absence without valid or
relationship. The second is the more determinative factor and is manifested
by overt acts from which it may be deduced that the employee has no more
intention to work. The intent to discontinue the employment must be shown
by clear proof that it was deliberate and unjustified. Mere absence from
work does not imply abandonment.

It is apparent from the records that respondents did not abandon their
work. After their absence both Flores and Rallama reported back for work,
thus negating any intent on their part to sever their employer-employee
relationship with petitioner. As aptly held by the CA:

It should be noted that respondent Flores worked for almost one month
after the expiration of his leave while respondent Rallama reported back for
work after being hospitalized but was simply told that he was on AWOL and
was no longer allowed to work. Abandonment is further belied by the filing
of this complaint x x x.

Nueva Ecija Electric Cooperative v NLRC, 461 SCRA 169 (2005)
resume his employment; it is a form of neglect of duty;

hence, a just cause
employer: i.e., (a) serious misconduct or wilful disobedience by the
employee of the lawful orders of his employer or the latters representative
in connection with the employees work; (b) gross and habitual neglect by
the employee of his duties; (c) fraud or wilful breach by the employee of the
trust reposed in him by his employer or his duly authorized representative;

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(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 analogous causes.

Private respondents alleged abandonment of work through his employment
with the Provincial Government of Nueva Ecija was not clearly established
and proven. The evidence submitted by petitioner to buttress its allegation
that private respondent abandoned his work consists merely of indexes of
payments to employees under the name Eduardo Caimay without any
further evidence showing that Eduardo Caimay and private respondent
Eduardo Cairlan is one and the same person. The best evidence that could
have established the allegation that Eduardo Caimay and private respondent
Eduardo Cairlan is one and the same person is Eduardo Caimays Personal
Data Sheet which definitely would have the pertinent personal information
about him and a picture that would identify him and not a testimony of a
representative from the Provincial Government of Nueva Ecija, as adverted
to by petitioner to justify its motion for a trial type hearing.

Gabuay v Oversea Paper Supply, Inc, 436 SCRA 514 (2004)
As correctly ruled by the Labor Arbiter, the NLRC and the CA, the petitioners
were not illegally dismissed. Even after the petitioners received notices from
the respondent corporation requiring them to report for work and to explain
their unauthorized absences and failure to submit their updated bio-data,
they still failed to report for work. It can then be inferred that the
petitioners had abandoned their work. Indeed, the factors considered for
finding a valid abandonment are present in the case at bar: the petitioners'
failure to report for work or absence was without valid or justifiable cause,
and their refusal to report for work notwithstanding their receipt of letters
requiring them to return to work, show their clear intention to sever the
employer-employee relationship.

Mame v CA, 520 SCRA 552 (2007)
In cases where abandonment is the cause for termination of employment,
two factors must concur: (1) there is a clear, deliberate and unjustified
refusal to resume employment; and (2) a clear intention to sever the
employer-employee relationship. The burden of proof that there was
abandonment lies with the employer. Where the employee takes steps to
protest his layoff, it cannot be said that he has abandoned his work because
a charge of abandonment is totally inconsistent with the immediate filing of
a complaint for illegal dismissal, more so when it includes a prayer for
reinstatement.

There is logic in the finding of the NLRC that it was quite improbable for
petitioner to have abandoned his job after having been employed with
respondents for twelve years. If, as the CA ruled, petitioner had decided to
do so, petitioner should have immediately left Baguio City to file his
complaint; however, he remained in the workers barracks until September
28, 2001.

Requisites
Failure to report for work or absence without valid or justifiable
reason
A clear intention, as manifested by some overt act, to sever the
employer-employee relationship

No Abandonment
Mere absence from work, especially when the employee has
been verbally told not to report, cannot by itself constitute
abandonment
Employees do not need to take their meals within the company
premises. The act of going home to have dinner does NOT
constitute abandonment.
The act of leaving workplace to relieve himself can hardly be
characterized as abandonment, much less a willful or intentional
disobedience of company rules since he was merely answering
the call of nature over which he had no control.

NOTES
Employer has the burden of proving abandonment
Filing of a complaint for illegal dismissal against the employer is
a clear indication that the employee has not given up his work.

Cases
NS Transport Services, Inc v Zeta, 520 SCRA 261 (2007)
It bears emphasis that for termination of employment on the ground of
abandonment to be considered valid, the employer must prove, by
substantial evidence, the concurrence of two essential requisites: first, the
failure of the employee to report for work or his absence from work without
valid or justifiable reason; and second, his clear and deliberate intention to
discontinue his employment. The second requisite, considered to be the
more crucial one, may be established by evidence of overt acts on the part
of the employee from which may be inferred a lack of intention to resume
his work.

Leonardo v NLRC, 333 SCRA 589 (2000)
Neither can we say that FUERTE's actions are indicative of abandonment. To
constitute such a ground for dismissal, there must be (1) failure to report
for work or absence without valid or justifiable reason; and (2) a clear
intention, as manifested by some overt acts, to sever the employer-
employee relationship.

We have accordingly held that the filing of a
complaint for illegal dismissal, as in this case, is inconsistent with a charge
of abandonment.

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R.P. Dinglasan Construction Inc v Atienza, 433 SCRA 263 (2004)
To constitute abandonment of work, two (2) requisites must concur: first,
the employee must have failed to report for work or must have been absent
without justifiable reason; and second, there must have been a clear
intention on the part of the employee to sever the employer-employee
relationship as manifested by overt acts. Abandonment as a just ground for
dismissal requires deliberate, unjustified refusal of the employee to resume
his employment. Mere absence or failure to report for work, after notice to
return, is not enough to amount to abandonment.

As a rule, the employer bears the burden to prove that the dismissal was for
a valid and just cause. In this case, the respondents failed to prove any
such cause for the petitioners dismissal. They insinuated that the petitioner
abandoned his job. To constitute abandonment, these two factors must
concur: (1) the failure to report for work or absence without valid or
relationship. Obviously, the petitioner did not intend to sever his relationship
with the respondent company for at the time that he allegedly abandoned
his job, the petitioner just filed a complaint for regularization, which was
forthwith amended to one for illegal dismissal. A charge of abandonment is
totally inconsistent with the immediate filing of a complaint for illegal
dismissal, more so when it includes a prayer for reinstatement.

Floren Hotel v NLRC, 458 SCRA 128 (2005)
In our view, petitioners failed to adduce sufficient evidence to prove the
charge of abandonment. Petitioners merely presented joint affidavits from
hotel supervisors Agustin Aninag and Lourdes Cantago and other hotel
employees showing that Calimlim, Rico, and Bautista simply went on
absence without leave after they were confronted with certain irregularities,
and that Abalos and Lopez likewise just left their employment, also without
filing leaves of absence. Those joint affidavits, however, are insufficient as
they do not show that the absence of Calimlim, Rico, Bautista, Abalos and
Lopez were unjustified. More important, they do not show any overt act that
proves that private respondents unequivocally intended to sever their
working relationship with the petitioners. We have held that mere absence
from work does not constitute abandonment.

GSP Manufacturing Corp v Cabanban, 495 SCRA 123 (2006)
Abandonment as a just ground for dismissal requires the deliberate,
unjustified refusal of the employee to perform his employment
responsibilities. Mere absence or failure to work, even after notice to return,
is not tantamount to abandonment. The records are bereft of proof that
petitioners even furnished respondent such notice.

Furthermore, it is a settled doctrine that the filing of a complaint for illegal
dismissal is inconsistent with abandonment of employment. An employee
who takes steps to protest his dismissal cannot logically be said to have
abandoned his work. The filing of such complaint is proof enough of his
desire to return to work, thus negating any suggestion of abandonment.
2. Absenteeism
Cases
City Trading Inc v Balajadia, 498 SCRA 309 (2006)
Petitioners contend that respondents intention to abandon his work can be
gleaned from his history of absenteeism, his request for a Certificate of
Employment, and the belated filing of the complaint for illegal dismissal.

We hold that absenteeism per se is not an overt act which would prove an
unequivocal intent on the part of the employee to discontinue
employment. In the case at bar, respondent was able to explain his alleged
absenteeism. He did not report for work beginning January 7, 2001 because
the chief mechanic and cousin of petitioner informed him that he may
continue working but should not expect to be paid his salary. Later, the
company secretary and sister of petitioner John Edles told him point-blank
that his services have already been terminated. Petitioners neither
controverted nor denied these incidents.

Inference
Cases
Hacienda Dapdap v NLRC, 285 SCRA 9 (1998)
It has been said that abandonment of position cannot be lightly inferred,
much less legally presumed from certain equivocal acts such as an interim
employment.

Specific Acts
Cases
Premiere Development Bank v NLRC (293 SCRA 49 (1998)
Abandoning one's job means the deliberate, unjustified refusal of the
employee to resume his employment and 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 law, however, does not enumerate what
specific overt acts can be considered as strong evidence of the intention to
sever the employee-employer relationship. An employee who merely took
steps to protest her indefinite suspension and to subsequently file an action
for damages, cannot be said to have abandoned her work nor is it indicative
of an intention to sever the employer-employee relationship. Her failure to
report for work was due to her indefinite suspension. Petitioner's allegation
of abandonment is further belied by the fact that private respondent filed a
complaint for illegal dismissal. Abandonment of work is inconsistent with
the filing of said complaint.


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1. Loans
Borrowing Money
Borrowing money is neither dishonest, nor immoral, nor
illegal much less criminal.
BUT, said act becomes a serious misconduct that may justly
be asserted as a ground for dismissal WHEN
REPREHENSIBLE BEHAVIOR SUCH AS THE USE OF A TRUST
RELATIONSHIP AS A LEVERAGE FOR BORROWING MONEY is
involved.

Cases
Medical Doctors Inc v NLRC, 136 SCRA 1 (1985)
As stressed by the labor arbiter in the aforequoted paragraphs, borrowing
money is neither dishonest, nor immoral nor illegal, much less criminal.
Private respondent paid the money she borrowed from the hospital patient.
She was even recommended for permanent appointment from her
probationary status, from clerk to secretary, by her immediate superior, Sis.
Consolacion Briones.

It may be added that she must have been compelled to borrow P50.00 from
her patient because of economic necessity, which circumstance should
evoke sympathy from this Court, the very constitutional organ mandated by
the fundamental law to implement the social justice guarantee for the
protection of the lowly, efficient and honest employee, who is economically
disadvantaged, like herein petitioner!

Pearl S. Buck Foundation Inc v NLRC, 182 SCRA 446 (1990)
However, said act becomes a serious misconduct that may justly be
asserted as a ground for dismissal when reprehensible behavior such as the
use of a trust relationship as a leverage for borrowing money is involved. A
recipient of largesse may be so grateful that out of a sense of "utang na
loob" she may lend money to an employee or relative of a benefactor
believing that the loan would be paid anyway In this case, the fact that
Aliarte has retracted her complaint is of no moment. She loaned money to
the respondent, not once but twice and there can be no other assumption
where the money came from except from the trust funds intended for the
ward.

2. Courtesy Resignation
Cases
Batongbacal v Associated Bank, 168 SCRA 600 (1989)
While it may be said that the private respondent's call for courtesy
resignations was prompted by its determination to survive, we cannot lend
legality to the manner by which it pursued its goal. By directing its
employees to submit letters of courtesy resignation, the bank in effect
forced upon its employees an act which they themselves should voluntarily
do. It should be emphasized that resignation per se means voluntary
relinquishment of a position or office. Adding the word "courtesy" did not
change the essence of resignation. That courtesy resignations were utilized
in government reorganization did not give private respondent the right to
use it as well in its own reorganization and rehabilitation plan. There is no
guarantee that all employers will not use it to rid themselves arbitrarily of
employees they do not like, in the guise of "streamlining" its organization.
On the other hand, employees would be unduly exposed to outright
termination of employment, which is anathema to the constitutional
mandate of security of tenure.

3. Work Attitude
Absences
Cases
Manila Electric Co v NLRC, 263 SCRA 531 (1996)
In the case at bar, the service record of private respondent with petitioner is
perpetually characterized by unexplained absences and unauthorized sick
leave extensions. The nature of his job i.e. as a lineman-driver requires his
physical presence to minister to incessant complaints often faulted with
electricity. As aptly stated by the Solicitor General:
Habitual absenteeism of an errant employee is not concordant with
the public service that petitioner has to assiduously provide. To have
delayed power failure in a certain district simply because a
MERALCO employee assigned to such area was absent and cannot
immediately be replaced is a breach of public service of the highest
order. A deep sense of duty would, therefore, command that private
respondent should, at the very least, limit his absence for justifiable
reasons.

The penchant of private respondent to continually incur unauthorized
absences and/or a violation of petitioner's sick leave policy finally rendered
his dismissal as imminently proper. Private respondent cannot expect
compassion from this Court by totally disregarding his numerous previous
infractions and take into consideration only the period covering August 2,
1989 to September 19, 1989. As ruled by this Court in the cases of Mendoza
v. National Labor Relations Commission, and National Service Corporation v.
Leogardo, Jr., it is the totality, not the compartmentalization, of such
company infractions that private respondent had consistently committed
which justified his penalty of dismissal.
GSP Manufacturing Corp v Cabanban, 495 SCRA 123 (2006)
Mere absence or failure to work, even after notice to return, is not
tantamount to abandonment. The records are bereft of proof that petitioners
even furnished respondent such notice.


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4. Term Employment
Cases
Brent School v Zamora, 181 SCRA 702 (1990)
Criteria under which Term Employment does NOT circumvent SECURITY
OF TENURE
The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress or improper pressure
being brought to bear upon the employee and absent any other
circumstances vitiating his consent; OR
It satisfactorily appears that the employer and the employee dealt
with each other or more or less equal terms with no moral dominance
exercised by the former or the latter.

Romares v NLRC, 294 SCRA 411 (1998)
At this juncture, the leading case of Brent School, Inc. vs. Zamora proves
instructive. As reaffirmed in subsequent cases, this Court has upheld the
legality of fixed-term employment. It ruled that the decisive determinant in
"term employment" should not be the activities that the employee is called
upon to perform but the day certain agreed upon by the parties for the
commencement and termination of their employment relationship. But this
Court went on to say that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be struck down or disregarded as contrary to
public policy and morals.

The Brent ruling also laid down the criteria under which "term employment"
cannot be said to be in circumvention of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral
dominance exercised by the former or the latter.

None of these requisites were complied with.

Medenilla v Phil. Veterans Bank, 328 SCRA 1 (2000)
The Court has repeatedly upheld the validity of fixed-term employment. In
the case of Philippine National Oil Company-Energy Development
Corporation vs. NLRC, it was held:
As can be gleaned from the said case, the two guidelines by which fixed
contracts of employment can be said NOT to circumvent security of
tenure, are either:

1. The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; OR

2. It satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.

Magsalin v National Organization of Working Men, G.R. No. 148492,
May 09, 2003
The repeated rehiring of respondent workers and the continuing need for
their services clearly attest to the necessity or desirability of their services in
the regular conduct of the business or trade of petitioner company. The
Court of Appeals has found each of respondents to have worked for at least
one year with petitioner company. While this Court, in Brent School, Inc. vs.
Zamora, has upheld the legality of a fixed-term employment, it has done so,
however, with a stern admonition that where from the circumstances it is
apparent that the period has been imposed to preclude the acquisition of
tenurial security by the employee, then it should be struck down as being
contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged for
a fixed period of few months, short of the normal six-month probationary
period of employment, and, thereafter, to be hired on a day-to-day basis,
mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be
employed on such basis and to forego the protection given to them on their
security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with
public interest. The provisions of applicable statutes are deemed written into
the contract, and "the parties are not at liberty to insulate themselves and
their relationships from the impact of labor laws and regulations by simply
contracting with each other."

Labayog v M.Y. San Biscuits, Inc, 494 SCRA 486 (2006)
Contracts of employment for a fixed period are not unlawful. What is
objectionable is the practice of some scrupulous employers who try to
circumvent the law protecting workers from the capricious termination of
employment. Employers have the right and prerogative to choose their
workers. "The law, while protecting the rights of the employees, authorizes
neither the oppression nor destruction of the employer. When the law
angles the scales of justice in favor of labor, the scale should never be so
tilted if the result is an injustice to the employer."


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5. Past Infractions
Past Offenses
Cases
Acebedo Optical v NLRC, 527 SCRA 655 (2007)
Accordingly, the finding that the alleged absences and incidences of
tardiness of private respondent are but past infractions for which petitioners
had already imposed several sanctions and for which private respondent had
been duly penalized. And being past infractions, they cannot be taken
collectively as a justification for the dismissal from service of the employee.

Stellar Industrial Service Inc v NLRC, 252 SCRA 323 (1996)
Furthermore, as correctly observed by the labor arbiter, those past
infractions had either been "satisfactorily explained, not proven, sufficiently
penalized or condoned by the respondent." In fact, the termination notice
furnished Pepito only indicated that he was being dismissed due to his
absences from November 2, 1990 to December 10, 1990 supposedly
without any acceptable excuse therefor. There was no allusion therein that
his dismissal was due to his supposed unexplained absences on top of his
past infractions of company rules. To refer to those earlier violations as
added grounds for dismissing him is doubly unfair to private respondent.
Significantly enough, no document or any other piece of evidence was
adduced by petitioner showing previous absences of Pepito, whether with or
without official leave.

La Carlota Planters Association v NLRC, 298 SCRA 252 (1998)
The reliance by petitioners on the past offenses of private respondent
supposedly dictating his eventual dismissal is unavailing. The correct rule
has always been that such previous offenses may be so used as valid
justification for dismissal from work only if the infractions are related to the
subsequent offense upon which basis the termination of employment is
decreed.

The previous infraction, in other words, may be used if it has a
bearing to the proximate offense warranting dismissal.

6. Professional Training
Residency Training
Cases
Felix v Buenaseda, 240 SCRA 139 (1995)
A residency or resident physician position in a medical specialty is never a
permanent one. Residency connotes training and temporary status. It is the
step taken by a physician right after post-graduate internship (and after
hurdling the Medical Licensure Examinations) prior to his recognition as a
specialist or sub-specialist in a given field.

Under this system, residents, specialty those in university teaching hospitals
enjoy their right to security of tenure only to the extent that they
periodically make the grade, making the situation quite unique as far as
physicians undergoing post-graduate residencies and fellowships are
concerned. While physicians (or consultants) of specialist rank are not
subject to the same stringent evaluation procedures, specialty societies
require continuing education as a requirement for accreditation for good
standing, in addition to peer review processes based on performance,
mortality and morbidity audits, feedback from residents, interns and medical
students and research output. The nature of the contracts of resident
physicians meet traditional tests for determining employer-employee
relationships, but because the focus of residency is training, they are neither
here nor there. Moreover, stringent standards and requirements for renewal
of specialist-rank positions or for promotion to the next post-graduate
residency year are necessary because lives are ultimately at stake.

7. Love and Morals
Immortality
Cases
Santos v NLRC, 287 SCRA 117 (1998)
On the outset, it must be stressed that to constitute immorality, the
circumstances of each particular case must be holistically considered and
evaluated in light of the prevailing norms of conduct and applicable laws.

America jurisprudence has defined immorality as a course of conduct which
offends the morals of the community and is a bad example to the youth
whose ideals a teacher is supposed to foster and to elevate,

the same
including sexual misconduct. Thus, in petitioner's case, the gravity and
seriousness of the charges against him stem from his being a married man
and at the same time a teacher.

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. Likewise, they must observe a
high standard of integrity and honesty.

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.

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.

