“Success = Preparation meets Opportunity”

LABOR REVIEW REVIEWER

I. PROCEDURE & JURISDICTION
1. Labor Arbiter
Article 223 (formerly Art. 217): Jurisdiction of the Labor Arbiter

LA have original and exclusive jurisdictions over:

1. Unfair labor practice cases
2. Termination disputes
3. Money claims of workers accompanied by prayer for reinstatement
4. Claims for actual, moral and exemplary damages arising from ER-EE relationship
5. Cases arising from violation of Art. 269, including legality of strikes and lock-outs
6. All other cases arising from EREE relationship
7. OFW employment
8. Wage distortion dispute
9. Enforcement of compromise agreement
10. Other cases provided by law

Halaguea v. PAL, G.R. No. 172013, October 2, 2009

DOCTRINE: Not every controversy or money claim by an employee against the employer or vice-versa
is within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer
where the employer-employee relationship is merely incidental and the cause of action precedes from
a different source of obligation is within the exclusive jurisdiction of the regular court. Here, the
employer-employee relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or
other labor relations statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and
the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or
expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction
over such claims to these agencies disappears.
This Court holds that the grievance machinery and voluntary arbitrators do not have the
power to determine and settle the issues at hand. They have no jurisdiction and competence to decide
constitutional issues relative to the questioned compulsory retirement age. Their exercise of
jurisdiction is futile, as it is like vesting power to someone who cannot wield it.

Lapanday Agricultural Dev’t. Corp v. CA, G.R. No. 112139, January 31, 2000
DOCTRINE: We resolve first the issue of jurisdiction. We agree with the respondent that the RTC
has jurisdiction over the subject matter of the present case. It is well settled in law and
jurisprudence that 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 all these cases, an employer-employee relationship is an indispensable jurisdictional
requisite; and there is none in this case.

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7K Corp. vs. Albarico, GR No. 182295, June 26, 2013
DOCTRINE: The above circumstances, however, do not obtain in the present case. There is no claim
that the issue of entitlement to separation pay is being resolved in the context of any authorized
cause of termination undertaken by petitioner corporation. Neither is there any allegation that a
consideration of social justice is being resolved here. In fact, even in instances in which separation
pay is awarded in consideration of social justice, the issue of the validity of the dismissal still needs
to be resolved first. Only when there is already a finding of a valid dismissal for a just cause does the
court then award separation pay for reason of social justice. The other circumstances when
separation pay may be awarded are not present in this case.

The foregoing findings indisputably prove that the issue of separation pay emanates solely
from respondent’s allegation of illegal dismissal. In fact, petitioner itself acknowledged the issue of
illegal dismissal in its position paper submitted to the NCMB.

Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin that
a voluntary arbitrator has plenary jurisdiction and authority to interpret an agreement to arbitrate
and to determine the scope of his own authority when the said agreement is vague — subject only,
in a proper case, to the certiorari jurisdiction of this Court.

Having established that the issue of the legality of dismissal of Albarico was in fact
necessarily – albeit not explicitly – included in the Submission Agreement signed by the parties, this
Court rules that the voluntary arbitrator rightly assumed jurisdiction to decide the said issue.

Consequently, we also rule that the voluntary arbitrator may award backwages upon a
finding of illegal dismissal, even though the issue of entitlement thereto is not explicitly claimed in
the Submission Agreement. Backwages, in general, are awarded on the ground of equity as a form of
relief that restores the income lost by the terminated employee by reason of his illegal dismissal.

People’s Broadcasting vs. Sec. of Labor, GR No. 179652, March 6, 2012

DOCTRINE: To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE
that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the
exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the
jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied
by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3)
of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction
over those cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement.
If a complaint is filed with the NLRC, and there is still an existing employer-employee
relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may
still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.

*NOTES:
1. ER-EE subsisting, regardless of amount -- RD (DOLE)
2. EE resigned/terminated, regardless of amount -- NLRC
3. NO ER-EE AT THE BEGINNING/AT ALL -- NEITHER LA/DOLE/NLRC HAS JURISDICTION

Ruling:

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 Under Art. 129 of the Labor Code, the power of the DOLE and its duly authorized hearing
officers to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits was qualified by the proviso that the complaint not include a claim for reinstatement,
or that the aggregate money claims not exceed PhP 5,000. RA 7730, or an Act Further Strengthening
the Visitorial and Enforcement Powers of the Secretary of Labor, did away with the PhP 5,000
limitation, allowing the DOLE Secretary to exercise its visitorial and enforcement power for claims
beyond PhP 5,000. The only qualification to this expanded power of the DOLE was only that there
still be an existing employer-employee relationship.
It is conceded that if there is no employer-employee relationship, whether it has been
terminated or it has not existed from the start, the DOLE has no jurisdiction. Under Art. 128(b) of
the Labor Code, as amended by RA 7730, the first sentence reads, "Notwithstanding the provisions
of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of
inspection." It is clear and beyond debate that an employer-employee relationship must exist for
the exercise of the visitorial and enforcement power of the DOLE.
The question now arises, may the DOLE make a determination of whether or not an
employer-employee relationship exists, and if so, to what extent?
The first portion of the question must be answered in the affirmative.
The prior decision of this Court in the present case accepts such answer, but places a
limitation upon the power of the DOLE, that is, the determination of the existence of an employer-
employee relationship cannot be co-extensive with the visitorial and enforcement power of the
DOLE.
But even in conceding the power of the DOLE to determine the existence of an employer-
employee relationship, the Court held that the determination of the existence of an employer-
employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE
is merely preliminary.
This conclusion must be revisited.
The DOLE, in determining the existence of an employer-employee relationship, has a ready
set of guidelines to follow, the same guide the courts themselves use.
The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
(4) the employer’s power to control the employee’s conduct. The use of this test is not solely limited
to the NLRC.
The DOLE Secretary, or his or her representatives, can utilize the same test, even in the
course of inspection, making use of the same evidence that would have been presented before the
NLRC.
The determination of the existence of an employer-employee relationship by the DOLE must
be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the
employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employer-employee relationship
be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that
evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the
existence of an employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee relationship, it
takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction

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only if the employer-employee relationship has already been terminated, or it appears, upon
review, that no employer-employee relationship existed in the first place.
It must also be remembered that the power of the DOLE to determine the existence of an
employer-employee relationship need not necessarily result in an affirmative finding. The DOLE
may well make the determination that no employer-employee relationship exists, thus divesting
itself of jurisdiction over the case. It must not be precluded from being able to reach its own
conclusions, not by the parties, and certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered
to make a determination as to the existence of an employer-employee relationship in the exercise of
its visitorial and enforcement power, subject to judicial review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is
still a threshold amount set by Arts. 129 and 217 of the Labor Code when money claims are
involved, i.e., that if it is for PhP 5,000 and below, the jurisdiction is with the regional director of the
DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the jurisdiction is with the
labor arbiter, under Art. 217. The view states that despite the wording of Art. 128(b), this would
only apply in the course of regular inspections undertaken by the DOLE, as differentiated from
cases under Arts. 129 and 217, which originate from complaints.
There are several cases, however, where the Court has ruled that Art. 128(b) has been amended to
expand the powers of the DOLE Secretary and his duly authorized representatives by RA 7730. In
these cases, the Court resolved that the DOLE had the jurisdiction, despite the amount of the money
claims involved. Furthermore, in these cases, the inspection held by the DOLE regional director was
prompted specifically by a complaint. Therefore, the initiation of a case through a complaint does
not divest the DOLE Secretary or his duly authorized representative of jurisdiction under Art.
128(b).
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE
that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the
exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the
jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied
by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3)
of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction
over those cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement.
If a complaint is filed with the NLRC, and there is still an existing employer-employee
relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may
still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there was an employer-
employee relationship has been subjected to review by this Court, with the finding being that there
was no employer-employee relationship between petitioner and private respondent, based on the
evidence presented. Private respondent presented self-serving allegations as well as self-defeating
evidence.
The findings of the Regional Director were not based on substantial evidence, and private
respondent failed to prove the existence of an employer-employee relationship. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship present. Thus, the
dismissal of the complaint against petitioner is proper

2. National Labor Relations Commission

a. Original Jurisdiction of the NLRC

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A. Certified Cases – cases certified to it by compulsory arbitration by SOLE under Art. 278 or the
President under Art. 279.
a. Article 278 – Strikes, Picketing and Lockouts
b. Article 279 – Prohibited Activities – Legality of Strikes or Lockouts
B. Injunction cases under Art. 225 and 278
a. Article 225 – Powers of the Commission
i. Power to Investigate
ii. Power to issue compulsory processes
iii. Ocular inspection
iv. Rulemaking power
v. Power to issue injunctions and restraining orders
vi. Contempt power
C. Contempt Cases
D. Verified Petition
E. Petition to annul or modify the order of the resolution (including those issued during execution
proceedings) of the labor arbiter

b. Article 223 (formerly Art. 217); Exclusive Appellate jurisdiction

A. Cases decided by the Labor Arbiters under Art. 224 (b) of Labor Code and RA 8042 Sec. 10
a. Article 224 (b)
b. RA 8042 Sec. 10
B. Cases decided by the Regional Office of DOLE in the exercise of its adjudicatory function under Art.
129 of the Labor Code over monetary claims of workers amounting to not more than P5,000.
C. Contempt Cases decided by Labor Arbiters

c. Article 229 (formerly Art. 223); Appeal

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained only on any of the following
grounds:
1. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
2. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
3. If made purely on questions of law; and
4. If serious errors in the findings of facts are raised which would cause grave or irreparable
damage or injury to the appellant.
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall
impose reasonable penalty, including fines or censures, upon the erring parties.

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 In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other
party who shall file an answer not later than ten (10) calendar days from receipt thereof.
The Commission shall decide all cases within twenty (20) calendar days from receipt of the
answer of the appellee. The decision of the Commission shall be final and executory after ten (10)
calendar days from receipt thereof by the parties.
Any law enforcement agency may be deputized by the Secretary of Labor and Employment
or the Commission in the enforcement of decisions, awards or orders. (As amended by Section 12,
Republic Act No. 6715, March 21, 1989)

Mcburnie vs. Ganzon, GR No. 178034, Oct. 17, 2013

Doctrine: The rule on appeal bonds
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the Labor Arbiter. The lawmakers clearly intended to make the
bond a mandatory requisite for the perfection of an appeal by the employer as inferred from the
provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety
bond." The word "only" makes it clear that the posting of a cash or surety bond by the employer is the
essential and exclusive means by which an employer’s appeal may be perfected.

The prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond,
coupled with compliance with the two conditions, namely,
(1) a meritorious ground, AND
(2) posting of a bond in a reasonable amount,
shall suffice to suspend the running of the period to perfect an appeal from the labor arbiter’s decision
to the NLRC. To require the full amount of the bond within the 10-day reglementary period would only
render nugatory the legal provisions which allow an appellant to seek a reduction of the bond.
The filing of a motion to reduce bond and compliance with the two conditions stop the running
of the period to perfect an appeal.
The requirement on the existence of a "meritorious ground" delves on the worth of the parties’
arguments, taking into account their respective rights and the circumstances that attend the case. The
condition was emphasized in University Plans Incorporated v. Solano, wherein the Court held that
while the NLRC’s Revised Rules of Procedure "allows the [NLRC] to reduce the amount of the bond, the
exercise of the authority is not a matter of right on the part of the movant, but lies within the sound
discretion of the NLRC upon a showing of meritorious grounds.

The Supreme Court laid down the Rules to take into consideration as to Appeal and Appeal Bond:
1. On the issue of the NLRC’s denial of the respondents’ motion to reduce appeal bond, the CA ruled
that the NLRC committed grave abuse of discretion in immediately denying the motion without
fixing an appeal bond in an amount that was reasonable, as it denied the respondents of their
right to appeal from the decision of the LA.
2. On the issue of the NLRC’s dismissal of the appeal on the ground of the respondents’ failure to
post the additional appeal bond, the CA also found grave abuse of discretion on the part of the
NLRC, explaining that an appeal bond in the amount of ₱54,083,910.00 was prohibitive and
excessive.
3. On the matter of the filing and acceptance of motions to reduce appeal bond, as provided in
Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that
henceforth, the following guidelines shall be observed:
a. The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to
the following conditions:
(1) there is meritorious ground; and
(2) a bond in a reasonable amount is posted;

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 b. For purposes of compliance with condition no. (2), a motion shall be accompanied by the
posting of a provisional cash or surety bond equivalent to ten percent (10%) of the
monetary award subject of the appeal, exclusive of damages and attorney's fees;
c. Compliance with the foregoing conditions shall suffice to suspend the running of the 10-
day reglementary period to perfect an appeal from the labor arbiter's decision to the
NLRC;
d. The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount of bond that shall be posted by the appellant, still in
accordance with the standards of meritorious grounds and reasonable amount;
e. In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount of the provisional bond, the appellant shall be given a fresh period of
ten (10) days from notice of the NLRC order within which to perfect the appeal by posting
the required appeal bond.

Lepanto Consolidated Mining vs. Icao, GR No. 196047, Jan. 15, 2014
Doctrine: An unencumbered amount of money in the form of cash in the custody of the NLRC from the
previous case of the appellant is sufficient to be accepted as a bond in order to perfect an appeal.

Reasons:
1. there is no question that the appeal was filed within the 10-day reglementary period. Except for
the alleged failure to post an appeal bond, the appeal to the NLRC was therefore in order
2. it is also undisputed that petitioner has an unencumbered amount of money in the form of cash
in the custody of the NLRC. To reiterate, petitioner had posted a cash bond of ₱401,610.84 in the
separate case Dangiw Siggaao, which was earlier decided in its favor. As claimed by petitioner
and confirmed by the Judgment Division of the Judicial Records Office of this Court, the Decision
of the Court in Dangiw Siggaao had become final and executory as of 28 April 2008, or more
than seven months before petitioner had to file its appeal in the present case. This fact is shown
by the Entry of Judgment on file with the aforementioned office. Hence, the cash bond in that
case ought to have been released to petitioner then.
3. cash bond in the amount of ₱401,610.84 posted in Dangiw Siggaao is more than enough to cover
the appeal bond in the amount of ₱345,879.45 required in the present case.
4. this ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure
that workers will receive the money awarded in their favor when the employer’s appeal
eventually fails.

Sadol vs. Pilipinas Kao, GR No. 87530, June 13, 1990

Ruling:
There is no question that private respondents failed to file a timely appeal from the derision
of the labor arbiter while the petitioner was able to interpose his appeal within the reglementary
period. It is also an accepted postulate that issues not raised in the lower court or the labor arbiter
may not be raised for the first time on appeal.
The rules of technicality must yield to the broader interest of justice. It is only by giving due
course to the motion for reconsideration that was timely filed that the NLRC may be able, to
equitably evaluate the conflicting versions of facts presented by the parties.
Attached to respondent SKLB's motion likewise is the joint affidavit of one Mario T.
Ecarnum and Benito U. Ecarnum who jointly stated that they were neighbors and co- workers of the
complainant in the pit burning area, in a work contracted by aforesaid respondent with respondent
Pilipinas Kao, Inc.; that complainant abandoned his work starting April 19,1984 when he went to
Manila to apply for work abroad and it wall only about eight (8) months later that he returned

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when he failed to secure an overseas employment; that complainant's prolonged absence was
without prior permission or leave of absence.
It does strike Us as odd that if indeed complainant was dismissed sometime in April 1984 it
took him almost three (3) years before filing the instant case for illegal dismissal . This
circumstance adds a significant dimension to respondent's position that indeed complainant
abandoned his job to look for greener pastures and it was only when he failed to find such.
All the foregoing undisputed taken together, preponderate in favor of respondent SKLB's
claim of being a lawful independent labor contractor which employed complainant who
unjustifiably abandoned his employment.

Ong vs. CA, GR No. 152494, Sept. 22, 2004

Doctrine: Time and again it has been held that the right to appeal is not a natural right or a part of
due process, it is merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of law. The party who seeks to avail of the same must comply with
the requirements of the rules. Failing to do so, the right to appeal is lost.
Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor Arbiter’s
monetary award:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. x x x.
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.

Parts of the Ruling:

The employer, his counsel, as well as the bonding company, shall submit a joint declaration
under oath attesting that the surety bond posted is genuine.
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the
amount of the bond. The filing of the motion to reduce bond shall not stop the running of the period
to perfect appeal.
Thus, After careful scrutiny of the motion to reduce appeal bond, The Supreme Court agrees
with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied
petitioner’s motion for the same failed to either elucidate why the amount of the bond was
"unjustified and prohibitive" or to indicate what would be a "reasonable level. "a substantial
monetary award, even if it runs into millions, does not necessarily give the employer-appellant a
"meritorious case" and does not automatically warrant a reduction of the appeal bond."
Even granting arguendo that petitioner has meritorious grounds to reduce the appeal bond,
the result would have been the same since he failed to post cash or surety bond within the
prescribed period.

d. Article 224 (formerly Art. 218); Powers of the Commission

A. Power to Investigate – involves the power to investigate matter and hear disputes within its
jurisdiction/adjudicatory power including:
a. Original Jurisdiction
b. Appellate Jurisdiction
B. Power to Issue Compulsory Processes – Involves the following:

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 a. Administering oaths
b. Summoning parties
c. Issuance of Subpoenas
C. Ocular Inspection
D. Rule Making Power – Involves the promulgation of rules and regulations concerning:
a. Disposition of cases
b. Internal function
c. Matters which may be necessary to carry out the purpose of Labor Code
E. Power to issue Injunctions and Restraining orders
F. Contempt power

Yupangco Cotton Mills vs. CA, GR No. 126332, Jan. 16, 2002
Doctrine: FORUM SHOPPING. There is no forum-shopping where two different orders were
questioned, two distinct causes of action and issues were raised, and two objectives were sought.

The accion reinvindicatoria filed by petitioner in the trial court was to recover the property illegally
levied upon and sold at auction. Hence, the causes of action in these cases were different.

THIRD PARTY CLAIM. a third party whose property has been levied upon by a sheriff to enforce a
decision against a judgment debtor is afforded with several alternative remedies to protect its
interests. The third party may avail himself of alternative remedies cumulatively, and one will not
preclude the third party from availing himself of the other alternative remedies in the event he failed
in the remedy first availed of

PAL vs. NLRC, GR No. 120567, March 20, 1998

Doctrine: The term "labor dispute" is defined as "any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment regardless of
whether or not the disputants stand in the proximate relation of employers and employees."

The petition for injunction directly filed before the NLRC is in reality an action for illegal
dismissal. This is clear from the allegations in the petition which prays for: reinstatement of private
respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As such,
the petition should have been filed with the labor arbiter who has the original and exclusive
jurisdiction to hear and decide the following cases involving all workers, whether agricultural or
non-agricultural

3. Article 232 (formerly Art. 226) Bureau of Labor Relations

Article 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations
Divisions in the regional offices of the Department of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both parties, on all inter-union
and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-
management relations in all workplaces, whether agricultural or non-agricultural, except those
arising from the implementation or interpretation of collective bargaining agreements which shall
be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension
by agreement of the parties. (As amended by Section 14, Republic Act No. 6715, March 21, 1989).