Love
Cases
Chua-Qua v Clave, 189 SCRA 117 (1990)
With the finding that there is no substantial evidence of the imputed

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immoral acts, it follows that the alleged violation of the Code of Ethics
governing school teachers would have no basis. Private respondent utterly
failed to show that petitioner took advantage of her position to court her
student. If the two eventually fell in love, despite the disparity in their ages
and academic levels, this only lends substance to the truism that the heart
has reasons of its own which reason does not know. But, definitely, yielding
to this gentle and universal emotion is not to be so casually equated with
immorality. The deviation of the circumstances of their marriage from the
usual societal pattern cannot be considered as a defiance of contemporary
social mores.
Duncan Association v Glaxo-Wellcome, 438 SCRA 278 (2004)
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo
only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor
to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of
the workers. The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play.

8. Violation of Company Rules
Cases
Aparente Sr v NLRC, 331 SCRA 82 (2000)
The petitioner's dismissal is justified by company rules and regulations. It is
true that his violation of company rules is his first offense. Nonetheless, the
damage caused to private respondent amounted to more than P5,000.00,
thus, the penalty of discharge is properly imposable as provided by Section
12 of Rule 005-85 of CCBPI's Code of Disciplinary Rules and Regulations.

It is recognized that company policies and regulations, unless shown to be
grossly oppressive or contrary to law, are generally valid and binding on the
parties and must be complied with until finally revised or amended,
unilaterally or preferably through negotiation, by competent authority. The
Court has upheld a company's management prerogatives so long as they
are exercised in good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements.

9. Criminal Case
Effect of Acquittal
Cases
Ramos v NLRC, 298 SCRA 225 (1998)
Similarly, it is a well established rule that the dismissal of the criminal case
against an employee shall not necessarily be a bar to his dismissal from
employment on the ground of loss of trust and confidence.
Conviction
Cases
Sampaguita Garments Corp v NLRC, 233 SCRA 260 (1994)
The private respondents conviction of the crime of theft of property
belonging to the petitioner has affirmed the existence of a valid ground for
her dismissal and thus removed the justification for the administrative
decision ordering her reinstatement with back wages. Nevertheless, the
petitioner is still subject to sanction for its failure to accord the private
respondent the right to an administrative investigation in conformity with
the procedural requirements of due process.

DismissalCriminal Cases
Cases
Lacorte v Inciong, 166 SCRA 1 (1988)
As we have already ruled, "the conviction of an employee in a criminal case
is not indispensable to warrant his dismissal, and the fact that a criminal
complaint against the employee has been dropped by the fiscal is not
binding and conclusive upon a labor tribunal.

Guilt or Innocence
Cases
In Pepsi Cola Bottling Company of the Philippines v. Guanzon,

we held that:
"Private respondent's guilt or innocence in the criminal case is not
determinative of the existence of a just or authorized cause for his
dismissal". This doctrine follows from the principle that the quantum and
weight of evidence necessary to sustain conviction in criminal cases are
quite different from the quantum of evidence necessary for affirmance of a
decision of the Labor Arbiter and of the NLRC.

10. Moonlighting
Cases
In Sandoval Shipyard v. Clave, we held that an employee who deliberately
absented from work without leave or permission from his employer, for the
purpose of looking for a job elsewhere, is considered to have abandoned his
job. We should apply that rule with more reason here where petitioners

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were absent because they were already working in another company.

The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of
notice and hearing in the termination of employment. On the other hand,
the law also recognizes the right of the employer to expect from its workers
not only good performance, adequate work and diligence, but also good
conduct and loyalty. The employer may not be compelled to continue to
employ such persons whose continuance in the service will patently be
inimical to his interests.
11. Suspicion
Cases
Eastern Telecommunications Phils Inc v Diane, 491 SCRA 239
(2006)
Undoubtedly, it cannot be presumed that Diamse misappropriated the funds
because to do so would do violence to her right to security of tenure and the
well-settled rule that the burden of proof is on the employer to establish the
ground for dismissal. Suspicion has never been a valid ground for dismissal
and the employees fate cannot, in justice, be hinged upon conjectures and
surmises.

12. Acting Appointment
Cases
Aklan College Inc v Guarino, 530 SCRA 40 (2007)
This Court has held that an acting appointment is merely temporary, or one
which is good until another appointment is made to take its place. And if
another person is appointed, the temporary appointee should step out and
cannot even dispute the validity of his successors appointment.

The
undisturbed unanimity of cases is that one who holds a temporary
appointment has no fixed tenure of office; his employment can be
terminated anytime at the pleasure of the appointing power without need to
show that it is for cause.

13. Graceful Exit
Cases
Cathay Pacific Airways v Marin, 501 SCRA 401 (2006)
In fact, Leviste even went out of her way to suggest to respondent to resign
voluntarily, or else face the adverse consequences of not being extended
regular employment on account of unsatisfactory work performance; had he
resigned voluntarily before the expiry of the probationary period, he would
have brighter prospects of employment with another airline or other
business entities.

However, respondent rejected the suggestion and opted to file his complaint
with the NLRC. A decision of petitioner to afford respondent a graceful exit is
perfectly within its discretion.

14.06 TransfersDischarge and Suspension
Cases
Lanzaderas v Amethyst Security and General Services Inc, 404 SCRA
505 (2003)
Security of tenure, although provided in the Constitution, does not give an
employee an absolute vested right in a position as would deprive the
company of its prerogative to change their assignment or transfer them
where they will be most useful. When a transfer is not unreasonable, nor
inconvenient, nor prejudicial to an employee; and it does not involve a
demotion in rank or diminution of his pay, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal.

Case law recognizes the employers right to transfer or assign employees
from one area of operation to another, or one office to another or in pursuit
of its legitimate business interest, provided there is no demotion in rank or
diminution of salary, benefits and other privileges and not motivated by
discrimination or made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. This matter is a prerogative inherent in
the employers right to effectively control and manage the enterprise.

Westin Phil. Plaza Hotel v NLRC, 306 SCRA 631 (1999)
On the issue of legality and reasonableness of the order of transfer, it must
be emphasized that this Court has recognized and upheld the prerogative of
management to transfer an employee from one office to another within the
business establishment, provided that there is no demotion in rank or a
diminution of his salary, benefits and other privileges. This is a privilege
inherent in the employer's right to control and manage its enterprise
effectively. Besides, it is the employer's prerogative, based on its
assessment and perception of its employee's qualifications, aptitudes and
competence, to move him around in the various areas of its business
operations in order to ascertain where the employee will function with
utmost efficiency and maximum productivity or benefit to the company. An
employee's right to security of tenure does not give him such a vested right
in his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful.

Castillo v NLRC, 308 SCRA 326 (1999)
In case of a constructive dismissal, the employer has the burden of proving
that the transfer and demotion of an employee are for valid and legitimate
ground, i.e., that the transfer is not unreasonable inconvenient, or
prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Where the employer
fails to overcome this burden of proof, the employee's demotion shall no
doubt be tantamount to unlawful constructive dismissal.

OSS Security and Allied Services Inc v NLRC, 325 SCRA 157 (2000)
In the employment of personnel, the employer can prescribe the hiring,

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work assignments, working methods, time, place and manner of work, tools
to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of work, subject only to limitations
imposed by laws.

Thus, the transfer of an employee ordinarily lies within the ambit of
management prerogatives.

However, a transfer amounts to constructive
dismissal when the transfer is unreasonable, inconvenient, or prejudicial to
the employee, and it involves a demotion in rank or diminution of salaries,
benefits and other privileges. In the case at bench, nowhere in the record
does it show that that the transfer of private respondent was anything but
done in good faith, without grave abuse of discretion, and in the best
interest of the business enterprise.

Mendoza v Rural Bank, 433 SCRA 756 (2004)
In the pursuit of its legitimate business interest, management has the
prerogative to transfer or assign employees from one office or area of
operation to another -- provided there is no demotion in rank or diminution
of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is inherent in the right of
employers to control and manage their enterprise effectively. The right of
employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to
change their assignments or to transfer them.

Resignation and Effectivity
Cases
EMCO Plywood Corp v Abelgas, 427 SCRA 496 (2004)
Moreover, resignation is the voluntary act of employees who are compelled
by personal reasons to dissociate themselves from their employment. It
must be done with the intention of relinquishing an office, accompanied by
the act of abandonment.

Therefore, it would have been illogical for
respondents to resign and then file a Complaint for illegal dismissal.
Resignation is inconsistent with the filing of the Complaint.

Shie Jie Corporation/Seastar Ex-im Corporation v National
Federation of Labor, 463 SCRA 569 (2005)
Voluntary resignation is defined as the act of an employee, who finds
himself in a situation in which he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service; thus, he has no other
choice but to disassociate himself from his employment. Acceptance of a
resignation tendered by an employee is necessary to make the resignation
effective. No such acceptance, however, was shown in the instant case.

Moreover, the fact that respondents immediately filed a complaint for illegal
dismissal against petitioners and repudiated their alleged resignation
completely negated petitioners claim that they voluntarily resigned.

Abolition of Position
Cases
Benguet Electric Corp v Verzosa, 425 SCRA 41 (2004)
The abolition of a position deemed no longer necessary is a management
prerogative, and this Court, absent any findings of malice and arbitrariness
on the part of management, will not efface such privilege if only to protect
the person holding that office.
Dishonesty
Cases
Naguit v NLRC, 408 SCRA 617 (2003)
The Court credits that Naguit was in good faith when he did not correct the
entry in the Notice of Overtime and Timesheet reflecting that he worked up
to 5PM instead of 12PM. The charge of falsification against him does NOT lie.

In labor cases, the Court has consistently held that where the adverse party
is deprived of opportunity to cross-examine the affiants, affidavits are
generally rejected for being hearsay, unless the affiant themselves are place
on the witness stand to testify thereon. Thus, such affidavits of Cabuhat are
inadmissible as evidence against Naguit.

Constructive DischargeDefined
Cases
Fungo v Lourdes School of Mandaluyong, 528 SCRA 248 (2007)
Thus, we rule that petitioner was constructively dismissed from her
employment. There is constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part
of the employee that it would foreclose any choice by him except to forego
her continued employment. It exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay.
Respondent Fr. Bustamante claimed that he had lost trust and confidence in
petitioner. Under this circumstance, coupled with Fr. Remirezs threat that
she would not be given her separation pay, petitioner was compelled to
resign.

Philippine-Japan Active Carbon Corp v NLRC, 171 SCRA 164 (1989)
A constructive discharge is defined as: "A quitting because continued
employment is rendered impossible, unreasonable or unlikely; as, an offer
involving a demotion in rank and a diminution in pay."

Dusit Hotel Nikko v National Union in Hotel, Restaurant and Allied
Industries, 466 SCRA 374 (2005)
We agree with the contention of the petitioners that it is the prerogative of

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management to transfer an employee from one office to another within the
business establishment based on its assessment and perception of the
employees qualification, aptitude and competence, and in order to ascertain
where he can function with the maximum benefit to the company.
However, this Court emphasized that:
But, like other rights, there are limits thereto. The managerial
prerogative to transfer personnel must be exercised without grave
abuse of discretion, bearing in mind the basic elements of justice
and fair play. Having the right should not be confused with the
manner in which that right is exercised. Thus, it cannot be used as
a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of
his salaries, privileges and other benefits. Should the employer fail
to overcome this burden of proof, the employees transfer shall be
tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving a demotion in rank
and diminution in pay.

There is constructive dismissal when there is a demotion in rank and/or
diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee.

Mobile Protective and Detective Agency v Ompad, 458 SCRA 308
(2005)
What is more, respondent should be deemed as constructively dismissed
when he tendered his resignation letters on September 23, 1998.
Constructive dismissal is "a quitting because continued employment is
rendered impossible, unreasonable or unlikely, as, an offer involving a
demotion in rank and diminution in pay."

Duncan Association v Glaxo Wellcome Phils, 438 SCRA 278 (2004)
Constructive dismissal is defined as a quitting, an involuntary resignation
resorted to when continued employment becomes impossible, unreasonable,
or unlikely; when there is a demotion in rank or diminution in pay; or when
a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee. None of these conditions are present in the
instant case. The record does not show that Tescon was demoted or unduly
discriminated upon by reason of such transfer.

Dinglasan v Atienza, 433 SCRA 263 (2004)
We hold that private respondents were constructively dismissed by
petitioner. Constructive dismissal is defined as quitting when continued
employment is rendered impossible, unreasonable or unlikely as the offer of
employment involves a demotion in rank and diminution of pay. In the case
at bar, petitioner committed constructive dismissal when it offered to
reassign private respondents to another company but with no guaranteed
working hours and payment of only the minimum wage. The terms of the
redeployment thus became unacceptable for private respondents and
foreclosed any choice but to reject petitioners offer, involving as it does a
demotion in status and diminution in pay. Thereafter, for six (6) months,
private respondents were in a floating status. Interestingly, it was only after
private respondents filed a complaint with the DOLE that petitioner
backtracked in its position and offered to reinstate private respondents to
their former job in Shell Corporation with no diminution in salary.
Eventually, however, petitioner unilaterally withdrew its offer of
reinstatement, refused to meet with the private respondents and instead
decided to dismiss them from service.

Go v CA, 430 SCRA 358 (2004)
Constructive dismissal exists where there is a cessation of work because
continued employment is rendered impossible, unreasonable or unlikely. It
is present when an employee's functions, which were originally supervisory
in nature, were reduced, and such reduction is not grounded on valid
grounds such as genuine business necessity.

Acuna v CA, 489 SCRA 568 (2006)
As we have held previously, constructive dismissal covers the involuntary
resignation resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution
in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to an employee.

In this case, the appellate court found that petitioners did not deny that the
accommodations were not as homely as expected. In the petitioners
memorandum, they admitted that they were told by the principal, upon
their arrival, that the dormitory was still under construction and were
requested to bear with the temporary inconvenience and the dormitory
would soon be finished. We likewise note that petitioners did not refute
private respondents assertion that they had deployed approximately sixty
other workers to their principal, and to the best of their knowledge, no other
worker assigned to the same principal has resigned, much less, filed a case
for illegal dismissal.

To our mind these cited circumstances do not reflect malice by private
respondents nor do they show the principals intention to subject petitioners
to unhealthy accommodations. Under these facts, we cannot rule that there
was constructive dismissal.

Poseidon Fishing v NLRC, 482 SCRA 717 (2006)
To recapitulate, it was after 12 long years of having private respondent
under its wings when petitioners, possibly sensing a brewing brush with the

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law as far as private respondents employment is concerned, finally found a
loophole to kick private respondent out when the latter failed to properly
record a 7:25 a.m. call. Capitalizing on this faux pas, petitioner summarily
dismissed private respondent. On this note, we disagree with the finding of
the NLRC that private respondent was negligent on account of his failure to
properly record a call in the log book. A review of the records would
ineluctably show that there is no basis to deduct six months worth of salary
from the total separation pay that private respondent is entitled to. We note
further that the NLRCs finding clashes with that of the Labor Arbiter which
found no such negligence and that such inadvertence on the part of private
respondent, at best, constitutes simple negligence punishable only with
admonition or suspension for a day or two.

Constructive Discharge and Illegal Dismissal
Cases
Mark Roche International v NLRC, 313 SCRA 356 (1999)
However, it must be made clear here that the dismissal of private
respondents was not a constructive dismissal but an illegal dismissal, and
this is where both the NLRC and the Labor Arbiter erred. Constructive
dismissal or a constructive discharge has been defined as a quitting because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank and; a diminution in pay.
3
In the
instant case, private respondents were not demoted in rank nor their pay
diminished considerably. They were simply told without prior warning or
notice that there was no more work for them. After receiving the notice of
hearing of the petition for certification election on 27 October 1992,
petitioners immediately told private respondents that they were no longer
employed. Evidently it was the filing of the petition for certification election
and organization of a union within the company which led petitioners to
dismiss private respondents and not petitioners' allegations of absence or
abandonment by private respondents. The formation of a labor union has
never been a ground for valid termination, and where there is an absence of
clear, valid and legal cause, the law considers the termination illegal.

Globe Telecom Inc v Florendo, 390 SCRA 201 (2003)
In constructive dismissal, the employer has the burden of proving that the
transfer and demotion of an employee are for just and valid grounds such as
genuine business necessity. The employer must be able to show that the
transfer is not unreasonable, inconvenient, or prejudicial to the employee.
It must not involve a demotion in rank or a diminution of salary and other
benefits. If the employer cannot overcome this burden of proof, the
employee's demotion shall be tantamount to unlawful constructive
dismissal.

Preventive Suspension
Cases
Community Rural Bank v Paez, 508 SCRA 245 (2007)
Be that as it may, the Court finds that respondents suspension from April
11, 1997 until he was dismissed from employment on August 15, 1997, for
a total of one hundred twenty-six (126) days, is clearly beyond the
maximum period allowed by law. The Implementing Rules of Book V: Rule
XXIII (Termination of Employment) of the Labor Code provides:

Sec. 9. Period of suspension. - No preventive
suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his
former or in a substantially equivalent position or the
employer may extend the period of suspension
provided that during the period of extension, he pays
the wages and other benefits due to the worker. In
such case, the worker shall not be bound to reimburse
the amount paid to him during the extension if the
employer decides, after completion of the hearings, to
dismiss the worker.

The rule clearly provides that a preventive suspension shall not exceed a
maximum period of thirty (30) days, after which period the employee must
be reinstated to his former position. If the suspension is otherwise
extended, the employee shall be entitled to his salaries and other benefits
that may accrue to him during the period of such suspension. Thus,
respondent is entitled to backwages for ninety-six (96) days or the period of
his preventive suspension beyond the maximum thirty-day period allowed
by law.

Globe-Mackay Cable and Radio Corp v NLRC, 206 SCRA 702 (1992)
The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's
acts in conflict with his position as technical operations manager,
necessitated immediate and decisive action on any employee closely,
associated with Saldivar. The suspension of Salazar was further impelled by
th.e discovery of the missing Fedders airconditioning unit inside the
apartment private respondent shared with Saldivar. Under such
circumstances, preventive suspension was the proper remedial recourse
available to the company pending Salazar's investigation. By itself,
preventive suspension does, not signify that the company has adjudged the
employee guilty of the charges she was asked to answer and explain. Such
disciplinary measure is resorted to for the protection of the company's
property pending investigation any alleged malfeasance or misfeasance
committed by the employee.

PAL v NLRC, 292 SCRA 40 (1998)
Preventive suspension is a disciplinary measure for the protection of the

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company's property pending investigation of any alleged malfeasance or
misfeasance committed by the employee. The employer may place the
worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the employer
or of his co-workers.

Finally, the Labor Arbiter found that petitioner is entitled to salary
differentials for the period of his preventive suspension, as there is no
sufficient basis shown to justify his preventive suspension. During the
pendency of the investigation, the employer may place the worker
concerned under preventive suspension if his continued employment poses
a serious and imminent threat to life or property of the employer or of his
co-workers.

But in this case, there is no indication that petitioner posed a
serious threat to the life and property of the employer or his co-employees.
Neither was it shown that he was in such a position to unduly influence the
outcome of the investigation. Hence, his preventive suspension could not be
justified, and the payment of his salary differentials is in order.

Cadiz v CA, 474 SCRA 232 (2005)
Preventive suspension, which is never obligatory on the part of the
employer, may be resorted to only when the continued employment of the
employee poses a serious and imminent threat to the life or property of the
employer or of his co-workers.

Maricalum Mining Corp v Decorion, 487 SCRA 182 (2006)
The Rules are explicit that preventive suspension is justified where the
employees continued employment poses a serious and imminent threat to
the life or property of the employer or of the employees co-workers.
Without this kind of threat, preventive suspension is not proper.