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FUNCTIONS AND AUTHORITY OF BLR – it shall:
A. Set policies, standards, and procedures on the registration and supervision of legitimate labor
union activities including denial, cancellation, and revocation of labor union permits;
B. Set policies, standards, and procedures relating to collective bargaining agreements, and the
examination of financial records of accounts of labor organizations to determine compliance
with relevant laws; and
C. Provide proper orientation to workers on their schemes and projects for improvement of the
standard of living of workers and their families.
D. “Inter union disputes” or “Representation disputes”
E. “Intra union disputes” or “Internal union disputes”

Diokno vs. Cacdac, GR No. 168475, July 4, 2007

Montano vs. Verceles, GR. No. 168583, July 6, 2010

4. National Conciliation and Mediation Board Jurisdiction

A. Composed of an Administrator and two (2) Deputy Administrators and as many Conciliators-
Mediators as the needs of the public service requires.
B. The Conciliation, Mediation, and Voluntary Arbitration of the BLR shall be absorbed by the
NCMB
C. It exercises the following functions:
a. Formulate policies, programs, standards, procedures, manuals of operation, and
guidelines pertaining to effective mediation and conciliation of labor disputes;
b. Perform preventive mediation and conciliation functions;
c. Coordinate and maintain linkages with other sectors or institutions and other
government authorities concerned with matters relative to the prevention and
settlement of labor disputes;
d. Formulate policies, plans, programs, standards, procedures, manuals of operation and
guidelines pertaining to the promotion of cooperative and non-adversarial schemes,
grievance handling, voluntary arbitration and other voluntary modes of dispute
settlement;
e. Administer the voluntary arbitration program; maintain/update a list of voluntary
arbitrators; compile arbitration awards and decisions;
f. Provide counselling and preventive mediation assistance particularly in the
administration of collective agreements;
g. Monitor and exercise technical supervision over the Board programs being implemented
in the regional offices; and
h. Perform such other functions as may be provided by law or assigned by the Secretary of
Labor and Employment.

5. Regional Directors Jurisdiction

a. Article 128- Visitorial and Enforcement Powers

Maternity Children’s Hospital vs. Sec. of Labor, GR No. 79809, June 30, 1989

b. Adjudicatory Power

Brokenshire Memorial Hospital vs. Minister of Labor, GR. No. 74621, Feb. 7, 1990

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 D.O No. 83-07, Series of 2007
 Designation of DOLE Regional Directors and Asst. Regional Directors as Ex-
Officio Voluntary Arbitrators

6. Grievance Machinery and Voluntary Arbitration

a. Grievance Machinery Definition

Grivance Machinery is a mechanism for the adjustment of controversies or disputes arising from
the interpretation or implementation of the CBA and the interpretation and enforcement of
company personnel policies.

 It Is a must in any CBA and no agreement can be registered in the absence of such
procedure; in other words, IT IS MANDATORY.
 Jurisdiction – Cases must be referred of Grievance
o Disputes on the interpretation or implementation of CBA.
o Disputes on the interpretation or enforcement of company personnel policies.

b. Article 267 (formerly Art. 261) Jurisdiction of Voluntary Arbitrators

Arbitrable disputes:
A. Contract Negotiation Disputes – disputes as to the terms of CBA
B. Contract Interpretation Disputes – disputes arising under existing CBA, involving matters as
interpretation and application of the contract or alleged violation of its provision.

Jurisdiction of Voluntary Arbitrators (Exclusive Original Jurisdiction Conferred by Law):

A. All unresolved grievances arising from the interpretation or implementation of CBA
B. Unresolved grievances arising from the interpretation or enforcement of Company
Personnel Policies
C. Hear and Decide Wage Distortion issues arising from the application of any wage orders in
organized establishment
D. Unresolved grievances arising from interpretation and implementation of the Productivity
incentive programs under RA 6071

Carlos L. Octavio vs. PLDT Co., GR No. 175492, Feb. 27, 2013

II. RECRUITMENT & PLACEMENT

1. Article 13 (b): Definition of Recruitment & Placement

“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, in any manner, offers or
promises for a fee employment to two or more persons shall be deemed engaged in recruitment
and placement.

2. Article 13 (b): When there is a presumption of Recruitment & Placement

People v. Panis, L-58674-77, July 11, 1986

11
Doctrine: 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."

3. Illegal Recruitment
a. Definition of Illegal Recruitment under Labor Code

Illegal recruitment is activities undertaken by non-licensees or nonholders of authority.

b. Definition of Illegal Recruitment under the Migrant Worker’s Act (R.A. No. 8042)
Constitutionality –

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 the Labor Code of the Philippines

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.

Lazo v. Salac, G.R. No. 152642, November 13, 2012

c. Article 13: License v. Authority

“LICENSE” means a document issued by the DOLE authorizing a person or entity to operate a
private employment agency.

“AUTHORITY” means a document issued by the DOLE authorizing a person or association to

engage in recruitment and placement activities as a private recruitment entity.

PRIVATE EMPLOYMENT AGENCY PRIVATE RECRUITMENT ENTITY

It has the right to charge a fee to ER or
workers or both
Authorized to recruit only for overseas
placement
Authorized to recruit and place workers
from a document denominated as
“license”
It has no right to charge a fee
Allowed to recruit for both local and
overseas
Sources its authority from document
called “authority”

d. Article 34: Prohibited Acts

e. Additional grounds (prohibited acts) added by Migrant Worker’s act, apart from Art.
34

It shall likewise include the following acts, whether committed by any person, whether a non-
licensee, non-holder, licensee or holder of authority

a. (illegal exaction) To charge greater amount than that specified int eh schedule of allowable
fees;

12
 b. (false infromation) To furnish or publish any false notice or information or document in
relation to recruitment or employment;
c. (false statement) To give any false notice, testimony, information or document or commit
any act of misrepresentation to secure a license or authority;
d. (pirating) To include or attempt to induce a worker already employed to quit his job in lieu
of another offer unless it is designed to liberate the worker from oppressive terms of
employment;
e. (influencing not to employ) To influence or attempt to influence any person or entity not to
employ any worker who has not applied for employment through his agency;
f. (harmful jobs) 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. (failure to comply with rules and regulations) 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;
h. (alteration of contracts) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the SOLE;
i. (travel agency officers recruiting) 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;
j. (witholding travel documents) To withhold or deny travel documents from applicant
workers before 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;
k. Failure to actually deploy a contracted worker without valid reason as determined by the
Department of Labor and Employment;
l. 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
m. To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.

In addition to the acts enumerated above, it shall also be unlawful for any person or entity to
commit the following prohibited acts:

n. 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;
o. 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;
p. 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;
q. Impose a compulsory and exclusive arrangement whereby an overseas 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;

13
 r. Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is
required to undergo training, seminar, instruction or schooling of any kind only from
specifically designated institutions, entities or persons, except fpr recommendatory
trainings mandated by principals/shipowners where the latter shoulder the cost of such
trainings;
s. For a suspended recruitment/manning agency to engage in any kind of recruitment activity
including the processing of pending workers' applications; and
t. 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.

f. Illegal recruitment as economic sabotage

Illegal recruitment shall be considered an offense involving economic sabotage if any of the
qualifying circumstances exists:
A. Committed by a Syndicate
B. Committed in Large Scale

g. Differences: Simple Illegal recruitment, illegal recruitment in large scale, illegal

recruitment by a syndicate

Simple Illegal recruitment – does not have a license or authority to lawfully engage in the
recruitment and placement of workers

Illegal recruitment in Large Scale – if it is committed against 3 or more persons individual or as a

group

Illegal recruitment by a Syndicate – carried out by a group of 3 or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction

Simple Economic Sabotage

Prescription
5 years 20 years
Imprisonment
12 years & 1 day to 20 Life Imprisonment
years
Fine
Php1-2M Php2-5M

h. Illegal Recruitment v. Estafa

Estafa
 The accused represented themselves to complainants to have the capacity to send workers
abroad although they did not have any authority or license. It is by representation that they
induced complainants to pay a placement fee – Estafa under par. 2 Art 315, RPC.
 When a workers suffers pecuniary damage, regardless of the amount, as a result of a
previous or simultaneous false pretense resorted by a nonlicensee or nonholder of
authority, may complain of estafa ART 315 RPC aside from illegal recruitment

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  Par2 Art 315 RPC, estafa is committed by any person who defrauds another by using a
fictitious name, or falsely pretends to possess power, influence, qualifications, property,
credit, agency, business or imaginary transactions, or by means of similar deceits executed
prior to or simultaneously with the commission of the fraud.
 The offended party must have relied on the false pretense, fraudulent act or fraudulent
means of the accused and as a result thereof, the offended party suffered damages.

i. Liabilities of the local employment agency and the employer

j. Theory of Imputed Knowledge

Any information material to the transaction, either possessed by the agent at the time of the
transaction or acquired by him before its completion, is deemed to be the knowledge of the
principal, at least so far as the transaction is concerned, even though in fact the knowledge is not
communicated to the principal at all. Not the other way around. The Agent is not deemed to know
any information or transaction done by the Principal and the Worker.

In simpler terms – The theory of imputed knowledge ascribes the knowledge to the agent, to the
principal, ER not the other way around. The knowledge of the principal-foreign ER cannot,
therefore, be imputed to its agent. - Sunace

Sunace International vs. NLRC G.R. No. 161757, January 25, 2006
Doctrine: Imputed Knowledge is not applicable to the employment agency, upon termination of the
employment contract, to transactions entered between the principal and the worker.
The knowledge of the principal-foreign employer cannot, therefore, be imputed to its agent
Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the
2-year employment contract extension, it cannot be said to be privy thereto. As such, it and its
"owner" cannot be held solidarily liable for any of Divina’s claims arising from the 2-year
employment extension. As the New Civil Code provides, Contracts take effect only between the
parties, their assigns, and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision of law.

k. Rule on the pre-termination of contract of a migrant worker

 In case of termination of overseas employment without just, valid or authorized cause as

defined by law or contract or there are unathorized deductions from his salary, 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.

 The subject clause in the 5th paragraph of Section 10 RA 8042 is violative of the right of
petitioner (OFW) to equal protection.

Serrano v. Gallant, G.R. No. 167614, March 24, 2009

Doctrine: Sec. 10 of RA 8042 (Migrant Workers Act of 1995) – Unconstitutional. Hence, in case of
pretermination of employment contract the alternative to pay 3 month’s salary for every year of the
unexpired term is no longer available. The OFW is entitled to his salaries for the unexpired portion
of his employment contract, plus full reimbursement of his placement fee with interest of 12% per
annum.

15
Constitutional right to equal protection.

Yap v. Thenamaris, G.R. No. 179532, May 30, 2011

Doctrine: SC declared as unconstitutional the clause "or for three months for every year of the unexpired
term, whichever is less" provided in the 5th paragraph of Section 10 of RA 8042.
That said provision of law has long been a source of abuse by callous employers against migrant
workers; and that said provision violates the equal protection clause under the Constitution because,
while illegally dismissed local workers are guaranteed under the Labor Code of reinstatement with
full backwages computed from the time compensation was withheld from them up to their actual
reinstatement, migrant workers, by virtue of Section 10 of RA 8042, have to waive nine months of
their collectible backwages every time they have a year of unexpired term of contract to reckon with.

4. Regulation and Enforcement

a. Article 35: Suspension or cancellation of license or authority

 The minister of Labor shall have the power to suspend or cancel any license or authority to
recruit EEs for overseas employment for violation of rules and regulations issued by SOLE,
Overseas Employment Development Board, and National Seamen Board…

 Grounds for imposition of administrative sanction of POEA:

A. Engaging in the act/s of misrepresentation for the purpose of securing a license or renewal
thereof, such as giving false testimonies;
B. Engaging in the recruitment or placement of workers in jobs harmful to public health or
morality or dignity of the RP;
C. Charging of any fee in amount exceeding the allowable rate; and
D. Obstructing inspections by DOLE.

 SOLE and POEA Administrator have concurrent jurisdiction to suspend or cancel a license

 A recruitment agency is solidarily liable for the unpaid salaries of a worker it recruited for
employment with a foreign principal; liability extends up to and until the expiration of the
employment contracts of the EEs recruited and employed.
o Except – peculiar circumstances such as when the EEs were informed of the risks
but the latter insisted to return to work despite warnings

 Recruitment agency is obligated to protect and tend to the welfare of its recruits

 A foreign corporation which, through unlicensed agents, recruits workers in the country may be
sued in and found liable by Philippine courts

b. Penalties of Illegal Recruitment under Section 7, R.A. No. 8042

A. Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not
less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less
than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
B. The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.

16
Provided, however, that the maximum penalty shall be imposed if the person illegally recruited is
less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.

c. Rule on remittance of foreign exchange earnings

 Article 22 LC, it shall be mandatory to all Filipino workers abroad to remit a portion of their
foreign exchange earnings to their families, dependents, and or beneficiary in the country
 Remittance should be in the foreign currency and not converted to Peso abroad
 EO 857, as amended, prescribe the percentage of foreign exchange ranging from 50%-80% of
the basic salary, depending on the worker’s kind of job.
 OFW – “Mga Bagong Bayani”
 Exceptions to Mandatory Remittance:
1) Filipino servicemen working in the US military installations
2) Worker’s immediate family members. Dependents, beneficiaries are residing with him
abroad
3) EEs working with UN

5. Article 18: Direct Hiring, and Rules & Regulations Governing Overseas Employment:
Exceptions

Art 18. Ban on Direct Hiring

 No ER may hire Filipino workers for overseas employment except through the Boards or
entities authorized by DOLE
 Direct hiring of Filipino workers by foreign employers is not allowed
 EXCEPT:
1) Direct hiring by members of the diplomatic corps
2) International Organizations
3) Other ERs allowed by DOLE
4) “NAME HIRES” those individual workers who are able to secure contracts for overseas
employment on their own efforts and representation without the assistance of any
agency provided they submit to POEA documents of:
a. employment contract;
b. valid passport;
c. employment visa / work permit;
d. certificate of medical fitness;
e. certificate of attendance to employment orientation
 Reasons for Prohibition:
1) To assure the best possible terms and conditions of work to the EE
2) To assure the foreign ER that he hires only qualified Filipino workers
3) To insure compliance with the LC

Invalid Side Agreement

 An agreement that diminishes the EE’s pay and benefits as contained in a POEA-approved
contract is void, unless such agreement is approved by POEA
 The terms and conditions stated in the Employment Contract are in conformance with the
Standard Employment Contract for Entertainers prescribed by the POEA under
Memorandum Circular 2 1986. Any alterations or changes made in any part of this contract
without prior approval by the POEA shall be null and void.

17
III. LABOR STANDARDS
1. Hours of Work
a. Article 82: Who are covered and excluded from the provision
Title I, Book III of the LC dealing with hours of work, weekly rest periods, holidays, service incentive
leaves and service charges, covers all EE in all establishments, whether for profit or not.

EXCEPT:
A. Government EE
B. Managerial EE including member of the managerial staff
C. Field Personnel
D. Members of the Family of the ER who are dependent on him for support
E. Domestic Helpers or Persons in the Personal Service of Another
F. Workers paid by the Result

i. Health Workers
ii. Compressed Work Week (CWW)
CWW is resorted to by the ER to prevent serious losses due to causes beyond his control, such as
when there is substantial slump in demand for his goods or services or when there is lack of raw
materials. To be an exception to the 8-hr a day requirement, the workers must agree to the
temporary change of work schedule and they do not suffer any loss of overtime pay, fringe
benefits or their weekly or monthly take home pay.

This scheme is an alternative arrangement whereby the normal workweek is reduced to less that
6days but the total number of normal hours per week remains at 48 hours. The normal workday is
increased to more than 8 hours without corresponding to overtime premiums. This applies to 40 or
44 hour workweek firms

Requisites:
A. Expressly and voluntarily supported by majority of the EEs affected
B. If work is hazardous, Certification from accredited agency
C. DOLE is duly notified

Effects:
A. Work is more than 8 hours but not to exceed 12 hours – during those periods no overtime
pay
B. Meal period: not less than 60mins
C. Adoption of the scheme shall not result in diminution of existing benefits

b. Article 83: Normal hours of work & exceptions

Normal Hours of Work: Not to Exceed 8 hours in a day; 6 days a week; 48 hours a week

c. Article 84: Hours Worked

i. Meal Break
Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, April 15, 1998
Ruling:
The case before us does not pertain to any controversy involving discrimination of employees but
only the issue of whether the change of work schedule, which management deems necessary to increase

18
production, constitutes unfair labor practice. As shown by the records, the change effected by
management with regard to working time is made to apply to all factory employees engaged in the same
line of work whether or not they are members of private respondent union. Hence, it cannot be said that
the new scheme adopted by management prejudices the right of private respondent to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it may devise means
to attain that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. Thus, management is free
to regulate, according to its own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, processes to be followed,
supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers
and discipline, dismissal and recall of workers.
Further, management retains the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. So long as such prerogative is exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements, this Court will uphold such exercise.
Management also has rights which, as such, are entitled to respect and enforcement in the interest of
simple fair play.

PAN-AM v. PAN-AM Employees Association, 1 SCRA 527

Doctrine: The Meal Period given to EE should be a time for themselves wherein they can eat or rest
without any control from the ER. However, when EEs are on standby for emergency purposes or
work and if they are happened to be called by the lead man and if they are not available would
suffer reprimand form the lead man then such meal period is considered a work time that would be
included in the 8 hour work.

ii. Waiting Time

iii. Rule on Brownout
d. Night shift differential (NSD) and those not covered by NSD
e. Overtime Work/Overtime Pay
i. Condition for entitlement to overtime pay
ii. Basis for Computation
iii. Waiver or quitclaim
2. Wages
a. “no work no pay” principle and exception to “no work no pay”
b. Facilities v. Supplements
c. Exempted from the rules on wages
d. Non-diminution rule
e. Wage Distortion

WAGE DISTORTION is a situation where an increase in prescribed rates results in the elimination
or severe contraction of international quantitative differences in wage or salary rates between and
among EE 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.

f. Rule on those paid by results

g. Article 113: Wage Deduction
3. Rest Day

19
 a. Article 91: Right to Weekly Rest Day
b. Article 93: Compensation for Rest Day, Sunday, Holiday Work
4. Holiday pay/Premium pay
a. Article 94: Coverage/ Exclusions
b. Article 94: Computation
c. Legal Holidays
d. Holiday Economic Rule
5. Leaves
a. Service Incentive Leave (SIL) and Exemptions
b. Vacation Leave & Sick Leave

PSTMSDWO, represented by its president, Rene Soriano v. PNCC Skyway Corp, G.R. No. 171231,
February 17, 2010
Doctrine: The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids. The intention of the
parties must be gathered from that language, and from that language alone. Stated differently,
where the language of a written contract is clear and unambiguous, the contract must be taken
to mean that which, on its face, it purports to mean, unless some good reason can be assigned
to show that the words used should be understood in a different sense
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article
VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall
be under the option of the employer. The preference requested by the employees is not
controlling because respondent retains its power and prerogative to consider or to ignore said
request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be
strictly adhered to and respected if its ends have to be achieved, being the law between the
parties.
Although the preferred vacation leave schedule of petitioner's members should be given
priority, they cannot demand, as a matter of right, that their request be automatically granted by
the respondent. If the petitioners were given the exclusive right to schedule their vacation leave
then said right should have been incorporated in the CBA. In the absence of such right and in
view of the mandatory provision in the CBA giving respondent the right to schedule the vacation
leave of its employees, compliance therewith is mandated by law.
The vacation leave privilege was not intended to serve as additional salary, but as a
non-monetary benefit. To give the employees the option not to consume it with the aim of
converting it to cash at the end of the year would defeat the very purpose of vacation leave

c. Leaves that are required by Law (mandatory)

i. Service Incentive Leave (SIL)

Definition of Service Incentive Leave

Service incentive leave is a right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in which case said period
shall be considered as one year. It is also commutable to its money equivalent if not used or exhausted at

20
the end of the year. In other words, an employee who has served for one year is entitled to it. He may use
it as leave days or he may collect its monetary value.