Pido v NLRC, 516 SCRA 609 (2007)
The allowable period of suspension in such a case is not six months but only
30 days, following Sections 8 and 9 of Rule XXIII, Book V of the Omnibus
Rules Implementing the Labor Code (Implementing Rules), viz:

SEC. 8. Preventive suspension. - The employer may place the
worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or
property of the employer or of his co-workers.

SEC. 9. Period of suspension. - No preventive suspension shall last
longer than thirty (30) days. The employer shall thereafter reinstate
the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that
during the period of extension, he pays the wages and other
benefits due to the worker. In such case, the worker shall not be
bound to reimburse the amount paid to him during the extension if
the employer decides, after completion of the hearing, to dismiss
the worker. (Emphasis, italics, and underscoring supplied)

As above-quoted Section 9 of the said Implementing Rules expressly
provides, in the event the employer chooses to extend the period of
suspension, he is required to pay the wages and other benefits due the
worker and the worker is not bound to reimburse the amount paid to him
during the extended period of suspension even if, after the completion of
the hearing or investigation, the employer decides to dismiss him.

Rationale
Cases
Kwikway Engineering Works v NLRC, 195 SCRA 526 (1991)
Further, the preventive suspension of respondent Vargas for an indefinite
period amounted to a dismissal and is violative of Section 4, Rule XIV of the
Implementing Rules of the Labor Code which limits the preventive
suspension to thirty (30) days. The said rule also provides that "the
employer shall thereafter reinstate the worker in his former or in a
substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages
and other benefits due to the worker." (Pacific Cement Company Inc. v.
NLRC, G.R. Nos. 78871-72, May 5, 1989, 173 SCRA 192).

Gatbonton v NLRC, 479 SCRA 416 (2006)
Preventive suspension is a disciplinary measure for the protection of the
companys property pending investigation of any alleged malfeasance or
misfeasance committed by the employee. The employer may place the
worker concerned under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of the employer
or of his co-workers.

However, when it is determined that there is no
sufficient basis to justify an employees preventive suspension, the latter is
entitled to the payment of salaries during the time of preventive suspension.

Number Offenses
Cases
Aparente v NLRC, 331 SCRA 82 (2003)
In the case of Camua v. NLRC, the Court laid down the guidelines in the
grant of separation pay to a lawfully dismissed employee, thus:

We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication
or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to

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give the dismissed employee separation pay, or financial assistance,
or whatever other name it is called, on the ground of social justice.

In the instant case, we find the award to petitioner of separation pay by way
of financial assistance equivalent to one-half (1/2) month's pay for every
year of service equitable. Although meriting termination of employment,
petitioner's infraction is not so reprehensible nor unscrupulous as to warrant
complete disregard for the fact that this is his first offense in an
employment that has spanned eighteen (18) long years.

OTHER CAUSESBUSINESS RELATED CAUSES

Recognition of RightBusiness Related Causes/Protection

Cases
Justice in every case should only be for the deserving party. It should not be
presumed that every case of illegal dismissal would automatically be decided
in favor of labor, as management has rights that should be fully respected
and enforced by this Court. As interdependent and indispensable partners in
nation-building, labor and management need each other to foster
productivity and economic growth; hence, the need to weigh and balance
the rights and welfare of both the employee and employer.

Uichico v NLRC, 273 SCRA 35 (1997)
The law recognizes the right of every business entity to reduce its work
force if the same is made necessary by compelling economic factors which
would endanger its existence or stability. In spite of overwhelming support
granted by the social justice provisions of our Constitution in favor of labor,
the fundamental law itself guarantees, even during the process of tilting the
scales of social justice towards workers and employees, "the right of
enterprises to reasonable returns of investment and to expansion and
growth. To hold otherwise would not only be oppressive and inhuman, but
also counter-productive and ultimately subversive of the nation's thrust
towards a resurgence in our economy which would ultimately benefit the
majority of our people. Where appropriate and where conditions are in
accord with law and jurisprudence, the Court has authorized valid reductions
in the work force to forestall business losses,

the hemorrhaging of capital, or
even to recognize an obvious reduction in the volume of business which has
rendered certain employees redundant.

Filipinas etc v Gatlabayan, 487 SCRA 673 (2006)
To impart operational meaning to the constitutional policy of providing "full
protection" to labor, the employers prerogative to bring down labor costs by
retrenching must be exercised essentially as a 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, etc. have been
tried and found wanting.

Business Services of the Future Today, Inc v CA, 480 SCRA 571
(2006)
Notice of closure to the DOLE is mandatory. It allows the DOLE to ascertain
whether the closure and/or dismissals were done in good faith and not a
pretext for evading obligations to the employees. This requirement protects
the workers right to security of tenure. Failure to comply with this
requirement taints the dismissal.

This rule, however, admits of exceptions. If
the employee consented to his retrenchment due to the closure or cessation
of operation, the required prior notice to the DOLE is not necessary as the
employee thereby acknowledges the existence of a valid cause for
termination of his employment.

A. Installation of Labor Saving Devices
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 worker and the Ministry 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 worker
affected thereby shall be entitled to a separation pay equivalent to at
least his 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 as one (1) whole year.

B. Redundancy
ART. 283: see supra

Business Judgment
Cases
Wiltshire File Co. v NLRC, 193 SCRA 665 (1991)
The determination of the continuing necessity of a particular officer or
position in a business corporation is management's prerogative, and the
courts will not interfere with the exercise of such so long as no abuse of

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discretion or merely arbitrary or malicious action on the part of
management is shown.

Asufrin v San Miguel Corp, 425 SCRA 270 (2004)
The determination that employees services are no longer necessary or
sustainable and, therefore, properly terminable is an exercise of business
judgment of the employer. The wisdom or soundness of this judgment is not
subject to discretionary review of the Labor Arbiter and the NLRC, provided
there is no violation of law and no showing that it was prompted by an
arbitrary or malicious act. In other words, it is not enough for a company to
merely declare that it has become overmanned. It must produce adequate
proof that such is the actual situation to justify the dismissal of the affected
employees for redundancy.

Soriano Jr v NLRC, 521 SCRA 526 (2007)
It is clear that the foregoing documentary evidence constituted substantial
evidence to support the findings of Labor Arbiter Lustria and the NLRC that
petitioners employment was terminated by respondent PLDT due to a valid
or legal redundancy program since substantial evidence merely refers to
that amount of evidence which a reasonable mind might accept as adequate
to support a conclusion.

Financial Loss
(1) The losses incurred are substantial and not de minimis;
(2) The losses are actual or reasonably imminent;
(3) The retrenchment is reasonably necessary and is likely to be
effective in preventing the expected losses; and
(4) The alleged losses, if already incurred, or the expected imminent
losses sought to be forestalled are proven by sufficient and
convincing evidence.
Cases
Escareal v NLRC, 213 SCRA 472 (1992)
While concededly, Article 283 of the Labor Code does not require that the
employer should be suffering financial losses before he can terminate the
services of the employee on the ground of redundancy, it does not mean
either that a company which is doing well can effect such a dismissal
whimsically or capriciously. The fact that a company is suffering from
business losses merely provides stronger justification for the termination.

Law Required Position
Cases
A position is redundant when it is superfluous, and superfluity of a position
or positions may be the outcome of a number of factors, such as the
overhiring of workers, a decreased volume of business or the dropping of a
particular product line or service activity previously manufactured or
undertaken by the enterprise.
When Redundancy
Cases
Soriano Jr v NLRC, 521 SCRA 526 (2007)
Redundancy exists when the service capability of the workforce is in excess
of what is reasonably needed to meet the demands of the business
enterprise. A position is redundant where it is superfluous, and superfluity of
a position or positions may be the outcome of a number of factors such as
over-hiring of workers, decrease in volume of business, or dropping a
particular product line or service activity previously manufactured or
undertaken by the enterprise.

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 over-hiring of workers, decreased volume of business, dropping of a
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.
We believe that redundancy, for purposes of our Labor Code, exists where
the services of an employee are in excess of what is reasonably demanded
by the actual requirements of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
The employer has no legal obligation to keep in its payroll more employees
than are necessarily for the operation of its business.

Tierra International Construction Corp v NLRC, 211 SCRA 73 (1992)
Redundancy 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 or
positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by the
enterprise.

Redundancy in an employers personnel force, however, does not
necessarily or even ordinarily refer to duplication of work. That no other
person was holding the same position which the dismissed employee held
prior to the termination of his services does not show that his position had
not become redundant.

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Edge Apparel Inc v NLRC, 286 SCRA 302 (1998)
Redundancy exists where the services of an employee are in excess of what
would 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 could 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 previously manufactured 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.

CriteriaSelection of Employee
Cases
Panlilio v NLRC, 281 SCRA 53 (1997)
We have held that it is important for a company to have fair and reasonable
criteria in implementing its redundancy program, such as but not limited to,
(a) preferred status, (b) efficiency and (c) seniority.

Golden Thread Knitting Industries Inc v NLRC, 304 SCRA 568 (1999)
In selecting the employees to be dismissed, a fair and reasonable criteria
must be used, such as but not limited to: (a) less preferred status (e.g.,
temporary employee), (b) efficiency, and (c) seniority.

Tanjuan v Phil. Postal Savings Bank, 411 SCRA 168 (2003)
Before any reduction of personnel becomes legal, any claim of actual or
potential business losses must satisfy established standards as follows: (1)
the losses incurred are substantial and not de minimis; (2) the losses are
actual or reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing the expected losses; and
(4) the alleged losses, if already incurred, or the expected imminent losses
sought to be forestalled are proven by sufficient and convincing evidence.

Complainants are not in a position to anticipate how respondent will present
its case for redundancy particular[ly] because no standard, criteria or
guidelines for the selection of dismissed employees was made known to
them, and all that they were told was that "you were selected as among
those who will be separated from the service;" nonetheless, this early, it is
possible to point out certain facts which throw light on the plausibility or
want of it, of the ground relied upon.

The absence of criteria, guidelines, or standard for selection of dismissed
employees renders the dismissals whimsical, capricious and vindictive.

Employment of Independent ContractorEffect
Cases
Asian Alcohol Corp v NLRC, 305 SCRA 416 (1999)
n any event, we have held that an employers good faith in implementing a
redundancy program is not necessarily destroyed by availment of the
services of an independent contractor to replace the services of the
terminated employees. We have previously ruled that the reduction of the
number of workers in a company made necessary by the introduction of the
services of an independent contractor is justified when the latter is
undertaken in order to effectuate more economic and efficient methods of
production.

ProcedureRequirement
Cases
Asian Alcohol Corp v NLRC, 305 SCRA 416 (1999)
The requirements for valid retrenchment which must be proved by clear and
convincing evidence are:
(1) That the retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in
good faith by the employer;
(2) That the employer served written notice both to the employees and
to the Department of Labor and Employment at least one month
prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one month pay or at least # month pay for every year
of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees
in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the
employees, such as status (i.e., whether they are temporary,
casual, regular or managerial employees), efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.

Hearing
Cases
Where, as in the instant case, the ground for dismissal or termination of
services does not relate to a blameworthy act or omission on the part of the
employee, there appears to us no need for an investigation and hearing to
be conducted by the employer who does not, to begin with, allege any
malfeasance or non-feasance on the part of the employee. In such case,
there are no allegations which the employee should refute and defend
himself from. Thus, to require petitioner Wiltshire to hold a hearing, at

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which private respondent would have had the right to be present, on the
business and financial circumstances compelling retrenchment and resulting
in redundancy, would be to impose upon the employer an unnecessary and
inutile hearing as a condition for legality of termination.

Venue of Complaint
Cases
This is not to say that the employee may not contest the reality or good
faith character of the retrenchment or redundancy asserted as grounds for
termination of services. The appropriate forum for such controversion
would, however, be the Department of Labor and Employment and not an
investigation or hearing to be held by the employer itself. It is precisely for
this reason that an employer seeking to terminate services of an employee
or employees because of "closure of establishment and reduction of
personnel", is legally required to give a written notice not only to the
employee but also to the Department of Labor and Employment at least one
month before effectivity date of the termination.

C. Retrenchment to Prevent Losses

Defined
Cases
FF Marine Corp v NLRC, 455 SCRA 154 (2005)
Retrenchment is the termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter,
resorted to by management during periods of business recession, industrial
depression, or seasonal fluctuations or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient machinery, or
of automation. Retrenchment is a valid management prerogative. It is,
however, subject to faithful compliance with the substantive and procedural
requirements laid down by law and jurisprudence.
DistinctionRedundancy and Retrenchment
Cases
J.A.T. General Services v NLRC, 421 SCRA 78 (2004)
While the Court of Appeals defined the issue to be the validity of dismissal
due to alleged closure of business, it cited jurisprudence relating to
retrenchment to support its resolution and conclusion. While the two are
often used interchangeably and are interrelated, they are actually two
separate and independent authorized causes for termination of
employment. Termination of an employment may be predicated on one
without need of resorting to the other.
Closure of business, on one hand, is the reversal of fortune of the employer
whereby there is a complete cessation of business operations and/or an
actual locking-up of the doors of establishment, usually due to financial
losses. Closure of business as an authorized cause for termination of
employment aims to prevent further financial drain upon an employer who
cannot pay anymore his employees since business has already stopped. On
the other hand, retrenchment is reduction of personnel usually due to poor
financial returns so as to cut down on costs of operations in terms of
salaries and wages to prevent bankruptcy of the company. It is sometimes
also referred to as down-sizing. Retrenchment is an authorized cause for
termination of employment which the law accords an employer who is not
making good in its operations in order to cut back on expenses for salaries
and wages by laying off some employees. The purpose of retrenchment is
to save a financially ailing business establishment from eventually
collapsing.

Alabang Country Club v NLRC, 466 SCRA 329 (2005)
Retrenchment is the reduction of personnel for the purpose of cutting
down on costs of operations in terms of salaries and wages resorted to by
an employer because of losses in operation of a business occasioned by lack
of work and considerable reduction in the volume of business.

Closure of a business or undertaking due to business losses is the
reversal of fortune of the employer whereby there is a complete cessation of
business operations to prevent further financial drain upon an employer who
cannot pay anymore his employees since business has already stopped.

One of the prerogatives of management is the decision to close the entire
establishment or to close or abolish a department or section thereof for
economic reasons, such as to minimize expenses and reduce capitalization.

Coverage
Cases
Phil. Tuberculosis Society v NLRC, 294 SCRA 567 (1998)
Article 278 of the Labor Code states that the fiscal measures recognized
therein which an employer may validly adopt apply to "all establishments or
undertakings, whether for profit or not."

Balbalec v NLRC, 251 SCRA 399 (1995)
The above-quoted article not only contemplates the termination of
employment of workers or employees to minimize established business
losses but also to prevent impending losses, for the law's phraseology
explicitly uses the phrase "retrenchment to prevent losses." However,
retrenchment strikes at the very core of an individual's employment and the
burden clearly falls upon the employer to prove economic or business losses
with appropriate supporting evidence. After all, not every asserted potential
loss is sufficient legal warrant for a reduction of personnel and the evidence
adduced in support of a claim of actual or potential business losses should
satisfy certain established standards, to wit:

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1. The losses expected and sought to be avoided must be substantial
and not merely de minimis;
2. The apprehended substantial losses must be reasonably imminent,
as such imminence can be perceived objectively and in good faith by
the employer;
3. The retrenchment should reasonably necessary and likely to prevent
effectively the expected losses;
4. The losses, both the past and forthcoming, must be proven by
sufficient and convincing evidence.

Procedure
Cases
Mayon Hotel & Restaurant v Adana, 458 SCRA 609 (2005)
Article 221 of the Labor Code is clear: technical rules are not binding, and
the application of technical rules of procedure may be relaxed in labor cases
to serve the demand of substantial justice. The rule of evidence prevailing in
court of law or equity shall not be controlling in labor cases and it is the
spirit and intention of the Labor Code that the Labor Arbiter shall use every
and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure, all in
the interest of due process. Labor laws mandate the speedy administration
of justice, with least attention to technicalities but without sacrificing the
fundamental requisites of due process.

Temporary Retrenchment
Cases
Sebugero v NLRC, 248 SCRA 532 (1995)
This provision (Art. 283), however, speaks of a permanent retrenchment as
opposed to a temporary lay-off as is the case here. 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.
These employees cannot forever be temporarily laid-off. To remedy this
situation or fill the hiatus, Article 286 may be applied but only by analogy to
set a specific period that employees may remain temporarily laid-off or in
floating status.
13
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 six
months. After six months, the employees should either be recalled to work
or permanently retrenched following the requirements of the law, and that
failing to comply with this would be tantamount to dismissing the employees
and the employer would thus be liable for such dismissal.

RequirementsStandards
(1) Necessity of the retrenchment to prevent losses, and proof of such
losses;
(2) Written notice to the employees and to the Department of Labor
and Employment (DOLE) at least one month prior to the intended
date of retrenchment; and
(3) Payment of separation pay equivalent to one-month pay or at least
one-half month pay for every year of service, whichever is higher.

Cases
Lopez Sugar Corp v Federation of Free Workers, 189 SCRA 179
(1990)
We consider it may be useful to sketch the general standards in terms of
which the acts of petitioner employer must be appraised. Firstly, the losses
expected should be substantial and not merely de minimis in extent. If the
loss purportedly sought to be forestalled by retrenchment is clearly shown
to be insubstantial and inconsequential in character, the bona fide 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 operational meaning to the constitutional policy of
providing "full protection" to labor, the employer's prerogative to bring down
labor costs by retrenching must be exercised essentially as a 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,
etc. have been tried and found wanting.
Lastly, but certainly not the least important, alleged if already realized, and
the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.

Retrenchment is a management prerogative consistently recognized and
affirmed by this Court. It is, however, subject to faithful compliance with the
substantive and the procedural requirements laid down by law and
jurisprudence. It must be exercised essentially as a measure of last resort,
after less drastic means have been tried and found wanting.

For a valid termination due to retrenchment, the law requires that written

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notices of the intended retrenchment be served by the employer on the
worker and on the Department of Labor and Employment at least one (1)
month before the actual date of the retrenchment. The purpose of this
requirement is to give employees some time to prepare for the eventual loss
of their jobs, as well as to give DOLE the opportunity to ascertain the verity
of the alleged cause of termination.

Blucor Minerals Corp v Amarilla, 458 SCRA 37 (2005)
Retrenchment is one of the authorized causes for dismissing employees
under Article 283 of the Labor Code. The 'loss' referred to in this provision,
however, cannot be of just any kind or amount; otherwise, a company could
easily feign excuses to suit its whims and prejudices or to rid itself of
unwanted employees.
Before any reduction of personnel becomes legal, any claim of actual or
potential business losses must satisfy the following established standards:
(1) the losses incurred are substantial, not de minimis; (2) the losses are
actual or reasonably imminent; (3) the retrenchment can be fairly regarded
as necessary and likely to be effective in preventing the expected losses;
and (4) sufficient and convincing evidence prove the alleged losses, if
already incurred, or the expected imminent losses sought to be forestalled
are proven.

San Miguel Corp v Aballa, 461 SCRA 392 (2005)
For retrenchment to be considered valid the following substantial
requirements must be met: (a) the losses expected should be substantial
and not merely de minimis in extent; (b) the substantial losses apprehended
must be reasonably imminent such as can be perceived objectively and in
good faith by the employer; (c) the retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses; and (d) the
alleged losses, if already incurred, and the expected imminent losses sought
to be forestalled, must be proved by sufficient and convincing evidence.

Phil. Carpet etc v Sto. Tomas, 483 SCRA 128 (2006)
The prerogative of an employer to retrench its employees must be exercised
only as a last resort, considering that it will lead to the loss of the
employees livelihood. It is justified only when all other less drastic means
have been tried and found insufficient or inadequate. Moreover, the
employer must prove the requirements for a valid retrenchment by clear
and convincing evidence; otherwise, said ground for termination would be
susceptible to abuse by scheming employers who might be merely feigning
losses or reverses in their business ventures in order to ease out employees.
The requirements are:
1. That the retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in
good faith by the employer;
2. That the employer served written notice both to the employees and
to the Department of Labor and Employment at least one month
prior to the intended date of retrenchment;
3. That the employer pays the retrenched employees separation pay
equivalent to one month pay or at least # month pay for every year
of service, whichever is higher;
4. That the employer exercises its prerogative to retrench employees
in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and
5. That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the
employees, such as status (i.e., whether they are temporary,
casual, regular or managerial employees), efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.

Nature of Loss
(1) The losses incurred are substantial, not de minimis;
(3) The retrenchment can be fairly regarded as necessary and likely to
be effective in preventing the expected losses; and
(4) Sufficient and convincing evidence prove the alleged losses, if
already incurred, or the expected imminent losses sought to be
forestalled.
Cases
(1990)
Firstly, the losses expected should be substantial and not merely de
minimis in extent. If the loss purportedly sought to be forestalled by
retrenchment is clearly shown to be insubstantial and inconsequential in
character, the bona fide 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

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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 operational meaning to the constitutional policy of
providing "full protection" to labor, the employer's prerogative to bring down
labor costs by retrenching must be exercised essentially as a 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,
etc. have been tried and found wanting.
Lastly, but certainly not the least important, alleged if already realized, and
the expected imminent losses sought to be forestalled, must be
proved by sufficient and convincing evidence.

Edge Apparel v NLRC, 286 SCRA 302 (1998)
The general standards or elements needed for the retrenchment to be valid
i.e., that the losses expected are substantial and not merely de minimis
in extent; that the expected losses are reasonably imminent such as can be
perceived objectively and in good faith by the employer; that the
retrenchment is reasonably necessary and likely to effectively prevent the
expected losses; and that the imminent losses sought to be forestalled are
substantiated were adequately shown in the present case.

Bogo-Medellin Sugar Cane Planters Assn. v NLRC, 296 SCRA 108
(1998)
(1) The losses incurred are substantial and not deminimis:
(3) The retrenchment is reasonably necessary and is likely to be
effective in preventing the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence.

Cama v Jonis Food Services, 425 SCRA 259 (2004)
The Constitution, while affording full protection to labor, nonetheless,
recognizes "the right of enterprises to reasonable returns on investments,
and to expansion and growth." In line with this protection afforded to
business by the fundamental law, Article 283 of the Labor Code clearly
makes a policy distinction. It is only in instances 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" that employees whose employment has been terminated as a
result are entitled to separation pay. In other words, Article 283 of the
Labor Code does not obligate an employer to pay separation benefits when
the closure is due to serious losses.
15
To require an employer to be
generous when it is no longer in a position to do so, in our view, would be
unduly oppressive, unjust, and unfair to the employer. Ours is a system of
laws, and the law in protecting the rights of the working man, authorizes
neither the oppression nor the self-destruction of the employer. Hence, we
find that the Court of Appeals did not err when it decreed that petitioners
herein are not entitled to separation pay under Article 283 of the Labor
Code.
Phil. Carpet etc v Sto. Tomas, 483 SCRA 128 (2006)
"To prevent losses" means that retrenchment or termination of the services
of some employees is authorized to be undertaken by the employer
sometime before the losses anticipated are actually sustained or realized. It
is not, in other words, the intention of the lawmaker to compel the employer
to stay his hand and keep all his employees until sometime after losses shall
have, in fact, materialized; if such an intent were expressly written into the
law, that law may well be vulnerable to constitutional attack as taking
property from one man to give to another.

Sliding Income
Cases
San Miguel Jeepney Service v NLRC, 265 SCRA 35 (1996)
As petitioners themselves admitted, what they suffered were sliding
incomes, in other words, decreasing gross revenues. What the law
speaks of is serious business losses or financial reverses. Clearly, sliding
incomes are not necessarily losses, much less serious business losses within
the meaning of the law.

Proof of Loss
Cases
(1990)
No audited financial statements showing the financial condition of petitioner
corporation during the above mentioned crop years were submitted. Since
financial statements audited by independent external auditors constitute the
normal method of proof of the profit and loss performance of a company, it
is not easy to understand why petitioner should have failed to submit such
financial statements.

Bogo-Medellin Sugar Cane Planters Assn. v NLRC, 296 SCRA 108
(1998)
A comparative statement of revenue and expenses for two years, by itself,
is not conclusive proof of serious business losses. The Court has previously
ruled that financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of
a company.

Mitsubishi Motors v Chrysler, 433 SCRA 407 (2004)
Business reverses or losses are recognized by law as an authorized cause
for termination of employment. Still, it is an essential requirement that
alleged losses in business operations must be proven convincingly.
Otherwise, such ground for termination would be susceptible to abuse by

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scheming employers, who might be merely feigning business losses or
reverses in their business ventures to ease out employees.
40
Retrenchment
is an authorized cause for termination of employment which the law accords
an employer who is not making good in its operations in order to cut back
on expenses for salaries and wages by laying off some employees. The
purpose of retrenchment is to save a financially ailing business
establishment from eventually collapsing.

Danzas Intercontinental v Daguman, 456 SCRA 382 (2005)
The condition of business losses justifying retrenchment is normally shown
by audited financial documents like yearly balance sheets and profit and loss
statements as well as annual income tax returns. Financial statements must
be prepared and signed by independent auditors. Otherwise, they may be
assailed as self-serving. Since the losses incurred must be substantial and
actual or reasonably imminent, it is necessary that the employer show that
the losses increased through a period of time and that the condition of the
company is not likely to improve in the near future.

Composite Enterprises v Caparoso, 529 SCRA 470 (2007)
It is not enough for a company to merely declare that it has implemented a
retrenchment program. It must produce adequate proof that such is the
actual situation to justify the retrenchment of employees. Normally, the
condition of business losses is shown by audited financial documents like
yearly balance sheets, profit and loss statements and annual income tax
returns. The financial statements must be prepared and signed by
independent auditors, failing which these can be assailed as self-serving
documents.

Raycor Aircontrol Systems v San Pedro, 526 SCRA 429 (2007)
The best evidence of reversal of fortune is audited financial and income
statements which detail the extent and pattern of business losses suffered
by the employer.

Burden of Proof
Cases
Sy v CA, 398 SCRA 301 (2003)
In termination cases, the burden is upon the employer to show by
substantial evidence that the termination was for lawful cause and validly
made.

Article 277(b) of the Labor Code puts the burden of proving that the
dismissal of an employee was for a valid or authorized cause on the
employer, without distinction whether the employer admits or does not
admit the dismissal.

For an employees dismissal to be valid, (a) the
dismissal must be for a valid cause and (b) the employee must be afforded
due process.

National Book Store v CA, 378 SCRA 194 (2002)
Petitioner National Bookstore, as correctly pointed out by the Labor Arbiter
in his decision, more than substantially observed this requirement. On 30
July 1992 it gave private respondents an opportunity to explain why they
should not be dismissed for the loss of company funds, which private
respondents immediately complied with by submitting their joint answer on
31 July 1992. Moreover, on 29 August 1992 petitioner National Bookstore
sent another written notice to private respondents informing them of its
decision to terminate their services setting forth the reasons therefor. But
the burden imposed on petitioner National Bookstore does not stop here. It
must also show with convincing evidence that the dismissal was based on
any of the just or authorized causes provided by law for termination of
employment by an employer.

When Effected
Cases
(1990)
To impart operational meaning to the constitutional policy of providing "full
protection" to labor, the employer's prerogative to bring down labor costs by
retrenching must be exercised essentially as a 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, etc.

Cajucom VII v IPI Phils. Cement Corp, 451 SCRA 70 (2005)
For his part, petitioner insists that actual, not probable losses, justify
retrenchment. Article 283 (quoted earlier) entails, among others, only
a situation where there is retrenchment to prevent losses.[14] The
phrase to prevent losses means that retrenchment or termination from the
service of some employees is authorized to be undertaken by the employer
sometime before the losses anticipated are actually sustained or
realized.[15] This is the situation in the case at bar. Evidently, actual
losses need not set in prior to retrenchment.

Procedure (Retrenchment and Redundancy)
Cases
Sebugero v NLRC, 248 SCRA 532 (1995)
What the law requires is a written notice to the employees concerned and
that requirement is mandatory.

The notice must also be given at least one
month in advance of the intended date of retrenchment to enable the
employees to look for other means of employment and therefore to ease the
impact of the loss of their jobs and the corresponding income.

That they
were already on temporary lay-off at the time notice should have been
given to them is not an excuse to forego the one-month written notice
because by this time, their lay-off is to become permanent and they were
definitely losing their employment.

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For a valid termination due to retrenchment, the law requires that written
notices of the intended retrenchment be served by the employer on the
worker and on the Department of Labor and Employment at least one (1)
month before the actual date of the retrenchment. The purpose of this
requirement is to give employees some time to prepare for the eventual loss
of their jobs, as well as to give DOLE the opportunity to ascertain the verity
of the alleged cause of termination.

Industrial Timber Corp v Ababon, 480 SCRA 171 (2006)
Three requirements are necessary for a valid cessation of business
operations: (a) service of a written notice to the employees and to the DOLE
at least one month before the intended date thereof; (b) the cessation of
business must be bona fide in character; and (c) payment to the employees
of termination pay amounting to one month pay or at least one-half month
pay for every year of service, whichever is higher.

Re-Hiring Effect
Cases
Atlantic Gulf and Pacific Co of Manila v NLRC, 307 SCRA 714 (1999)
While it is true that the company rehired or re-employed some of the
dismissed workers, it has been shown that such action was made only as
company projects became available and that it was done in pursuance of the
company's policy of giving preference to its former workers in the rehiring of
project employees. The rehiring or re-employment does not negate the
imminence of losses, which prompted private respondents to retrench.

Liability
Cases
Capitol Medical Center v Meris, 470 SCRA 236 (2005)
Reinstatement, however, is not feasible in case of a strained employer-
employee relationship or when the work or position formerly held by the
dismissed employee no longer exists, as in the instant case. Dr. Meris is
thus entitled to payment of separation pay at the rate of one (1) month
salary for every year of his employment, with a fraction of at least six (6)
months being considered as one(1) year, and full backwages from the time
of his dismissal from April 30, 1992 until the expiration of his term as Chief
of ISU or his mandatory retirement, whichever comes first.

D. Closing of Business
ART. 283: see supra

Cases
Raycor Aircontrol Systems v San Pedro, 526 SCRA 429 (2007)
Worse, there is no evidence at all that petitioner dismissed respondent
because it actually ceased or suspended business operations, or it
resorted to the dismissal of respondent and other employees to stave off
cessation or suspension of its business. The best evidence of reversal of
fortune is audited financial and income statements which detail the extent
and pattern of business losses suffered by the employer. Petitioner did not
present any such document where it could have demonstrated how the 1997
Asian financial currency crisis or the rehabilitation of Uniwide adversely and
significantly affected the viability of its business.

Right
Cases
Espina v CA, 519 SCRA 327 (2007)
And the phrase "closure or cessation not due to serious business losses or
financial reverses" recognizes the right of the employer to close or cease its
business operations or undertaking even in the absence of serious business
losses or financial reverses, as long as he pays his employees their
termination pay in the amount corresponding to their length of service.
It would indeed be stretching the intent and spirit of the law if a court were
to unjustly interfere in managements prerogative to close or cease its
business operations just because said business operation or undertaking is
not suffering from any loss.

The determination to cease operations is a
prerogative of management which the State does not usually interfere with,
as no business or undertaking must be required to continue operating
simply because it has to maintain its workers in employment, and such act
would be tantamount to a taking of property without due process of law. As
long as the companys exercise of the same is in good faith to advance its
interest and not for the purpose of circumventing the rights of employees
under the law or a valid agreement, such exercise will be upheld.

MacAdams Metal Engineering Union v MacAdams Metal Engineering,
414 SCRA 411 (2003)
Explicit from the above provision is that closure or cessation of business
operations is allowed even if the business is not undergoing economic
losses. The owner, for any bona fide reason, can lawfully close shop at
anytime. Just as no law forces anyone to go into business, no law can
compel anybody to continue in it. It would indeed be stretching the intent
and spirit of the law if we were to unjustly interfere with the managements
prerogative to close or cease its business operations just because said
business operation or undertaking is not suffering from any loss or simply to
provide the workers continued employment.

Catatista v NLRC, 247 SCRA 46 (1995)
In any case, Article 283 of the Labor Code is clear that an employer may
close or cease his business operations or undertaking even if he is not
suffering from serious business losses or financial reverses, as long as he
pays his employees their termination pay in the amount corresponding to
their length of service. It would, indeed, be stretching the intent and spirit
of the law if we were to unjustly interfere in management's prerogative to

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close or cease its business operations just because said business operation
or undertaking is not suffering from any loss.

Galaxie Steel Workers Union v NLRC, 504 SCRA 692 (2006)
The Constitution, while affording full protection to labor, nonetheless,
recognizes "the right of enterprises to reasonable returns on investments,
and to expansion and growth." In line with this protection afforded to
business by the fundamental law, Article 283 of the Labor Code clearly
makes a policy distinction. It is only in instances of "retrenchment to
prevent losses and in cases of closures or cessation of operations of
financial reverses" that employees whose employment has been
terminated as a result are entitled to separation pay. In other
words, Article 283 of the Labor Code does not obligate an employer
to pay separation benefits when the closure is due to serious losses.
To require an employer to be generous when it is no longer in a
position to do so, in our view, would be unduly oppressive, unjust,
and unfair to the employer. Ours is a system of laws, and the law in
protecting the rights of the working man, authorizes neither the
oppression nor the self-destruction of the employer.

Alabang Country Club v NLRC, 466 SCRA 329 (2005)
In fine, managements exercise of its prerogative to close a section, branch,
department, plant or shop will be upheld as long as it is done in good faith
to advance the employers interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid agreement.

Capitol Medical Center v Meris v 470 SCRA 236 (2005)
Employers are also accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This mass
of privileges comprises the so-called management prerogatives. Although
they may be broad and unlimited in scope, the State has the right to
determine whether an employers privilege is exercised in a manner that
complies with the legal requirements and does not offend the protected
rights of labor. One of the rights accorded an employer is the right to close
an establishment or undertaking.

The right to close the operation of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes
in terminating employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code.

Industrial Timber Corp. v Ababon, 480 SCRA 171 (2006)
The right to close the operation of an establishment or undertaking is one of
the authorized causes in terminating employment of workers, the only
limitation being that the closure must not be for the purpose of
circumventing the provisions on termination of employment embodied in the
Labor Code.

Extent/Degree of Partial Closure
Cases
The closure of business operation by petitioners, in our view, is not tainted
with bad faith or other circumstance that arouses undue suspicion of
malicious intent. The decision to permanently close business operations
was arrived at after a suspension of operation for several months
precipitated by a slowdown in sales without any prospects of improving.
There were no indications that an impending strike or any labor-related
union activities precipitated the sudden closure of business. Further,
contrary to the findings of the Labor Arbiter, petitioners had notified private
respondent and all other workers through written letters dated November
25, 1998 of its decision to permanently close its business and had submitted
a termination report to the DOLE. Generally, review of labor cases elevated
to this Court on a petition for review on certiorari is confined merely to
questions of law. But in certain cases, we are constrained to analyze or
weigh the evidence again if the findings of fact of the labor tribunals and the
appellate court are in conflict, or not supported by evidence on record or the
judgment is based on a misapprehension of facts.

Cheniver Deco Print Technics Corp v NLRC, 325 SCRA 758 (2000)
It must be stressed that the phrase "closure or cessation of operation of an
reverses" under Article 283 of the Labor Code includes both the complete
cessation of all business operations and the cessation of only part of a
company's business.

There is no doubt that petitioner has legitimate reason to relocate its plant
because of the expiration of the lease contract on the premises it occupied.
That is its prerogative. But even though the transfer was due to a reason
beyond its control, petitioner has to accord its employees some relief in the
form of severance pay.

As public respondent observed, the subsequent transfer of petitioner to
another place hardly accessible to its workers resulted in the latter's
untimely separation from the service not to their own liking, hence, not
construable as resignation. Resignation must be voluntary and made with
the intention of relinquishing the office, accompanied with an act of
relinquishment.

Indeed, it would have been illogical for private respondents
herein to resign and then file a complaint for illegal dismissal. Resignation is
inconsistent with the filing of the said complaint.

Espina v CA, 519 SCRA 661 (2007)
The phrase "closure or cessation of operations of establishment or

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undertaking" includes a partial or total closure or cessation.

x x x Ordinarily, the closing of a warehouse facility and the termination of
the services of employees there assigned is a matter that is left to the
determination of the employer in the good faith exercise of its management
prerogatives. The applicable law in such a case is Article 283 of the Labor
Code which permits "closure or cessation of operation of an establishment or
undertaking not due to serious business losses or financial reverses," which,
in our reading includes both the complete cessation of operations and the
cessation of only part of a companys business.

Requisite
Cases
Me-Shurn Corp v Me-Shurn Workers Union, 448 SCRA 41 (2005)
To justify the closure of a business and the termination of the services of
the concerned employees, the law requires the employer to prove that it
suffered substantial actual losses. The cessation of a company's operations
shortly after the organization of a labor union, as well as the resumption of
business barely a month after, gives credence to the employees' claim that
the closure was meant to discourage union membership and to interfere in
union activities. These acts constitute unfair labor practices.

TEMPORARY CESSATION OF OPERATION
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 (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases,
the employer shall reinstate the employee to his former position without
loss of seniority rights if he indicates his desire to resume his work not
later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty.

Basis
Cases
San Pedro Hospital of Digos v Sec. of Labor, 263 SCRA 98 (1996)
Temporary suspension of operations is recognized as a valid exercise of
management prerogative provided it is not carried out in order to
circumvent the provisions of the Labor Code or to defeat the rights of the
employees under the Code. The determination to case or suspend
operations is a prerogative of management that the State usually does not
interfere with, as no business can be required to continue operating at a loss
simply to maintain the workers in employment. Such an act would be
tantamount to a taking of property without due process of law, which the
employer has a right to resist. But where it is shown that the closure is
motivated not by a desire to prevent further losses, but to discourage the
workers from organizing themselves into a union for more effective
negotiation with management, the State is bound to intervene.
We need not belabor the issue of notice requirement for a suspension of
operation of business under Article 286 of the Labor Code. This matter is
not pertinent to, much less determinative of, the disposition of this case.
Suffice it to state that there is no termination of employment during the
period of suspension, thus the procedural requirement for terminating an
employee does not come into play yet.

Mayon Hotel & Restaurant v Adona, 458 SCRA 609 (2005)
Moreover, even assuming arguendo that the cessation of employment on
April 1997 was merely temporary, it became dismissal by operation of law
when petitioners failed to reinstate respondents after the lapse of six (6)
months, pursuant to Article 286 of the Labor Code.

Me-Shurn Corp v Me-Shurn Workers Union, 448 SCRA 41 (2005)
Basic is the rule in termination cases that the employer bears the burden of
showing that the dismissal was for a just or authorized cause. Otherwise,
the dismissal is deemed unjustified. Apropos this responsibility, petitioner
corporation should have presented clear and convincing evidence[24] of
imminent economic or business reversals as a form of affirmative defense in
the proceedings before the labor arbiter or, under justifiable circumstances,
even on appeal with the NLRC.