Autobus Transport System v. Bautista, May 16, 2005

Doctrine: As a Regular EE, he is entitled to SIL provided he is not one of those exempted from the
benefit. Bautista, Bus driver of Autobus, is not considered as a field EE because he has a specific
route to traverse as a bus driver and that is a specific place that he needs to be at work. There are
inspectors hired by Auto Bus to constantly check him. There are inspectors in bus stops who
inspects the passengers, the punched tickets, and the driver. Therefore he is definitely supervised
though he is away from the Auto Bus main office.
In cases of nonpayment of allowances and other monetary benefit, if it is established that
the benefits being claimed have been withheld from the EE for a period longer than 3 years, the
amount pertaining to the period beyond the 3-year prescriptive period is barred by prescription.
The amount that can only be demanded by the aggrieved EE shall be limited to the amount for
benefits withheld with 3years before the filing of the complaint. Applying Art291 LC, the 3-year
prescriptive period commences, not at the end of the year when EE becomes entitled to the
commutation of his service incentive leave, but from the time when the ER refuses to pay its
monetary equivalent after demand of commutation or upon termination or EE.

ii. Paternity Leave (R.A. No. 8187)

This benefit shall apply to the first four deliveries or miscarriage of the EE’s lawful wife with whom
he is cohabitating. For this purpose, cohabitating refers tot eh obligation of the husband and wife to
live together. Where the sps are not physically living together because of work station or
occupation, the male EE is still entitled tot eh paternity leave benefit.

The leave shall be for 7 days, with full pay xxx. Availment of the paternity leave may be after the
delivery, without prejudice to an ER’s policy of allowing the EE to avail of the benefit before or
duringthe delivery, provided the total number of days shall not be more than 7 days for each
covered delivery.
iii. Maternity Leave (SSS Law)
RA 1161 SSS Law
Maternity Leave Benefit – A female member who has paid at least 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 100% of her average daily salary credit for 60 days or
78 days in case of caesarean delivery.

iv. Solo Parent Leave (R.A. No. 8972)

ER shall provide for a flexible working schedule for solo parents provided that the same
shall not affect individual and company productivity.
No ER shall discriminate against any solo parent EE with respect to terms and conditions of
employment on account of his/her status. In addition to leave privileges under existing laws,
parental leave of not more than 7 working days every year shall be granted to any solo parent EE
who has rendered service of at least 1 year.

21
 v. Battered Woman Leave (R.A. No. 9262)
Procedures:
A. BW has to submit to her ER a certification from the Punong Baranggay / Kagawad /
Prosecutor / Clerk of Court that an action under RA9262 has been filed and pending
B. Period: 10 days on top of other paid leaves; leave is extendible subject to the necessity as
provided in the protection order

6. Thirteenth Month Pay (P.D. 851)

a. Value of 13th month pay

b. Coverage

7. Separation Pay

Songco v. NLRC, G.R. No. L-50999, March 23, 1990

Doctrine: The nature of the work of a salesman and the reason for such type of remuneration for
services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We take
judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions
and allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of
the fact that some salesman do not received any basic salary but depend on commissions and
allowances or commissions alone, although an employer-employee relationship exists. Since the
commissions in the present case were earned by actual market transactions attributable to petitioners,
these should be included in their separation pay. In the computation thereof, what should be taken into
account is the average commissions earned during their last year of employment.

Millares v. NLRC, G.R. No. 122827, March 29, 1999

8. Retirement Pay

Qualifications for Retirement:

In case of retirement, the EE shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any CBA and other agreements: Provided, however, that an
EE;s retirement benefits under any CBA and other agreements shall no be less than those provided
herein.
In the absence of retirement plan or agreement providing for retirement benefits of EEs, an
EE upon reaching the age of 60 years or more, but not beyond 65 year which is hereby declared the
compulsory retirement age, who at least served at least 5 years in the said establishment, may
retire and shall be entitled to retirement pay equivalent to at least ½ month salary for every year of
service, a fraction of at least 6mos being considered as 1 year.
Unless parties provide for broader inclusions, the term ½ month salary shall mean 15days PLUS
1/12 of the 13th month pay and the cash equivalent of not more than 5days SIL.

9. Apprentices, Learners and Handicapped Workers

APPRENTICE

22
Apprentice is a worker who is undergoing training for an approved apprenticeable occupation
covered by the apprenticeship agreement with an individual ER.
Requisites for employment of apprentices:
D. ER should be engaged in business that is highly technical industry;
E. Work of the apprentice should be classified as an apprenticeable occupation.
Requirements for an apprentice:
A. must be at least 15 y/o
B. must have the vocational aptitude
C. must possess the ability to comprehend and follow oral/written instructions
Features:
A. Salary: not less than 75% of the prescribed minimum wage
B. Period: More than 3mos but not to exceed 6mos
C. Approval of SOLE for an apprenticeship program
D. ER not compelled to continue one’s employment
E. ½ of the value of labor training expenses incurred for developing the productivity
and efficiency of the apprentices of the training cost is deducted from the ER’s
income tax but not to exceed 10% of direct labor wage
F. If apprenticeship is part of the school’s training, ER may not pay any wage

LEARNERS
Learners are persons hired as trainees in semi-skilled and other industrial occupations which are
non-apprenticeable and which may be learned through practical training on the job in a relatively
short period of time which shall not exceed 3 months.
Features:
A. Salary: not less than 75% of the prescribed minimum wage
B. Period: shall not exceed 3mos
C. Upon completion, the ER may be compelled to continue with the services of the
learner as a regular EE
D. There is a commitment form ER to employ learners if they so desire, as regular EE
upon completion of the learnership
E. All learners who have been allowed or suffered to work during the first 2mos shall
be deemed regular EE
F. Learners engaged in semi-skilled jobs.

HANDICAPPED Workers
Handicapped workers are those whose earning capacity is impaired by age or physical or mental
deficiency or injury.
Features:
A. Salary: not less than 75% of the prescribed minimum wage
B. Eligibility: ma be hired as apprentices or leaners if their handicap is not such as to
effectively impede the performance of job operations in the particular occupations
for which they are hired

10. Women Workers

a. Non-Discrimination Rule

RA6725 Women in Development and Nation Building Act

23
“The state recognizes the role of women in nation building and shall ensure the fundamental
equality before the law of women and men. The state shall provide women rights and opportunities
equal to that of men.”

To attain the foregoing policy:

(1) A substantial portion of official development assistance funds received from foreign
governments and multilateral agencies and organizations shall be set aside and utilized by the
agencies concerned to support programs and activities for women;
(2) All government departments shall ensure that women benefit equally and participate
directly in the development programs and projects of said department, specifically those funded
under official foreign development assistance, to ensure the full participation and involvement of
women in the development process; and
(3) All government departments and agencies shall review and revise all their regulations,
circulars, issuances and procedures to remove gender bias therein.

b. Stipulation Against Workers

Stipulation Against Marriage
It shall be unlawful for an ER to require as a condition of employment or continuation of
employment that a woman EE
A. Shall not get married
B. That upon getting married a woman EE shall be deemed resigned

11. Minor Workers (R.A. No. 7678, R.A. No. 9231, & R.A. 7323)

Minimum Employable Age

A. No child below 15 y/o shall be employed except when he works directly under the sole
responsibility of his parents or guardians and his employment does not interfere with his
schooling
B. Between 15 y/o ad 18 y/o may be employed for such numbers of hours and such periods of
the day as determined by SOLE
C. No employment of person below 18 y/o in work which is hazardous or deleterious in nature
as determined by SOLE

Duty of ER to report all children employed by him

RA 9231 – Children below 15 y/o shall not be employed except when a child works directly under
the sole responsibility of his/her parents or legal guardian and where only members of his/her
family are employed provided that his/her employment neither endangers his/her life, safety,
health, morals, nor impairs his/her normal development, provided further that the parent or legal
guardian shall provide the said child with the prescribed primary and/or secondary education.
Child – all persons under 18 y/o
Max Work in a Max Work in a No work
Week Day during
Below 15 y/o 20hrs 4hrs 8pm to 6am
15 y/o – below 40hrs 8hrs 10pm to 6am
18 y/o

RA 7323 – “Employment of Poor but deserving Students”; aims to help poor but deserving students
pursue their education; it encourages employment in private firms and government agencies

24
through incentives granted to ERs, allowing them to pay 60% of their salaries and 40% through
education vouchers to be paid by the government

12. Househelpers (Domestic Workers Act, R.A. No. 10361)

“Domestic Servants” – any person, whether male or female, who renders services in and about the
ER’s 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 ER’s
family.

IV. TERMINATION OF EMPLOYMENT

1. Employer-Employee Relationship
a. Four-Fold Test

Sonza v. ABS-CBN, G.R. No. 138051, June 10, 2004

DOCTRINE: elements of an employee-employer relationship are:
(a) selection and engagement of the employee
(b) the payment of wages,
(c) the power of dismissal
(d) the employer’s power to control the employee on the means and methods by which the
work is accomplished.
The last element, the so-called "control test", is the most important element.

b. Economic Reality Test

Refers to whether the worker is dependent on the alleged ER for his continued employment in that
line of business.

Francisco v. NLRC, G.R. No. 170087, August 21, 2006

DOCTRINE: Receiving check vouchers indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social Security contributions from Company can
give rise to EE-ER Relationship.

2. Kinds of Employment
a. Regular Employees

Regular Employment arrangement where the EE:

A. Has been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the ER; (nature of work test)
B. Has rendered at least 1 year of service, whether such service is continuous or broken, with
respect to the activity in which he is employed; (period of service test) or
C. When an EE is allowed to work after probationary period. (probationary employment test)

Granted the Benefit of Security of Tenure

De Leon v. NLRC, G.R. No. 70705, August 21, 1989

DOCTRINE: The test is whether the former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by considering the nature of the work

25
performed and its relation to the scheme of the particular business or trade in its entirety. (FOR EE-
ER)

b. Casual Employees

Casual employment is where an EE is engaged to perform activities which are not necessary or
desirable in the usual trade or business of the ER.
A. Status of regular employment attaches to casual EE who has rendered at least 1 year of
service, whether such service is continuous or broken, with respect to the activity in which
he is employed and his employment shall continue while such activity exists
B. Casual EE is only casual for 1 year and its passage of time gives him a regular status
*Constitutional guarantees of security of tenure and right to self-organization

NO Security of Tenure

Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra)
Regular and Casual Employment.—The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of 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 employed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

provided,that, any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such actually exists.

Philippine Geothermal, Inc. v. NLRC, G.R. No. 82643-47, August 30, 1990
RULING:
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 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.
If the employee has been performing the job for at least a year, even if the performance is not
continuous & merely intermittent, the law deems the repeated & continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only w/ respect to such activity & while such activity
exists. Seasonal workers who are called to work from time to time & are temporarily laid off during
off-season are not separated from service in said period, but merely considered on leave until re-
employed

c. Seasonal Employees

26
Seasonal employment is an employment arrangement where an EE is engaged to work during a
particular season on an activity that is usually necessary or desirable in the usual business or trade
of the ER.

During off-season, EE –ER relationship no severed but is considered “on-leave of absence without
pay”

Seasonal EE deemed Regular EE:

A. When there is reasonable connection between the particular activity performed by the EE in
relation to the usual trade or business of the ER; and
B. Seasonal workers who are repeatedly engaged to perform the same tasks for more that one
season

Separation pay – when the business establishment is sold

Hacienda Fatima v. National Federation of Sugarcane Workers, G.R. No. 149440, January 28, 2003
Doctrine: An employment shall be deemed to be casual if it is not covered by art 280 with regards
to regular employment: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
activity exist.
"The fact that [respondents] do not work continuously for one whole year but only for
the duration of the . . . season does not detract from considering them in regular employment
since in a litany of cases this Court has already settled that seasonal workers who are called
to work from time to time and are temporarily laid off during off-season are not separated
from service in said period, but merely considered on leave until re-employed."

d. Fixed-Term

Fixed Term employment is an employment arrangement where an EE is engaged to work on a

specific project or undertaking which is usually necessary or desirable in the usual business or
trade of the ER, the completion of which has been determined at the time of the engagement of the
EE.

Freedom of parties to contract so long as the stipulations are not contrary to law, morals, good
customs, public order, and public policy

Validity of fixed-term employment:

A. Fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure; or
B. It satisfactorily appears that ER and EE dealt with each other on more or less equal terms
with no moral dominance exercised by the former to the latter.

Fixed-Term deemed Regular EE:

A. EEs were allowed to work beyond the fixed-term without a new contract;
B. EE were allowed to work for more than 1 year and there is reasonable connection between
the particular activity performed by the EEs in relation to the usual business or trade of the
ER
C. Successive renewals of fixed period contracts

27
Brent School, Inc. v. Zamora, G.R. No. 48494, February 5, 1990
Doctrine: An employment shall be deemed to be without a definite period 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.

e. Project Employees

Project employment is when the employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of engagement of the EE.

Requirements:
A. Specific project stated in the employment contract
B. Estimated date of completion of project
C. EE must have been dismissed every after completion of project
D. There must be report to the DOLE of his dismissal on account of completion of project

When the employment of project EE is extended long after the supposed project has been finished,
the EEs are removed from the scope of project EEs and considered Regular EE.

Project EE deemed Regular EE:

A. There is continuous rehiring of project EE even after the cessation of project for the same
tasks (EE must be continuously rehired without gaps and intervals)
B. The task performed are Vital, Necessary and Indispensable tot eh usual business or trade of
ER

Project – reference to a particular job; it must be separate, distinct, and identifiable form the main
business of the ER and the duration must be determinable

Separation Pay:
General Rule – Project EE are not entitled to separation upon completion of project
EXCEPT: Projects have not been completed and their services are terminated, also enjoy security of
tenure ONLY during the limited time of their employment

Cartajenas v. Romago Electric Company, Inc., G.R. No. 82973, September 15, 1989
Doctrine: Project employment is a job where the employee was engaged for a specific undertaking,
the completion or termination of which has been determined at the time of the engagement.

3. Probationary Employment

Probationary Employment exist where the EE, upon his engagement is made to undergo a trial
period during which the ER determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of his engagement.

Duration:
General Rule: shall not exceed 6 months from the date the EE started working
EXCEPT:

28
 A. Covered by apprenticeship agreement stipulating longer period
B. Parties to the employment contract agree otherwise
C. Stated in the Company Policy
D. Required by the nature of work performed by the EE

Termination of Probationary Employment (due process):

A. Just Cause; AND
B. Failure to meet the standards for qualifications for regular employment which was made
known to him at the time of his engagement
C. When he fails to qualify as a regular EE in the accordance with the reasonable standards
prescribed by the ER

International Catholic Migration Commission v. NLRCC, G.R. No. 72222, January 30, 1989
Doctrine: An employer has the authority pursuant to Art 281, to terminate a probationary
employee for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement.

4. Difference between Job Contracting & Labor-Only Contracting

JOB CONTRACTING / SUBCONTRACTING – an arrangement whereby a principal agrees to put out

with a contractor or subcontractor the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premise of the principal.
A. Principal
B. Contractor / subcontractor
C. Contractual EE

Principal has NO ER-EE relationship with Contractual EE; Contractor / subcontractor has ER-EE
relationship with Contractual EE

Elements of Legitimate Contracting / Subcontracting:

A. The contractor or subcontractor must be registered in accordance with the rules and carries
a distinct and independent business and undertakes to perform a job, work or service on its
own responsibility, according to its own method, and free from control and direction of the
principal in all matters connected with the performance of the work except as tot eh results
thereof;
B. Contractor has Substantial Capital and/or Investment;
C. Service Agreement ensures Compliance with all rights and benefits under the Labor Laws

LABOR ONLY CONTRACTING – an arrangement where the contractor or subcontractor merely

recruits, supplies or places workers to perform a job, work, or service for a principal, and any of the
following elements is present:
A. The contractor or subcontractor does not have Substantial Capital or Investment which
relates to the job, work, or services to be performed, and the EEs recruited, supplied or
placed by such contractor or subcontractor are performing activities which are directly
related to the main business of the principal; OR
B. The contractor does not exercise control over the performance of the work of the
contractual EE.

Prohibited by Law because it is contrary to public policy

29
Labor-Only Contracting is only allowed when it is engaged in RECUIRTMENT activities/agency
 Recruitment provided it is Accredited and Licensed
 Recruit workers to be used by Principals

Job Contracting Labor-Only Contracting

As to Nature of ER/Principal
The ER/Principal is merely an indirect ER/Principal is treated as direct ER of
ER of the contractor’s EE the contractor’s EE
As to existence or ER-EE relationship with ER/Principal
Law creates an ER-EE relationship for a Law creates an ER-EE relationship
limited purpose (to ensure payment of
wages of EE)
As to liability of the principal
Principal becomes solidarily liable with Principal becomes solidarily liable with
the contractor in the event the latter fails the contractor
to pay the EE’s wages and for violation of
labor standard laws. Liability does not
extend to payment of backwages or
separation pay of EE who are illegally
dismissed.
As to validity
Permissible Prohibited by law
As to Capital
Presence of Substantial Capital or Absence of Substantial Capital or
investment investment
As to Contractor
Separate personality and independent Mere Agent of the Principal
from the Principal

Mandaue Galleon Trade v. Andales, G.R. No. 159668, March 7, 2008

Article 106 of the Labor Code explains the relations which may arise between an employer, a contractor and the
contractors employees thus:
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 directly related to the principal business of such employer. In such

30
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.

The first two paragraphs of Article 106 set the general rule that a principal is permitted by law to engage the services of a
contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the
contractor for the wages of the contractors employees.

Sections 5 and 7 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended (Implementing Rules),
reinforce the rules in determining the existence of employer-employee relationship between employer, contractor or
subcontractor, and the contractors or subcontractors employee, to wit:
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited.
For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the
following elements are [is] present:
i) The contractor or subcontractor does not have substantial capital or investment which relates to the
job, work or service to be performed and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the performance of the work of the
contractual employee.

Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in
the performance or completion of the job, work or service contracted out.