Effect on Employer-Employee Relationship
Cases
San Pedro Hospital of Digos v Sec. of Labor, 263 SCRA 98 (1996)
Art. 286 of the Labor Code provides: "The bona fide suspension of the
operation of a business or undertaking for a period not exceeding six (6)
months . . . shall not terminate employment." Section 12, Rule 1, Book VI of
the Omnibus Rules Implementing the Labor Code provides that the
employer-employee relationship shall be deemed suspended in case of the
suspension of operation referred to above, it being implicitly assumed that
once operations are resumed, the employer-employee relationship is revived
and restored.

If a legitimate, valid and legal suspension of operation does not terminate
but merely suspends the employee-employer relationship, with more reason
will an invalid and illegal suspension of operations, as in this case, not affect
the employment relationship.

E. Installation of Labor Saving Devices
Cases
Abapo v CA, 439 SCRA 594 (2004)
In a similar case (involving the same issue the validity of the termination
of SMC employees at the Mandaue Brewery), this Court, through Mr. Justice
Vicente V. Mendoza, now retired, held that the installation of labor-saving
devices by SMC at the Mandaue plant was a proper ground for terminating

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employment. The quitclaims and releases, signed by the employees
concerned as reasonable settlements, are binding upon the parties.

F. Floating Status
Cases
Pido v NLRC, 516 SCRA 609 (2007)
Verily, a floating status requires the dire exigency of the employer's bona
fide suspension of operation of a business or undertaking. In security
services, this happens when the security agencys clients which do not
renew their contracts are more than those that do and the new ones that
the agency gets. Also, in instances when contracts for security services
stipulate that the client may request the agency for the replacement of the
guards assigned to it even for want of cause, the replaced security guard
may be placed on temporary "off-detail" if there are no available posts
under respondents existing contracts.

When a security guard is placed on a "floating status," he does not receive
any salary or financial benefit provided by law. Due to the grim economic
consequences to the employee, the employer should bear the burden of
proving that there are no posts available to which the employee temporarily
out of work can be assigned. This, respondent failed to discharge.

DISEASE
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 to the health of
his co-employees: Provided, That he is paid separation pay equivalent to
at least one (1) month salary or to one-half (1/2) month salary for
every year of service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.

Cases
Sy v CA, 398 SCRA 301 (2003)
In order to validly terminate employment on this ground, Book VI, Rule I,
Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from
a disease and his continued employment is prohibited by law or prejudicial
to his health or to the health of his co-employees, the employer shall not
terminate his employment unless there is a certification by competent public
health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical
treatment. If the disease or ailment can be cured within the period, the
employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
G. Special Case of Business Transferssee CLVs Corp book

Nature of Labor Contract
Cases
Sundowner Development Corp v Drilon, 180 SCRA 14 (1989)
The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties. A labor contract merely
creates an action in personally and does not create any real right which
should be respected by third parties. This conclusion draws its force from
the right of an employer to select his employees and to decide when to
engage them as protected under our Constitution, and the same can only be
restricted by law through the exercise of the police power.

H. Procedural Due ProcessNature and Requirements
ART. 277 (B): Subject to the constitutional right of workers to security
of tenure and their right to be protected against dismissal except for a
just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the
worker whose employment is sought to be terminated a written notice
containing a statement of the causes 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 the
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 the Department 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
Section 33, Republic Act No. 6715, March 21, 1989).

SEC. 2 (D), Book VI, Rule 1, IRR
In all cases of termination of employment, the following standards of
due process shall be substantially observed:

For termination of employment based on just causes defined in Article
282 of the Labor Code:

1. A written notice served on the employee specifying the ground or
grounds for termination, and giving said employee reasonable

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opportunity within which to explain his side.

2. A hearing or conference during which the employee concerned, with
the assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence, or rebut the evidence
presented against him.

3. 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.

1. Requirements
In General
Cases

BASIS FOR TERMINATION REQUIREMENTS
Art. 282Just Causes TWIN NOTICE REQUIREMENT
1. Notice specifying the grounds for
which dismissal is sought
2. Hearing or opportunity to be
heard
3. Notice of the decision to dismiss
Art. 283 & 284
Authorized Causes
Notice to
1. Employees
2. DOLE
At least 30 days prior to effectivity of
the separation

4 Possible
Situations
Effect Liability of ER
1. Just or
Authorized Cause +
Due Process
Termination VALID NO Liability

Separation Pay if for
Authorized Cause
2. NO Just or
Authorized Cause +
Due Process
Termination INVALID Reinstatement + Full
Backwages

*Reinstatement not
possibleSeparation
Pay
3. NO Just or
Authorized Cause +
NO Due Process
Backwages

*Reinstatement not
possibleSeparation
Pay
4. Just or
Authorized Cause +
NO Due Process
Termination INVALID Liable for non-
compliane with
procedural
requirements

Authorized Cause

Essence of Due Process
Cases
Solid Development Corp. Workers Assn. v Solid Development Corp,
530 SCRA 132 (2007)
On the matter of due process, well-settled is the dictum that the twin
requirements of notice and hearing constitute the essential elements of due
process in the dismissal of employees. It is a cardinal rule in our jurisdiction
that the employer must furnish the employee with two written notices
before the termination of employment can be effected: (1) the first
apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the second informs the employee of the
employers decision to dismiss him. The requirement of a hearing, on the
other hand, is complied with as long as there was an opportunity to be
heard, and not necessarily that an actual hearing was conducted.

Central Pangasinan Elec. Coop. v Macaraeg, 395 SCRA 720 (2003)
Time and again, we have stressed that due process is simply an opportunity
to be heard.

The essence of due process is simply an opportunity to be heard, or as
applied to administrative proceedings, an opportunity to explain ones side
or an opportunity to seek a reconsideration of the action or ruling
complained of. A formal or trial-type hearing is not at all times and in all
instances essential, as the due process requirements are satisfied where the
parties are afforded fair and reasonable opportunity to explain their side of
the controversy at hand. What is frowned upon is the absolute lack of notice
and hearing.

Carag v NLRC, 520 SCRA 28 (2007)
The essence of due process is that a party be afforded a reasonable
opportunity to be heard and to submit any evidence he may have in support
of his defense. Where, as in this case, sufficient opportunity to be heard
either through oral arguments or position paper and other pleadings is not
accorded a party to a case, there is undoubtedly a denial of due process.


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UCPB v Beluso, 530 SCRA 567 (2007)
Indeed, due process mandates that a defendant should be sufficiently
apprised of the matters he or she would be defending himself or herself
against.

Right to Counsel
Cases
Salaw v NLRC, 202 SCRA 7 (1991)
It is true that administrative and quasi-judicial bodies are not bound by the
technical rules of procedure in the adjudication cases. However, the right to
counsel, a very basic requirement of substantive due process, has to be
observed. Indeed, rights to counsel and to due process of law are two of
fundamental rights guaranteed by the 1987 Constitution to person under
investigation, be the proceeding administrate civil, or criminal. Thus, Section
12(1), Article III thereof specifically provides: "Any person under
investigation for the commssion of an offense shall have the right to ... have
compete and independent counsel preferably of his own choice. If the
person cannot afford the service of counsel, he must be provided with one.
These rights cannot be waived except in writing in the presence of counsel."
To underscore the inviolability this provision, the third paragraph of the
same section explicitly states that, "any confession or admission obtained in
violation of this or the preceding section shall be inadmissible evidence
against him."

Notice
Cases
Carag v NLRC, 520 SCRA 28 (2007)
Neither does bad faith arise automatically just because a corporation fails to
comply with the notice requirement of labor laws on company closure or
dismissal of employees. The failure to give notice is not an unlawful act
because the law does not define such failure as unlawful. Such failure to
give notice is a violation of procedural due process but does not amount to
an unlawful or criminal act. Such procedural defect is called illegal dismissal
because it fails to comply with mandatory procedural requirements, but it is
not illegal in the sense that it constitutes an unlawful or criminal act.

King of Kings Transport v Mamac, 526 SCRA 116 (2007)
To clarify, the following should be considered in terminating the services of
employees:

(1) The first written notice to be served on the employees should contain
the specific causes or grounds for termination against them, and a directive
that the employees are given the opportunity to submit their written
explanation within a reasonable period. Reasonable opportunity under the
Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their
defense.[15] This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as
basis for the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under
Art. 282 is being charged against the employees.

(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarify their defenses to the charge against
them; (2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management. During the hearing
or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to
justify the severance of their employment.

Colegio de San Juan de Letran-Calamba v Villas, 399 SCRA 551
(2003)
The law requires the employer to give the worker to be dismissed two
written notices before terminating his employment. Considering that these
notices are mandatory, the absence of one renders any management
decision to terminate null and void.

Procedurally, (1) if the dismissal is based on a just cause under Article 282,
the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based
on authorized causes under Articles 283 and 284, the employer must give
the employee and the Department of Labor and Employment written notices
30 days prior to the effectivity of his separation.

Sta. Catalina College v NLRC, 416 SCRA 233 (2003)
As regards the requirement of notice of termination, it was error for the CA

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to apply Sec 2, Rule XIV, Book V of the Omnibus Rules Implementing the
Labor Code. It should be noted that when Hilaria abandoned her teaching
position in 1971, the law in force was Republic Act 1052 or the Termination
Pay Law, as amended by Republic Act 1787, Section 1 of which provides:

SEC. 1. In cases of employment, without a definite period, in a
commercial, industrial, or agricultural establishment or enterprise,
the employer or the employee may terminate at any time the
employment with just cause; or without just cause in the case of
an employee by serving written notice on the employer at least one
month in advance, or in the case of an employer, by serving such
notice to the employee at least one month in advance or one-half
month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one
whole year.

The employer, upon whom no such notice was served in case of
termination of employment without just cause may hold the
employee liable for damages.

The employee, upon whom no such notice was served in case of
termination of employment without just cause shall be entitled to
compensation from the date of termination of his employment in an
amount equivalent to his salaries or wages corresponding to the
required period of notice.

Two Notice Rule
Cases

BASIS FOR TERMINATION REQUIREMENTS
Art. 282Just Causes TWIN NOTICE REQUIREMENT
4. Notice specifying the grounds for
which dismissal is sought
5. Hearing or opportunity to be
heard
6. Notice of the decision to dismiss
Art. 283 & 284
Authorized Causes
Notice to
3. Employees
4. DOLE
At least 30 days prior to effectivity of
the separation

Caingat v NLRC, 453 SCRA 142 (2005)
The due process prescribed in Article 277 of the Labor Code, as amended,
and in Sections 2 and 7, Rule I, Book VI of the Implementing Rules of the
Labor Code, are mandatory. Two notices should be sent to the employee.
The first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought; while the second informs the employee of the
employers decision to dismiss him. The latter must come after the
employee is given a reasonable period from receipt of the first notice within
which to answer the charge, and ample opportunity to be heard and defend
himself with the assistance of his representative, if he so desires.

Heavylift Manila Inc v CA, 473 SCRA 541 (2005)
The law requires the employer to give the worker to be dismissed two
written notices before terminating his employment, namely, (1) a notice
which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employers decision to dismiss him.

Simply stated, the employer must furnish the employee a written notice
containing a statement of the cause for termination and to afford said
employee ample opportunity to be heard and defend himself with the
assistance of his representative, if he so desires, and the employee must be
notified in writing of the decision dismissing him, stating clearly the reasons
therefor.

Hearing
Cases
PLDT v Bolso, 530 SCRA 550 (2007)
The essence of due process is simply an opportunity to be heard, or as
applied to administrative proceedings, an opportunity to explain ones side
or an opportunity to seek a reconsideration of the action or ruling
complained of. A formal or trial-type hearing is not at all times and in all
circumstances essential.

Magos v NLRC, 300 SCRA 484 (1998)
Although a hearing is essential to due process, in Bernardo v. NLRC we did
hold that no formal hearing was necessary when the petitioner had already
admitted his responsibility for the act he was accused of.

Caurdanetaan Piece Workers Union v Laguesma, 285 SCRA 291
(1998)
Private respondent had been duly informed of the pendency of the illegal
dismissal case, but it chose not to participate therein without any known
justifiable cause. The labor arbiter sent notices of hearing or arbitration to
the parties, requiring them to submit position papers at 1:30 p.m. on
November 14, 1992. Respondent Corfarm did not attend the hearing.
According to Respondent NLRC, there was no proof that Respondent
Corfarm received such notice. In any case, petitioner filed a Motion to
Admit Amended Complaint on December 23, 1992. Again, another notice
for hearing or arbitration on January 7, 1993 was sent to the parties. This

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was received by petitioners counsel as evidenced by the registry return
receipt duly signed by private respondents counsel, Atty. Alfonso Bince, Jr.
It was only on January 28, 1993, however, that Atty. Bince entered his
appearance as counsel for Respondent Corfarm. On May 10, 1993, Corfarm
was again given a new period of ten (10) days within which to submit its
position paper and documentary evidence; otherwise, [the labor arbiter]
will be constrained to resolve this case based on available evidence on
record. As evidenced by a registry return receipt, a copy of said directive
was received by respondents counsel on May 25, 1993. Still and all,
Corfarm failed to file its position paper. Clearly, private respondent was
given an opportunity to present its evidence, but it failed or refused to avail
itself of this opportunity without any legal reason. Due process is not
violated where a person is given the opportunity to be heard, but chooses
not to give his side of the case.

National Semi-Conductor (HK) v NLRC, 291 SCRA 348 (1998)
That the investigations conducted by petitioner may not be considered
formal or recorded hearings or investigations is immaterial. A formal or trial
type hearing is not at all times and in all instances essential to due process,
the requirements of which are satisfied where the parties are afforded fair
and reasonable opportunity to explain their side of the controversy. It is
deemed sufficient for the employer to follow the natural sequence of notice,
hearing and judgment.

La Carlota Planters Assn. v NLRC, 298 SCRA 252 (1998)
The law requires the employer to afford his employee ample opportunity to
be heard.

Lavador v J Marketing Corp, 461 SCRA 497 (2005)
In this case, the dismissal of petitioner from the service is due to dishonesty
or a just cause. But due process was not observed as no hearing was
conducted despite her request. Thus, respondents should be held liable for
violation of her right to due process and should pay her indemnity in the
form of nominal damages, pursuant to our ruling in Agabon, which we fix at
P20,000.00.

Position Paper
Cases
Shoppes Manila v NLRC, 419 SCRA 354 (2004)
The holding of a formal hearing or trial is discretionary with the labor arbiter
and is something that the parties cannot demand as a matter of right. It is
entirely within his authority to decide a labor case before him, based on the
position papers and supporting documents of the parties, without a trial or
formal hearing.

The requirements of due process are satisfied when the
parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it
be decided that no hearing should be conducted or was necessary.
C.F. Sharp & Co. v Zialcita, 495 SCRA 387 (2006)
Trial-type hearings are not required in labor cases and these may be
decided on verified position papers, with supporting documents and their
affidavits.

Cross Examination
Cases
It is not necessary for the affiants to appear and testify and be cross-
examined by the counsel for the adverse party. It is sufficient that the
documents submitted by the parties have a bearing on the issue at hand
and support the positions taken by them.

FAILURE OF DUE PROCESS
Cases
Sadagnot v Reinier Pacific International Shipping Inc., 529 SCRA
413 (2007)
The violation of petitioners right to due process only warrants the payment
of indemnity in the form of nominal damages, the amount of which is
addressed to the sound discretion of the Court, taking into consideration the
relevant circumstances.

Effect of FailureSubstantiveProcedural
Cases
Suico v NLRC, 513 SCRA 325 (2007)
It should be emphasized, however, that, consistent with our ruling in
Agabon, the procedural deficiency in the dismissal of Suico, et al. did not
affect the validity or effectivity of the dismissal as the substantive bases
thereof were never put in issue.

Thus, the April 12, 2002 CA Decision in G.R.
No. 163793 was erroneous as it declared the dismissal of Borje illegal
merely for failure of PLDT to observe due process. The CA should have
affirmed the validity of the dismissal of Borje and awarded him nominal
damages for the impairment of his statutory right to due process.

4 Possible
Situations
Effect Liability of ER
1. Just or
Authorized Cause +
Due Process
Termination VALID NO Liability

Authorized Cause
2. NO Just or
Authorized Cause +
Due Process
Backwages

*Reinstatement not
possibleSeparation
Pay

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3. NO Just or
Authorized Cause +
NO Due Process
Backwages

*Reinstatement not
possibleSeparation
Pay
4. Just or
Authorized Cause +
NO Due Process
Termination INVALID Liable for non-
compliane with
procedural
requirements

Authorized Cause

Aladdin Transit Corp v CA, 460 SCRA 234 (2005)
Since there is no dispute that petitioner did not inform the respondent
employee in dismissing him from the service, the whole issue to be resolved
is whether the Court of Appeals correctly applied the ruling of this Court in
Serrano v. NLRC, to the effect that in cases where there is a valid cause to
dismiss the employee but the required notice of dismissal was not given, the
dismissal is deemed ineffectual and the employee must be reinstated with
full backwages.

Recently, this Court has had occasion to revisit the Serrano doctrine and the
present rule is set forth in the Agabon v. NLRC, et al., namely, that where
the dismissal is based on a just cause, the failure to give the required notice
does not invalidate the same, but merely holds the employer liable for
damages for violating said notice of requirement. The amount of damages
was fixed at Thirty Thousand Pesos (P30,000) by way of nominal damages.

Glaxo-Wellcome Phils. Inc v Nagkakaisang Empleyado ng Wellcome,
453 SCRA 256 (2005)
Prior to the promulgation of Wenphil v. NLRC in 1989, the prevailing
doctrine held that dismissing employees without giving them prior notices
and an opportunity to be heard was illegal; and that, as a consequence,
they were entitled to reinstatement plus full back wages. Wenphil abandoned
this jurisprudence and ruled that if the dismissal was for a just or an
authorized cause, but done without due process, the termination was valid;
but that, the employer should be sanctioned with the payment of indemnity
ranging from P1,000 to P10,000. Serrano v. NLRC, promulgated in 2000,
modified Wenphil. It considered such termination ineffectual (not illegal)
and sanctioned the employer with payment of full back wages plus nominal
and moral damages, if warranted by the evidence; and, in case the dismissal
was for an authorized cause, separation pay in accordance with Article 283
of the Labor Code.

Recently in Agabon v. NLRC, this Court effectively reverted to Wenphil and
ruled that a dismissal due to abandonment -- a just cause -- was not illegal
or ineffectual, even if done without due process; but that the employer
should indemnify the employee with nominal damages for non-compliance
with statutory due process.

2. Other Procedural Matters
BURDEN AND DEGREE OF PROOF
Burden
Cases
LBC Domestic Franchise Co. v Florido, 530 SCRA 607 (2007)
awIn termination cases, the burden of proof rests upon the employer to
show that the dismissal is for a valid and just cause. Failure to do so would
necessarily mean that the dismissal was not justified, and, therefore, was
illegal. It is sufficient to show by substantial evidence that the employee is
guilty of misconduct which makes the latter unworthy of the trust and
confidence demanded by his position.

It bears stressing that in termination cases, the employer bears the onus of
proving that the dismissal was for just cause. Indeed, a condemnation of
dishonesty and disloyalty cannot arise from suspicions spawned by
speculative inferences. Because of its subjective nature, this Court has been
strictly scrutinizing the allegations and the evidence in cases of dismissal
based on loss of trust and confidence because they can easily be concocted
by an abusive employer. Thus, when the breach of trust or loss of
confidence alleged is not borne by clearly established facts, as in this case,
such dismissal on the cited grounds cannot be allowed.

Ching v Nicdao, 522 SCRA 316 (2007)
It is a basic rule in evidence that the burden of proof lies on the party who
makes the allegations Et incumbit probatio, qui dicit, non qui negat; cum
per rerum naturam factum negantis probatio nulla sit (The proof lies upon
him who affirms, not upon him who denies; since, by the nature of things,
he who denies a fact cannot produce any proof).

In civil cases, the party
having the burden of proof must establish his case by a preponderance of
evidence. Preponderance of evidence is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of evidence" or "greater weight
of the credible evidence." Preponderance of evidence is a phrase which, in
the last analysis, means probability of the truth. It is evidence which is more
convincing to the court as worthy of belief than that which is offered in
opposition thereto.


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Degree
Cases
Central Pangasinan Elec. Coop v Macaraeg, 395 SCRA 720 (2003)
their position.

Salvador v Phil. Mining Service Corp., 395 SCRA 729 (2003)
Preliminarily, the Labor Code provides that an employer may terminate the
services of an employee for just cause and this must be supported by
substantial evidence.

The settled rule in administrative and quasi-judicial
proceedings is that proof beyond reasonable doubt is not required in
determining the legality of an employers dismissal of an employee, and not
even a preponderance of evidence is necessary as substantial
evidence is considered sufficient. Substantial evidence is more than a
mere scintilla of evidence or relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. Thus, substantial evidence
is the least demanding in the hierarchy of evidence.

Prescription Period
Cases
Victory Liner v Race, 519 SCRA 356 (2007)
The four-year prescriptive period shall commence to run only upon the
accrual of a cause of action of the worker. It is settled that in illegal
dismissal cases, the cause of action accrues from the time the employment
of the worker was unjustly terminated. Thus, the four-year prescriptive
period shall be counted and computed from the date of the employees
dismissal up to the date of the filing of complaint for unlawful termination of
employment.

In addition, an action for reinstatement by reason of illegal dismissal is one
based on an injury which may be brought within four (4) years from the
time of dismissal pursuant to Art. 1146 of the Civil Code. Hence, Capulso's
case which was filed after a measly delay of four (4) months should not be
treated with skepticism or cynicism. By law and settled jurisprudence, he
has four (4) years to file his complaint for illegal dismissal. A delay of
merely four (4) months in instituting an illegal dismissal case is more than
sufficient compliance with the prescriptive period. It may betray an
unlettered man's lack of awareness of his rights as a lowly worker but,
certainly, he must not be penalized for his tarrying.

Antonio v Morales, 512 SCRA 318 (2007)
This Court held that under the Civil Code, the prescription of an action refers
to the time within which an action must be brought after the right of action
has accrued. The prescriptive statutes serve to protect those who are
diligent and vigilant, not those who sleep on their rights. The rationale
behind the prescription of actions is to prevent fraudulent and stale claims
from springing up at great distances of time, thus surprising the parties or
their representatives when the facts have become obscure from the lapse of
time or the defective memory or death or removal of the witnesses.
Prescription applies even to the most meritorious claims.

Prescription as understood and used in this jurisdiction does not simply
mean a mere lapse of time. Rather, there must be a categorical showing
that due to plaintiffs negligence, inaction, lack of interest, or intent to
abandon a lawful claim or cause of action, no action whatsoever was taken,
thus allowing the statute of limitations to bar any subsequent suit.

Offer to Reinstate
Cases
Ranara v NLRC, 212 SCRA 631 (1992)
At any rate, sincere or not, the offer of reinstatement could not correct the
earlier illegal dismissal of the petitioner. The private respondents incurred
liability under the Labor Code from the moment Ranara was illegally
dismissed, and the liability did not abate as a result of Chang's repentance.

G. SANCTIONS AND REMEDIES

14.07 General Rule

Nature of RemediesTwin Remedies: REINSTATEMENT + BACKWAGES
Cases
Marival Trading Inc v NLRC, 525 SCRA 708 (2007)
Under Article 279 of the Labor Code, an employee who is unjustly dismissed
and other privileges, and to the payment of his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. These remedies give life to the workers
constitutional right to security of tenure.

In actions for recovery of wages or where an employee was forced to litigate
and thus incurred expenses to protect his rights and interests, a maximum
of 10% of the total monetary award by way of attorneys fees is justifiable
under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its
Implementing Rules; and paragraph 7, Article 2208 of the Civil Code.

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Pheschem Industrial Corp v Moldez, 458 SCRA 339 (2005)
On the issue of backwages, we reject the position of petitioner that its
computation should be made only after the finality of the NLRC decision.
Article 279 of the Labor Code provides that an illegally dismissed employee
shall be entitled, inter alia, to the payment of his full backwages,
inclusive of allowances and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld
from him, i.e., from the time of his illegal dismissal, up to the time of
his actual reinstatement. Thus, where reinstatement is adjudged, the
award of backwages and other benefits continues beyond the date of the
labor arbiters decision ordering reinstatement and extends up to the time
said order of reinstatement is actually carried out.

Nueva Ecija Electric Corp. v NLRC, 461 SCRA 169 (2005)
Where the dismissal is without just or authorized cause and there was no
due process, Article 279 of the Labor Code mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges
and full backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time the compensation was not
paid up to the time of actual reinstatement.

An employee who was illegally dismissed from work is entitled to
reinstatement without loss of seniority rights, and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Thus, Belga is
entitled to be reinstated to her former or equivalent position and to the
payment of full backwages from the time she was illegally dismissed until
her actual reinstatement.

Great Southern Maritime Services Corp v Acuna, 452 SCRA 422
(2005)
A thorough scrutiny of the purported resignation letters reveals the true
nature of these documents. In reality, they are waivers or quitclaims which
are not sufficient to show valid separation from work or bar respondents
from assailing their termination. The burden of proving that quitclaims were
voluntarily entered into falls upon the employer.

Deeds of release or
quitclaim cannot bar employees from demanding benefits to which they are
legally entitled or from contesting the legality of their dismissal.

The reason
for this rule was laid down in the landmark case of Cario vs. ACCFA:

Acceptance of those benefits would not amount to estoppel. The
reason is plain. Employer and employee, obviously, do not stand on
the same footing. The employer drove the employee to the wall. The
latter must have to get hold of money. Because, out of job, he had
to face the harsh necessities of life. He thus found himself in no
position to resist money proffered. His, then, is a case of adherence,
not of choice. One thing sure, however, is that petitioners did not
relent their claim. They pressed it. They are deemed not to have
waived any of their rights. Renuntiatio non praesumitur.

Cabatulan v Buat, 451 SCRA 234 (2005)
Under the existing law, an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights. It must be
emphasized, though, that the Court has declared that there are specific
circumstances obtaining where reinstatement is not a practicable remedy,
as when the relations between the employer and employee have been so
severely strained that it is no longer fitting to order reinstatement or when
the employee decides not to be reinstated.

Separation pay is the amount that an employee receives at the time of his
severance from the service and is designed to provide the employee with
the wherewithal during the period that he is seeking another employment.
The grant of separation pay does not impede an award for backwages as the
latter represents the amount of earnings lost by reason of unjustified
dismissal. A more equitable settlement, therefore, would be an award of
separation pay equivalent to at least one month pay for every year of
service in addition to his full backwages, allowances and other benefits.

Triad Security and Allied Services Inc v Ortega, 481 SCRA 591
(2006)
As the law now stands, an illegally dismissed employee is entitled to two
reliefs, namely: backwages and reinstatement. These are separate and
distinct from each other. However, separation pay is granted where
reinstatement is no longer feasible because of strained relations between
the employee and the employer.

In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if reinstatement
is no longer viable and backwages.

Backwages and separation pay are, therefore, distinct reliefs granted to one
who was illegally dismissed from employment. The award of one does not
preclude that of the other as this court had, in proper cases, ordered the
payment of both.

Rationale for Remedies
Cases
Globe-Mackay etc v NLRC, 206 SCRA 701 (1992)
The intendment of the law in prescribing the twin remedies of reinstatement
and payment of backwages is, in the former, to restore the dismissed
employee to her status before she lost her job, for the dictionary meaning of
the word "reinstate" is "to restore to a state, conditione positions etc. from
which one had been removed"

and in the latter, to give her back the income

NIKKI HIPOLITO
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lost during the period of unemployment. Both remedies, looking to the past,
would perforce make her "whole."

14.08 Reinstatement
Defined
Cases
Union of Supervisors v Secretary of Labor, 128 SCRA 442 (1981)
Reinstatement is aimed to restore the situation as nearly as possible to
status quo ante the unfair labor practice. This requires that those deprived
of a recognized and protected interest by the violations of the law should be
made whole so as to prevent the violator from profiting from his misdeeds.

Pheschem Industrial Corp. v Moldez, 458 SCRA 339 (2005)
Reinstatement is the restoration to a state or condition from which one had
been removed or separated. In providing foremost for the reinstatement of
an illegally dismissed employee, the Labor Code not only recognizes the
security of tenure granted by law to regular employees, but also gives
substance and meaning to the protection accorded by the Constitution to
labor. Employment is significant to every working man. It is the means by
which he sustains himself and his family, hence, the law mandates the
reinstatement of an illegally dismissed employee to his former position.

Payment of separation pay as a substitute for reinstatement is allowed only
under exceptional circumstances, viz:
(1) When reasons exist which are not attributable to the fault or beyond
the control of the employer, such as, when the employer, who is in
severe financial strait and has suffered serious business losses, has
ceased operations, implemented retrenchment, or abolished the
position due to the installation of labor-saving devices;
(2) When the illegally dismissed employee has contracted a disease and
his reinstatement will endanger the safety of his co-employees; or,
(3) Where strained relationship exists between the employer and the
dismissed employee.

Employee Right
Cases
Quijano v Mercury Drug, 292 SCRA 109 (1998)
Reinstatement is the remedy that most effectively restores the right of an
employment before he was unjustly deprived of his job. In giving an illegally
dismissed employee the right to reinstatement, the law recognizes the fact
that continued employment gives to a worker, especially to a lowly or
menial laborer, an assurance of continuity in his source of income which a
grant of separation pay could not provide. In the case at bar, we give
primacy to the employee's right to reinstatement rather than the employers
claim that due to "strained relationship," his illegally dismissed employee
should just be given separation pay.

Rosario v Victory Ricemill, 397 SCRA 760 (2003)
On the other hand, with respect to dismissals for cause under Art. 282, if it
is shown that the employee was dismissed for any of the just causes
mentioned in said Art. 282, then, in accordance with that article, he should
not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of
employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.

In fine, the lack of notice and hearing is considered as being a mere failure
to observe a procedure for the termination of employment which makes the
dismissal ineffectual but not necessarily illegal. The procedural infirmity is
then remedied by ordering the payment to the employee his full backwages
from the time of his dismissal until the court finally rules that the dismissal
has been for a valid cause.

Supreme Steel Corp v Bardaje, 522 SCRA 155 (2007)
W]here a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe. It
is not only because of the laws concern for the workingman. There is, in
addition, his family to consider. Unemployment brings untold hardships and
sorrows on those dependent on the wage-earner. The misery and pain
attendant on the loss of jobs then could be avoided if there be acceptance of
the view that under all circumstances of this case, petitioners should not be
deprived of their means of livelihood. Nor is this to condone what had been
done by them For all this while, since private respondent considered them
separated from the service, they had not been paid.

Panuncillo v CAP Phil., 515 SCRA 323 (2007)
The issuance of the temporary restraining order did not nullify the rights
of private respondents to their reinstatement and to collect their wages
during the period of the effectivity of the order but merely suspended the
implementation thereof pending the determination of the validity of the
NLRC resolutions subject of the petition. Naturally, a finding of this Court
that private respondents were not entitled to reinstatement would mean
that they had no right to collect any back wages. On the other hand, where
the Court affirmed the decision of the NLRC and recognized the right of
private respondents to reinstatement, private respondents are entitled to
the wages accruing during the effectivity of the temporary restraining
order.

Effect of Failure to Ask Relief
Cases
General Baptist Bible College v NLRC, 219 SCRA 549 (1993)
We hereby note that Basa's failure to specifically pray for the relief of
reinstatement in a complaint which he personally prepared and signed using
a standard form prepared by the NLRC Regional Arbitration, Branch No XI,

NIKKI HIPOLITO
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Davao City, is a procedural lapse which cannot put to naught a right which
he is entitled under a substantive law. Technicalities have no room in labor
cases, were the Rules of Court are applicable only in order to effectuate the
objectives of the Labor Code and not to defeat them. The pertinent
provisions of the Revised Rules of Court of the Philippines and prevailing
jurisprudence may be applied by analogy or in a suppletory character to
effect an expeditious resolution of labor controversies in a practical and
convenient manner.

Pheschem Industrial v Moldez, 458 SCRA 339 (2005)
Respondents omission to pray for reinstatement in his position paper before
the labor arbiter cannot be considered as an implied waiver to be reinstated.
It was a mere procedural lapse which should not affect his substantive right
to reinstatement.

It is a settled principle that technicalities have no place in
labor cases as rules of procedure are designed primarily to give substance
and meaning to the objectives of the Labor Code to accord protection to
labor.

Rules on Reinstatement

Rationale
Cases
Composite Enterprises v Caparoso, 529 SCRA 470 (2007)
Reinstatement is the restoration to a state or condition from which one has
been removed or separated. The intent of the law in making a reinstatement
order immediately executory is much like a return-to-work order, i.e., to
restore the status quo in the workplace in the meantime that the issues
raised and the proofs presented by the contending parties have not yet been
finally resolved. It is a legal provision which is fair to both labor and
management because while execution of the order cannot be stayed by the
posting of a bond by the employer, the workers also cannot demand their
physical reinstatement if the employer opts to reinstate them only in the
payroll.

Roquero v PAL, 401 SCRA 424 (2003)
"In authorizing execution pending appeal of the reinstatement aspect of a
decision of the Labor Arbiter reinstating a dismissed or separated employee,
the law itself has laid down a compassionate policy which, once more,
vivifies and enhances the provisions of the 1987 Constitution on labor and
the working man.

These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which the
Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability.

In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending
appeal.

. . . Then, by and pursuant to the same power (police power), the State
may authorize an immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that saving act is
designed to stop, although temporarily since the appeal may be decided in
favor of the appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and his family."

Phil. National Oil Co. Energy Development Corp. v Abella, 448 SCRA
549 (2005)
Accordingly, an employee who is separated from his employment on a false
or nonexistent cause is entitled to be reinstated to his former position
because the separation is illegal. If the position is no longer available for
any other valid and justifiable reason, however, the reinstatement of the
illegally dismissed employee to his former position would neither be fair nor
just. The law itself can not exact compliance with what is impossible. Ad
imposible tenetur. The employers remedy is to reinstate the employee to a
substantially equivalent position without loss of seniority rights as provided
for above.

G&S Transport Corp v Infante, 533 SCRA 288 (2007)
Section 4, Rule I of the Rules Implementing Book VI of the Labor Code
provides:

SEC. 4. Reinstatement to former position.(a) An employee who is
separated from work without just cause shall be reinstated to his
former position, unless such position no longer exists at the time of
his reinstatement, in which case he shall be given a substantially
equivalent position in the same establishment without loss of
seniority rights.

The above-quoted rule enunciates reinstatement as the standard relief.
However, in this case, seventeen (17) years have elapsed since respondents
were illegally dismissed. In Association of Independent Unions in the
Philippines v. NLRC, where more than eight (8) years have passed since the
petitioners therein staged an illegal strike and were found to have been
unlawfully terminated, an award of separation pay equivalent to one (1)
month pay for every year of service, in lieu of reinstatement, was deemed
more practical and appropriate to all the parties concerned. We adopt the
same tack in this case.


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Exceptions

BUSINESS CONDITIONS
Cases
Union of Supervisors v Secretary of Labor, 128 SCRA 442 (1981)
The reinstatement remedy must always be adapted to economic-business
conditions.

Espejo v NLRC, 255 SCRA 430 (1996)
We sustain the challenged decision insofar as it disallowed reinstatement.
The law recognizes as valid any retirement plan, agreement or management
policy regarding retirement at an earlier or older age. In the case of
petitioner, CISP did not have any retirement plan for its employees. In such
situation, Sec. 13, Book IV, of the Omnibus Rules Implementing the Labor
Code provides that in the absence of a retirement plan, agreement or policy
an employee may be retired upon reaching the age of-sixty (60) years.
Construing this provision, we held that an employee may retire, or may be
retired by his employer, upon reaching sixty (60). Thus, an employee held
to be illegally dismissed cannot be reinstated if he had already reached the
age of sixty (60) years at the time of his second complaint (pressing for
reinstatement) before the Labor Arbiter's Office. NLRC therefore did not err
in denying the reinstatement of Petitioner.

STRAINED RELATIONS
Cases
Pearl S. Buck Foundation v NLRC, 182 SCRA 446 (1990)
The parties to a case should not be forced into a situation where a peaceful
relationship is not feasible. As the petitioner appears to have lost its trust in
private respondent, who in turn is not seeking reinstatement, it would be an
act of oppression to compel them to return to the status quo ante.

Commercial Motors Corp v NLRC, 192 SCRA 191 (1990)
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable
thereto to an increasing extent, due to the resultant atmosphere of
antipathy and antagonism or strained relations or irretrievable
estrangement between the employer and the employee.

Sentinel Security Agency Inc v NLRC, 295 SCRA 123 (1998)
The Agency cannot reassign them to the client, as the former has recruited
new security guards; the complainants, on the other hand, refuse to accept
other assignments. Verily, complainants do not pray for reinstatement; in
fact, they refused to be reinstated. Such refusal is indicative of strained
relations. Thus, separation pay is awarded in lieu of reinstatement.

Sibal v Notre Dame of Greater Manila, 182 SCRA 538 (1990)
No strained relations should arise from a valid and legal act of asserting
ones right, such as in the instant case, for otherwise, an employee who shall
assert his/ her right could be easily separated from the service by merely
paying his/her separation pay on the pretext that his/her relationship with
his/her employer had already become strained.

To Our mind, strained relations in order that it may justify the award of
separation pay in lieu of reinstatement with backwages, should be such,
that they are so compelling and so serious in character, that the continued
employment of an employee is so obnoxious to the person or business of
the employer, and that the continuation of such employment has become
inconsistent with peace and tranquility which is an Ideal atmosphere in
every workplace.

Naga College Foundation Education Workers Organization v Bose,
289 SCRA 747 (1998)
No strained relations should arise from a valid and legal act of asserting
one's right; otherwise an employee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the
pretext that his relationship with his employer had already become strained.

Bascon v CA, 422 SCRA 122 (2004)
To protect labors security of tenure, we emphasize that the doctrine of
"strained relations" should be strictly applied so as not to deprive an illegally
dismissed employee of his right to reinstatement. Every labor dispute
almost always results in "strained relations," and the phrase cannot be given
an overarching interpretation, otherwise, an unjustly dismissed employee
can never be reinstated.

Cabatulan v Buat, 451 SCRA 234 (2005)
Under the existing law, an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights. It must be
emphasized, though, that the Court has declared that there are specific
circumstances obtaining where reinstatement is not a practicable remedy,
as when the relations between the employer and employee have been so
severely strained that it is no longer fitting to order reinstatement or when
the employee decides not to be reinstated. It must be stressed that the
petitioner was charged by the respondent spouses with qualified theft and
was even coerced into withdrawing the labor case against them. No other
conclusion may be deduced other than the categorical fact that antagonism
already caused a severe strain in the relationship between the respondent
spouses and petitioner. Separation pay is the amount that an employee
receives at the time of his severance from the service and is designed to
provide the employee with the wherewithal during the period that he is
seeking another employment. The grant of separation pay does not impede
an award for backwages as the latter represents the amount of earnings lost
by reason of unjustified dismissal. A more equitable settlement, therefore,

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would be an award of separation pay equivalent to at least one month pay
for every year of service in addition to his full backwages, allowances and
other benefits.