The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be

considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code
and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of
any violation of any provision of the Labor Code, including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a
competent authority:
a. where there is a labor-only contracting; or
b. where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.

5. Dismissal from Employment

a. Security of Tenure

Security of Tenure is the constitutional right granted the EE, that the ER shall not terminate the
services of an EE except for just cause or when authorized by law. Extends to regular (permanent)
and non-regular (temporary) employment.

Consequences of the Violation of Security of Tenure

A. Reinstatement without loss of seniority rights
B. Full Backwages, inclusive of allowances and other benefits or their monetary equivalent
computed from the time his compensation was withheld from him upto the time of his
actual reinstatement
C. Recovery of Moral and Exemplary damages and Attorney’s fees.

b. Just Causes

Just Causes for Dismissal:

31
 F. SERIOUS MISCONDUCT
G. WILLFUL DISOBEDIENCE OR INSUBORDINATION
H. GROSS AND HABITUAL NEGLECT OF DUTIES
I. FRAUD OR WILLFUL BREACH OF TRUST
J. COMMISSION OF A CRIME OR OFFENCE
K. ANALOGOUS CAUSES

A. Serious Misconduct
Misconduct has been defined as the transgression of some established and definite rule of action, a
forbidden act, a declaration of duty, willful in character, and implies wrongful intent and not mere
error in judgment
Requisites:
1. Misconduct must be serious
2. Must relate tot eh performance of the EE’s duties
3. EE has become unfit to continue working for ER
4. Performed with wrongful intent
Ex. Sexual harassment; fighting w/in co premises/ uttering obscene, insulting words to superior;
gross immorality; falsification of time records; sexual intercourse inside co premises and during
working hours

B. Willful disobedience or Insubordination

Requisites:
1. The EE’s assailed conduct has been willful or intentional “wrongful and perverse
attitude”
2. Order violated must have been:
a) Reasonable and lawful
b) Made known to the EE
c) In Connection to the duties which he had been engaged to discharge

“qui jure suo utitur neminem laedit” he who uses his own legal right injures no one

C. Gross and Habitual Neglect of Duties

The neglect of duties must be gross and habitual
1. Gross Neglect means an absence of that diligence that an ordinarily prudent man
would use in his own affairs
2. Habitual Neglect implies repeated failure to perform one’s duties over a period of
time
Ex. Habitual tardiness and absenteeism; abandonment of work

D. Fraud or Willful Breach of Trust

Fraud or Dolo consists in the conscious and intentional proposition to evade the normal fulfillment
of an obligation. Commission on fraud by an EE against the ER will necessarily result in the latter’s
lost of trust and confidence
Requisites for FRAUD:
1. Fraud must be committed against the ER or his representatives; and
2. In connection with the EE’s work
Ex. Falsification of time cards; theft of company properties;
Requisites of Doctrine of Loss of Confidence:
1. Loss of Confidence should not be simulated
2. Not used as a subterfuge for causes which are improper, illegal, unjustified

32
 3. Not arbitrarily asserted in the face of overwhelming evidence to the contrary
4. Must be genuine, not a mere afterthought
5. EE involved holds a position of trust and confidence

E. Commission of a Crime or Offence

This refers to an offense by the EE against the person of his ER or any immediate member of his
family or his duly authorized representatives and thus, the conviction of a crime involving moral
turpitude is not analogous thereto as the element of relation to his work or to his ER is lacking.
The conviction of an EE in a criminal case is not necessary to warrant his dismissal by his
ER.

F. Analogous Causes
Must be due to the voluntary and/or willful act or omission of the EE
Ex. Violation of co rules and regulations; drunkenness; Gross inefficiency (failure to meet quota
based on valid productivity standard; illegally diverting ER’s products

Totality of Infractions Doctrine - where the EE has been found to have repeatedly incurred
several suspensions or warnings on account of violations of company rules and regulations, the law
warrants their dismissal as akin to “habitual delinquency”

G. Other Just Causes recognized under the LC

1. Union Officers who knowingly participate in an illegal strike
2. Any EE, union officers or member who knowingly participates in the commission of
illegal acts during a strike
3. Strikers who violate orders, prohibitions, and/or injunctions issued by the SOLE or
NLRC
4. Violation of union security clause
5. Doctrine of Incompatibility – where the EE has done something that is contrary or
incompatible with the faithful performance of his duties, his ER has a just cause for
terminating his employment

Agabon v. NLRC, G.R. No. 158693, November 17, 2004

DOCTRINE: 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.
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 employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified.

Lack of procedural Due Process will still make the dismissal legal but the ER will be liable for
nominal damages in the amount of Php30,000 (Just Causes) and Php50,000 (Authorized Causes).

Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, September 21, 1990
DOCTRINE: We believe that not every case of insubordination or wilful disobedience by an
employee of a lawful work-connected order of the employer or its representative is reasonably

33
penalized with dismissal. For one thing, Article 282 (a) refers to "serious misconduct or wilful
disobedience". There must be reasonable proportionality between, on the one hand, the wilful
disobedience by the employee and, on the other hand, the penalty imposed therefor.

c. Authorized Causes

Authorized Causes for Dismissal:

A. INSTALLATION OF LABOR SAVINGS DEVICES
B. REDUNDANCY – POSITION IS SUPERFLUOUS
C. RETRENCHMENT TO PREVENT LOSES
D. CLOSING OR CESSATION OF OPERATIONS
E. DISEASE

A. INSTALLATION OF LABOR SAVINGS DEVICES

a. Automation / robotics
b. Separation pay: 1mo or 1mo for every year of service

B. REDUNDANCY – POSITION IS SUPERFLUOUS

a. Exist where the services of an EE are in excess of what is reasonably demanded by
the actual requirements of the enterprise
b. Separation pay: 1mo or 1mo for every year of service
c. REQUISITES:
i. Written notice served on both EE and DOLE at least one month prior to the
intended date of termination
ii. Payment of separation pay
iii. Good Faith in abolishing the redundant position
iv. Fair and reasonable criteria in ascertaining what positions are to be
declared redundant
d. Evidence to Substantiate Redundancy:
i. New Staffing Pattern
ii. Feasibility studies
iii. Job description
iv. Approval by the Management

C. RETRENCHMENT TO PREVENT LOSSES (downsizing)

a. Reduction of personnel usually due to poor financial returns so as to cut down on
costs of operations to prevent bankruptcy; linked with losses; cost cutting measure
b. Separation pay: 1mo or ½mo for every year of service
c. Actual losses need not set in prior to retrenchment
d. REQUISITES:
i. Retrenchment is reasonably necessary
ii. Written notice served on both EE and DOLE at least one month prior to the
intended date of termination
iii. ER pays retrenched EE separation pay
iv. Retrenchment in Good Faith for the advancement of ER’s interest
v. ER used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained
e. STADARD of RETRENCHMENT
i. Losses expected are Substantial

34
 ii. Imminent
iii. Reasonably Necessary
iv. Proved by Sufficient and Convincing Evidence
f. LIFO “Last In First Out” – when there are 2 or more EE occupying the same position
affected by the retrenchment

Retrenchment
ER reduces the number of its
personnel to prevent further losses
Act of ER of dismissing EE because
of business losses, lack of work,
considerable reduction on the
volume of his business
Redundancy
The purpose of economy a co
decides to reorganize rendering
some duties unnecessary
Not always triggered by decline in
business, ER may validly dismiss an
EE due to redundancy if that
position has already become in
excess of what the ER’s enterprise
requires

D. CLOSING OR CESSATION OF OPERATION

a. Separation pay: 1mo or ½mo for every year of service
b. REQUISITES:
i. Decision to close down is done in Good Faith
ii. Purpose should not Circumvent the LC
iii. No other option but to close down
iv. Notice requirement
v. Separation pay
c. RULES:
i. When closure is due to serious business losses, NO SEPARATION PAY is
required
ii. If no due to serious business losses, EE are entitled to Separation pay
iii. Closure due to act of government, workers are not entitled to Separation pay

DUE PROCESS to be observed by the ER:

A. Authorized cause as ground for dismissal
B. Written notices to:
a. EE and
b. DOLE at least 1mo prior to the intended date
C. ER in Good Faith
D. ER uses fair and reasonable criteria in ascertaining who will be dismissed

Santos v. CA, G.R. No. 141947, July 5, 2001

DOCTRINE: Redundancy exists when the service capability of the workforce is in excess of what is
reasonably needed to meet the demands of the enterprise. A redundant position is one rendered
superfluous by a number of factors, such as overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured by the company or phasing out of a
service previously undertaken by the business.

E. Disease (Art 284)

Requisites:

35
 1. EE is suffering from a disease
2. His continued employment is prohibited by law, prejudicial to his health
3. There is certification by a competent health authority that the disease cannot be cured
within a period of 6 months even with proper medical treatment
4. Notice of termination based on this ground served on the EE and DOLE at least 30 days
prior to effectivity
5. Separation pay: 1mo or ½mo for every year of service

Exercise of Management Prerogative

F. Other Authorized Causes recognized under the LC

1. Total and permanent disability of EE
2. Valid application of Union Security Clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return to work order
8. Commission of illegal acts in a strike
9. Violation of contractual commitment
10. Retirement

Labor Saving Redundancy Retrenchment Disease Closure of Business

Device
It does not It does not It requires proof It does not require proof of
require proof require proof of of actual or actual or imminent loss
of actual or actual or imminent loss
imminent loss imminent loss
Separation Pay
Equivalent to at least 1 mo or at Equivalent to at least 1 mo Equivalent Business
least 1 mo for every year of service or at least ½ mo for every to at least 1 Losses /
whichever is higher, a fraction of year of service whichever is mo or at Closure due to
6mo is considered 1yr higher, a fraction of 6mo is least ½ mo Act of
considered 1yr for every Governemnt:
year of No Separation
service pay
whichever
is higher, a
fraction of
6mo is
considered
1yr.