Acesite Corp v NLRC, 449 SCRA 360 (2005)
In illegal dismissal cases, reinstatement to an illegally dismissed employees
former position may be excused on the ground of "strained relations." This
may be invoked against employees whose positions demand trust and
confidence, or whose differences with their employer are of such nature or
degree as to preclude reinstatement. In the case at bar, Gonzales was Chief
of Security, whose duty was to "manage the operation of the security areas
of the hotel to provide and ensure the safety and security of the hotel
guests, visitors, management, staff and their properties according to
company policies and local laws. It cannot be gainsaid that Gonzales
position is one of trust and confidence, he being in charge of the over-all
security of said hotel. Thus, reinstatement is no longer possible. In lieu
thereof, Acesite is liable to pay separation pay of 1 month for every year of
service.

BPI Employees Union v BPI, 454 SCRA 357 (2005)
Well-entrenched is the rule that an illegally dismissed employee is entitled
to reinstatement as a matter of right. Over the years, however, the case law
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, particularly where the illegally dismissed
employee held a managerial or key position in the company, it would be
more prudent to order payment of separation pay instead of reinstatement.
Some unscrupulous employers, however, have taken advantage of the
overgrowth of this doctrine of strained relations' by using it as a cover to get
rid of its employees and thus defeat their right to job security.

To protect labor's security of tenure, we emphasize that the doctrine of
'strained relations' should be strictly applied so as not to deprive an illegally
dismissed employee of his right to reinstatement. Every labor dispute
almost always results in 'strained relations' and the phrase cannot be given
an overarching interpretation, otherwise, an unjustly dismissed employee
can never be reinstated.

Sagum v CA, 459 SCRA 223 (2005)
The existence of strained relations is a factual finding and should be initially
raised, argued and proven before the Labor Arbiter. Petitioner is correct that
the finding of strained relations does not have any basis on the records.
Indeed, nowhere was the issue raised in private respondents' pleadings
before the Labor Arbiter and the NLRC. Sieving through the records, private
respondents first raised the issue in their Comment to Petitioner's Motion for
Partial Reconsideration before the Court of Appeals. In Globe-Mackay
Cable and Radio Corporation v. NLRC, we emphasized that the principle
of strained relations cannot be applied indiscriminately. Otherwise, an
illegally dismissed employee can never be reinstated because invariably,
some hostility is engendered between litigants. As a rule, no strained
relations should arise from a valid and legal act of asserting one's right;
otherwise, an employee who asserts his right could be easily separated from
the service by merely paying his separation pay on the pretext that his
relationship with his employer had already become strained.

IMPLEMENTATION = OPTIONS AND RATIONALE
Options and Rationale
Cases
Jardine Davies Inc v NLRC, 225 SCRA 757 (1993)
The order of immediate reinstatement pending appeal, in cases of illegal
dismissal is an ancillary relief under R.A. 6715 granted to a dismissed
employee to cushion him and his family against the impact of economic
dislocation or abrupt loss of earnings. If the employee chooses not to report
for work pending resolution of the case appeal, he foregoes such a
temporary relief and is not paid of his salary. The final determination of the
rights and obligations respectively of the parties is the ultimate and final
resolution of this Commission.

Pioneer Texturing Corp v NLRC, 280 SCRA 380 (1997)
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 quite obvious, i.e., 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.

International Container Services Inc v NLRC, 300 SCRA 335 (1998)
Under Art. 223 as presently construed, the reinstatement aspect of the
Labor Arbiter's decision, albeit under appeal, was immediately enforceable
as a consequence of which, petitioner, as the employer, was duty-bound to
choose forthwith whether to re-admit Tanpiengco or to reinstate him in the
payroll and to inform Tanpiengco of its choice to enable the latter to act
accordingly. Failing to exercise the options in the alternative, petitioner
must pay the salary of Tanpiengco which automatically accrued from notice
of the Labor Arbiter's order of reinstatement until its ultimate reversal by
the NLRC.


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Kiamco v NLRC, 309 SCRA 424 (1999)
If in the wisdom of the Court, there may be a ground or grounds for the
nonapplication of the above-cited provision (Art. 279, Labor Code) this
should be by way of exception, such as when the reinstatement may be
inadmissible due to ensuing strained relations between the employer and
employee.

In such cases, it should be proved that the employee concerned occupies a
position where he enjoys the trust and confidence of his employer; and that
it is likely that if reinstated, an atmosphere of antipathy and antagonism
may be generated as to adversely affect the efficiency and productivity of
the employee concerned x x x x Obviously, the principle of strained
relations cannot be applied indiscriminately. Otherwise, reinstatement can
never be possible simply because some hostility is invariably engendered
between the parties as a result of litigation. That is human nature.

Besides, no strained relations should arise from a valid legal act of asserting
ones right; otherwise an employee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the
pretext that his relationship with his employer had already become strained.

14.08 Backwages

Definition
Cases
Equitable Banking Corp. v Sadac, 490 SCRA 380 (2006)
The term backwages without qualification and deduction means that the
workers are to be paid their backwages fixed as of the time of the dismissal
or strike without deduction for their earnings elsewhere during their layoff
and without qualification of their wages as thus fixed; i.e., unqualified by
any wage increases or other benefits that may have been received by their
co-workers who are not dismissed or did not go on strike. Awards including
salary differentials are not allowed. The salary base properly used should,
however, include not only the basic salary but also the emergency cost of
living allowances and also transportation allowances if the workers are
entitled thereto."

St. Theresas School of Novaliches Foundation v NLRC, 289 SCRA
110 (1998)
The term backwages has been defined as that for earnings lost by a
worker due to his illegal dismissal. Backwages are generally granted on
grounds of equity. Payment thereof is a form of relief that restores the
income lost by reason of such unlawful dismissal. It is not private
compensation or damages, but is awarded in furtherance and effectuation of
the public objectives of the Labor Code. Nor is it a redress of a private right
but, rather, in the nature of a command to the employer to make public
reparation for dismissing an employee, either due to the formers unlawful
act or bad faith.

General Baptist Bible College v NLRC, 219 SCRA 549 (1993)
When the term "backwages" was used in the NLRC Decision, what was
actually meant was unpaid salaries, which pertain to compensation due the
employee for services actually rendered before termination. Backwages, on
the other hand, refer to his supposed earnings had he not been illegally
dismissed. Unpaid salaries refer to those earned prior to dismissal whereas
backwages refer to those earnings lost after illegal dismissal. Thus,
reinstatement would always bring with it payment of backwages but not
necessarily payment of unpaid salaries. Payment of unpaid salaries is only
ordered if there are still salaries collectible from his employer by reason of
services already rendered.

We also want to clarify that when there is an award of backwages this
actually refers to backwages without qualifications and deductions. Thus, We
held that:

The term "backwages without qualification and deduction" means
that the workers are to be paid their backwages fixed as of the time
of the dismissal or strike without deduction for their earnings
elsewhere during their layoff and without qualification of their wages
as thus fixed; i.e., unqualified by any wage increases or other
benefits that may have been received by their co-workers who are
not dismissed or did not go on strike. Awards including salary
differentials are not allowed. The salary base properly used should,
however, include not only the basic salary but also the emergency
cost of living allowances and also transportation allowances of the
workers are entitled thereto.

Viernes v NLRC, 400 SCRA 557 (2003)
Backwages are granted on grounds of equity to workers for earnings lost
due to their illegal dismissal from work. On the other hand, the award of
indemnity, as we have earlier held, is meant to vindicate or recognize the
right of an employee to due process which has been violated by the
employer.

NaturePurpose
Cases
Tomas Claudio Memorial College Inc v CA, 423 SCRA 122 (2004)
The payment of backwages is generally granted on the ground of equity. It
is a form of relief that restores the income that was lost by reason of the
unlawful dismissal; the grant thereof is intended to restore the earnings that
would have accrued to the dismissed employee during the period of
dismissal until it is determined that the termination of employment is for a
just cause. It is not private compensation or damages but is awarded in

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furtherance and effectuation of the public objective of the Labor Code. Nor is
it a redress of a private right but rather in the nature of a command to the
employer to make public reparation for dismissing an employee either due
to the formers unlawful act or bad faith.

Effect of Failure to Claim
Cases
Dela Cruz v NLRC, 299 SCRA 1 (1998)
Petitioner would have, likewise, been entitled to reinstatement as a
consequence of his illegal dismissal from employment. However, by
expressly asking for separation pay, he is deemed to have opted for
separation pay in lieu of reinstatement. This is the tenor of the holding in
Reformist Union v. NLRC to the effect that separation pay is awarded as an
alternative to reinstatement.

Effect of Failure to Order
Cases
Aurora Land v NLRC, 266 SCRA 48 (1997)
In this case, the failure of the Labor Arbiter and the public respondent NLRC
to award backwages to the private respondent, who is legally entitled
thereto having been illegally dismissed, amounts to a "plain error" which we
may rectify in this petition, although private respondent Dagui did not bring
any appeal regarding the matter, in the interest of substantial justice. The
Supreme Court is clothed with ample authority to review matters, even if
they are not assigned as errors on appeal, if it finds that their consideration
is necessary in arriving at a just decision of the case.

Rules of procedure are
mere tools designed to facilitate the attainment of justice. Their strict and
rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided.

Thus,
substantive rights like the award of backwages resulting from illegal
dismissal must not be prejudiced by a rigid and technical application of the
rules.

PeriodComputation
Cases
Itogon Suyoc v Sangilo, 24 SCRA 873 (1968)
The judgment below directs petitioner to pay individual respondents back
wages from the time of their dismissal to their actual reinstatement without
loss of seniority and privileges.

Since the dismissal of respondents in 1958, more than ten years had
elapsed. It would not seem out of place to restate the guidelines to be
observed in the ascertainment of the total back wages payable under the
judgment below. These are:

First. To be deducted from the back wages accruing to each of the laborers
to be reinstated is the total amount of earnings obtained by him from other
employment(s) from the date of dismissal to the date of reinstatement.
Should the laborer decide that it is preferable not to return to work, the
deduction should be made up to the time judgment becomes final. And
these, for the reason that employees should not be permitted to enrich
themselves at the expense of their employer. Besides, there is the "law's
abhorrence for double compensation."

Second. Likewise, in mitigation of the damages that the dismissed
respondents are entitled to, account should be taken of whether in the
exercise of due diligence respondents might have obtained income from
suitable remunerative employment. We are prompted to give out this last
reminder because it is really unjust that a discharged employee should, with
folded arms, remain inactive in the expectation that a windfall would come
to him. A contrary view would breed idleness; it is conducive to lack of
initiative on the part of a laborer. Both bear the stamp of undesirability.

Feati University v Bautista, 58 SCRA 395 (1974)
The computation of such accrued backwages shall be based on the
university records and payrolls as directed in the industrial courts February
7, 1969 execution order (upheld by this Court in L-30484 on May 22, 1969)
save that the report of such computation shall be made to the industrial
court within thirty (30) days from notice hereof and payment of the three
years backwages (based on ten months per year) without qualification or
deduction shall be effected immediately thereafter to the faculty club
members entitled thereto.

Mercury Drug v CIR, 56 SCRA 694 (1974)ABANDONED
An award of back wages equivalent to three years (where the case is not
terminated sooner) should serve as the base figure for such awards without
deduction, subject to deduction where there are mitigating circumstances in
favor of the employer but subject to increase by way of exemplary damages
where there are aggravating circumstances (e.g. oppression or dilatory
appeals) on the employer's part. ! Separate Opinion of J. Teehankee

Pines City Educational Center v NLRC, 227 SCRA 655 (1993)
Thus, the order for their reinstatement and payment of full backwages and
other benefits and privileges from the time they were dismissed up to their
actual reinstatement is proper, conformably with Article 279 of the Labor
Code, as amended by Section 34 of Republic Act No. 6715, which took effect
on March 21, 1989.

Bustamante v NLRC, 265 SCRA 61 (1996)
The law specifically declared that the award of backwages was to be
computed from the time compensation was withheld from the employee up
to the time of his reinstatement.


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The Court deems it appropriate, however, to reconsider such earlier ruling
on the computation of backwages as enunciated in said Pines City
Educational Center case, by now holding that conformably with the evident
legislative intent as expressed in Rep. Act No. 6715, above-quoted,
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 family, while full
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 Rep. Act No. 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. Thus, a closer adherence to the
legislative policy behind Rep. Act No. 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. In other words, the provision calling for "full backwages" to
illegally dismissed employees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or strained interpretation.
Index animi sermo est.

Romagos v Metro Cebu Water District, 533 SCRA (2007)
However, the award of backwages and other monetary benefits should not
be limited to 5 years and must therefore be modified in line with the recent
case of Civil Service Commission v. Gentallan. We held in said case that an
illegally dismissed government employee who is later ordered reinstated is
entitled to backwages and other monetary benefits from the time of her
illegal dismissal up to her reinstatement. This is only fair and just because
an employee who is reinstated after having been illegally dismissed is
considered as not having left her office and should be given the
corresponding compensation at the time of her reinstatement.

G&S Water Transport Corp v Infante, 533 SCRA 288 (2007)
Under the circumstances, respondents reinstatement without backwages
suffices for the appropriate relief. If reinstatement is no longer possible,
given the lapse of considerable time from the occurrence of the strike, the
award of separation pay of one (1) month salary for each year of service, in
lieu of reinstatement, is in order.

Del Monte v Saldiar, 504 SCRA 192 (2006)
Del Monte cites a jurisprudential rule that an employer who acted in good
faith in dismissing employees on the basis of a closed- shop provision may
not be penalized even if the dismissal were illegal. Such a doctrine is
admittedly supported by the early case of National Labor Union v. Zip
Venetian Blind and the later decision in 1989 of Soriano v. Atienza, wherein
the Court affirmed the disallowance of backwages or "financial assistance" in
dismissals under the aforementioned circumstance.

However, the Court now recognizes that this doctrine is inconsistent with
Article 279 of the Labor Code, as amended by Republic Act No. 6715, which
took effect just five (5) days after Soriano was promulgated. It is now
provided in the Labor Code that "[a]n employee who is unjustly dismissed
and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual
reinstatement." Thus, where reinstatement is adjudged, the award of
backwages and other benefits continues beyond the date of the labor
arbiter's decision ordering reinstatement and extends up to the time said
order of reinstatement is actually carried out.

Torres v NLRC, 330 SCRA 311 (2000)
Now, the rule is that back wages awarded to an illegally dismissed employee
shall not be diminished or reduced by the earnings derived by him
elsewhere during the period of his illegal dismissal.

Kay Products v CA, 464 SCRA 544 (2005)
Thus, the said provision provides that illegally dismissed employees are
entitled to backwages plus other benefits computed from the time
compensation was withheld up to the time of actual reinstatement. An
illegally dismissed employee who, in contemplation of the law, never left his
office, should be granted the compensation which rightfully belongs to him
from the moment he was unduly deprived of it up to the time it was
restored to him; the backwages to be awarded should not be diminished or
reduced by earnings derived by the illegally dismissed employee elsewhere
during the term of his illegal dismissal.

Standard Electric Manufacturing Corp v Standard Electric Employees
Union, 468 SCRA 316 (2005)
Finally, in line with the rulings of this Court in Magtoto and Pedroso on the
matter of backwages, respondent Javier is not entitled to any salary during
the period of his detention. His entitlement to full backwages commenced
from the time the petitioner refused his reinstatement. In the instant case,
when respondent Javier was freed on May 24, 1996 by virtue of the
judgment of acquittal dated May 17, 1996, he immediately proceeded to the
petitioner but was not accepted back to work; hence, the reckoning point for
the grant of backwages started therefrom.

BPI Employees Union v BPI, 454 SCRA 357 (2005)
Verily, the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, is that the 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.

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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. Corollary thereto, full backwages have to be paid by
the employer as part of the price or penalty he has to pay for illegally
dismissing his employee. Thus, a closer adherence to the legislative policy
behind Rep. Act. No. 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. In
other words, the provision calling for 'full backwages' to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore, must be
applied without attempted or strained interpretation.

Consequently, in accordance with Section 34, Rep. Act No. 6715, employees
illegally dismissed after 21 March 1989 are entitled to their 'full backwages,
inclusive of other benefits or their monetary equivalent, from the time their
actual compensation was withheld from them up to the time of their actual
reinstatement.

Filipinas Pre-Fabricated Building Systems v Puente, 453 SCRA 820
(2005)
Without a valid cause, the employment of project employees cannot be
terminated prior to expiration. Otherwise, they shall be entitled to
reinstatement with full back wages. However, if the project or work is
completed during the pendency of the ensuing suit for illegal dismissal, the
employees shall be entitled only to full back wages from the date of the
termination of their employment until the actual completion of the project or
work.

Intercontinental Broadcasting Corp v Benedicto, 495 SCRA 561
(2006)
-- NO RELATION TO COMPUTATION OF BACKWAGES

TPI Cement Corp v Cajucom, 483 SCRA 494 (2006)
It bears reiterating that under Article 283, in case of retrenchment to
prevent losses, respondent is entitled to an award of separation pay
equivalent to one-half (1/2) months pay for every year of service
(with a fraction of at least six [6 months considered one [1 whole year).
Since he was employed by petitioners for four (4) years, or from June 1,
1995 to December 30, 1998, with a monthly salary of P80,000.00, he
should be paid P160,000.00 as separation pay.

Effect of Inflation
Cases
Lantion v NLRC, 181 SCRA 513 (1990)
In respect of the argument that the inflation that has supervened justifies
the imposition of interest, this Court has held that the effects of
extraordinary inflation are not to be applied without an agreement between
the parties and without an official declaration thereof by competent
authorities.

14.10 Financial Assistance

Allowed Financial Assistance
Cases
PLDT v NLRC, 164 SCRA 671 (1988)
We hold that henceforth separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social
justice.

Salavarria v Letran College, 296 SCRA 184 (1998)
As a general rule, an employee who is dismissed for cause is not entitled to
any financial assistance. However, equity considerations provide an
exception. In PLDT v. NLRC,

equity has been defined as justice outside law,
being ethical rather than jural and belonging to the sphere of morals than of
law. It is grounded on the precepts of conscience and not on any sanction of
positive law, for equity finds no room for application where there is law.
Further, it was held that the grant of separation pay is not merely based on
equity but on the provisions of the Constitution regarding the promotion of
social justice and protection of the rights of the workers.

Gustilo v Wyeth Phils, 440 SCRA 67 (2004)
We are of course aware that financial assistance may be allowed as a
measure of social justice in exceptional circumstances and as an equitable
concession. We are likewise mindful that financial assistance is allowed only
in those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character.

Pinero v NLRC, 437 SCRA 112 (2004)
An employee who is dismissed for cause is generally not entitled to any
financial assistance. Equity considerations, however, provide an exception.
Equity has been defined as justice outside law, being ethical rather than
jural and belonging to the sphere of morals than of law. It is grounded on
the precepts of conscience and not on any sanction of positive law, for
equity finds no room for application where there is law.

Eastern Shipping Lines v Sedan, 486 SCRA 565 (2006)
We are not unmindful of the rule that financial assistance is allowed only in
instances where the employee is validly dismissed for causes other than

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serious misconduct or those reflecting on his moral character.