Recap:
Just Causes for Dismissal: Authorized Causes for Dismissal:
A. SERIOUS MISCONDUCT A. INSTALLATION OF LABOR SAVINGS
B. WILLFUL DISOBEDIENCE OR DEVICES
INSUBORDINATION B. REDUNDANCY – POSITION IS
C. GROSS AND HABITUAL NEGLECT OF SUPERFLUOUS
DUTIES C. RETRENCHMENT TO PREVENT LOSES

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 D. FRAUD OR WILLFUL BREACH OF D. CLOSING OR CESSATION OF
TRUST OPERATIONS
E. COMMISSION OF A CRIME OR E. DISEASE
OFFENCE
F. ANALOGOUS CAUSES

Dismissal for Just Causes Termination for Authorized Causes

EE is dismissed for causes which are
attributable to his fault or culpability
A dismissed EE is not entitled to separation pay;
ER may pay separation pay based on social
justice
Before an EE is dismissed for just cause, he must
be given ample opportunity to be heard and to
defend himself – twin notice – procedure
EE is dismissed for causes independent of his
fault or culpability
Entitled to Separation Pay
ER must give EE a written notice at least 1 mo
before the intended date of termination –
procedure

a. Procedural Due Process (Twin-notice & Hearing)

Requirements for Termination:

1. Substantive Due Process
The ER shall not terminate the services of an EE except for JUST cause and AUTHORIZED
cause. When there is no showing of a clear, valid, and legal cause for the termination of
employment, the law considers the case a matter of illegal dismissal

2. Procedural Due Process

A. Just causes, compliance with the ff:
Two-Notice requirement for the Just: The law requires that the ER must furnishes the
worker sought to be dismissed with 2 written notices before termination of employment
can be legally effected.
a. PRE NOTICE - Written Notice which apprises the EE of the particular acts or
omission for which the dismissal is sought and giving said EE reasonable
opportunity to explain his side (specifies material dates and acts comiitted by him
which may constitute as ground for terminationa nd the grounds for termination);
b. Hearing or Conference follows (may or may not be conducted as long as the party
was given a chance to explain his side fo the controversy);
c. POST NOTICE - Subsequent Written Notice of termination served on the EE
indicating that upon due consideration of all circumstances, grounds have been
established to justify his termination.

Reasonable Opportunity of Time – 5 days

Pre Notice must be received by the EE
Lack in Procedural Due Process
- Dismissal will still be legal but
- ER will be liable for nominal Damages in the amount of Php30,000 (Just Causes) and
Php50,000 (Authorized Causes)
- Nominal Damages in Authorized Causes is higher because the EE had no infraction that
led to his dismissal

B. Authorized causes

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 a. Service of written notice to the EE; AND
b. Written notice to the appropriate Regional Office of the DOLE at least 30 days before
effectivity of the termination, specifying the ground/s for termination

C. Termination based on completion of contract – No prior notice is required

D. For termination or Probationary Employment based on failure to meet the standards of
employment written notice must be served tot eh EE concerned within a reasonable time
from the effective date of termination

Burden of Proof – rest upon the ER to show that the dismissal of the EE is for a just cause, failure to
do so would necessarily mean that the dismissal is not justified

Degree of Proof – Substantial Evidence (administrative or Quasi-judicial proceedings)

SOLE may suspend the effects of termination pending resolution of the case in the event of prima
facie finding by the appropriate official of the DOLE before whom the dispute is pending that:
A. Termination may cause serious labor dispute
B. Termination is in implementation of a mass lay-off

Acesite Corp v. NLRC, G.R. No. 152308, January 26, 2005

Doctrine: The Court has ruled that the EE’s RIGHT TO DUE PROCESS prevails over the company
rules that allows “immediate dismissal: of erring EE”.

6. Abandonment

Labor,et.al v. NLRC, G.R. No. 110388, September 14, 1995

Doctrine: The Elements of Abandonment and Immediate Filing of Dismissal Complaint Negates
Abandonment. 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 ER-EE relationship;
However, the rule has no application where the complainant does not pray for reinstatement and
asks for separation pay instead.

Due Process in Abandonment:

A. First Notice directing the EE to explain why he should not be declared as having
abandoned his job
B. Second notice to inform him of the ER’s decision to dismiss hom on the ground of
abandonment
Abandonment is a matter of intention and cannot lightly be presumed
ER Burden of proving EE’s abandonment
If EE files a case of illegal dismissal with reinstatement, it negates abandonment of EE

7. Constructive Dismissal

Constructive Dismissal:
A. If an act of clear discrimination, insensibility, or disdain by an ER becomes so unbearable on
the part of the EE that it could foreclose any choice by him except to forego his continued
employment
B. Demotion in rank / Diminution in pay

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 C. Resignation is not Voluntary
D. Floating Status for more than 6 months
E. Preventive suspension beyond 30 days

Preventive suspension:
A. Evidence of guilt is strong and the ER is convinced that the continued stay of the EE during
the period of investigation constitutes a distraction to the normal operations
B. His continued employment poses a serious and imminent threat to life or property of the ER
30 day period may be extended provided the ER pays the suspended EE his wages and other
benefits; if non-payment then it may be constructive dismissal
It is a preventive remedy and not the actual sanction

Philippine Japan Active Carbon Corp. v. NLRC, G.R. No. 83239, March 8, 1989
Doctrine: A CONSTRUCTIVE DISMISSAL is “a quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay”. It is an ER’s act amounting to dismissal but made to appear as if it were not, a dismissal in
disguise.

8. Floating Status

Reyes v. RP Guardians Security Agency, G.R. No. 193756, April 10, 2013
Doctrine: When the floating status lasts for more than 6 months, the EE may be considered to have
been constructively dismissed. Constitution guarantees the right of worker to security of tenure,
thus, EE can only be dismissed for just or authorized causes and after they have been afforded the
due process of law.

9. Consequences of Illegal Dismissal

Reinstatement
Restores the EE who was
unjustly dismissed to the
position from which he was
removed
Backwages
Allows the same EE to
recover from the ER that
which he had lost by way od
wages as a result of his
dismissal

Separation Pay Backwages

As to when paid
Separation pay is paid when reinstatement Backwages is paid for the compensation
is no longer possible which otherwise the EE should have earned
had he not been illegally dismissed
As to computation
Computed on the basis of the EE’s length of Computed from the time of illegal dismissal
service up to the actual reinstatement, of if
reinstatement is no longer possible, until the
finality of the decision
As to reason for payment
Paid as an assistance during the period that Paid for the loss of earnings during the
an EE is looking for another employment period between illegal dismissal and
reinstatement

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 As to purpose
Oriented towards the future Restoration of the past income lost

a. Reinstatement
i. Actual Reinstatement
Actual Reinstatement – The EE shall be admitted back to work.

ii. Payroll Reinstatement

Payroll Reinstatement – The EE is merely reinstated in the payroll.

iii. Separation in lieu of Reinstatement:

Doctrine of Strained Relations – Under the circumstances where the employment relationship
has become so strained to preclude a harmonious working relationship, and all hopes of
reconciliation are nil after reinstatement, it would be more beneficial to accord the EE backwages +
separation pay
A. The EE occupies a position where he enjoys the trust and confidence of his ER
B. IF reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely
affect the efficiency and productivity of the EE concerned

Separation pay:
A. In lieu of reinstatement in illegal dismissal cases, where the EE is ordered reinstated but
reinstatement is not feasible
B. ER’s statutory obligation in cases of legal termination due to Authorized Causes
C. Financial Assistance, as an act of social justice
D. Employment benefit under CBA or company policy

Proceeds from an illegal dismissal wherein reinstatement is ordered by cannot be carried out
because:
A. Reinstatement cannot be effected in view of the long passage of time or of realities of the
situation
B. It would be inimical to ER’s interest
C. Reinstatement would no longer be feasible
D. It will not serve the best interest of the parties
E. Company will be prejudiced by the reinstatement
F. It will not serve a prudent purpose
G. There is a resultant strained relations
H. ER’s business has closed down

Starlite Plastic Industrial Corp v. NLRC, G.R. No. 78491, March 16, 1989
Doctrine: In the event that reinstatement is no longer feasible (DOCTRINE OF STRAINED
RELATIONS), or if the EE chooses not to be reinstated, the ER shall pay him SEPARATION PAY IN
LIUE OF REINSTATEMENT, such separation pay to be computed according to the formula used in
the earlier case.

b. Backwages

Backawages is the relief given to an EE to compensate him for loss earnings during the period of
his dismissal. Presupposes illegal termination.

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Includes: Transportation and Emergency allowances; Vacation or Service Incentive Leave and Sick
Leaves; 13th month pay

10. Voluntary Resignation

Resignation is the voluntary act of the EE who are compelled by personal reasons to disassociate
themselves from their employment. It must be done with:
A. Intention of relinquishing an office and
B. Accompanied by the act of abandonment
Withdrawal of Resignation – if already accepted, needs ER’s consent

Termination by EE:
a. Without Just Cause – by serving a written notice on the ER at least 1 mo in advance.
No notice, Er may hold EE liable for damages
b. With Just Cause – an EE may put an end to his employment without serving any notice
on the ER for any of the following just cause:
i. Serious insult by the ER or his representative on the honor and person of the EE
ii. Inhumane and Unbearable Treatment accorded the EE by the ER or his
representative
iii. Commission of a crime or offense by the ER or is representative against the
person of the EE or any of his immediate family
iv. Other causes analogous to any of the foregoing

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