Neither are
we unmindful of this Courts pronouncements in Arc- Corporation v. NLRC,
Lemery Savings and Loan Bank v. NLRC, where the Court ruled that when
there is no dismissal to speak of, an award of financial assistance is not in
order.

But we must stress that this Court did allow, in several instances, the grant
of financial assistance. In the words of Justice Sabino de Leon, Jr., now
deceased, financial assistance may be allowed as a measure of social justice
and exceptional circumstances, and as an equitable concession. The instant
case equally calls for balancing the interests of the employer with those of
the worker, if only to approximate what Justice Laurel calls justice in its
secular sense.

Pangasinan Electric Coop. v NLRC, 528 SCRA 146 (2007)
Although long years of service might generally be considered for the award
of separation benefits or some form of financial assistance to mitigate the
effects of termination, this case is not the appropriate instance for
generosity under the Labor Code nor under our prior decisions. The fact
that private respondent served petitioner for more than twenty years with
no negative record prior to his dismissal, in our view of this case, does not
call for such award of benefits, since his violation reflects a regrettable lack
of loyalty and worse, betrayal of the company. If an employees length of
service is to be regarded as a justification for moderating the penalty of
dismissal, such gesture will actually become a prize for disloyalty, distorting
the meaning of social justice and undermining the efforts of labor to cleanse
its ranks of undesirables.

Not Allowed
Cases
Phil. Construction Corp v NLRC, 170 SCRA 207 (1989)
Henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character.
Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice.

Eastern Paper Mills v NLRC, 170 SCRA 595 (1989)
The only cases when separation pay shall be paid, although the employee
was lawfully dismissed, are when the cause of termination was not
attributable to the employee's fault but due to: (1) the installation of labor-
saving devices, (2) redundancy (3) retrenchment, (4) cessation of the
employer's business, or (5) when the employee is suffering from a disease
and his continued employment is prohibited by law or is prejudicial to his
health and to the health of his co- employees. (Articles 283 and 284, Labor
Code.) Other than these cases, an employee who is dismissed for a just and
lawful cause is not entitled to separation pay even if the award were to be
called by another name.

This Court has several times ruled that "financial assistance", whatever form
it might assume, is permissible where the employee has been validly
dismissed, only in those instances where the cause of dismissal was
something other than serious misconduct on the part of the employee or
other cause reflecting adversely on the employee's moral character.

14.11 Separation Pay

When AlternativeWHEN REINSTATEMENT IMPOSSIBLE
Cases
Coca-Cola Bottlers Phil. v Vital, 438 SCRA 278 (2004)
However, the circumstances obtaining in this case do not warrant the
reinstatement of respondent. Antagonism caused a severe strain in the
relationship between him and petitioner company. A more equitable
disposition would be an award of separation pay equivalent to at least one
month pay, or one month pay for every year of service, whichever is higher,
(with a fraction of at least six (6) months being considered as one (1) whole
year), in addition to his full backwages, allowances and other benefits.

Gustilo v Wyeth Phils., 440 SCRA 67 (2004)
"x x x henceforth, separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid
dismissal is, x x x an offense involving moral turpitude x x x, the employer
may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of
social justice."

National Federation of Labor v CA, 440 SCRA 604 (2004)
--case cannot be located

Pheschem Industrial Corp v Moldez, 458 SCRA 339 (2005)
The legal consequences of an illegal dismissal are reinstatement of the
employee without loss of seniority rights and other privileges, and
payment of his full backwages, inclusive of allowances, and other
benefits or their monetary equivalent. Clearly, the law intended
reinstatement to be the general rule. It is only when reinstatement
is no longer feasible that payment of separation pay is awarded to
an illegally dismissed employee.


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Etcuban v Sulpicio Liners, 448 SCRA 516 (2005)
Well-settled is the rule that separation pay shall be allowed only in those
instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Inasmuch as
reason for which the petitioner was validly separated involves his integrity,
which is especially required for the position of purser, he is not worthy of
compassion as to deserve at least separation pay for his length of service.

Hanford Phils v Joseph, 454 SCRA 786 (2005)
It is well to note that there is no provision in the Labor Code which grants
separation pay to employees who voluntarily resign. Under the Code,
separation pay may be awarded only in cases when the termination of
employment is due to:
(a) installation of labor saving devices,
(b) redundancy,
(c) retrenchment,
(d) closing or cessation of business operations,
(e) disease of an employee and his continued employment is prejudicial to
himself or his co-employees, or
(f) when an employee is illegally dismissed but reinstatement is no
longer feasible.

When not Allowed
Cases
North Davao Mining Corp v NLRC, 254 SCRA 721 (1996)
The underscored portion of Art. 283 governs the grant of separation benefits
"in case of closures or cessation of operation" of business establishments
"NOT due to serious business losses or financial reverses . . . ". Where,
however, the closure was due to business losses as in the instant case, in
which the aggregate losses amounted to over P20 billion the Labor Code
does not impose any obligation upon the employer to pay separation
benefits, for obvious reasons.

Computation
Cases
Millares v NLRC, 305 SCRA 500 (1999)
In Santos, the Court decreed that in the computation of separation pay
awarded in lieu of reinstatement, account must be taken not only of the
basic salary but also of transportation and emergency living allowances.
Later, the Court in Soriano, citing Santos, was general in its holding that the
salary base properly used in computing separation pay where reinstatement
was no longer feasible should include not just the basic salary but also the
regular allowances that the employee had been receiving. Insular merely
reiterated the aforementioned rulings. The rationale is not difficult to
discern. It is the obligation of the employer to pay an illegally dismissed
employee the whole amount of his salaries plus all other benefits, bonuses
and general increases to which he would have been normally entitled had he
not been dismissed and had not stopped working.
20
The same holds true in
case of retrenched employees. And thus we applied Insular and Soriano in
Planters in the computation of separation pay of retrenched employees.
Songco likewise involved retrenchment and was relied upon in Planters,
Soriano and Santos in determining the proper amount of separation pay. As
culled from the foregoing jurisprudence, separation pay when awarded to an
illegally dismissed 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. But in view
of the previous discussion that the disputed allowances were not regularly
received by petitioners herein, there was no reason at all for petitioners to
resort to the above cases.

Effect of Acceptance
Cases
Anino v NLRC, 290 SCRA 489 (1998)
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.

LIABILITY OF CORPORATE OFFICERS

Liability Rule
Cases
Bogo-Medellin Sugarcane Planters Assn. v NLRC, 296 SCRA 108
(1998)
Unless they have exceeded their authority, corporate officers are, as a
general rule, not personally liable for their official acts, because a
corporation, by legal fiction, has a personality separate and distinct from its
officers, stockholders and members. However, this fictional veil may be
pierced whenever the corporate personality is used as a means of
perpetuating fraud or an illegal act, evading an existing obligation, or
confusing a legitimate issue. In cases of illegal dismissal, corporate directors
and officers are solidarily liable with the corporation, where terminations of
employment are done with malice or in bad faith.

NYK International v NLRC, 397 SCRA 607 (2003)
In this case Cathy Ng, admittedly, is the manager of NYK. Conformably with
our ruling in A. C. Ransom, she falls within the meaning of an "employer" as
contemplated by the Labor Code, who may be held jointly and severally
liable for the obligations of the corporation to its dismissed employees.
Pursuant to prevailing jurisprudence, Cathy Ng, in her capacity as manager
and responsible officer of NYK, cannot be exonerated from her joint and
several liability in the payment of monetary award to private respondent.


NIKKI HIPOLITO
196
Tan v Timbal, Jr., 434 SCRA 381 (2004)
In labor cases, corporate directors and officers are solidarily liable with the
corporation for the termination of employment of corporate employees
committed with malice or bad faith. The ruling applies in a case where a
corporate officer acts with malice or bad faith in suspending an employee.
Whether or not the petitioner acted with malice or bad faith in ordering the
suspension of the respondent is a question of fact submitted by the parties
to the Labor Arbiter for resolution.

In holding Angerbauer and Kennedy solidarily liable, the NLRC intended "to
deter other foreign employer[s] from repeating the inhuman treatment of
their Filipino employees who should be treated with equal respect especially
in their own land and prevent further violation of their human rights as
employees."

The records of the case do not, however, show any inhuman treatment of
Gonzales. His superiors just happen to be foreigners. Moreover, as
previously discussed, bad faith or malice was not proven. Angerbauer,
acting on behalf of Acesite, was, like Gonzales, perhaps also too
presumptuous in thinking that the telegrams ordering the latter to report for
work were all received on time, drawing him to hastily conclude that
Gonzales intentionally disobeyed the orders contained therein.

14.12 Damages
Moral/Exemplary
Cases
Colegio de San Juan Letran-Calamba v Villas, 399 SCRA 550 (2003)
Moral damages are recoverable only where the dismissal is attended by bad
faith or fraud, or constitutes an act oppressive to labor, or is done in a
manner contrary to morals, good customs or public policy. A dismissal may
be contrary to law but, by itself alone, it does not necessarily establish bad
faith.

Asia Pacific Chartering (Phils) v Farolan, 393 SCRA
To warrant award of moral damages, it must be shown that the dismissal of
the employee was attended to by bad faith, or constituted an act opposite to
labor, or was done in a manner contrary to morals, good customs or public
policy.

Award of moral and exemplary damages for an illegally dismissed employee
is proper where the employee had been harassed and arbitrarily terminated
by the employer.

In determining the amount of moral damages recoverable, however, the
business, social and financial position of the offended party and the business
or financial position of the offender are taken into account.
Viernes v NLRC, 400 SCRA 557 (2003)
The indemnity is in the form of nominal damages intended not to penalize
the employer but to vindicate or recognize the employees right to
procedural due process which was violated by the employer. Under Article
2221 of the Civil Code, nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.

Tolosa v NLRC, G.R. No. 149578. April 10, 2003
Claims for damages under paragraph 4 of Article 217 must have a
reasonable causal connection with any of the claims provided for in the
article in order to be cognizable by the labor arbiter. Only if there is such a
connection with the other claims can the claim for damages be considered
as arising from employer-employee relations.

Maquiling v Phil. Tuberculosis Society, 450 SCRA 465 (2005)
It may be also argued that actual or compensatory damages may be
recovered in employment termination cases. Actual or compensatory
damages are not available as a matter of right to an employee dismissed for
just cause but denied statutory due process. The award must be based on
clear factual and legal bases and correspond to such pecuniary loss suffered
by the employee as duly proven. Evidently, there is less degree of
discretion to award actual or compensatory damages.

Kay Products v CA, 464 SCRA 644 (2005)
Indeed, 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. Bad faith on the part of
petitioners may be gleaned from the fact that they transferred the private
respondents to two (2) employment agencies just so they could evade their
legal responsibility as employers to accord them the status and benefits of
regular employees under the Labor Code. The dismissal, no doubt, was
effected in a wanton, oppressive or malevolent manner as the private
respondents were deprived of due process.

Acuna v CA, 489 SCRA 658 (2006)
Moral and exemplary damages are recoverable only where the dismissal of
an employee was attended by bad faith or fraud, or constituted an act
oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy.

The person claiming moral damages must prove
the existence of bad faith by clear and convincing evidence, for the law
always presumes good faith.


NIKKI HIPOLITO
197
Moral damages are recoverable only where the dismissal of the employees
was attended by bad faith or fraud or constituted an act oppressive to labor
or was done in a manner contrary to morals, good customs or public policy.
Exemplary damages on the other hand may be awarded only if the dismissal
was effected in a wanton, oppressive or malevolent manner.

Sagum v CA, 459 SCRA 223 (2005)
The award of moral and exemplary damages is proper when an illegally
dismissed employee had been harassed and arbitrarily terminated by the
employer, as when the latter committed an anti-social and oppressive abuse
of its right to investigate and dismiss an employee. The person claiming
moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It is not
enough that one merely suffered sleepless nights, mental anguish or serious
anxiety as the result of the actuations of the other party.

Nominal Damages
Cases
Central Luzon Conference v CA, 466 SCRA 711 (2005)
The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances.

SECTION 15. RETIREMENT

15.01 Retirement
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 employees retirement benefits under any collective bargaining and
other agreements shall not be less than those provided therein.

In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which
is hereby declared the compulsory retirement age, who has served at least
five (5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (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.

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.

Definition
Cases
Ariola v Philex Mining Corp, 446 SCRA 152 (2005)
Retirement results from a voluntary agreement between the employer and
the employee where the latter, after reaching a certain age, agrees to sever
his employment with the former.

Jaculbe v Silliman University, 518 SCRA 445 (2007)
Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the latter,
after reaching a certain age agrees to sever his or her employment with the
former.

Types
Cases
Gerlach v Reuters Ltd Phils, 448 SCRA 335 (2005)
There are three kinds of retirement schemes. The first type is compulsory
and contributory in character. The second type is one set up by agreement
between the employer and the employees in collective bargaining
agreements or other agreements between them. The third type is one that
is voluntarily given by the employer, expressly as in an announced company
policy or impliedly as in a failure to contest the employee's claim for
retirement benefits. It is this third type of retirement scheme which covers
respondents Plan.

Basis
Cases
Aquino v NLRC, 206 SCRA 118 (1992)
Retirement benefits, where not mandated by law, may be granted by
agreement of the employees and their employer or as a voluntary act on the
part of the employer. Retirement benefits are intended to help the employee
enjoy the remaining years of his life, lessening the burden of worrying for
his financial support, and are a form of reward for his loyalty and service to
the employer.


NIKKI HIPOLITO
198
Gamogamo v PNOC Shipping and Transport Corp, 381 SCRA 742
(2002)
Retirement results from a voluntary agreement between the employer and
the employee whereby the latter after reaching a certain age agrees to
sever his employment with the former.

Interpretation
Cases
Lopez v National Steel Corp, 423 SCRA 109 (2004)
While it is axiomatic that retirement laws are liberally construed in favor of
the persons intended to be benefited, however, such interpretation cannot
be made in this case in light of the clear lack of consensual and statutory
basis of the grant of retirement benefits to petitioner.

Salomon v Assn of International Shipping Lines, 457 SCRA 254
(2005)
While it is axiomatic that retirement laws are liberally construed in favor of
the persons intended to be benefited, however, such interpretation
cannot be made in this case in light of the clear lack of consensual
and statutory basis of the grant of retirement benefits to petitioner.

Age
Cases
MAI Phils. Inc v NLRC, 151 SCRA 196 (1988)
Yet a third serious mistake, amounting to grave abuse of discretion, too,
may be ascribed to the Commission; and that is, its refusal, or neglect to
consider the fact-again quite plain from the record and to which MAI had
adverted more than once-that the matter of Nolasco's reinstatement had
become moot and academic at the time that he filed his second action
before the labor arbiters' office against MAI on August 16, 1982; for as of
that day, he had already reached the age of 60 years, which is the
retirement age fixed by the Labor Code.

Rationale
Cases
Producers Bank of the Phils v NLRC, 298 SCRA 517 (1998)
Hence, the retirement of an employee does not, in itself, affect his
employment status especially when it involves all rights and benefits due to
him, since these must be protected as though there had been no
interruption of service. It must be borne in mind that the retirement scheme
was part of the employment package and the benefits to be derived
therefrom constituted, as it were, a continuing consideration for services
rendered, as well as an effective inducement for remaining with the
corporation. It is intended to help the employee enjoy the remaining years
of his life, releasing him from the burden of worrying for his financial
support, and are a form of reward for his loyalty.

Eligibility
Cases
Reyes v NLRC, 529 SCRA 487 (2007)
The article provides for two types of retirement: (a) compulsory and (b)
optional. The first takes place at age 65, while the second is primarily
determined by the collective bargaining agreement or other employment
contract or employers retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement, other employment
contract, or employers retirement plan, an employee may optionally retire
upon reaching the age of 60 years or more, but not beyond 65 years,
provided he has served at least five years in the establishment concerned.

Brion v South Phil. Union Mission of the Seventh Day Adventist
Church, 307 SCRA 497 (1999)
Again, it has been held that "pension and retirement plans create a
contractual obligation in which the promise to pay benefits is made in
consideration of the continued faithful service of the employee for the
requisite period. In other words, before a right to retirement benefits or
pension vests in an employee, he must have met the stated conditions of
eligibility with respect to the nature of employment, age, and length of
service. This is a condition precedent to his acquisition of rights thereunder.

We rule that the conditions of eligibility for retirement must be met at the
time of retirement at which juncture the right to retirement benefits or
pension, if the employee is eligible, vests in him.

Ground Termination
Cases
Cainta Catholic School v Cainta Catholic School Employees Union,
489 SCRA 468 (2006)
Retirement is a different specie of termination of employment from dismissal
for just or authorized causes under Articles 282 and 283 of the Labor Code.
While in all three cases, the employee to be terminated may be unwilling to
part from service, there are eminently higher standards to be met by the
employer validly exercising the prerogative to dismiss for just or authorized
causes. In those two instances, it is indispensable that the employer
establish the existence of just or authorized causes for dismissal as spelled
out in the Labor Code. Retirement, on the other hand, is the result of a
bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a certain age agrees
and/or consents to sever his employment with the former.


NIKKI HIPOLITO
199
15.02 Accrual of Benefits

Accrual
Cases
Cruz v Phil. Global Communications, Inc, 430 SCRA 185 (2004)
Thus, petitioners are entitled only to either the separation pay provided
under Article 283 of the Labor Code, as amended, or retirement benefits
prescribed by the Retirement Plan, whichever is higher.

The employees right to payment of retirement benefits and/or separation
pay is governed by the Retirement Plan of the parties. Under the
Retirement Plan before us, petitioners are not entitled to both
separation pay and retirement benefits.

Llora Motors Inc v Drilon, 179 SCRA 175 (1989)
Examination of Article 287 above shows that entitlement to retirement
benefits may accrue either (a) under existing laws or (b) under a collective
bargaining agreement or other employment contract. It is at once apparent
that Article 287 does not itself purport to impose any obligation upon
employers to set up a retirement scheme for their employees over and
above that already established under existing laws. In other words, Article
287 recognizes that existing laws already provide for a scheme by which
retirement benefits may be earned or accrue in favor of employees, as part
of a broader social security system that provides not only for retirement
benefits but also death and funeral benefits, permanent disability benefits,
sickness benefits and maternity leave benefits. As is commonplace
knowledge, the Social Security Act provides for retirement benefits which
essentially consist of the right to receive a monthly pension for the rest of
the covered employee's life provided that: (1) such employee had paid at
least one hundred twenty (120) monthly contributions prior to retirement;
and (2) has reached the age of sixty (60) years (if his salary is less than
P300.00 a month) or 65 years. The retirement scheme here 'established is
compulsory and contributory in character on the part of both the employer
and the employee, backed up by criminal sanctions and administered by a
large and elaborate bureaucracy.

15.03 Private Plan

Employer Obligation
Cases
GVM Security and Protective Agency v NLRC, 224 SCRA 734 (1993)
As stressed in Llora Motors, Inc., Article 287 does not in itself purport to
impose any obligation upon employers to set up a retirement scheme for
their employees over and above that already established under existing
laws, like the Social Security Act.

15.04 Benefits and Gratuity
Cases
Sta. Catalina College v NLRC, 416 SCRA 233 (2004)
Gratuity pay x x x is paid to the beneficiary for the past services or favor
rendered purely out of the generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual services rendered or for
actual performance. It is a money benefit or bounty given to the worker,
the purpose of which is to reward employees who have rendered
satisfactory service to the company.

FOR SOCIAL LEGISLATION, PLEASE REFER TO NOTES
GIVEN BY SIR.

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LABOR LAW 1 | ATTY.

DISINI | 3A 2010-2011 NOTES

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